FAQ on share repurchase programs of PJSC Detsky Mir’s shares (including mandatory tender offer and buyback)
- Question: What is the status of reorganization of PJSC Detsky Mir (the Company), which was approved at the Extraordinary General Meeting of Shareholders of the Company on December 29, 2022?
Answer: In line with a plan of gradual transformation of the Company into a private business, announced in November 2022, PJSC Detsky Mir completed its reorganisation and transformation into a private business. - Question: Which entity will make a tender offer to repurchase shares of the Company (hereinafter referred to as the “Shares”) and how long will it be valid?
Answer: Subsidiaries of PJSC Detsky Mir launched two programs to repurchase shares of PJSC Detsky Mir (“Shares”):
- On October 5, 2023 JSC “DMFA” made a mandatory tender offer, according to the Russian Law for the purchase of the Shares, the period for the acceptance of applications for the sale of Shares is 70 days: from October 5, 2023 to December 14, 2023 (“DMFA MO”);
- On October 9, 2023 LLC “DMI” launched a program for the purchase of Shares on the PJSC Moscow Exchange in trading mode “Buyback: Target Orders”, which will run from October 9, 2023 to November 3, 2023 (hereinafter the “DMI Offer”).
- Question: What are the differences between these two programs?
Answer: Each share repurchase program has its own characteristics, the main are the following:
- In respect of DMI Offer – the payment due dates for the Shares sold under the DMI Offer are significantly shorter than the payment deadlines for the Shares sold under tender offer, and therefore the DMI Offer may be of interest to resident shareholders. In addition, in the event of the sale of Shares under the DMI Offer, the shareholder does not have to provide the documents confirming the right to reduce the income tax.
The Company recommends that prior to making a decision to sell their Shares, shareholders should carefully review the terms of the announced share repurchase programs and all related materials published (or to be published) on the Internet.
- In respect of DMI Offer – the payment due dates for the Shares sold under the DMI Offer are significantly shorter than the payment deadlines for the Shares sold under tender offer, and therefore the DMI Offer may be of interest to resident shareholders. In addition, in the event of the sale of Shares under the DMI Offer, the shareholder does not have to provide the documents confirming the right to reduce the income tax.
- Question: How many Shares are going to be repurchased from the shareholders of the Company?
Answer: At that stage, the buyback amount will be up to 100% of outstanding Shares.
At the same time, as part of the buyback of Shares on the Moscow Exchange, JSC DMK has the right to terminate the acquisition program (DMK Offer) ahead of schedule, from the moment it owns 25% of all outstanding Shares. - Question: At what price will the shares be repurchased from the shareholders of PJSC Detsky Mir and when the payments will be made?
Answer: Payments for the acquired Shares will be made in the currency of the Russian Federation (rubles) at a price of 71.5 rubles per Share, which is equal to the buyback price of one Share in the course of the completed voluntary tender offer and higher than the weighted average price per Share, which is based on the results of organized trading for the six months preceding the date of submission of the Mandatory Tender Offer to the Central Bank of Russia.- Payment for the Shares sold under the DMI Offer at a price of 71.5 rubles will be made on the day of delivery of the Shares for the entire period of validity of the DMI Offer (from 10/09/2023 to 11/03/2023).
- Payment for the Shares sold during the DMFA MO will be made in the currency of the Russian Federation (rubles) within 17 days from the date of the expiration of the acceptance period for the mandatory tender offer (between 12/15/2023 and 01/09/2024).
- Question: Can non-resident investors from unfriendly countries receive payment for their Shares to a bank account opened outside the Russian Federation?
Answer: No, as previously reported, in accordance with a permission from the sub-committee of the Government Commission for Control over Foreign Investments in the Russian Federation (hereinafter referred to as “the Government Commission”), as part of the Mandatory Tender Offer, non-resident investors from unfriendly countries and persons under their control who will participate in the Mandatory Tender Offer will be able to receive cash payments for the Shares sold only to C-type accounts. - Question: Who defines which states are unfriendly?
Answer: Classification of a state as unfriendly is carried out by the Government of the Russian Federation. At the moment, the list of unfriendly states is determined in accordance with the Decree of the Government of the Russian Federation No. 430-r dated March 5, 2022 (as amended). - Question: In case a non-resident investor from unfriendly countries cannot take part in the mandatory tender offer, will it be possible to receive payments to account specified by him, bypassing the type “C” account, during the liquidation that may follow the completion of the mandatory tender offer?
