• Prospectus for the listing of the shares of RHI Magnesita on the London Stock Exchange approved by the Dutch Authority for the Financial Markets (AFM)
• Last trading day on the Vienna Stock Exchange expected for October 25, 2017
• Closing date of the transaction foreseen for October 26, 2017
• First day of trading on the London Stock Exchange anticipated on October 27, 2017

The Dutch Authority for the Financial Markets (AFM) today approved the prospectus for admission to listing of RHI Magnesita shares on the Premium Listing segment of the Official List of the UK Financial Conduct Authority and to trading on the London Stock Exchange’s Main Market for listed securities. The prospectus is available for download at prospectus.rhimagnesita.com.
The cross-border merger of RHI AG with its wholly-owned subsidiary RHI Magnesita N.V. should become effective on October 26, 2017. Upon such effectiveness, RHI AG will cease to exist as legal entity.

Accordingly, the last day of trading of RHI AG’s shares on the Vienna Stock Exchange will be October 25, 2017.
RHI and the controlling shareholders of Magnesita, GP Investments and Rhône Capital, agreed to changes of the share purchase agreement (dated October 5, 2016), whereby RHI in order to allow a quick implementation of the business combination waived the controlling shareholders’ commitment to purchase additional new RHI Magnesita shares (the controlling shareholders’ obligation to purchase up to another 1.5 million shares if not all of Magnesita’s other shareholders would have elected to receive RHI Magnesita shares in a mandatory tender offer to be made).

The controlling shareholders and additional sellers adhered to the share purchase agreement will deliver 50% plus one share in Magnesita and therefore will jointly receive a payment of EUR 117.3 million in cash and 5.0 million newly issued shares in RHI Magnesita.
Completion of the share purchase agreement is expected to occur on October 26, 2017, and Admission to listing of RHI Magnesita’s shares in the Premium segment of the Official List on October 27, 2017. Trading of the shares on the Main Market of the London Stock Exchange will begin on the same date. The management of RHI Magnesita aims to include the RHI Magnesita shares for trading in the newly established “Global Market”, a multilateral trading facility of the Vienna Stock Exchange, as well.
Based on the financial statements for the year 2016, the combined revenue of RHI and Magnesita amounted to approximately € 2.5 billion. The new company will serve over 10,000 customers in nearly all countries of the world. The combination of RHI and Magnesita will enable the combined company to offer its customers an even more comprehensive range of services and thus provide added value. There is further significant value creation potential due to the realization of planned synergies, strong cash flow generation, and innovations based on the combined know-how of the companies.

·         Prospectus for the listing of the shares of RHI Magnesita on the London Stock Exchange approved by the Dutch Authority for the Financial Markets (AFM)

·         Last trading day on the Vienna Stock Exchange expected for October 25, 2017

·         Closing date of the transaction foreseen for October 26, 2017

·         First day of trading on the London Stock Exchange anticipated on October 27, 2017

The Dutch Authority for the Financial Markets (AFM) today approved the prospectus for admission to listing of RHI Magnesita shares on the Premium Listing segment of the Official List of the UK Financial Conduct Authority and to trading on the London Stock Exchange’s Main Market for listed securities. The prospectus is available for download at prospectus.rhimagnesita.com.

The cross-border merger of RHI AG with its wholly-owned subsidiary RHI Magnesita N.V. should become effective on October 26, 2017. Upon such effectiveness, RHI AG will cease to exist as legal entity.

Accordingly, the last day of trading of RHI AG’s shares on the Vienna Stock Exchange will be October 25, 2017.

RHI and the controlling shareholders of Magnesita, GP Investments and Rhône Capital, agreed to changes of the share purchase agreement (dated October 5, 2016), whereby RHI in order to allow a quick implementation of the business combination waived the controlling shareholders’ commitment to purchase additional new RHI Magnesita shares (the controlling shareholders’ obligation to purchase up to another 1.5 million shares if not all of Magnesita’s other shareholders would have elected to receive RHI Magnesita shares in a mandatory tender offer to be made).

