Key points:
- Evraz shares have been suspended by the FCA
- The dividend has been cancelled
- It’s impossible to predict the next stage
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Evraz (LON: EVR) shares have been suspended in London meaning that trade in the company is now not possible. The board has also cancelled the payment of the upcoming dividend – the shares were due to go ex-dividend yesterday.
This is, of course, all over the current unpleasantness and the connection to Roman Abramovich. The problem for us as investors is that it’s impossible to predict the next stage.
Abramovich has been directly sanctioned as an individual. Evraz points out that while he has a substantial stake in the business he does not meet any of the usual tests of being a controlling shareholder. Or, more carefully, he does not exercise effective control. Evraz then goes on to claim that Evraz itself does not fall foul of any of the sanctions provisions: “the Company considers that the UK financial sanctions shall not apply to the Company itself.”
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The problem with this is that this is the statement by the company. We all await the other shoe dropping, which is the statement by those imposing the sanctions. Which may or may not agree with that reading of the situation from Evraz.
Evraz has also cancelled the interim dividend. Again with the uncertainty, whether it will ever reappear as a special dividend in the future, or is simply gone, is impossible to predict.
Finally, there’s the suspension of the Evraz shares. It’s worth noting why this was done: “in order to protect investors pending clarification of the impact of the UK sanctions”. This is not – not as yet – an insistence that Evraz does come under the sanctions legislation, or does not. What it is is an insistence from the FCA that there is this radical uncertainty and therefore – whatever the view of the Evraz board on the issue – it’s not possible to have an orderly market in Evraz shares until the matter is sorted out. What, actually, is the legal position concerning sanctions and Evraz?
Again, to hammer this point home. The claim is not that Evraz itself is to be subject to sanctions. It is that the legal position is not clear therefore Evraz is suspended until it is.
What this means for us as traders is that everyone is locked into – or out of – any position in Evraz. There simply is nothing that can be done. Until the law is clarified it is impossible to value Evraz shares. If the company itself is to be subject to sanctions then it’s difficult to see what value there might be. If it is not to be then that leads to a different idea of the share price. But as even the government – via the FCA – doesn’t in fact know what the legal position actually is it’s impossible to even speculate on the value of Evraz.