Answer: The Company plans to request authorization from the Ministry of Finance of the Russian Federation to remit payments in cash, remaining after settlements with creditors during liquidation, for shares of non-resident investors from unfriendly countries to their respectively indicated accounts by bypassing C-type accounts. Should such authorization be granted, the shareholders may use the funds at their own discretion and no additional approval from the Russian regulator will be needed. - Question: Is a shareholder required to provide any documents regarding participation in tender offer to a company acquiring Shares?
Answer: The Company recommends that individual shareholders who have accepted the DMFA MO provide the documents necessary for the correct calculation of the amount of personal income tax (“Tax”) to company acquiring the Shares.
As a general rule, a company acquiring Shares from individuals is recognized as a tax agent for the Tax on the transaction (except for cases when transactions for the sale of Shares in the interests of a shareholder – an individual are carried out by a broker, trustee acting in the interests of a shareholder).
The tax is withheld by the tax agent from the positive difference between the income from the sale of Shares and the shareholder’s actually incurred and documented expenses on operations related to the acquisition and sale of the alienated Shares. The list of documents recommended for submission to the company acquiring the Shares for the correct calculation of the amount of Tax will be published on the website of PJSC Detsky Mir on the Internet at https://ir.detmir.ru/general-meeting-of-shareholders/.
If a shareholder does not provide all documents confirming the expenses incurred in regards transactions with the Shares, and the acquirer of the Shares withholds the Tax in an excessive amount, the shareholder will have the right to return the overpaid Tax in the manner prescribed by the tax legislation. If the shareholder accepts the DMI Offer, which will be executed through a broker, then in addition to the reduced payment time, the shareholder will not provide any documents for the correct calculation of the Tax (this will be done by the broker). The Company underscores to its resident shareholders that the sale of Shares via transactions on PJSC Moscow Exchange simplifies the procedure for the shareholder to sell the Shares. - Question: How will the procedure for submitting applications for the sale of Shares and settlements under the share repurchase programs be carried out technically?
Answer: All technical details can be clarified with the largest local brokers and local depositories.
An order for the sale of Shares under the DMI Offer shall be sent in the “Redemption: Address Orders” mode.
An application for the sale of Shares under the DMFA MO shall be sent to:- Shareholders directly registered in the register of shareholders of PJSC Detsky Mir: To the Registrar at the following address: Russian Federation, 107076, Moscow, st. Stromynka, 18, bldg. 5B (Central Office of the Joint Stock Company “Independent Registrar Company R.O.S.T.”), or at the address of any of the branches of the Registrar, which will be indicated in the Unified State Register of Legal Entities on the date of filing the application of the owner of securities registered in the register of shareholders PJSC Detsky Mir, on the sale of securities. Information about the branches of the Registrar of PJSC Detsky Mir is published on the page: https://rrost.ru/ru/filials/.
- Shareholders who are not directly registered in the register of shareholders of PJSC Detsky Mir (that is, who own the Shares through nominal holders): by giving appropriate instructions (instructions) to the person who records his rights to the Shares (nominal holder). Such indication (instruction) is given in accordance with the rules of the legislation of the Russian Federation on securities.
- Question: Can a shareholder withdraw an application to sell Shares under the DMFA MO?Answer: A Shareholder who submitted an application for the sale of Shares under the DMFA MO has the right to withdraw his application before the expiration date for accepting the relevant mandatory tender offer.
- Question: If the shareholders of PJSC Detsky Mir do not want to participate in any of the announced share repurchase programs, will they be able to remain shareholders of the Company?
Answer: Shareholders of the Company are not required to participate in any of the announced tender offers. If a shareholder decides not to sell his Shares, he will remain a shareholder of PJSC Detsky Mir.
It is expected that upon completion of share purchase programs the Company may be liquidated subject to appropriate corporate approvals. In this case, the shareholders of PJSC Detsky Mir, who any reason did not sell the Shares before the start of liquidation, will be able to receive the property of the liquidated Company remaining after the completion of settlements with creditors (liquidation value) as part of the voluntary liquidation of the Company. The terms of the voluntary liquidation and distribution of the property of the liquidated Company will be announced later, subject to the relevant corporate approvals.