The controlling shareholders and additional sellers adhered to the share purchase agreement will deliver 50% plus one share in Magnesita and therefore will jointly receive a payment of EUR 117.3 million in cash and 5.0 million newly issued shares in RHI Magnesita.

Completion of the share purchase agreement is expected to occur on October 26, 2017, and Admission to listing of RHI Magnesita’s shares in the Premium segment of the Official List on October 27, 2017. Trading of the shares on the Main Market of the London Stock Exchange will begin on the same date. The management of RHI Magnesita aims to include the RHI Magnesita shares for trading in the newly established “Global Market”, a multilateral trading facility of the Vienna Stock Exchange, as well.

Based on the financial statements for the year 2016, the combined revenue of RHI and Magnesita amounted to approximately € 2.5 billion. The new company will serve over 10,000 customers in nearly all countries of the world. The combination of RHI and Magnesita will enable the combined company to offer its customers an even more comprehensive range of services and thus provide added value. There is further significant value creation potential due to the realization of planned synergies, strong cash flow generation, and innovations based on the combined know-how of the companies.

• Positive economic environment strengthens business development
• M&A costs and currency effects weigh on margins
• Adjusted operating EBIT exceeds first half of 2016

In the first half of 2017, the RHI Group’s revenue was up 3.1% on the comparative period of 2016 and amounted to € 855.8 million. Revenue of the Steel Division rose by 2.9%, among other things thanks to a positive business development in the US. The increase in revenue by 2.0% in the Industrial Division is among other things due to higher project deliveries of the glass business unit and a satisfactory repair business in the cement/lime business unit.

Stefan Borgas, CEO of RHI and designated CEO of RHI-Magnesita, comments on the half-year result: “In the first half of the year, we got many issues on the right track, even though the figures were somewhat mixed due to one-off effects. We expect a strong third quarter and are confident to achieve the goals we set.”

The operating EBIT amounted to € 59.0 million in the first half of 2017 after € 70.2 million in the first half of 2016 and includes external costs of € 12.6 million related to the planned combination of RHI and Magnesita as well as negative currency effects of € 9.2 million resulting from the measurement of balance sheet items. Adjusted for these two effects, the operating EBIT amounts to € 80.8 million in the first half of 2017, which corresponds to a margin of 9.4%. This positive development is among other things attributable to a more favorable market environment in many customer industries, the associated improved order situation and the resulting higher utilization of production capacities. The higher raw material costs resulting from a shortage of supply could so far not be fully passed on to customers.

EBIT amounted to € 49.6 million in the first half of the year and includes impairments of € 5.5 million as a result of the planned sale or closure of the plant in Aken, Germany. The imminent sale of the Italian San Vito plant and the Russian Podolsk plant, which produce fused cast refractories for the use in the glass industry led to impairments of € 1.7 million. The negative net effect from the power supply contract in Norway of € 1.2 million resulting from declining electricity future prices also had a negative impact on EBIT. In addition, restructuring costs of € 1.0 million related to changes in the product portfolio at the site in Porsgrunn, Norway, were incurred in the first quarter of 2017.

Net cash flow from operating activities amounted to € 39.8 million in the first half of 2017 after € 76.7 million in the same period of 2016. Net cash flow from investing activities amounted to € (4.8) million in the first half of 2017 after € (17.1) million in the first half of 2016. Free cash flow thus amounted to € 35.0 million in the first half of 2017 after € 59.6 million in the comparative period of 2016.

Development in the second quarter of 2017 In the second quarter of 2017 the RHI Group’s revenue increased by 4.3% compared with the preceding quarter and amounted to € 437.0 million. This increase is due to higher contributions to revenue by both the Steel Division and the Industrial Division. Here, revenue growth is above all attributable to the start of the maintenance season in the oil and gas segment in North America as well as in Europe.

The operating EBIT amounted to € 21.1 million in the past quarter compared with € 37.9 million in the first quarter of 2017 and includes external costs of € 8.8 million related to the planned combination of RHI and Magnesita as well negative currency effects of € 5.6 million resulting from the measurement of balance sheet items. Adjusted for these two effects, the operating EBIT amounts to € 35.5 million in the second quarter of 2017, which corresponds to a margin of 8.1%.

