21/10/20 18:49 MOEX (RUR): 59.30 change in % 1.90

Questions and answers

The below questions and answers (“Q&As”) have been prepared in summary form and published solely for the convenience of TMK’s securityholders.  Shareholders who wish to participate in the Voluntary Tender Offer or learn more about its terms and conditions should review the Voluntary Tender Offer document and other materials in relation to the Voluntary Tender Offer, available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer, prior to making any decision on participating in the Voluntary Tender Offer.  In case of any discrepancies between the below Q&As and the Voluntary Tender Offer document and other materials in relation to the Voluntary Tender Offer, available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer, the Voluntary Tender Offer document should prevail.

I. General Matters

  • 1. What is the Voluntary Tender Offer?

    - On 18 May 2020, PAO “TMK” (“TMK”) received a voluntary tender offer made by “Volzhsky Pipe Plant”, Joint stock company (“VTZ”), a wholly-owned subsidiary of TMK, to acquire up to 358,758,064, or 34.7%, of the ordinary shares of TMK. The voluntary tender offer (the “Voluntary Tender Offer”) is made under Russian law and complies with the requirements of the Russian Joint-Stock Companies Law (the “JSC Law”) applicable to mandatory tender offers.

    - The Voluntary Tender Offer was made further to the approval by the Board of Directors of TMK on 8 April 2020 of a programme to purchase ordinary shares of TMK.

    - The purchase price for the ordinary shares to be paid in the Voluntary Tender Offer is RUB 61 for each ordinary share and will be paid in cash.

    - The purchase price represents (i) a cash premium of RUB 14.34 and 30.7% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 7 April 2020, the last trading day prior to the public announcement of the approval of the repurchase programme by the Board of Directors of TMK, (ii) a cash premium of RUB 4 and 7.0% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 29 April 2020, the last trading day before the Voluntary Tender Offer was resubmitted to the Central Bank of Russia (the “CBR”), and (iii) a cash premium of RUB 2.18 and 3.7% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 18 May 2020, the day TMK received the Voluntary Tender Offer. The purchase price also represents (i) a cash premium of RUB 9.14 and 17.6% per ordinary share of TMK to the 6-month volume weighted average price of RUB 51.86 for the period ending on 7 April 2020, (ii) a cash premium of RUB 7.78 and 14.6% per ordinary share of TMK to the 6-month volume weighted average price of RUB 53.22 for the period ending on 29 April 2020, and (iii) a cash premium of RUB 7.51 and 14.0% per ordinary share of TMK to the 6-month volume weighted average price of RUB 53.49 for the period ending on 18 May 2020.

    - The period for acceptance of the Voluntary Tender Offer is 70 days from the date the Voluntary Tender Offer was received by TMK (i.e. the period for acceptance is from 19 May 2020 to 27 July 2020, inclusive). The expiration date of the Voluntary Tender Offer is 27 July 2020.

  • 2. How is VTZ related to TMK?

    - VTZ is a wholly-owned subsidiary of TMK and part of TMK Russian Division, the biggest pipe producer in Russia and CIS countries.  VTZ is the largest operating subsidiary of TMK in terms of revenue.

  • 3. Why is VTZ making the Voluntary Tender Offer? Has the Board of Directors of TMK approved the Voluntary Tender Offer?

    VTZ is making the Voluntary Tender Offer further to the approval by the Board of Directors of TMK on 8 April 2020 of a programme to purchase ordinary shares of TMK.

    As announced by TMK on 8 April 2020 (see TMK’s press release available at: https://www.tmk-group.com/PressReleases/show/1147), the Board of Directors, at its meeting on 8 April 2020, approved a programme to purchase ordinary shares of TMK to be carried out by way of the Voluntary Tender Offer by VTZ.  In addition, the Board of Directors of TMK evaluated the benefits of TMK retaining a listing of its global depositary receipts on the London Stock Exchange and determined that it was no longer a strategic priority for TMK.  The Board of Directors approved the cancellation of the listing of the global depositary receipts on the London Stock Exchange, to be carried out following the completion of the Voluntary Tender Offer.  Following the completion of the Voluntary Tender Offer, it is expected that the listing of the ordinary shares on the Moscow Exchange will be downgraded from its current premium listing to a lower listing level, and the liquidity in the trading of the ordinary shares may substantially decrease.  Although the Board of Directors of TMK has not decided to pursue a delisting of the ordinary shares on the Moscow Exchange at the present time, it is possible that the Board of Directors may in the future decide to recommend that shareholders approve such delisting.  TMK may also consider a termination of its depositary receipt programmes following the cancellation of the listing of the global depositary receipts on the London Stock Exchange.

    The initial review of the strategic priorities of TMK and the evaluation of the programme to purchase its ordinary shares and the cancellation of the listing of the global depositary receipts on the London Stock Exchange was conducted by a special committee of the Board of Directors, consisting solely of the independent non-executive directors (the “Special Committee”) led by its Chairman Sergey Kravchenko and which included Natalyia Chervonenko, Yaroslav Kuzminov and Frank-Detlef Wende. To assist the Special Committee and the Board of Directors of TMK in their review, TMK engaged UBS AG London Branch as financial adviser and Debevoise & Plimpton LLP as legal counsel.

    On 8 April 2020, the Special Committee, having considered the advice of its financial adviser and other matters it deemed relevant, unanimously recommended to the Board of Directors that they approve the principal terms of the repurchase programme by way of the Voluntary Tender Offer and the cancellation of the listing of the global depositary receipts on the London Stock Exchange, and the Board of Directors took into account these recommendations in reaching its decision to approve the principal terms of the repurchase programme to be carried out through the Voluntary Tender Offer and the cancellation of the listing of the global depositary receipts.

    In arriving at these recommendations and decisions, the Special Committee and the Board of Directors considered, among other things, that:

    - TMK’s capitalisation continues to face pressure due to various market factors and low liquidity of TMK’s equity securities. The trading of TMK’s ordinary shares and global depositary receipts has been severely hampered primarily due to various external market factors, including an unfavourable economic environment and significant volatility of global currency markets, as well as current pricing conditions in the markets generally.

    - Due to the imposition of sanctions against, among others, the companies operating in the Russian oil and gas industry, as well as the recent sale by TMK of IPSCO Tubulars Inc., a U.S. manufacturer of steel pipe, TMK has significantly lowered its international presence and expects to primarily focus on its operations in the Russian market in the upcoming years.

    - Taking into account its earnings profile and future projections, TMK expects that the dividends it pays in the foreseeable future, if any, will be at a level lower than it has paid in the past, and lower than the level expected by investors.

    - TMK believes that the above factors hinder any favourable prospects for TMK in the equity markets, which are expected to remain volatile in the near future.

    - The tender offer to purchase ordinary shares of TMK provides an exit opportunity for the holders of TMK’s ordinary shares (and indirectly depositary receipt holders, provided that they cancel the depositary receipts held by them and receive the underlying ordinary shares) at a premium of 30.7% with respect to the closing price per ordinary share trading on the Moscow Exchange on 7 April 2020, before a possible downgrade of the ordinary shares from the current premium listing to a lower listing level on the Moscow Exchange and a further possible termination of TMK’s depositary receipt programmes, while allowing each holder of TMK’s ordinary shares and depositary receipts to consider its own specific circumstances, given high volatility in the securities markets.

    In making the decisions and the other determinations described above, the Special Committee and the Board of Directors also considered TMK’s business, operations, financial condition, performance, development prospects and strategy, as well as the risks and challenges inherent in executing its strategy in the current environment, and the potential effects of the Voluntary Tender Offer, including those discussed in answer to Question 10 below.

  • 4. Has the Board of Directors of TMK adopted any recommendations with respect to the Voluntary Tender Offer?

    - On 19 May 2020, the Board of Directors of TMK unanimously recommended that the shareholders of TMK accept the Voluntary Tender Offer on the terms and conditions set forth in the Voluntary Tender Offer document, taking into account, among other things, that:

    - - The purchase price of RUB 61 proposed in the Voluntary Tender Offer complies with the requirements of the JSC Law. In particular, the purchase price exceeds the 6-month volume weighted average price of RUB 53.22 per one TMK’s ordinary share traded on the Moscow Exchange for the period ending on 29 April 2020, the last trading day before the Voluntary Tender Offer was resubmitted to the CBR, and, save for the cancellation of the global depositary receipts held by VTZ and receipt of the underlying ordinary shares, VTZ and its affiliates did not acquire, or undertake any obligation to acquire, any shares of TMK within the six months prior to the date of submission of the Voluntary Tender Offer to TMK.

