International law firm Dechert LLP’s Moscow team is representing Kinross Gold Corporation (“Kinross”) (TSX: K, NYSE: KGC) on its US$350 million acquisition of a 25% stake in Chukotka Mining and Geological Company (CMGC), the 100% owner of the Kupol gold and silver mine in the Chukotka Autonomous Okrug of the Far East Region of the Russian Federation. CMGC is currently owned 75% by Kinross and 25% by the State Unitary Enterprise of the Chukotsky Autonomous Okrug (Chukotsnab). The proposed acquisition – which signed on 4th April – would bring Kinross’s total stake in CMGC to 100%. The consideration is subject to adjustments equal to the amount of the attributable dividend payments. Kinross intends to finance the acquisition costs in part though a non-recourse debt facility of approximately US$200 million, on which Dechert is also advising Kinross.
The acquisition required the approval of the Russian Federation’s State Commission for the Control of Foreign Investments (“the Commission”) pursuant to Russian Federation Law No. 57-FZ on the Procedure for Foreign Investment in Companies with Strategic Significance for National Security and Defense, and the Subsoil Law (together, commonly referred to as “The Strategic Sectors Law”). Kinross announced on 25th March that it had received the pre-approval of the Commission. The transaction is expected to close in Q3 2011, and is subject to certain conditions, including other governmental approvals in Russia.
The Dechert Moscow team advising Kinross is being led by Moscow office managing partner and head of the Russia practice Laura M. Brank, assisted by senior corporate associate Olga Watson and associates Alexander Volnov, Evgenia Gaysinskaya, Alexander Egorushkin, Elena Ivankina, Kirill Skopchevskiy, Tatiana Kozlova and Irina Kulyba. Dechert’s Moscow corporate team has also advised on several other corporate/M&A transactions that signed in March. In 2010, Dechert represented Kinross on its US$368 million indirect acquisition of the high-grade Dvoinoye deposit and the Vodorazdelnaya property, both located approximately 100km north of the Kupol mine. This transaction was also subject to the Strategic Sectors Law. Laura Brank has represented and advised Kinross in relation to its operations in Russia for over a decade, including on Kinross’s US$3.1 billion acquisition of Bema Corporation to create a US$7.9 billion major gold producer, on a related US$425 million project financing, on divestments of mining assets, and on a wide spectrum of mining law and other commercial and operational matters.
Dechert was ranked by mergermarket as one of the leading top legal advisors by deal value in both Russia and Central and Eastern Europe in 2010. Dechert’s Moscow office recently advised PepsiCo on its approximately US$3.8 billion acquisition of a majority stake in Wimm-Bill-Dann Foods OJSC, Russia’s leading branded food and beverage company.