Outlook In its forecast published in July 2017, the International Monetary Fund predicts global economic growth of 3.5% in the current year after 3.2% in the year 2016. However, there is considerable uncertainty regarding the impact of the policies of the newly elected US government. Although the environment in the advanced economies improved, especially in Europe, the pace of growth in the emerging markets will continue to influence the global economy to a significant extent. Based on a current study, the research institute CRU expects a decline in steel production in China by roughly 1% in the year 2017 and an increase in steel production outside China by 4%. Based on these estimates, RHI expects a more positive market environment in 2017. The focus will stay on the generation of free cash flow in the current financial year in order to reduce net debt further. Due to the preparations for a successful completion of the planned combination with Magnesita and the integration of the two companies, external costs will be incurred.

Closing of the combination with Magnesita expected for late October The planned combination of RHI and Magnesita has obtained all merger control clearances. The company is currently working intensively on the preparations for the share’s listing in the Premium Segment of the London Stock Exchange. The first trading day in London and the closing of the transaction are scheduled for late October 2017.

Stefan Borgas adds: “London offers the company as the global market leader in the refractories segment access to an important capital market. At the same time we will stay loyal to the Vienna Stock Exchange via the new Global Market. With the combination of the two companies we will open a new chapter in the long history of RHI.”

1) EBIT before expenses from derivatives from supply contracts, impairment and restructuring effects

„With the sale of the two sites, the combination of RHI AG with Magnesita is also still right on schedule“, commented CEO Stefan Borgas. “We expect the confirmation by the European Commission in the near future.”

In late August, a contract was also signed to sell the production sits in San Vito, Italy, and Sherbinska, Russia. With the closing of the transaction, which is expected for the third quarter of 2017, the RHI Group divests the production of fused cast refractories for the use in the glass industry, which is associated with high fixed costs. Revenue that was generated with products manufactured at the two plants amounted to roughly € 26 million in 2016. The measurement of the disposal group based on the purchase price offer led to an impairment of € 1.7 million in the second quarter of 2017.

In the first half of 2017, production at the site in Aken, Germany, was stopped for an indefinite period. The Management Board intends to sell or close the plant in order to ensure capacity utilization of the production network. The inactive assets were impaired by € 5.5 million as of June 30, 2017.

“The global network optimization of RHI is progressing. As planned, we are implementing the individual measures and also optimize our positioning geographically in every way”, Borgas emphasizes.

• Extraordinary general meeting enables all legally required steps to create the new world market leader RHI-Magnesita in the refractory industry
• Closing of the transaction contemplated to take place late October 2017
• Announcement of the nominated RHI Magnesita N.V. Directors

RHI AG’s shareholders approved the proposed resolutions with an overwhelming majority of more than 99.7% of the share capital represented at today’s extraordinary general meeting. “With this clear vote, we have been given a clear mandate for the combination of the two companies. The shareholders’ decision paves the way for a new, powerful company, which leads the global refractories market and also drives it with its innovations,” commented Stefan Borgas, designated CEO of RHI-Magnesita. The resolution was preceded by a unanimous recommendation for the combination by the RHI AG Supervisory Board including the employee representatives. 

The combination of RHI and Magnesita will enable the combined company to offer its customers an even more comprehensive range of services and thus provide added value. There is further significant value creation potential due to the realization of planned synergies and innovations based on the combined know-how of the companies.

At the end of the general meeting, Wolfgang Ruttenstorfer thanked the company’s CFO, Barbara Potisk-Eibensteiner, who will leave the company as of the end of August 2017, for her excellent work over the past ten years.

Overview of the transaction steps
At today’s general meeting, the two steps required for the reorganization under Austrian company law were approved: (1) the spin-off of all significant assets of RHI AG to its wholly-owned Austrian subsidiary RHI Feuerfest GmbH and (2) the subsequent cross-border merger of RHI AG with its wholly-owned Dutch subsidiary RHI-MAG N.V. As a result of the second step, RHI-MAG N.V. will become the group holding company. Completion of the acquisition by RHI-MAG N.V. of a controlling interest in Magnesita Refratários S.A. is scheduled to occur shortly after the merger becomes legally effective and after the ordinary shares of RHI-MAG N.V. (represented by Depositary Interests) have been admitted to listing on the Premium Segment of the London Stock Exchange. The new company will be managed by a European-Brazilian management team in Vienna.