    - - The purchase price represents (i) a cash premium of RUB 14.34 and 30.7% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 7 April 2020, the last trading day prior to the public announcement of the approval of the repurchase programme by the Board of Directors of TMK, (ii) a cash premium of RUB 4 and 7.0% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 29 April 2020, and (iii) a cash premium of RUB 2.18 and 3.7% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 18 May 2020, the day TMK received the Voluntary Tender Offer.

    - - The purchase price also represents (i) a cash premium of RUB 9.14 and 17.6% per ordinary share of TMK to the 6-month volume weighted average price of RUB 51.86 for the period ending on 7 April 2020, (ii) a cash premium of RUB 7.78 and 14.6% per ordinary share of TMK to the 6-month volume weighted average price of RUB 53.22 for the period ending on 29 April 2020, and (iii) a cash premium of RUB 7.51 and 14.0% per ordinary share of TMK to the 6-month volume weighted average price of RUB 53.49 for the period ending on 18 May 2020.

    - - The market price of TMK’s shares, following the completion of the Voluntary Tender Offer, may be subject to wide fluctuations due to a number of factors beyond the control of TMK or the Board of Directors, including micro- and macro-economic conditions, changes in the prices of TMK’s products and services provided by TMK, changes in the profitability of TMK’s business, estimates of analysts, amendments to applicable legislation, general economic conditions or other events or circumstances.

    - - Following the completion of the Voluntary Tender Offer, TMK’s free float could significantly decrease, which could lead to a downgrade of TMK’s shares from the current premium listing to a lower listing level on the Moscow Exchange and affect the market price and liquidity of TMK’s shares.

    - TMK encourages all shareholders to carefully review and consider these recommendations, together with the Voluntary Tender Offer document and other materials in relation to the Voluntary Tender Offer, available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer, prior to making any decision on participating in the Voluntary Tender Offer.

  • 5. Who can participate in the Voluntary Tender Offer?

    - All holders of TMK’s ordinary shares can participate in the Voluntary Tender Offer, except VTZ and its affiliates, including certain other subsidiaries of TMK; the controlling shareholder of TMK (TMK Steel Holding Limited); and certain members of the boards of directors and management of VTZ, TMK and the TMK group.

    - In accordance with the provisions of the JSC Law, the Voluntary Tender Offer is made only to the holders of ordinary shares of TMK. Holders of TMK’s Regulation S global depositary receipts (“Regulation S GDRs”), Rule 144A global depositary receipts (“Rule 144A GDRs” and, together with Regulation S GDRs, “GDRs”) and Level 1 American depositary shares (“Level 1 ADSs” and, together with the GDRs, the “depositary receipts”) representing rights to TMK’s ordinary shares may participate in the Voluntary Tender Offer provided that they cancel the depositary receipts held by them, receive the respective underlying ordinary shares and submit an application to sell such ordinary shares pursuant to the terms of the Voluntary Tender Offer.

  • 6. Will TMK Steel Holding Limited participate in the Voluntary Tender Offer?

    - No.  TMK Steel Holding Limited, the majority shareholder of TMK, is an affiliate of VTZ and will not participate in the Voluntary Tender Offer.  VTZ and its affiliates, including certain other subsidiaries of TMK and certain members of the boards of directors and management of VTZ, TMK and the TMK group, also will not participate.

  • 7. Can holders of TMK’s depositary receipts participate in the Voluntary Tender Offer?

    Holders of TMK’s depositary receipts may participate in the Voluntary Tender Offer provided that they cancel the depositary receipts held by them and receive the underlying ordinary shares, as outlined in answer to Question 35 below.

    Holders of TMK’s depositary receipts must allow for sufficient time for the cancellation of the depositary receipts, the receipt of ordinary shares represented by the depositary receipts and the acceptance of the Voluntary Tender Offer.

  • 8. When is the deadline for accepting the Voluntary Tender Offer?

    - The expiration date of the Voluntary Tender Offer is 27 July 2020. All applications to sell TMK’s ordinary shares in the Voluntary Tender Offer must be received by TMK’s registrar, Joint Stock Company “Independent Registrar Company R.O.S.T.”, no later than on 27 July 2020 (inclusive).

    - Holders of TMK’s depositary receipts must allow for sufficient time for the cancellation of the depositary receipts, the receipt of ordinary shares represented by the depositary receipts and the acceptance of the Voluntary Tender Offer.

  • 9. Where can I access the documents relating to the Voluntary Tender Offer?

    - The text of the Voluntary Tender Offer document, together with the recommendations of the Board of Directors with respect to the Voluntary Tender Offer, the information letter for shareholders setting out the procedure for the acceptance of the Voluntary Tender Offer (the "Information Letter"), attaching an information letter on certain tax matters with respect to the Voluntary Tender Offer (the Tax Information Letter), TMK’s press releases and other required information have been published on TMK’s website at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.

II. Certain Effects of the Voluntary Tender Offer and Potential Risks for Shareholders of TMK

  • 10. What are some of the effects of the Voluntary Tender Offer?

    - In deciding whether or not to tender their shares in the Voluntary Tender Offer, shareholders are urged to consider the following information, together with the other information contained in the Voluntary Tender Offer document, the recommendations of the Board of Directors of TMK, the Information Letter and other materials regarding the Voluntary Tender Offer available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.

    - The Voluntary Tender Offer is addressed to, and may only be accepted by, TMK’s shareholders.

    In accordance with the provisions of the JSC Law, the Voluntary Tender Offer is made only to the holders of ordinary shares of TMK.  Holders of depositary receipts representing rights to TMK’s ordinary shares, may participate in the Voluntary Tender Offer provided that they cancel the depositary receipts held by them, receive the respective underlying ordinary shares and submit an application to sell such ordinary shares pursuant to the terms of the Voluntary Tender Offer.  Detailed instructions for cancelling depositary receipts are available at: https://www.tmk-group.com/Shares_and_GDRs.  Please refer to the Information Letter for a description of the procedure for participating in the Voluntary Tender Offer, available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.

    Surrender of the depositary receipts will be subject to the payment by depositary receipt holders of the relevant fees to The Bank of New York Mellon and to satisfaction of the other provisions of the respective deposit agreements for the depositary receipts. Depositary receipt holders are urged to consult with their tax advisers as to the tax consequences of the surrender of depositary receipts and receipt of shares, including whether any transfer taxes may apply.

    - Shareholders who accept the Voluntary Tender Offer and sell their ordinary shares into the Voluntary Tender Offer will forego any potential increase in the value of the ordinary shares following the completion of the Voluntary Tender Offer.

    While the purchase price represents (i) a cash premium of RUB 14.34 and 30.7% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 7 April 2020, the last trading day prior to the public announcement of the approval of the repurchase programme by the Board of Directors of TMK, (ii) a cash premium of RUB 4 and 7.0% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 29 April 2020, the last trading day before the Voluntary Tender Offer was resubmitted to the CBR, (iii) a cash premium of RUB 2.18 and 3.7% with respect to the closing price per ordinary share of TMK on the Moscow Exchange on 18 May 2020, the day TMK received the Voluntary Tender Offer, (iv) a cash premium of RUB 9.14 and 17.6% per ordinary share of TMK to the 6 month volume weighted average price of RUB 51.86 for the period ending on 7 April 2020, (v) a cash premium of RUB 7.78 and 14.6% per ordinary share of TMK to the 6 month volume weighted average price of RUB 53.22 for the period ending on 29 April 2020, and (vi) a cash premium of RUB 7.51 and 14.0% per ordinary share of TMK to the 6-month volume weighted average price of RUB 53.49 for the period ending on 18 May 2020, shareholders, by accepting the Voluntary Tender Offer and selling their ordinary shares into the Voluntary Tender Offer, will forego any potential increase in the value of the ordinary shares following the completion of the Voluntary Tender Offer. There can be no assurance as to the market value of ordinary shares or depositary receipts in the future.

