Privatization

BIDDING NOTICE

Joint Stock Company “National Mining Company “Tau-Ken Samruk” (hereinafter – the “Sectorial Company”) announces the holding of Biddings by means of an Open two-stage tender for the sale of 100% of the shares in the authorized capital of “Tau–Ken Temir” Limited Liability Partnership and 100% of the shares in the authorized capital of “Silicon mining” Limited Liability Partnership (hereinafter – as “Assets”, and separately “Asset”) owned by the Sectorial Company that will start on July 25, 2022 at 9.00 am (Nur-Sultan time) at the address: Nur-Sultan, 17/10, Syganak str. (hereinafter – the “Bidding”). The Bidding is held in order to determine the price and other conditions for the sale of Assets for the conclusion of sales and purchase agreement of a 100% stake in the Asset (hereinafter – the “Agreement”). If any permits and approvals of the state bodies of the Republic of Kazakhstan are required for the sale of Assets, the Agreement will be concluded if such permits and approvals are issued.

The sale of Assets is carried out in accordance with the Rules on transfer to the competitive environment of Assets of Joint Stock Company “Sovereign Wealth Fund “Samruk-Kazyna” and organizations, more than fifty percent of the voting shares (interests) of which directly or indirectly is owned by Samruk-Kazyna JSC on the right of property, approved by the decision of the absentee meeting of the Board of Directors of Samruk-Kazyna JSC of December 14, 2020 No. 181, with amendments and additions as of April 08, 2021 Minutes No. 183, of September 30, 2021 Minutes No. 187 (hereinafter – the “Rules”).

The procedure, stages and conditions of the Bidding are determined by the Rules and Annex No. 1 to this Bidding Notice (the “Notice”).

Stage 1 includes:

  1. Signing of a confidentiality agreement and familiarization with Assets from the date of publication of this Notice before the deadline for accepting Competition Applications (as this term is defined below). The right of access to the Virtual Data Room with confidential information regarding Assets is granted to potential participants after signing a confidentiality agreement.
  2. Competition Applications (as this term is defined below), drawn up in accordance with the requirements in the Notice, will be accepted until September 22, 2022 to 06.00 pm Nur-Sultan time (within 60 calendar days from the date of publication of the Notice) at the address: Nur-Sultan, 17/10, Syganak str. The Competition Application – a package of documents submitted by a potential participant within the framework of the bidding, containing a comprehensive description of the terms of the Asset acquisition to take a decision on the admission of a participant to the Bidding (hereinafter – the “Competition Application”). The Competition Application is an intention to participate in legally binding bidding, an agreement with the terms of the Bidding, within the framework of which the participant provides a preliminary price quotation, which must not be lower than the minimum price.
  3. Opening of packages with Competition Application and their verification for compliance with the requirements of the Notice (without checking compliance with the criteria for evaluating preliminary offers) by the Commission of the Sectorial Company on the day of the deadline for submitting Competition Applications for participation in the Bidding.
  4. Sending by the structural subdivision of the Sectorial Company (hereinafter – the “Responsible Department”) a written notification to the applicants to eliminate deficiencies in the Competition Applications, within 3 (three) working days from the date of completion of the Competition Application verification.
  5. Elimination by the applicant of the identified inconsistencies and provision of corrected materials to the Responsible Department of the Sectorial Department within 7 (seven) working days. At the same time, it is not allowed to provide information and documents that change the content and/or conditions of the preliminary offer.
  6. Consideration by the Commission of the Sectorial Company of Competition Application with the eliminated deficiencies and the preliminary offers attached to them within 3 (three) working days from the expiration date for the elimination of the identified inconsistencies.
  7. Summing up the results of the first stage of the Bidding and sending notice about the second stage.

Stage 2 includes:

1. Competitive Bids (as this term is defined below) containing a description of the conditions for the acquisition of Assets, in accordance with the criteria defined in the notice of the Sectorial Company on the completion of the first stage of the Bidding is accepted within 15 (fifteen) working days from the date of summing up the results of the first stage. Competitive Bid – a price quotation submitted by participants whose Competition Applications were selected as part of Stage 1 (hereinafter – “Competitive Bid”).

The Competitive Bid is submitted by the Participant of the Bidding in a sealed envelope. The Competitive Bid must be stitched, the pages or sheets are numbered, the last page or sheet is certified with the signature and seal of the participant of the Bidding.

On the front side of the sealed envelope with the Competitive Bid, the participant must indicate:

1) full name and postal address of the Participant;

2) full name and postal address of the Sectorial Company;

3) the name of the Assets for participation in the Bidding, according to which the Competitive Bid of the Participant is submitted;

4) the inscription “DO NOT OPEN BEFORE” indicating the date and time of the end of the reception of Competitive Bids in accordance with this Notice.

The envelope with the Competitive Bid submitted after the deadline is not opened and returned to the participant. A duly executed Competitive Bid is sent or provided by the participant to the address specified in the notice of the second stage of the Bidding within the deadline for submitting Competitive Bids.

2. Consideration of the Competitive Bid within 3 (three) working days from the date of opening by the Sectorial Company Commission of envelopes with Competitive Bids and taking the minutes for opening envelopes with Competitive Bids.

