Evraz recently became the sole owner of Yuzhkuzbassugol, which owns 11 coal mines. Raspadskaya, the country's second largest producer of coking coal, is 80% controlled by Cyprus-based Corber Enterprises Limited, which is co-owned on a parity basis by the Raspadskaya management and Evraz.
"I look forward to this new challenge. My top priority is to improve safety standards at all the mines of the combined company and ensure maximum control over the company's operations in order to achieve superior results," said Gennady Kozovoy, the head of Raspadskaya, who was appointed by the Evraz board of directors as the new chief executive of Yuzhkuzbassugol.
Yuzhkuzbassugol, the country's largest underground coal mining company, owns two mines that were hit by explosions in the spring of 2007, which took the lives of 149 people. Loose safety standards were blamed for the explosions at the mines.
Evraz, which held a 50% interest in Yuzhkuzbassugol before the mine blasts, decided to bring up its stake in the company to 100% as a way of modernizing the mines and preventing accidents in the future.
The exact terms and structure of the transaction are expected to be finalized in the second half of 2007. The merger is subject to the backing of Raspadskaya shareholders as well as various regulatory approvals, Evraz said in a statement.
After the deal is over, Raspadskaya will own 100% of shares in Yuzhkuzbassugol. Evraz will continue to hold its shares in Raspadskaya through Corber Enterprises Limited. As a result of the transaction, Evraz will exercise management and shareholder control in both Corber and Raspadskaya, the statement said.