    - Shareholders who do not sell their ordinary shares in the Voluntary Tender Offer and depositary receipt holders who do not cancel their depositary receipts and sell the underlying ordinary shares in the Voluntary Tender Offer will remain securityholders of TMK and bear the attendant risks associated with owning the respective securities.

    To the extent holders of ordinary shares or depositary receipts retain an equity interest in TMK, either because they did not participate in the Voluntary Tender Offer or sold only part of their holdings, they will continue to be securityholders of TMK. As a result, those securityholders will bear certain risks associated with holding securities of TMK. Securities held following the completion of the Voluntary Tender Offer may in the future be sold at a price significantly higher or lower than the purchase price of RUB 61 per ordinary share, and no assurance can be given as to the price at which a securityholder may be able to sell his or her securities in the future. In addition, the Voluntary Tender Offer is likely to result in a reduction of the overall liquidity of TMK’s securities, which could affect the ability of securityholders to freely trade their securities and have an effect on the price and liquidity of the securities. Furthermore, taking into account its earnings profile and future projections, TMK expects that the dividends it pays in the foreseeable future, if any, will be at a level lower than it has paid in the past, and lower than the level expected by investors.

    - TMK intends to cancel the listing of GDRs on the London Stock Exchange and may terminate its depositary receipt programmes.

    At its meeting on 8 April 2020, the Board of Directors of TMK determined that retaining TMK’s listing of its GDRs on the London Stock Exchange is not a strategic priority for TMK and resolved to proceed with cancelling the GDR listing on the London Stock Exchange following the completion of the Voluntary Tender Offer. It is not expected that the delisting of the GDRs from the London Stock Exchange will be accompanied by further repurchases of ordinary shares or GDRs. Under the UK Listing Rules, the listing may be cancelled by giving at least 20 business days’ notice of the intended cancellation through an announcement published through a Regulated Information Service, but does not require approval of GDR holders or any purchase of the outstanding GDRs. Following cancellation of the listing of the GDRs on the London Stock Exchange, the GDRs will no longer trade on the London Stock Exchange and it is unlikely that a liquid trading market for the GDRs will develop. As a result, the price of GDRs may become more volatile and it may be more difficult to complete a buy or sell order for the GDRs.

    Furthermore, following the delisting from the London Stock Exchange, TMK will no longer be subject to the disclosure and other obligations under the UK Listing, Disclosure and Transparency Rules and EU Market Abuse Regulation, and the level and type of disclosures provided to holders of the ordinary shares following the cancellation of the GDR listing may be different from that provided to GDR holders.

    TMK may review whether or not to maintain the depositary receipt programmes, including its GDR and Level 1 ADS programmes, following the cancellation of the listing, taking into consideration, among other things, the number of depositary receipts outstanding following the completion of the Voluntary Tender Offer. Any termination of the depositary receipt programmes may be effected upon giving a 90-day prior notice in the case of the GDR programmes and a 30-day prior notice in the case of the Level 1 ADS programme to The Bank of New York Mellon, as depositary for the depositary receipt programmes, which will then notify the depositary receipt holders. Upon receipt of notice of the termination, any depositary receipt holder who wishes to receive the underlying ordinary shares in exchange for their depositary receipts will need to comply with the procedures under the relevant deposit agreement (including payment of applicable fees) for receiving the ordinary shares underlying the depositary receipts they hold. With respect to any depositary receipt holders who do not elect to exchange their depositary receipts for the underlying ordinary shares, or are not permitted to hold ordinary shares, The Bank of New York Mellon in consultation with TMK will sell the ordinary shares underlying the depositary receipts remaining outstanding after the termination date and distribute the net proceeds to the former depositary receipt holders. No decision has yet been made whether or not to terminate the depositary receipt programmes, and there can be no assurance that the depositary receipt programmes will be maintained following the completion of the Voluntary Tender Offer.

    - The listing of the ordinary shares on the Moscow Exchange may be downgraded to a lower listing level following the completion of the Voluntary Tender Offer and such listing may be cancelled in the future.

    Following the completion of the Voluntary Tender Offer, TMK expects that it will not qualify for a premium listing due to the free float requirements of the Moscow Exchange, and the listing will be transferred to a lower category, which may affect the trading price and liquidity of TMK’s ordinary shares.

    Although the Board of Directors of TMK has not decided to pursue a delisting of the ordinary shares at the present time, it is possible that the Board of Directors may in the future decide to recommend that shareholders approve a delisting of the ordinary shares. A delisting of the ordinary shares from the Moscow Exchange must be approved together with the resolution on making TMK non-public and is subject to shareholders’ approval by a 95% majority vote of all holders of the voting shares. Shareholders voting against or not participating in the voting on the delisting may request that TMK redeem their ordinary shares. The purchase price for such ordinary shares must be determined by the Board of Directors and cannot be lower than the fair market value of the ordinary shares, which is to be determined by an appraiser, and the volume weighted average price of the ordinary shares over a period of six months preceding the date of the Board of Directors’ meeting. The resolution on the delisting will become effective if the amount of funds required to buy out all ordinary shares submitted for redemption does not exceed 10% of TMK’s net assets calculated under the Russian Accounting Standards (as of 31 March 2020, TMK’s net assets were equal to RUB 49,844,556,000 or approximately U.S.$682,991,129 using the exchange rate of the CBR as of 19 May 2020).

    If any such delisting were to occur, holders of the ordinary shares would not be entitled to the benefit of the listing of the ordinary shares on the Moscow Exchange, the ordinary shares would no longer trade on the Moscow Exchange, and it is unlikely that a liquid trading market for the ordinary shares would develop. As a result, the price of ordinary shares would become more volatile and it would be more difficult to complete a buy or sell order for the ordinary shares.

    - The Voluntary Tender Offer may lead one or more index providers to exclude TMK’s securities from their index or cut its weight, which may materially affect the price and liquidity of the securities.

    TMK’s securities are currently included in a wide range of different emerging markets and Russia-dedicated indices. These indices are used as a benchmark for investments by a number of institutional investors, including those who use a passive investment approach, such as ETFs. While the criteria for including or excluding a particular security from an index, or for changing the weight given to it in the index, vary from one index provider to another, one of the key elements taken into account by many of the indices is the size of the security’s free float (the amount held by public shareholders). TMK believes that the Voluntary Tender Offer is likely to cause TMK’s free float to fall below some of the thresholds which are used by the index providers as a minimum level for inclusion. As a result, it is likely that the Voluntary Tender Offer will lead one or more of these index providers to exclude TMK’s ordinary shares from the index or cut its weight given in the index after the completion of the Voluntary Tender Offer. Any such action could cause investors who use these indices as a benchmark to sell TMK’s securities they hold, which may have a material effect on the price and liquidity of TMK’s ordinary shares.

    - Shares acquired by VTZ will be held by VTZ or another member of the TMK group. Under Russian law, VTZ will retain all rights in the ordinary shares acquired in the Voluntary Tender Offer.

    Following the completion of the Voluntary Tender Offer, VTZ may hold the ordinary shares acquired in the Voluntary Tender Offer or transfer them to another member of the TMK group. While held by a member of the TMK group, the securities will not be considered outstanding for purposes of determining TMK’s earnings per share. However, unlike the laws of the United Kingdom and many other jurisdictions, under Russian law a direct or indirect subsidiary of the issuer retains all rights in the ordinary shares, in particular rights to dividends and other distributions, as well as voting rights available to shareholders generally. Therefore, VTZ, as well as any other subsidiary of TMK holding such securities, will be entitled to receive any accrued or future dividend payments with respect to the securities, or any other distribution paid on the securities, and to vote the securities until such securities are cancelled. Any cancellation of securities acquired in the Voluntary Tender Offer, if contemplated, is subject to a number of corporate approvals and accounting requirements and may take several years to complete. In particular, depending on the structure of the cancellation, a cancellation is likely to require a merger of VTZ into TMK.

    - The Voluntary Tender Offer may lead one or more credit rating agencies to review and downgrade TMK’s credit rating for a period following the completion of the Voluntary Tender Offer and may lead to a breach of TMK’s financial covenants.