Composition of the future Board of RHI Magnesita N.V.
After the merger has become legally effective, the company name of RHI-MAG N.V. will be changed to RHI-Magnesita N.V. The Board of RHI Magnesita N.V. will consist of 19 directors and will include two executive directors, the designated CEO Stefan Borgas and the designated CFO Octavio Lopes, as well as 17 non-executive directors, six of whom will be employee representatives. Seven of the remaining eleven non-executive directors will be appointed as independent directors in accordance with the UK Corporate Governance Code of the UK Financial Reporting Council. The following persons are planned for these appointments: Jim Leng (Senior Independent Director), Celia Baxter (Chair Remuneration Committee), John Ramsay (Chair Audit Committee), David Haines, Andrew Hosty, Wolfgang Ruttenstorfer, Karl Sevelda. In addition, Herbert Cordt (Chairman), David Schlaff, Stanislaus zu Sayn-Wittgenstein and Fersen Lambranho are planned to be appointed to the Board.

Next steps for the closing end of October 2017
After the resolutions of the general meeting, the management will focus on the further implementation of the planned steps for the combination of RHI and Magnesita. According to the time line, the closing of the transaction is scheduled for the end of October 2017. The main focus will be placed on meeting the merger control clearance requirements in Europe regarding the sale of three European plants, the preparation of the listing in the premium segment of the London Stock Exchange and the detailed planning of integration measures for the combination of the two companies.

The condition precedent to the share purchase agreement concluded between RHI and the controlling shareholders of Magnesita of October 5, 2016, according to which cash compensation claims of RHI AG shareholders in the context of the merger of RHI AG with RHI-MAG N.V. may not exceed EUR 70 million, has been met.

Immediately afterthe merger has become legally effective, the company name of RHI-MAG N.V. will be changed to RHI Magnesita N.V. The Board of RHI Magnesita N.V. will consist of 19 directors and will include two executive directors, the designated CEO Stefan Borgas and the designated CFO Octavio Lopes, as well as 17 non-executive directors, six of whom will be employee representatives. Seven of the remaining eleven non-executive directors will be appointed as independent directors in accordance with the UK Corporate Governance Code of the UK Financial Reporting Council. The following persons are planned for these appointments: Jim Leng (Senior Independent Director), Celia Baxter (Chair Remuneration Committee), John Ramsay (Chair Audit Committee), David Haines, Andrew Hosty, Wolfgang Ruttenstorfer and Karl Sevelda. In addition, Herbert Cordt (Chairman), David Schlaff, Stanislaus zu Sayn-Wittgenstein and Fersen Lambranho are planned to be appointed to the Board.

The Brazilian antitrust authority CADE granted its approval regarding the planned combination of the RHI Group with the Brazilian Magnesita Refratários S.A. on July 11, 2017.

Important milestones have been achieved with the merger control clearances in the USA, the European Union and Brazil. “As a next step, our shareholders will decide, among other things, about the merger of RHI AG with its wholly-owned Dutch subsidiary RHI MAG NV at an extraordinary general meeting yet to be convened. We are planning this general meeting for August 4,” Stefan Borgas, CEO of RHI and designated CEO of the future RHI-Magnesita Group, commented on the decision of the Brazilian authority.

The combination of RHI and Magnesita will enable the combined company to offer its customers an even more comprehensive range of services and thus provide added value. There is further significant value creation potential due to the realization of planned synergies and innovations based on the combined know-how of the companies.

Due to the increased probability of the planned combination with Magnesita, RHI intends to prepare audited half-year financial statements for the listing prospectus. Therefore, the publication of the half-year financial report 2017 will be postponed from August 9, 2017 to September 14, 2017.

