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Kiev, Luxembourg, and Warsaw
1 December 2010

Sadovaya Group S.A. publishes prospectus

  • Subscriptions by retail investors for shares in Sadovaya Group S.A., one of the largest private coal mining companies in Ukraine, will be accepted 8 – 10 December at points of sale and locations of Dom Maklerski BZ WBK S.A. and its agents.

  • Shares are offered to Polish retail and institutional investors and selected foreign institutional investors. The market where the shares are planned to be listed is the Warsaw Stock Exchange.

  • Retail investors will subscribe at the maximum price, which is PLN 17.50 per share.

  • The offering will include a total of up to 10,771,423 newly issued shares, which after completion of the offering will constitute up to 25% of the shares in the increased capital.

  • BG Capital JSC and BG Trading Limited will serve as the Lead Managers for the offering. Bank Zachodni WBK S.A. will act as Adviser.

  • Dom Maklerski BZ WBK S.A. will act as Co-Lead Manager and Offering Agent in Poland

“An important stage in Sadovaya’s public offering and admission to the Warsaw Stock Exchange began today,” said Alexander Tolstoukhov, founder and co-owner of Sadovaya Group. “We are offering our shares to a broad group of investors in Poland and selected foreign investors. We expect that the unique business model of our company, its development strategy, and the good prospects of the Ukrainian coal market on which we operate will meet with the interest of investors and in a few weeks we will debut on the stock exchange.”

Structure of offering

The offering by Sadovaya Group S.A., the Luxembourg-incorporated holding company of Sadovaya Group, a leading private producer of energy coal in Ukraine, includes up to 10,771,423 newly issued shares. If investors take up all of the shares, after the capital increase such shares will represent 25% of the capital of the company.

The public offering is not divided into tranches. In Poland it is directed to both retail and institutional investors. In addition, the shares are also offered to foreign institutional investors, excluding the United States, in reliance on Regulation S issued under the US Securities Act.

Schedule of offering

Retail investors may file subscriptions for shares 8 – 10 December 2010 at points of sale and locations of the agent of Dom Maklerski BZ WBK S.A. Retail investors will subscribe at the maximum price, which has been set at PLN 17.50 per share. The final offer price will be announced on or about 10 December 2010, before subscriptions are accepted from institutional investors, based on the result of the bookbuilding among institutional investors. The bookbuilding process will be conducted on 8 – 10 December 2010. For both retail and institutional investors, the price will be set no higher than the maximum price.

The final number of offer shares allotted to retail and institutional investors will be announced after closing of the subscription period for institutional investors. Allotment of shares is expected to occur on 17 December 2010, and trading in the shares on the Warsaw Stock Exchange is expected to begin on or about 30 December 2010.

Anticipated schedule of the offering*

Publication of Prospectus November 30
Institutional Book-building December 8 – 10
Subscriptions by Retail Investors December 8 – 10
Pricing and Initial Allotment Date December 10
Subscriptions by Institutional Investors December 13 – 16
Allotment Date December 17
Settlement Date December 20
Delivery Date December 21
Listing Date   December 30









*schedule dates for the offering subject to change

Company’s strategy and use of proceeds

The Group’s strategy is to increase sales of its own coal. The growth is expected to be facilitated by increased production efficiency at its current mines through the installation of modern extraction equipment, via the expansion of its base of coal reserves, and via the introduction of modern and efficient waste recovery facilities. Sadovaya’s development plan, which has been audited by mineral experts, will enable achievement of a net present value (NPV) of USD 348 million.

Gross proceeds from the sale of new shares, estimated at USD 40 to 62.5 million, will be used to finance development projects, including:

  • Modernization and development of existing mines Sadovaya and Rassvet-1. The group intends to increase operating capacities and productivity at its current mines and to mechanize coal extraction following the installation of modern mining equipment – USD 30.1 million.
  • Construction of two coal enrichment complexes to process the group’s coal waste deposits – USD 14.3 million.
  • Acquisition and development of the Roskoshniy and Krasnoluchskaya Severnaya coal deposits. The group expects to complete the acquisition in 2011. After the acquisition of these two deposits, the group’s total coal resources will increase from 23.1 million tonnes to 122.2 million tonnes – USD 5.6 million.

The investment program for 2011 is also expected to be financed through debt project financing and the Group’s operating cash flow. Any proceeds from the Offering exceeding USD 50 million will be directed for working capital financing and/or partial repayment of debt.

Alexander Tolstoukhov commented: “We are confident that the consistently realized strategy calling for an increase in production and sale of our own coal will enable us to reinforce our already strong market position among private producers in Ukraine. To this end, we have prepared an investment plan, ready for implementation, for total expenditures of USD 50 million. Under the investment plan, we seek to expand and modernize our existing mines, obtain new coal resources, and construct coal enrichment complexes. We intend to use the proceeds from the issue of shares to finance our development program.”


Currently 100% of the shares of Sadovaya Group S.A. are held by Connektico Ventures Limited, 51% of the capital of which is controlled by Alexander Tolstoukhov, and 49% by Sergiy Stetsurin. Connektico Ventures Limited does not carry out any operating activity except for holding shares in Sadovaya Group S.A.

After the offering is conducted, if investors take up all of the shares, Connektico Ventures Limited will control 75% of the company’s shares and the new shares will represent 25% of the capital of the company.

The company’s shareholder, Connektico Ventures Limited, and the company, have agreed, among other undertakings, that they will not issue, offer or sell shares or other securities for the 12 months following the share settlement date.

For more information please contact:
Jakub Smarz
NBS Communications
phone: +48 22 826 74 18
e-mail: [email protected]

This publication is for informational purposes only and shall not constitute the basis for a decision to invest in securities of Sadovaya Group S.A. (the “Company”). The prospectus (the “Prospectus”) prepared in connection with the offering of the Company’s shares and admission to trading on the Warsaw Stock Exchange is the sole legally binding document containing information on the Company and the offering of its shares in Poland. The Prospectus has been approved by Commission de Surveillance du Secteur Financier (the “CSSF”), the Luxembourg Financial Sector Supervision Authority which is competent capital markets authority for the Company. CSSF notified Komisja Nadzoru Finansowego, the Polish Financial Supervision Authority, of the approval of the Prospectus.
The Prospectus in electronic form in the English language, together with translation of the summary in Polish, is available on the website of the Company (www.sadovayagroup.com), the Lead Manager (www.bgcapital.ge) and the Offering Agent in Poland (www.dmbzwbk.pl).
Not to be released in the USA, Canada and Japan.

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