    TMK has credit ratings of B1 (Positive) (Moody’s), BB- (Negative) (S&P Global) and ruA (Stable) (Expert RA). While the determination of a credit rating is based on many factors, TMK believes that the Voluntary Tender Offer may cause TMK to fall below some of the financial assumptions made by one or more of the credit rating agencies in determining its ratings. As a result, it is possible that the Voluntary Tender Offer will lead one or more of such credit rating agencies to review and downgrade TMK’s credit rating for a period following the completion of the Voluntary Tender Offer. Any such downgrade could lead to an increase in interest expense for TMK and impact TMK’s ability to raise financing on favourable terms, and accordingly could have a material adverse effect on TMK’s financial position. Furthermore, although TMK believes, based on its current estimates, that the Voluntary Tender Offer is not likely to cause it to breach any financial covenants in any of its debt instruments, TMK’s compliance with such financial covenants depends on several factors, including its financial performance, and there can be no assurance that TMK will not breach any such financial covenants in the future. A breach of the financial or other covenants contained in one or more debt instruments may lead to a default under those debt instruments, which could have a material adverse effect on its business, financial condition, results of operations or prospects or the future trading price of its depositary receipts and ordinary shares.

    - If VTZ, together with its affiliates, acquires more than 95% of TMK’s ordinary shares as a result of the Voluntary Tender Offer, it may elect to proceed with a squeeze-out of the remaining minority shareholders of TMK.

    The Voluntary Tender Offer complies with the requirements of the JSC Law applicable to mandatory tender offers. Accordingly, if as a result of the Voluntary Tender Offer, VTZ, together with ordinary shares held by its affiliates, including TMK’s majority shareholder, TMK Steel Holding Limited, acquires more than 75% of TMK’s ordinary shares, it will not be required to launch a further mandatory tender offer. In the event that VTZ, together with its affiliates, acquires more than 95% of the total number of issued and outstanding ordinary shares as a result of the Voluntary Tender Offer, it will be required to offer to the remaining shareholders to purchase ordinary shares held by them or may elect to proceed with a squeeze-out notice to all of the then existing shareholders of TMK to consolidate up to 100% of the remaining ordinary shares of TMK. There can be no assurance that the relevant number of shares will be acquired or that the squeeze-out will be carried out. In addition, the increase in the number of TMK’s shares held by VTZ as a result of the Voluntary Tender Offer would result in an increase in the proportion of shares held by TMK’s majority shareholder, TMK Steel Holding Limited, which is not participating in the Voluntary Tender Offer.

    - COVID-19 may have an impact on the procedures required to implement the Voluntary Tender Offer.

    The onset of COVID-19, and the actions of governments to limit its spread, has had an unprecedented impact on business activity around the world. There can be no assurance that the disruptions caused by COVID-19 will not have an impact on the timing and processes required to implement the Voluntary Tender Offer, including the ability of depositary receipt holders to cancel their depositary receipts and receive underlying ordinary shares on a timely basis to participate in the Voluntary Tender Offer, as well as the procedures for acceptance and settlement of the Voluntary Tender Offer by holders of TMK’s ordinary shares.

    - VTZ, acting as a tax agent under Russian law with respect to the payment of the purchase price in relation to shares sold by TMK’s shareholders who are individuals, will be obliged to withhold the applicable tax from the full amount of the purchase price if such shareholders fail to provide documents confirming the costs at which they acquired the shares sold in the Voluntary Tender Offer or that they are eligible for an available exemption.

    As required by Russian law, VTZ will, subject to limited exceptions, act as a tax agent with respect to the payment of the purchase price in relation to shares sold by TMK’s shareholders who are individuals (the “individual shareholders”).  Please see answer to Question 22 below.  The applicable tax rate will depend on whether an individual shareholder is resident or non-resident in Russia and the applicable tax base will depend on whether there are any exemptions available or whether the relevant shareholder can confirm the costs at which it acquired the shares that are sold in the Voluntary Tender Offer.  Please refer to the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer for more information as to applicable procedures, including the indicative list of required documents, and consult with your professional tax advisers as to the amount and the procedure for any tax payment, including with respect to the applicable tax consequences of any other jurisdiction.

    If individual shareholders do not provide the documents confirming the acquisition costs of the shares or the applicability of an available tax exemption, or provide an incomplete set of documents or documents that are not properly certified, in each case prior to the Expiration Date, VTZ will be obliged to withhold the amount of the applicable tax (which is 13% for Russian residents and 30% for non-residents or individuals who do not confirm that they are Russian tax residents) from the full amount of the purchase price payable to such shareholders.

  • 11. Will the GDRs of TMK be delisted from the London Stock Exchange?

    Yes. At its meeting on 8 April 2020, the Board of Directors of TMK evaluated the benefits of TMK retaining a listing of its GDRs on the London Stock Exchange and determined that it is no longer a strategic priority for TMK. The Board of Directors approved the cancellation of the listing of the GDRs on the London Stock Exchange, to be carried out following the completion of the Voluntary Tender Offer. It is not expected that the delisting of the GDRs from the London Stock Exchange will be accompanied by further repurchases of ordinary shares or GDRs.

    Under the UK Listing Rules, the listing may be cancelled by giving at least 20 business days’ notice of the intended cancellation through an announcement published through a Regulated Information Service, but does not require approval of GDR holders or any purchase of the outstanding GDRs.

    Following cancellation of the listing of the GDRs on the London Stock Exchange, the GDRs will no longer trade on the London Stock Exchange and it is unlikely that a liquid trading market for the GDRs will develop. As a result, the price of GDRs may become more volatile and it may be more difficult to complete a buy or sell order for the GDRs.

  • 12. Will there be another repurchase in connection with the delisting of GDRs?

    It is not expected that the delisting of the GDRs from the London Stock Exchange will be accompanied by further repurchases of ordinary shares or GDRs.

  • 13. Will TMK’s depositary receipt programmes be terminated?

    At its meeting on 8 April 2020, the Board of Directors of TMK evaluated the benefits of TMK retaining a listing of its GDRs on the London Stock Exchange and determined that it is no longer a strategic priority for TMK. The Board of Directors approved the cancellation of the listing of the GDRs on the London Stock Exchange, to be carried out following the completion of the Voluntary Tender Offer.

    TMK may review whether or not to maintain the depositary receipt programmes, including its GDR and Level 1 ADS programmes, following the cancellation of the listing, taking into consideration, among other things, the number of depositary receipts outstanding following the completion of the Voluntary Tender Offer. Any termination of the depositary receipt programmes may be effected upon giving a 90-day prior notice in the case of the GDR programmes and a 30-day prior notice in the case of the Level 1 ADS programme to The Bank of New York Mellon, as depositary for the depositary receipt programmes, which will then notify the depositary receipt holders. Upon receipt of notice of the termination, any depositary receipt holder who wishes to receive the underlying ordinary shares in exchange for their depositary receipts will need to comply with the procedures under the relevant deposit agreement (including payment of applicable fees) for receiving the ordinary shares underlying the depositary receipts they hold. With respect to any depositary receipt holders who do not elect to exchange their depositary receipts for the underlying ordinary shares, or are not permitted to hold ordinary shares, The Bank of New York Mellon in consultation with TMK will sell the ordinary shares underlying the depositary receipts remaining outstanding after the termination date and distribute the net proceeds to the former depositary receipt holders. No decision has yet been made whether or not to terminate the depositary receipt programmes, and there can be no assurance that the depositary receipt programmes will be maintained following the completion of the Voluntary Tender Offer.

  • 14. Will dividends continue to be paid in the future following the completion of the Voluntary Tender Offer?

    As announced on 8 April 2020, taking into account its earnings profile and future projections, TMK expects that the dividends it pays in the foreseeable future, if any, will be at a level lower than it has paid in the past, and lower than the level expected by investors.

  • 15. Will TMK’s ordinary shares be delisted from the Moscow Exchange following the completion of the Voluntary Tender Offer?

    Following the completion of the Voluntary Tender Offer, TMK expects that it will not qualify for a premium listing due to the free float requirements of the Moscow Exchange, and the listing will be transferred to a lower category, which may affect the trading price and liquidity of TMK’s ordinary shares.