3. Summing up the Bidding results and selecting the winner by November 28, 2022.

The Competition Application should contain:

  1. Preliminary offer on the subject of Bidding. The preliminary offer must contain the obligations of the potential investor (hereinafter – the “Participant”) to fulfill the criteria for evaluating offers and minimum requirements;
  2. An application drawn up in the form according to Annex 1 to the Rules;
  3. An annex with documents confirming the applicant’s compliance with the qualification requirements, according to the list specified in Annex No. 1 to the Notice.

Initial (Starting) Asset price: KZT 19,900,390,937 (nineteen billion nine hundred million three hundred ninety thousand and nine hundred thirty-seven) for 100% of the share in the authorized capital of “Tau-Ken Temir” Limited Liability Partnership;

KZT 308 326 595 (three hundred eight million three hundred twenty six thousand and five hundred ninety five) for 100% of the share in the authorized capital of “Silicon mining” Limited Liability Partnership.

The criteria for evaluating preliminary offers are the price, preservation the activity profile of the Assets, acceptance of the obligation to limit the change of control over Assets according to the terms of this Notice, compliance with qualification requirements.

Minimum requirements – Assets sale terms are specified in Annex No. 1 to the Bidding Notice.

The criteria for evaluating Competitive Bids will be determined and sent based on the results of the first stage of Bidding.

Conditions for the transfer of ownership of Assets: ownership of Assets passes either after 100% payment of the Purchase price, if payment is made without installments, or in the manner provided for in Annex No. 1 to the Notice, in the case of payment in installments. In both cases, provided that the intra-group debt of Assets to the Sectorial Company is repaid by assignment of the right of claim in favor of the Participant who won the Bidding and concluded the Agreement.

Collateral. To participate in the Bidding, it is necessary to provide a guarantee fee to secure the Competition Application for participation in the Bidding and the fulfillment of obligations under the Competitive Bid and the sales and purchase agreement of 100% of the participation in the Asset (hereinafter – the “Agreement“) in the amount of KZT 186,874,772 (one hundred eighty-six million eight hundred seventy-four thousand and seven hundred seventy-two) for “Tau-Ken Temir” Limited Liability Partnership; KZT 15 125 228 (fifteen million one hundred twenty five thousand and two hundred twenty eight) for “Silicon mining” Limited Liability Partnership (hereinafter – “Collateral“) no later than the date of completion of applications. At the same time, the guarantee fee must be provided in full for both Assets, since under the Bidding, Assets are sold in one lot (that is, the possibility of acquiring Assets separately is excluded).

The collateral is a guaranteed cash contribution, in accordance with the terms of the tender documentation, deposited to the bank account of the Sectorial Company: JSC NMC Tau-Ken Samruk): BIN 090240000101, BC 16, BIC HSBKKZKX, IIC KZ696010111000044877, JSC Halyk Bank of Kazakhstan (account in KZT).

The amount of the guarantee fee does not include payment for banking services. The bank guarantee must be confirmed by a letter from the respective bank to the Sectorial Company.

The collateral of the Participant who won the Bidding and concluded the Agreement, provided by making a guarantee fee, is not refunded and is subject to offset against the payments due under the Agreement;

The conditions for the return of the Collateral, as well as cases when the Collateral is non-refundable, are established in accordance with the terms of the tender documentation.

To register as a Participant, it is necessary to provide:

  1. a Competition Application drawn up in accordance with the requirements in this Notice;
  2. a notarized copy of the charter (or a similar constituent document) of the entity applying for participation in the Bidding, with all amendments and additions;
  3. a notarized copy of the certificate or letter of verification of state registration (re-registration) of the Participant (or a similar document);
  4. a detailed ownership structure of the Participant to the final beneficiaries-individuals, indicating at each level the shareholders/participants and the jurisdictions of the institution and notarized documents confirming the establishment of legal entities;
  5. the original certificate from the bank confirming the existence of a bank account;
  6. contact details (postal address, phone, fax, e-mail);
  7. notarized copies of documents certifying the identity and authority of the signatory of the application for participation in the Bidding;
  8. for joint-stock companies – the original extract from the register of shareholders concerning the person applying for participation in the Bidding, as of the date not earlier than the date of publication of the Bidding Notice;
  9. documents confirming compliance with the qualification requirements specified in Annex No. 1 to the Bidding Notice and the Rules;
  10. letter of agreement with the sales terms of Assets;
  11. all necessary corporate decisions of the entity applying for participation in the Bidding, regulated by the applicable law and its constituent documents necessary for payment of the Collateral by an entity, including a decision on approval and/or execution of a large transaction or a perspective transaction (if applicable);
  12. a detailed description of the transaction financing mechanism, as well as documents confirming the participant’s ability to finance the transaction, for example: an account statement, a decision of the bank’s credit committee, a bank guarantee, a guarantee issued by an individual or legal entity;
  13. documents confirming the provision of the collateral under the conditions described above.

Brief description of Assets:

“Tau-Ken Temir” Limited Liability Partnership was established on December 4, 2013.