The EXECUTIVE MANAGEMENT TEAM (EMT) of RHI-Magnesita will be led by CEO, Mr. Stefan Borgas, who is currently member of the Management Board of RHI and its CEO.

Mr. Octavio Lopes, currently CEO of Magnesita, will become the Chief Financial Officer (CFO) of RHI-Magnesita.

Mr. Gerd Schubert, currently member of the Management Board of RHI responsible for operations, will become the new Chief Operating Officer (COO) of the joint company.

Mr. Reinhold Steiner, currently member of the Management Board of RHI responsible for worldwide sales to steel markets will become the new Chief Sales Officer (CSO) of RHI-Magnesita.

Mr. Luis Rodolfo Bittencourt, currently Executive Vice President responsible for research, development and mining operations at Magnesita, will become the new Chief Technology Officer (CTO) of RHI-Magnesita.

Further members of the RHI-Magnesita EMT will be Mr. Thomas Jakowiak (responsible for the integration of the two companies), Mr. Luis Rossato (responsible for Corporate Development) and a new Head of Human Resources still to be nominated.

The new EMT of RHI-Magnesita will be effective after closing of the transaction, which will probably be in early November 2017. Until then both companies will continue to operate separately with their existing management teams.

Mrs. Barbara Potisk-Eibensteiner, currently member of the Management Board of RHI and the company’s CFO, will leave RHI at her own request as of August 31st, 2017 in order to pursue other opportunities. Mrs. Potisk-Eibensteiner has been CFO of RHI since 2012 and has significantly contributed to RHI’s development and financial performance during this period. The Supervisory Board of RHI would like to thank Mrs. Potisk-Eibensteiner for her energy and contributions during this time and wish her success in her new role.

Under current planning, Mr. Stefan Borgas (CEO) will take over the CFO responsibilities for the interim period until closing of the merger with Magnesita after Mrs. Potisk-Eibensteiner has left RHI.

The Management Board today set the price of the cash compensation of EUR 26.50 per share. This assessment is based on a pure stand-alone view of RHI not including the synergies after closing of the planned transaction.

Further details regarding the merger will be announced in the course of the disclosure of the transaction documentation by June 30, 2017.

The EXECUTIVE MANAGEMENT TEAM (EMT) of RHI-Magnesita will be led by CEO, Mr. Stefan Borgas, who is currently member of the Management Board of RHI and its CEO.

Mr. Octavio Lopes, currently CEO of Magnesita, will become the Chief Financial Officer (CFO) of RHI-Magnesita.

Mr. Gerd Schubert, currently member of the Management Board of RHI responsible for operations, will become the new Chief Operating Officer (COO) of the joint company.

Mr. Reinhold Steiner, currently member of the Management Board of RHI responsible for worldwide sales to steel markets will become the new Chief Sales Officer (CSO) of RHI-Magnesita.

Mr. Luis Rodolfo Bittencourt, currently Executive Vice President responsible for research, development and mining operations at Magnesita, will become the new Chief Technology Officer (CTO) of RHI-Magnesita.

Further members of the RHI-Magnesita EMT will be Mr. Thomas Jakowiak (responsible for the integration of the two companies), Mr. Luis Rossato (responsible for Corporate Development) and a new Head of Human Resources still to be nominated.

The new EMT of RHI-Magnesita will be effective after closing of the transaction, which will probably be in early November 2017. Until then both companies will continue to operate separately with their existing management teams.

Mrs. Barbara Potisk-Eibensteiner, currently member of the Management Board of RHI and the company’s CFO, will leave RHI at her own request as of August 31st, 2017 in order to pursue other opportunities. Mrs. Potisk-Eibensteiner has been CFO of RHI since 2012 and has significantly contributed to RHI’s development and financial performance during this period. The Supervisory Board of RHI would like to thank Mrs. Potisk-Eibensteiner for her energy and contributions during this time and wish her success in her new role.

Under current planning, Mr. Stefan Borgas (CEO) will take over the CFO responsibilities for the interim period until closing of the merger with Magnesita after Mrs. Potisk-Eibensteiner has left RHI.