    Although the Board of Directors of TMK has not decided to pursue a delisting of the ordinary shares at the present time, it is possible that the Board of Directors may in the future decide to recommend that shareholders approve a delisting of the ordinary shares. A delisting of the ordinary shares from the Moscow Exchange must be approved together with the resolution on making TMK non-public and is subject to shareholders’ approval by a 95% majority vote of all holders of the voting shares. Shareholders voting against or not participating in the voting on the delisting may request that TMK redeem their ordinary shares. The purchase price for such ordinary shares must be determined by the Board of Directors and cannot be lower than the fair market value of the ordinary shares, which is to be determined by an appraiser, and the volume weighted average price of the ordinary shares over a period of six months preceding the date of the Board of Directors’ meeting. The resolution on the delisting will become effective if the amount of funds required to buy out all ordinary shares submitted for redemption does not exceed 10% of TMK’s net assets calculated under the Russian Accounting Standards (as of 31 March 2020, TMK’s net assets were equal to RUB 49,844,556,000 or approximately U.S.$682,991,129 using the exchange rate of the CBR as of 19 May 2020).

    If any such delisting were to occur, holders of the ordinary shares would not be entitled to the benefit of the listing of the ordinary shares on the Moscow Exchange, the ordinary shares would no longer trade on the Moscow Exchange, and it is unlikely that a liquid trading market for the ordinary shares would develop. As a result, the price of ordinary shares would become more volatile and it would be more difficult to complete a buy or sell order for the ordinary shares.

III. Procedures for Selling Shares in the Voluntary Tender Offer

  • 16. What do I do if I want to sell my shares in the Voluntary Tender Offer?

    To sell your shares to VTZ in the Voluntary Tender Offer and receive payment, you must:

    - - accept the Voluntary Tender Offer (see answer to Question 17 below); and

    - - not withdraw your application (instruction) to sell the shares until the expiration date of the Voluntary Tender Offer (i.e. 27 July 2020).

    The shares sold by you in the Voluntary Tender Offer must be free and clear of any rights of third parties and encumbrances (see answer to Question 19 below).

  • 17. What must I do to accept the Voluntary Tender Offer?

    The procedure for accepting the Voluntary Tender Offer and selling ordinary shares of TMK in the Voluntary Tender Offer is set forth in detail in the Voluntary Tender Offer document and the Information Letter available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.  All shareholders are urged to carefully read the Voluntary Tender Offer document and the Information Letter (including annexes thereto), as well as other materials in relation to the Voluntary Tender Offer.

    If you are a shareholder registered in the shareholders’ register of TMK, you may accept the Voluntary Tender Offer by sending a written application to sell your ordinary shares of TMK to TMK’s registrar (JSC “IRC - R.O.S.T.”) by post or delivering it personally at addresses set out in the Voluntary Tender Offer document.  The recommended form of an application to sell ordinary shares of TMK is available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.

    If you are a shareholder who is not registered in the shareholders’ register of TMK, you must submit an application to sell the ordinary shares of TMK to your nominee holder which records your rights to shares of TMK by giving an appropriate instruction (order) to such nominee holder. Such instruction (order) must be given in accordance with the Russian securities laws and must indicate the identity of the shareholder, the number of shares to be sold, the category/type of the shares to be sold and any other information provided for by the depository (custody) agreement and required by the depository (nominee holder) to identify such shareholder, transfer the shares to be sold from the depo account and transfer the funds for the shares purchased pursuant to the Voluntary Tender Offer to you.

    From the date TMK’s registrar receives your application or your nominee holder receives your instruction (order) to submit an application to sell the shares and until the date of making an entry on the transfer of title to the sold shares to VTZ (or until the date of receipt (i) by TMK’s registrar of withdrawal of the application or (ii) by the nominee holder of notice from TMK’s registrar that such application has been withdrawn), you may not dispose of or encumber the shares indicated in the application, including by pledge or any other encumbrance. This restriction will be recorded by TMK’s registrar or your nominee holder on the account on which your shares are held without your instruction (order).

    - All applications must be received by TMK’s registrar prior to the expiration of the period for acceptance of the Voluntary Tender Offer, i.e. not later than on 27 July 2020 (inclusive). Shareholders who hold shares through nominee holders should check applicable deadlines with their nominee holders.

    - Any questions with respect to the procedure for the acceptance of the Voluntary Tender Offer can be addressed to TMK’s registrar (JSC “IRC - R.O.S.T.”) by email: tmk@rrost.ru, or by telephone: 8-800-200-81-60.

    In accordance with Russian law, the Voluntary Tender Offer is made to the holders of the ordinary shares of TMK. Holders of TMK’s depositary receipts may participate in the Voluntary Tender Offer provided that they cancel the depositary receipts held by them, receive the underlying ordinary shares, as outlined in answer to Question 35 below, and submit applications to sell the ordinary shares of TMK pursuant to the Voluntary Tender Offer, on the terms and conditions of the Voluntary Tender Offer and within the applicable deadlines.

    Please note that pursuant to Russian law, you have a right, but not an obligation, to accept the Voluntary Tender Offer.  You should make your own decision as to whether to sell your ordinary shares of TMK pursuant to the Voluntary Tender Offer and, if so, how many shares to sell.  Prior to making any decision to sell your ordinary shares of TMK pursuant to the Voluntary Tender Offer, you should carefully read and consider the terms and conditions of the Voluntary Tender Offer, the applicable provisions of the JSC Law, the Information Letter in relation to the Voluntary Tender Offer for the purchase of ordinary shares of TMK, the recommended form of an application to sell ordinary shares of TMK pursuant to the Voluntary Tender Offer and other materials regarding the Voluntary Tender Offer available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.

    Please also note that the sale of shares and receipt of the purchase price pursuant to the Voluntary Tender Offer may have certain tax consequences.  You are urged to carefully review the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer and consult with your financial and tax advisers (including with respect to the applicable tax consequences of any other jurisdiction) and legal counsel before accepting the Voluntary Tender Offer.

  • 18. What is the period for acceptance of the Voluntary Tender Offer? May the Voluntary Tender Offer be extended?

    The period for acceptance of the Voluntary Tender Offer is 70 days from the date the Voluntary Tender Offer was received by TMK (i.e. the period for acceptance is from 19 May 2020 to 27 July 2020, inclusive). The expiration date of the Voluntary Tender Offer is 27 July 2020.

    Pursuant to Russian law, the Voluntary Tender Offer may be amended only in limited circumstances, namely if VTZ decides to increase the purchase price or decrease the term of payment for the shares set forth in the Voluntary Tender Offer. If any such amendments are introduced less than 25 days prior to the Expiration Date (i.e. 27 July 2020), the term of the Voluntary Tender Offer will, as required by Russian law, be extended by an additional 25 days.

  • 19. What must I do to transfer the shares to VTZ?

    The shares you transfer must be free and clear of any rights of third parties and encumbrances.

    If you are a shareholder registered in the shareholders’ register of TMK, no order from you is required in order for TMK’s registrar to record the transfer of title to the sold shares to VTZ after VTZ pays for the shares purchased.

    If you are a shareholder who is not registered in the shareholders’ register of TMK, your nominee holder registered in the register will be required to give an order to TMK’s registrar to transfer the shares from the personal account of such nominee holder in the register to the personal account of VTZ. The nominee holder registered in the register of TMK must give such order no later than two business days from the date it receives from VTZ cash funds for the purchase of the shares in its account and an extract from the report on the results of the Voluntary Tender Offer. The record of the transfer of title to the sold shares to VTZ entitles the nominee holder to make the respective record on your depo accounts without your instruction (order).

  • 20. How many shares will VTZ purchase pursuant to the Voluntary Tender Offer?

    The Voluntary Tender Offer is being made for 358,758,064 of the issued and outstanding ordinary shares of TMK, which represent all of the issued and outstanding ordinary shares of TMK other than the ordinary shares held by VTZ and its affiliates, including certain other subsidiaries of TMK; the controlling shareholder of TMK (TMK Steel Holding Limited); and certain members of the boards of directors and management of VTZ, TMK and the TMK group.

