MOSCOW, November 7. /TASS/. Detsky Mir plans a reorganization into a private firm in the form of a spin-off of LLC Detsky Mir as a subsidiary operating company, Russia’s children's goods retailer said in a statement on Monday.
"The Board of Directors plans to consider the gradual transformation of Detsky Mir into a private company. The procedure assumes a reorganization of PJSC Detsky Mir, gradual transition of shareholders from the public company PJSC Detsky Mir to a non-public company LLC Detsky Mir and a tender offer for shareholders of PJSC Detsky Mir who have not transferred to LLC Detsky Mir. Following these three steps, PJSC Detsky Mir may be liquidated subject to receipt of all necessary corporate approvals," the statement said.
Detsky Mir will continue its operations in children’s food and non-food product retail and will be able to focus on developing its existing retail chain, as well as to manage its business in an efficient and flexible way, the company noted.
"The Board of Directors plans to recommend that, at an Extraordinary General Meeting of Shareholders (EGM), the company’s shareholders approve the launch of the reorganization of PJSC Detsky Mir in the form of a spin-off of LLC Detsky Mir as a subsidiary operating company. The date of the EGM will be announced later," the retailer said.
As a result of the reorganization, LLC Detsky Mir will receive assets required to conduct business activities.
"Shareholders of PJSC Detsky Mir, who do not participate in voting on the reorganization or vote "against", will be entitled to demand redemption of their shares at a price to be determined by the Board of Directors in an amount not lower than the volume-weighted average price of shares of Detsky Mir on the Moscow Exchange for one month preceding the date of the decision to hold the EGM. The amount of funds that PJSC Detsky Mir may spend on the redemption of shares will not exceed 10% of the net assets value of PJSC Detsky Mir as of the EGM date (currently 10% of the net assets value amounts to approximately 1.6 billion rubles). If the number of shares tendered for redemption exceeds the number of shares that may be redeemed in accordance with the above limit, the shares will be redeemed from the shareholders pro rata to the tendered shares," according to the statement.
The company drew the attention of non-resident investors from unfriendly jurisdictions (such as the US, EU countries, Canada and other countries imposing sanctions on Russia) to the fact that the funds received during the share redemption process would be transferred to C-type accounts opened with Russian banks. The ability to use the funds in the C-type accounts is restricted by Russian law. "Non-residents may not transfer such funds to accounts in other countries without a special permission from relevant state authorities. Although PJSC Detsky Mir is not on sanctions lists of foreign states, the company recommends that non-resident investors consult with their responsible legal and compliance departments regarding their ability to participate in voting on the reorganization, due to the possibility that certain depositories receiving voting instructions may be designated on sanctions lists of foreign states," the statement reads.
If approved by the EGM, the reorganization will be completed within approximately six months of the EGM decision.
Upon completion of the reorganization, it is planned that shareholders of the public company Detsky Mir will be offered the opportunity to exchange their shares for shares in a subsidiary of PJSC Detsky Mir that will hold a 100% interest in the private company LLC Detsky Mir. The terms of the exchange offer will be determined by the company’s Board of Directors and if approved, will be announced to shareholders in subsequent communications.
Upon completion of the reorganisation and partial transfer of shareholders to LLC Detsky Mir, it is planned that in 2023 a subsidiary of the company will make a tender offer to all shareholders to sell their shares in PJSC Detsky Mir at the tender price that will be determined by the Board of Directors in an amount not lower than the volume-weighted average price of Detsky Mir’s shares on the Moscow Exchange for six months immediately preceding the date of the mandatory tender offer made in accordance with Russia’s law on joint-stock companies, and not lower than the value determined by an independent appraiser. The company plans to request an authorization from the Government Commission on Monitoring Foreign Investment in the Russian Federation to pay consideration in rubles for the shares sold in the offer to non-resident investors from unfriendly jurisdictions to accounts specified by them, without the use of C-type accounts. If the authorization of the Government Commission is granted, the non-resident investors will be able to use the received money at their discretion, the company said.
Detsky Mir Group is a multi-format omnichannel retailer operating on the market of children’s goods in Russia, Kazakhstan, and Belarus. The group comprises the Detsky Mir and the Detmir Pickup retail chains, the detmir.ru online store and marketplace, as well as the Zoozavr pet supplies retail chain. As of June 30, 2022, the total number of the group’s stores amounted to 1,123 across 442 cities and towns in Russia, Kazakhstan and Belarus.