Main activity: production of metallurgical silicon, cast iron, steel and ferroalloys; production of other chemical products.

Ownership: Sectorial Company – 100%.

“Silicon mining” Limited Liability Partnership was established on December 22, 2008.

Main activity: extraction and enrichment of non-metallic ores; research, experimental and methodological and development work in the geological industry.

Ownership: Sectorial Company – 100%.

Financial highlights Tau-Ken Temir LLP

Indicators (KZT million)2018201920202021For the 6 months ended June 30, 2022
Authorised capital       15 122       15 122        15 122        15 122          15 122
Revenue         9 948         8 971          1 012                 22                  8
EBITDA             (385)      (2 855)             (224)             (246)              (119)
Income/loss             (267)      (3 574)        (8 484)       (6 203)              (199)
Book value, incl.     
Assets       13 701      10 758          1 536            8 102            8 039
Liabilities         1 673        2 304            1 566            1 929            2 066
Intra-group debt to the Sectorial Company               981              981            1 074            1 524            1 681
Equity capital       12 028        8 454               (30)            6 173            5 973
Number of employees               376              307                 72                 73                 60

Silicon mining LLP

Indicators (KZT million)2018201920202021For the 6 months ended June 30, 2022
Authorised capital               354               354               355               536               537
Revenue               520          1 169                 15                    3
EBITDA             (231)               675               (34)               (60)                 –  
Income/loss             (282)                 90               (58)               (15)                 (2)
Book value, incl.     
Assets              796          1 273          1 057          1 131            1 133
Liabilities          1 353          1 739          1 580          1 502            1 506
Intra-group debt to the Sectorial Company          1 126          1 575          1 429          1 460            1 460
Equity capital             (557)             (466)             (523)             (371)              (373)
Number of employees                 14                 14                  4                  4                  5

Restrictions for participation in the Bidding. Entities applying for participation in the Bidding must meet the qualification requirements specified in Annex No. 1 to the Bidding Notice.

The provisions on the procedure for Bidding can be found in the Rules, which are publicly available on the websites of JSC SWF Samruk-Kazyna and the Sectorial Company.

The Sectorial Company Commission may decide to cancel and re-announce the Bidding before the Competition Application is opened. In this case, the Sectorial Company places an appropriate announcement in the media and on the Sectorial Company’s corporate website.

The deadlines for providing Competition Applications and Competitive Bids specified in this Notice may be adjusted upwards by the decision of the Sectorial Company before the deadline for the acceptance of Competition Application and Competitive Bids, respectively. In case of a decision to adjust the deadlines, the Sectorial Company places an appropriate announcement in the media and on the Sectorial Company’s corporate website.

This Notice is executed in Russian, Kazakh and English. In case of contradictions, the Russian version of the Notice shall prevail. The Bidding, the tender documentation and the Data Room will be presented in Russian. Translation services will not be provided, therefore, if necessary, the translation of documents must be carried out by the participants themselves.

Additional information about the bidding process can be obtained by phone:

Aidyn Jaxybayev +7 (771) 800 31 43, ajaxybayev@kpmg.kz and Zhanibek Tokanov: +7 (702) 695 61 91, ztokanov@kpmg.kz.

Instructions for obtaining access rights to the Data Room:

The right to access the Data Room with confidential information regarding Assets is granted to the Bidding Participant after the Participant signs a confidentiality agreement.

The electronic version of the confidentiality agreement signed by the Bidding Participant must be sent by e–mail to the representative of the Sectorial Company – Samat Kanafin (skanafin@tks.kz), as well as representatives of the independent consultant of the Sectorial Company – KPMG Tax and Advisory LLP: Aidyn Jaxybayev (ajaxybayev@kpmg.kz) and Zhanibek Tokanov (ztokanov@kpmg.kz).

In addition to the signed electronic version of the confidentiality agreement, the Participant must indicate in an e-mail the following data of individuals recipients of confidential information regarding Assets:

  1. Full name;
  2. Position;
  3. Full name of the Bidding Participant (legal entity);
  4. E-mail address;
  5. Phone number;

After performing the above actions, each person indicated in the email will receive an email from the provider of the Data Room with instructions and necessary details to gain access to it. Access is granted within 1 (one) business day after receiving the data listed above.

Access to the Data Room will be closed to Participants who have not passed the second stage of the Bidding, after summing up the results of the first stage.

All questions and explanatory requests regarding the materials in the Data Room should be sent by e–mail to representatives of the independent consultant of the Sectorial Company – KPMG Tax and Advisory LLP: Aidyn Jaxybayev (ajaxybayev@kpmg.kz) and Zhanibek Tokanov (ztokanov@kpmg.kz).

Annex to the Notice:

Contact details of JSC «Tau-Ken Samruk» NMC»:

e-mail: info@tks.kz

phone number: +7 (7172) 55 9 090

Contacts of representatives of JSC «Tau-Ken Samruk» NMC»:

Myrzakhmetov Daniyar: phone number: +7 701 225 76 89, e-mail: d.myrzakhmetov@tks.kz

Kanafin Samat: phone number: +7 701 389 55 41, e-mail: s.kanafin@tks.kz