    VTZ will purchase ordinary shares of those shareholders who validly accept the Voluntary Tender Offer prior to the expiration date of the Voluntary Tender Offer (i.e. 27 July 2020).

  • 21. I have validly accepted the Voluntary Tender Offer and transferred my shares to VTZ. When and how do I receive payment?

    If you submit the application to sell your shares in the Voluntary Tender Offer in a timely manner, payment for the purchased shares will be made in Russian roubles within 17 (seventeen) calendar days from the date of the expiration of the period for acceptance of the Voluntary Tender Offer (27 July 2020), i.e. by 13 August 2020, inclusive.

    Payment for the shares purchased from the shareholders registered in the shareholders’ register of TMK will be made by wire transfer of cash funds to their bank accounts kept by TMK’s registrar, JSC “IRC - R.O.S.T.”.

    Payment for the shares purchased from the shareholders who are not registered in the shareholders’ register of TMK will be made by wire transfer of cash funds to the bank account of the nominee holder registered in the shareholders’ register of TMK. The nominee holder registered in the shareholders’ register of TMK must pay the cash funds to its deponents (securities account holders) by wire transfer to their bank accounts no later than on the business day following the date on which the nominee holder gives an instruction (order) to TMK’s registrar to transfer title to the acquired shares to VTZ. Such instruction must be given within two business days from the date the nominee holder receives from VTZ cash funds for the purchase of the shares in its account and an extract from the report on the results of the Voluntary Tender Offer. The nominee holder who is not registered in the shareholders’ register of TMK must pay the cash funds to its deponents (securities account holders) by wire transfer to their bank accounts no later than on the business day following the date it receives the funds and the information on the number of shares sold from the intermediary depository through which the shares are held.

    VTZ will not be responsible for any inability to transfer cash funds to the bank account of any shareholder or nominee holder by the deadline specified in the Voluntary Tender Offer due to the failure by such shareholder or nominee holder to provide, or the provision of incomplete, inaccurate or insufficient bank account details, to the TMK’s registrar (as applicable).

    To update your details (including bank account details), you are urged to contact TMK’s registrar, JSC “IRC - R.O.S.T.” (and submit a questionnaire of a registered person), or your respective nominee holder, if applicable.

    Please note that, as required by Russian law, VTZ will, subject to limited exceptions, act as a tax agent with respect to the payment of the purchase price in relation to shares sold by individual shareholders.  Please refer to the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer for more information and consult with your professional tax advisers as to the amount and the procedure for any tax payment, including with respect to the applicable tax consequences of any other jurisdiction.

  • 22. Will I receive the full amount of the purchase price without any withholding on account of any tax for Russian tax purposes?

    Russian tax consequences with respect to sale of the shares will depend on whether the relevant shareholder is resident or non-resident in Russia and whether the shareholder is an individual or an institutional investor.

    As required by Russian law, VTZ will, subject to limited exceptions, act as a tax agent with respect to the payment of the purchase price in relation to shares sold by TMK’s individual shareholders.  The applicable tax rate will depend on whether an individual shareholder is resident or non-resident in Russia and the applicable tax base will depend on whether there are any exemptions available or whether the relevant shareholder can confirm the costs at which it acquired the shares that are sold in the Voluntary Tender Offer.  Please refer to the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer for more information as to applicable procedures, including the indicative list of required documents, and consult with your professional tax advisers (including with respect to the applicable tax consequences of any other jurisdiction) as to the amount and the procedure for any tax payment.

    Please note that if you do not provide the documents confirming the acquisition costs of the shares or the applicability of an available tax exemption, or provide an incomplete set of documents or documents that are not properly certified, in each case prior to the expiration date of the Voluntary Tender Offer (i.e. 27 July 2020), VTZ will be obliged to withhold the amount of the applicable tax (which is 13% for Russian residents and 30% for non-residents or individuals who do not confirm that they are Russian tax residents) from the full amount of the purchase price payable to such shareholders.

    Neither VTZ nor any other entity is acting as a tax agent with respect to the payment of the purchase price for the shares sold in the Voluntary Tender Offer by institutional shareholders and, accordingly, no withholding will be made from the payment of the purchase price to such shareholders. Shareholders are liable for their own taxes and have no recourse to VTZ or the dealer managers with respect to the Voluntary Tender Offer regarding any taxes arising in connection with the Voluntary Tender Offer. Shareholders are urged to consult their tax advisers for a full understanding of their individual tax consequences (including with respect to the applicable tax consequences of any other jurisdiction).

    The foregoing is only a summary of applicable Russian tax consequences of accepting the Voluntary Tender Offer for individual shareholders and institutional investors.  You are urged to carefully read the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer for more information as to applicable procedures and consult with your professional tax advisers as to the amount and the procedure for any tax payment, including with respect to the applicable tax consequences of any other jurisdiction.

  • 23. Can I receive payment for my shares sold in the Voluntary Tender Offer in foreign currency?

    No. All payments for the shares purchased by VTZ in the Voluntary Tender Offer will be made in Russian roubles.

  • 24. Do all shareholders of TMK whose shares are purchased by VTZ receive the same purchase price per share?

    Yes. All ordinary shares of TMK purchased by VTZ pursuant to the Voluntary Tender Offer will be purchased at a purchase price of RUB 61 for each ordinary share.

    However, please note that VTZ will, subject to limited exceptions, act as a tax agent with respect to the payment of the purchase price in relation to shares sold by individual shareholders and will be required to withhold and pay to the state budget the amount of the applicable tax.  Please see answer to Question 22 above and please refer to the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer for a detailed description of applicable procedures and consult with your professional tax advisers as to the amount and the procedure for any tax payment (including with respect to the applicable tax consequences of any other jurisdiction).

  • 25. Can VTZ revoke the Voluntary Tender Offer?

    No. The Voluntary Tender Offer, once made, is irrevocable.

  • 26. Can VTZ refuse to purchase any shares if I decide to accept the Voluntary Tender Offer? Is there any guarantee that I will receive payment for the shares I validly sold in the Voluntary Tender Offer?

    If you validly accept the Voluntary Tender Offer in accordance with the procedures set out in the Information Letter, VTZ may not refuse to accept and purchase your shares.

    The Voluntary Tender Offer is accompanied by a bank guarantee in the amount of RUB 23,323,709,435 issued by Gazprombank (Joint Stock Company).

    If VTZ does not pay for your shares validly tendered in the Voluntary Tender Offer, you may either require that Gazprombank (Joint Stock Company) pay for your shares under the bank guarantee or refuse to sell your shares to VTZ.

  • 27. May I sell pledged or otherwise encumbered shares in the Voluntary Tender Offer?

    No. To be transferred, the shares must be free and clear of any rights of third parties, including any pledges or encumbrances.

  • 28. Are there any limitations on the number of shares that I may sell in the Voluntary Tender Offer?

    No. You may sell any number of TMK’s shares owned by you, and there are no limitations on the maximum number of shares that may be sold.

  • 29. Must I sell all of my shares?

    No, you do not need to sell all of your shares. If you decide not to sell any number of your TMK’s shares, you will remain the shareholder of TMK and bear the attendant risks associated with owning the respective shares. Please see answer to Question 10 above.

    Securities held following the completion of the Voluntary Tender Offer (ordinary shares and depositary receipts) may in the future be sold at a price significantly higher or lower than the purchase price of RUB 61 for each ordinary share, and no assurance can be given as to the price at which a securityholder may be able to sell their securities in the future.

    The Voluntary Tender Offer is likely to result in a reduction of the overall liquidity of TMK’s securities, which could affect the ability of securityholders to freely trade their securities and have an effect on the price and liquidity of the securities. Furthermore, taking into account its earnings profile and future projections, TMK expects that the dividends it pays in the foreseeable future, if any, will be at a level lower than it has paid in the past, and lower than the level expected by investors.

  • 30. May I withdraw my application to sell shares?

    If you decide to participate in the Voluntary Tender Offer and submit an application to sell your shares, you may withdraw your application at any time until the expiration date of the Voluntary Tender Offer (i.e. 27 July 2020).

  • 31. If I sell my shares to a third party, will such third party be entitled to participate in the Voluntary Tender Offer?

