EANS-Adhoc: RHI AG / RHI and Magnesita to combine to create a leading refractory company

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Disclosed inside information pursuant to article 17 Market Abuse Regulation
(MAR) transmitted by euro adhoc with the aim of a Europe-wide distribution.
The issuer is solely responsible for the content of this announcement.
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Mergers - Acquisitions - Takeovers
05.10.2016

RHI AG ("RHI") and the controlling shareholders of Magnesita
Refratários S.A. ("Magnesita"), investment vehicles affiliated with
GP Investments ("GP") and Rhône Capital ("Rhône", and together with
GP, "Magnesita's Controlling Shareholders") announce that they have
reached an agreement to combine the operations of RHI and Magnesita
to create a leading refractory company to be named RHI Magnesita.

Accordingly, RHI's Management Board has agreed to sign a share
purchase agreement ("SPA") with Magnesita's Controlling Shareholders
regarding the acquisition of a controlling stake of at least 46%, but
no more than 50% plus one share of the total share capital in
Magnesita (the "Transaction"), pending RHI's Supervisory Board
approval. The purchase price for the 46% stake will be paid in cash
amounting to EUR 118 million and 4.6 million new shares to be issued
by RHI Magnesita, a new RHI entity to be established in the
Netherlands and listed in London. The exchange ratio applied in the
Transaction is 0.19 newly issued RHI Magnesita shares for 1 Magnesita
share. Based on RHI's six-month volume weighted average price of EUR
19.52 as of 4 October 2016, the implied value of the 46% stake
amounts to EUR 208 million, implying a value for Magnesita's entire
share capital of EUR 451 million. (1)

As a result of the Transaction, GP will become a relevant shareholder
of RHI Magnesita. The combined company's corporate governance will be
constituted on a one-tier board structure while GP will be
represented on the board of directors. All RHI Magnesita shares
issued as a result of the Transaction and subsequent mandatory tender
offer will be subject to a minimum 12-month lock-up period.

The completion of the Transaction is amongst others subject to (i)
approvals by the relevant competition authorities, (ii) the migration
of RHI to the Netherlands, (iii) the listing of RHI Magnesita's
shares in the premium segment of the Official List on the Main Market
of the London Stock Exchange and (iv) RHI's shareholders not having
exceeded statutory withdrawal rights in an amount of more than EUR 70
million in connection with organizational changes preceding RHI's
migration from Austria. The migration and the preceding
organizational changes in Austria require qualified approval by RHI's
shareholders' meeting. As a consequence of the Transaction, RHI
Magnesita will become the ultimate holding company of RHI Group while
the shareholders of RHI will cease to hold shares in RHI and instead
hold RHI Magnesita shares. Following registration of the corporate
restructurings, RHI's shares cease to be listed on the Vienna Stock
Exchange. The place of effective management of RHI Magnesita will be
Austria. If the Transaction is terminated for reasons not under the
control of Magnesita's Controlling Shareholders, an aggregate break
fee of up to EUR 20 million is payable by RHI to Magnesita's
Controlling Shareholders.

Following completion of the Transaction, which is expected for 2017,
a mandatory tender offer will be launched by RHI Magnesita or one of
its affiliates for the remaining shares in Magnesita ("Offer"). As
part of the Offer, a maximum number of 5.0 to 5.4 million RHI
Magnesita shares will be issued, depending on the stake acquired
within the Transaction, thereby resulting in an aggregate number of
no more than 10.0 million newly issued shares to finance the
acquisition. The Offer will include the option to sell shares on the
same payment terms as the Transaction as well as a cash-only
alternative amounting to EUR 8.19 per Magnesita share (subject to
certain adjustments according to the SPA). If some or all of
Magnesita's other shareholders elect not to receive RHI Magnesita
shares in the Offer, Magnesita's Controlling Shareholders have
committed to purchase at least 1.5 to 1.9 million and at most 3.4
million additional new RHI Magnesita shares, thereby increasing their
total number of RHI Magnesita shares to a maximum of 8.0 million. RHI
Magnesita may decide to combine the Offer with a delisting offer
and/or a voluntary offer to exit Magnesita from the "Novo Mercado"
listing segment. The Offer will follow applicable Brazilian laws and
regulations. Any RHI Magnesita shares that are not taken up in the
Offer by Magnesita's shareholders may be either placed into the
market or with institutional investors.

The Transaction will be financed by additional debt and the issuance
of 4.6 to 5.0 million RHI Magnesita shares to Magnesita's Controlling
Shareholders. At the same time, Magnesita will continue to finance
itself on a standalone basis without credit support from RHI Group.
Before or at completion of the Transaction, Magnesita is expected to
adopt RHI's accounting practices, which, according to RHI, could lead
to significant, however substantially non-cash adjustments in
Magnesita's book equity value.

As result of the Transaction, RHI's mid-term financial targets will
surpass RHI's current targets as communicated in RHI's Strategy 2020.
RHI expects the combined company to generate fully consolidated
revenues of EUR 2.6 billion to EUR 2.8 billion (previously EUR 2.0
billion to EUR 2.2 billion) with an operating EBIT margin of more
than 12% (previously more than 10%) by 2020, primarily as a result of
planned synergies.

(1) Based on 10 million newly issued RHI Magnesita shares (which
implies that all of Magnesita's other shareholders elect to receive
RHI Magnesita shares in the Offer), and 52,631,881 million Magnesita
ordinary shares.

Disclaimer: This document is for information purposes and shall not
be treated as giving any investment advice, financial analysis and/or
recommendation whatsoever; it does not constitute an offer or
marketing of securities of RHI, nor a prospectus. This document is
addressed exclusively to persons legally entitled to receive it and
is in particular not addressed to U.S. persons or persons residing
in, Australia, Canada, Japan, Ireland or the United Kingdom; it may
not be distributed to the USA.

For further information please contact

Investor Relations / Simon Kuchelbacher
Tel +43 (0)50213-6676
E-mail: simon.kuchelbacher@rhi-ag.com

Media Relations / Randolf Fochler
Tel +43 (0)50213-6120
E-mail: randolf.fochler@rhi-ag.com

Further inquiry note:
RHI AG
Investor Relations
Mag. Simon Kuchelbacher, CIIA
Tel: +43-1-50213-6676
Email: simon.kuchelbacher@rhi-ag.com

end of announcement euro adhoc
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issuer: RHI AG
Wienerbergstrasse 9
A-1100 Wien
phone: +43 (0)50213-6676
FAX: +43 (0)50213-6130
mail: rhi@rhi-ag.com
WWW: http://www.rhi-ag.com
sector: Refractories
ISIN: AT0000676903
indexes: ATX Prime, ATX
stockmarkets: official market: Wien
language: English

Original-Content von: RHI AG, übermittelt durch news aktuell