RBC Capital Markets Advises Severstal Resources on US$1.3 Billion Acquisition of PBS Coals Corporation

 

London, August 22, 2008 - RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada (TSX: RY; NYSE: RY), has acted as exclusive financial adviser to Severstal Resources ("Severstal"), the world's 4th largest steel producer, on its acquisition of PBS Coals Corporation ("PBS") by way of an acquisition of Penfold Capital Acquisition Corporation ("Penfold") following a business combination of PBS and Penfold for an all cash purchase price of C$8.30 per share, implying an enterprise value of US$1.3 billion.

 

Through its acquisition of PBS, Severstal expects to create value for its shareholders through benefits from the vertical integration of its upstream operations; the increase in self-sufficiency with regard to the supply of primary raw materials available to its North American operations will allow Severstal to control its operating costs.  PBS's central location will also mitigate transportation costs between Severstal's facilities.

 

Earlier this week, on 20 August, RBC Capital Markets announced it had acted as exclusive financial adviser to ArcelorMittal, the world's largest steelmaker, on its acquisition of London Mining Brasil, a Brazilian iron ore producer, from Oslo listed London Mining plc for a total consideration of approximately US$810 million.

 

Commenting for RBC Capital Markets, Richard Horrocks-Taylor, Managing Director, Investment Banking Europe said: "This latest transaction demonstrates RBC's outstanding credentials in the bulk commodities sector, our strength in the metals and mining sector globally and our ability to facilitate significant cross-border metals and mining deals.

 

"Steel companies continue to seek acquisitions in coal and iron ore to secure their supply chain and lower their reliance on the large diversified mining groups.  The proposed bid by BHP for Rio Tinto has provided further impetus to this strategic need and, as such, this consolidation activity is likely to continue for the forseeable future."

 

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Telephone: +44 (0)20 7029 7821 / 7685

 

About RBC Capital Markets

RBC Capital Markets is the corporate and investment banking arm of RBC and the 12th largest investment bank in the world (Bloomberg, April 2008).  RBC Capital Markets is active globally in fixed income, foreign exchange, infrastructure finance, metals, mining and energy. RBC's international fixed income and treasury businesses are managed from London, which is the centre of a 24-hour trading platform with major hubs in Toronto, New York and Sydney. 

 

RBC Capital Market's global Metals and Mining investment banking team advises metals and mining companies worldwide. RBC Capital Markets covers the full spectrum of metals and minerals and has one of the largest global Metals and Mining investment banking, equity sales and research teams of any global investment bank. RBC's investment banking, base metals and commodity sales and trading specialists operate out of London, New York, Sydney, Vancouver and Toronto.  RBC is a member of the London Metal Exchange and is a Nominated Advisor on the London Alternative Investment Market.  For more information, please visit www.rbccm.com

 

About RBC

RBC (RY on TSX and NYSE) is Canada's largest bank as measured by assets and market capitalisation (assets of C$627 billion and market capitalisation of C$62 billion as at 30 April 2008) and ranks among the top 25 banks in the world (#20 at 10/7/08 RBC is the 5th largest financial institution in North America with over 75,000 employees globally, serving more than 16 million personal, business, public sector and institutional clients through offices in 47 countries around the world. RBC has a Tier 1 capital ratio of 9.5% and senior debt ratings of Aaa (Moody's), AA- (S&P), AA (Fitch). RBC has been named the safest financial institution in Canada and 3rd safest in North America (Global Finance, 1999-2007). For more information, please visit www.rbc.com 

 

About Severstal Resources

Severstal Resources is a leading feedstock supplier in Russia to the iron-and-steel industry which manages the mining assets of Severstal. Severstal Resources incorporates the Karelsky Okatysh and Olcon iron ore complexes and Vorkutaugol, a coal mining complex. Stalmag, a niobium production facility is also part of Severstal Resources. In 2007, these operations produced 7.6 million tonnes of coking-coal, 1.8 million tonnes of steam coal, 10 million tonnes of iron-ore pellets and 4.7 million tonnes of iron-ore concentrate. In 2007, Severstal Resources established a gold business segment, which totalled 5.3 tonnes of gold output over the past year. In May, 2008 Sevestal Resources reached an agreement to purchase up to a 61.5% stake in African Iron Ore Group Ltd, which owns the exploration rights for an iron ore deposit in the Putu Range area of Liberia, West Africa.

 

About Severstal:

OAO Severstal is an international steel producer with a listing on the Russian Trading System and the London Stock Exchange. Incorporated in 1993, the company focuses on high value added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. In 2007, Severstal produced 17.5 million tonnes of steel With revenues of US$15.2 billion, EBITDA of US$3.7 billion and earnings per share of US$1.92.