    Yes.  Any shareholder of TMK, including those who acquired shares after 18 May 2020 (the date of receipt of the Voluntary Tender Offer by TMK), is entitled to participate in and accept the Voluntary Tender Offer until 27 July 2020 (inclusive) in accordance with the procedures set forth in the Voluntary Tender Offer document and the Information Letter available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer and as described in answer to Question 17 above.

    Shareholders who purchase TMK’s shares close to the expiration date of the Voluntary Tender Offer (i.e. 27 July 2020) should take into account the timing of the applicable settlement procedures (e.g. generally on a T+2 basis on the Moscow Exchange) and allow sufficient time to (i) have the title to the purchased shares transferred to them and recorded on the relevant personal or depo accounts and (ii) submit their applications to TMK’s registrar or give instructions (orders) to their nominee holders no later than 27 July 2020 (inclusive) or such earlier date as may be established by their custodians (nominee holders) (as applicable).

  • 32. Is my sale of shares in the Voluntary Tender Offer a taxable transaction?

    Shareholders should be aware that the sale of shares and receipt of the purchase price pursuant to the Voluntary Tender Offer may have certain tax consequences, and are urged to consult at their own expense with their tax advisers with respect to those consequences in considering the Voluntary Tender Offer. Securityholders are liable for their own taxes and have no recourse to VTZ or the dealer managers with respect to the Voluntary Tender Offer regarding any taxes arising in connection with the Voluntary Tender Offer.

    However, please note that VTZ will, subject to limited exceptions, act as a tax agent with respect to the payment of the purchase price in relation to shares sold by individual shareholders and will be required to withhold and pay to the state budget the amount of the applicable tax. Please see answer to Question 22 above.

    You are urged to carefully read the Tax Information Letter attached to the Information Letter and available at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer for more information as to applicable procedures and consult with your professional tax advisers as to the amount and the procedure for any tax payment, including with respect to the applicable tax consequences of any other jurisdiction.

  • 33. Will I have to pay any fees?

    You will not have to pay any fees if you sell your ordinary shares in the Voluntary Tender Offer.

    Please note that if you hold TMK’s shares through a nominee holder, your broker and/or nominee holder may charge separate fees for processing instructions (orders) received from you to sell your shares in the Voluntary Tender Offer.

    If you are a holder of depositary receipts and want to participate in the Voluntary Tender Offer, you will only be able to do so provided that you cancel the depositary receipts held by you and receive the underlying ordinary shares, in which case The Bank of New York Mellon, as the depositary for the depositary receipts programme, will charge a cancellation fee and other applicable fees, as set out in the relevant deposit agreement.

  • 34. What actions do I need to take if I decide not to sell any of my shares pursuant to the Voluntary Tender Offer?

    None.

  • 35. I am a holder of TMK’s depositary receipts and want to participate in the Voluntary Tender Offer. How do I cancel my depositary receipts and receive the underlying shares?

    Detailed information for depositary receipt holders on the cancellation of the depositary receipts held by them and receipt of the underlying ordinary shares is available at: https://www.tmk-group.com/Shares_and_GDRs.

    Please note that in order to participate in the Voluntary Tender Offer you must cancel the depositary receipts held by you and receive the underlying ordinary shares sufficiently in advance to be able to give applicable instructions to sell the shares in the Voluntary Tender Offer prior to the expiration date of the Voluntary Tender Offer (i.e. 27 July 2020).

    Please note that the cancellation of the depositary receipts held by you, receipt of the underlying ordinary shares and sale of such ordinary shares pursuant to the Voluntary Tender Offer, as well as receipt of the purchase price for the sold shares pursuant to the Voluntary Tender Offer, may have certain tax consequences, and you are urged to consult your tax advisers before cancelling your depositary receipts and participating in the Voluntary Tender Offer.

    Please note that the delivery of TMK’s ordinary shares represented by the depositary receipts upon the surrender and cancellation of the depositary receipts may take approximately ten Russian business days.  This period does not include the time necessary for the opening of a securities account for the receipt of the ordinary shares represented by the depositary receipts.  If you wish to cancel your depositary receipts and sell the ordinary shares represented by the depositary receipts held by you into the Voluntary Tender Offer, you are advised to notify your broker immediately of the deadline by which you need to receive the ordinary shares represented by the depositary receipts and inform them of the instructions set forth at: https://www.tmk-group.com/Shares_and_GDRs.  Once the broker submits the depositary receipt cancellation instruction, the broker can contact drsettlements@bnymellon.com or +353 1 900 3466 / +353-1-900-34-67 / +1-315-414-44-75 / +1-315-414-35-59 for status updates.

  • 36. What regulatory approvals are required for the Voluntary Tender Offer?

    The Voluntary Tender Offer is made in accordance with Russian law. The Voluntary Tender Offer has not been and will not be registered under the securities laws of the United States or in any other jurisdiction. Neither the U.S. Securities and Exchange Commission nor any other authority or securities exchange in the United States has approved or disapproved of the Voluntary Tender Offer, passed upon the fairness or merits of the Voluntary Tender Offer or determined whether the Voluntary Tender Offer is accurate or complete. Securityholders are urged to consult their own legal and tax advisers regarding possible legal requirements, as well as possible tax consequences of participating in the Voluntary Tender Offer in their particular circumstances.

    On 9 April 2020, VTZ filed an application with the Federal Antimonopoly Service of the Russian Federation (the “FAS”) seeking the preliminary consent to acquire up to 100% of the issued and outstanding ordinary shares of TMK (together with ordinary shares held by VTZ’s group entities). On 14 May 2020, VTZ received a letter from the FAS, dated as of 20 April 2020, clarifying that, in the opinion of the FAS, the transaction does not require the FAS consent.

    As required by the Russian Securities Market Law, VTZ will notify TMK and the CBR of any acquisition of ordinary shares pursuant to the Voluntary Tender Offer as well as of any acquisition of ordinary shares that entitle VTZ to exercise more than 5%, 10%, 15% or 20% of the total voting rights attaching to ordinary shares.

IV. Additional Information

  • 37. How do I obtain more information?

    The text of the Voluntary Tender Offer document, together with the recommendations of the Board of Directors with respect to the Voluntary Tender Offer, the Information Letter, the Tax Information Letter, TMK’s press releases and other required information have been published on TMK’s website at: www.tmk-group.ru, https://www.tmk-group.ru/voluntary_tender_offer, https://www.tmk-group.com/voluntary_tender_offer.

    Questions and requests for assistance in connection with the procedures for submitting applications to sell the ordinary shares pursuant to the Voluntary Tender Offer should be directed to TMK’s registrar, Joint Stock Company “Independent Registrar Company R.O.S.T.” during business hours at:

    - address: 18 Ul. Stromynka, Bldg. 5B, Office IX, 107076 Moscow;

    - email: tmk@rrost.ru; or

    - telephone: 8-800-200-81-60.

    Information for depositary receipt holders on cancellation procedures is available at: https://www.tmk-group.com/Shares_and_GDRs.  Any further clarifications related to the cancellation of the depositary receipts can be obtained from drsettlements@bnymellon.com.

 

***

Cautionary Statement Regarding Forward-Looking Statements

Some of the information in these Q&As may contain or refer to projections or other forward-looking statements regarding future events or the future financial performance of TMK.  You can identify forward-looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “forecast”, “intend”, “will”, “could”, “may”, or “might” the negative of such terms or other similar expressions.  These statements are only predictions and are based upon various assumptions which are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond TMK’s control.  TMK may not achieve or accomplish these plans or predictions.  TMK does not necessarily intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.  Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of TMK, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries in which TMK operates, the impact of various external market factors, regulatory developments, as well as many other risks specifically related to TMK and its business and operations.

 

Important Notice

THESE Q&AS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

THESE Q&AS ARE FOR INFORMATIONAL PURPOSES AND DO NOT CONSTITUTE OR FORM PART OF ANY OFFER OR ADVERTISEMENT OR INVITATION TO SELL OR ISSUE, OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY SHARES OR OTHER SECURITIES OF TMK, NOR SHALL ANY PART OF THEM NOR THE FACT OF THEIR DISTRIBUTIONS FORM PART OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR INVESTMENT DECISION RELATING THERETO, NOR DO THEY CONSTITUTE A RECOMMENDATION REGARDING SHARES OR SECURITIES OF TMK.  ANY SUCH OFFER OR SOLICITATION IS MADE ONLY BY MEANS OF THE VOLUNTARY TENDER OFFER DOCUMENT RECEIVED BY TMK.