The Company underscores that the liquidation value per Share that the Company’s shareholders will receive in the event of its voluntary liquidation may be lower than the price per Share acquired by JSC DMFA during the Mandatory Tender Offer.
IMPORTANT NOTICE
THIS DOCUMENT AND INFORMATION CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO, OR TO ANY PERSON IN, ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.
THE RELEASE, PUBLICATION OR DISTRIBUTION OF THIS DOCUMENT AND/OR THE MANDATORY TENDER OFFER DOCUMENT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THESE QUESTIONS & ANSWERS, THE MANDATORY TENDER OFFER DOCUMENT AND/OR ANY RELATED MATERIALS MAY COME ARE REQUIRED TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS. FAILURE TO OBSERVE SUCH RESTRICTIONS MAY CONSTITUTE A BREACH OF SECURITIES LAWS IN THE RELEVANT JURISDICTIONS.
THIS QUESTIONS & ANSWERS SECTION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES 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 SECURITIES OF THE COMPANY, NOR SHALL ANY PART OF IT NOR THE FACT OF ITS DISTRIBUTIONS FORM PART OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR INVESTMENT DECISION RELATING THERETO, NOR DOES IT CONSTITUTE A RECOMMENDATION REGARDING SECURITIES OF THE COMPANY. ANY SUCH OFFER OR SOLICITATION IS MADE ONLY BY MEANS OF THE MANDATORY TENDER OFFER DOCUMENT RECEIVED BY THE COMPANY.
THE TERMS OF THE MANDATORY TENDER OFFER ARE CONTAINED IN THE MANDATORY TENDER OFFER DOCUMENT. INVESTORS AND SHAREHOLDERS OF THE COMPANY ARE STRONGLY ADVISED TO READ THE MANDATORY TENDER OFFER DOCUMENT AND RELATED MATERIALS AS SOON AS THEY HAVE BEEN PUBLISHED, AS THESE WILL CONTAIN IMPORTANT INFORMATION. IN CONSIDERING THE MANDATORY TENDER OFFER, THE COMPANY SECURITYHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THE MANDATORY TENDER OFFER DOCUMENT.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY U.S. STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THE MANDATORY TENDER OFFER, PASSED UPON THE FAIRNESS OR MERITS OF THE MANDATORY TENDER OFFER OR DETERMINED WHETHER THE MANDATORY TENDER OFFER IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.
THE OFFEROR DOES NOT PLAN TO PURCHASE THE COMPANY’S ORDINARY SHARES, OTHER THAN PURSUANT TO THE MANDATORY TENDER OFFER, DURING THE MANDATORY TENDER OFFER PERIOD. IN ACCORDANCE WITH APPLICABLE RUSSIAN LAW, ANY ADVISER TO THE OFFEROR OR ANY OF THE OFFEROR’S 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, THE COMPANY’S ORDINARY SHARES OTHER THAN PURSUANT TO THE MANDATORY TENDER OFFER, BEFORE OR DURING THE PERIOD OF THE MANDATORY TENDER OFFER, SO LONG AS THOSE ACQUISITIONS OR ARRANGEMENTS COMPLY WITH APPLICABLE LAW. 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.
THIS ANNOUNCEMENT, AND ANY INVESTMENT ACTIVITY TO WHICH IT RELATES, IS 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 IT MAY OTHERWISE LAWFULLY BE MADE UNDER THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS ANNOUNCEMENT MAY NOT BE ACTED OR RELIED ON IN THE UNITED KINGDOM BY ANYONE WHO IS NOT A RELEVANT PERSON. THE COMPANY IS A COMPANY ORGANISED UNDER THE LAWS OF THE RUSSIAN FEDERATION. THE MANDATORY TENDER OFFER IS MADE PURSUANT TO RUSSIAN LAW. THE MANDATORY TENDER OFFER IS SUBJECT TO DISCLOSURE AND PROCEDURE REQUIREMENTS OF THE RUSSIAN FEDERATION WHICH ARE DIFFERENT FROM THOSE OF THE UNITED KINGDOM OR THE UNITED STATES. IN ADDITION, U.S. INVESTORS SHOULD BE AWARE THAT THE MANDATORY 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 MANDATORY TENDER OFFER FOR ORDINARY SHARES DIFFERS FROM U.S. PAYMENT AND SETTLEMENT PROCEDURES, PARTICULARLY WITH REGARD TO THE DATE OF PAYMENT OF CONSIDERATION.
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