RHI AG

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

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


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

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

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

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

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

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

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


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

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


For further information please contact

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

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


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

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



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