THE TERMS OF THE VOLUNTARY TENDER OFFER ARE CONTAINED IN THE VOLUNTARY TENDER OFFER DOCUMENT.  INVESTORS AND SHAREHOLDERS IN TMK ARE STRONGLY ADVISED TO READ THE VOLUNTARY TENDER OFFER DOCUMENT AND RELATED MATERIALS, AS THESE CONTAIN IMPORTANT INFORMATION.  IN CONSIDERING THE VOLUNTARY TENDER OFFER, TMK SECURITYHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THE VOLUNTARY TENDER OFFER DOCUMENT.

THE VOLUNTARY TENDER OFFER IS BEING MADE TO SHAREHOLDERS OF TMK RESIDENT IN THE UNITED STATES IN RELIANCE ON, AND COMPLIANCE WITH, SECTION 14(E) OF THE U.S. SECURITIES EXCHANGE ACT OF 1934 (THE “EXCHANGE ACT”) AND REGULATION 14E THEREUNDER TO THE EXTENT APPLICABLE.  THE VOLUNTARY TENDER OFFER IS BEING MADE BY VTZ AND NO ONE ELSE.  NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY U.S. STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THE VOLUNTARY TENDER OFFER, PASSED UPON THE FAIRNESS OR MERITS OF THE VOLUNTARY TENDER OFFER OR DETERMINED WHETHER THE VOLUNTARY TENDER OFFER IS ACCURATE OR COMPLETE.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

TO THE EXTENT PERMISSIBLE UNDER APPLICABLE SECURITIES LAWS, THE DEALER MANAGERS WITH RESPECT TO THE VOLUNTARY TENDER OFFER AND THEIR AFFILIATES MAY FROM TIME TO TIME PURCHASE, OR ENTER INTO ARRANGEMENTS TO PURCHASE, TMK’S ORDINARY SHARES OR DRS EITHER AS PRINCIPAL OR AGENT BEFORE AND DURING THE PERIOD OF THE VOLUNTARY TENDER OFFER.  NEITHER VTZ NOR ANY OF ITS AFFILIATES EXPECTS TO PURCHASE TMK’S ORDINARY SHARES OR DRS, OTHER THAN PURSUANT TO THE VOLUNTARY TENDER OFFER.  IN ADDITION, IN ACCORDANCE WITH RUSSIAN LAW AND PURSUANT TO RULE 14E-5(B)(10) UNDER THE EXCHANGE ACT, AFFILIATES OF TMK THAT ARE NEITHER AFFILIATES OF VTZ NOR MEMBERS OF THE TMK CONSOLIDATED GROUP AND OVER WHICH TMK DOES NOT EXERCISE CONTROL AND THEIR RESPECTIVE NOMINEES OR BROKERS (ACTING AS AGENTS), AND ANY ADVISER TO TMK OR ANY OF ITS AFFILIATES AND THE DEALER MANAGERS WITH RESPECT TO THE VOLUNTARY TENDER OFFER OR ANY OF THEIR AFFILIATES, AND ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, IN CONCERT WITH ANY SUCH PERSONS, MAY FROM TIME TO TIME MAKE PURCHASES OF, OR ARRANGEMENTS TO PURCHASE, TMK’S ORDINARY SHARES OR DRS OTHER THAN PURSUANT TO THE VOLUNTARY TENDER OFFER, BEFORE OR DURING THE PERIOD OF THE VOLUNTARY TENDER OFFER, SO LONG AS THOSE ACQUISITIONS OR ARRANGEMENTS COMPLY WITH APPLICABLE RUSSIAN LAW AND THE PROVISIONS OF THE EXEMPTION PROVIDED UNDER RULE 14E-5 UNDER THE EXCHANGE ACT.  ANY OF THE PURCHASES REFERRED TO IN THIS PARAGRAPH MAY OCCUR EITHER IN THE OPEN MARKET AT PREVAILING PRICES OR IN PRIVATE TRANSACTIONS AT NEGOTIATED PRICES.  INFORMATION ABOUT SUCH PURCHASES WILL BE DISCLOSED AS AND IF REQUIRED BY APPLICABLE SECURITIES LAWS.

THE INFORMATION CONTAINED IN THESE Q&AS IS ADDRESSED EXCLUSIVELY TO THE HOLDERS OF ORDINARY SHARES AND, TO THE EXTENT APPLICABLE, DRS OF TMK.  DRS, TO WHICH THESE Q&AS RELATE, ARE NEITHER REGISTERED IN THE RUSSIAN FEDERATION NOR ADMITTED TO PLACEMENT, PUBLIC PLACEMENT OR PUBLIC CIRCULATION IN THE RUSSIAN FEDERATION IN ACCORDANCE WITH ARTICLE 51.1 OF RUSSIAN FEDERAL LAW DATED 22 APRIL 1996 NO. 39-FZ “ON THE SECURITIES MARKET”, AS AMENDED (THE “RUSSIAN SECURITIES MARKET LAW”).  ANY INFORMATION IN THESE Q&AS AND RELATED DOCUMENTS IN RESPECT OF DRS OF TMK IS ADDRESSED IN THE RUSSIAN FEDERATION SOLELY TO PERSONS WHO ARE “QUALIFIED INVESTORS” AS DEFINED IN THE RUSSIAN SECURITIES MARKET LAW.

THE RELEASE, PUBLICATION OR DISTRIBUTION OF THESE Q&AS IN JURISDICTIONS MAY BE RESTRICTED BY LAW AND THEREFORE PERSONS SHOULD INFORM THEMSELVES ABOUT THE LAWS OF THEIR JURISDICTION, AND OBSERVE ANY APPLICABLE REQUIREMENTS.

THESE Q&AS, AND ANY INVESTMENT ACTIVITY TO WHICH THEY RELATE, ARE AVAILABLE ONLY TO (I) PERSONS WHO ARE OUTSIDE THE UNITED KINGDOM, (II) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”), (III) HIGH NET WORTH COMPANIES FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, (IV) PERSONS WITHIN THE SCOPE OF ARTICLE 43 OF THE ORDER, OR (V) ANY OTHER PERSONS TO WHOM THEY MAY OTHERWISE LAWFULLY BE MADE UNDER THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THESE Q&AS MAY NOT BE ACTED OR RELIED ON IN THE UNITED KINGDOM BY ANYONE WHO IS NOT A RELEVANT PERSON.

TMK IS A COMPANY ORGANISED UNDER THE LAWS OF THE RUSSIAN FEDERATION.  THE VOLUNTARY TENDER OFFER IS MADE SOLELY PURSUANT TO RUSSIAN LAW AND, IN THE CASE OF SHAREHOLDERS OF TMK RESIDENT IN THE UNITED STATES, SECTION 14(E) OF THE EXCHANGE ACT AND REGULATION 14E THEREUNDER TO THE EXTENT APPLICABLE.  THE VOLUNTARY TENDER OFFER IS NOT MADE OR INTENDED TO BE MADE PURSUANT TO THE PROVISIONS OF ANY OTHER LAW.  THE VOLUNTARY TENDER OFFER IS SUBJECT TO DISCLOSURE AND PROCEDURE REQUIREMENTS OF RUSSIA WHICH ARE DIFFERENT FROM THOSE OF THE UNITED KINGDOM OR THE UNITED STATES.  IN ADDITION, U.S. INVESTORS SHOULD BE AWARE THAT THE VOLUNTARY TENDER OFFER DOCUMENT HAS BEEN PREPARED IN A FORMAT AND STYLE, WHICH DIFFER FROM THE U.S. FORMAT AND STYLE.  FURTHERMORE, THE PAYMENT AND SETTLEMENT PROCEDURE WITH RESPECT TO THE VOLUNTARY TENDER OFFER FOR ORDINARY SHARES DIFFERS FROM U.S. PAYMENT AND SETTLEMENT PROCEDURES, PARTICULARLY WITH REGARD TO THE DATE OF PAYMENT OF CONSIDERATION.