Transfer and cancellation of treasury shares

Moscow, Russia – February 29, 2012 – OAO Severstal ("Severstal", the "Company") (LSE: SVST; MICEX-RTS: CHMF), one of the world's leading vertically integrated steel and steel-related mining companies, confirms its previously-announced intention to cancel 170 million out of the approximately 193 million Severstal treasury shares currently held by Lybica Holding B.V. ("Lybica"), a wholly owned subsidiary of Severstal, and obtained in the process of the Nordgold separation.

 

As previously communicated, 170 million Severstal treasury shares now held by Lybica will be transferred to Severstal treasury for cancellation. In order to facilitate this transfer and cancellation, Russian JSC law requires that Severstal’s Board of Directors convene an Extraordinary General Meeting of shareholders (EGM) to approve a resolution for Severstal to acquire 170 million Company shares through the legal procedure of a public cash tender offer (the "Offer"). The proposed Offer price is RUB 390 per share, based on the average mid-market closing price for the Severstal shares over the 120 days to 24 February 2012.

 

The EGM of Severstal will be held on 10 April 2012. If a majority of shareholders approve the resolution, it is anticipated that the Offer will be open for acceptances from 21 May 2012 to 19 June 2012 with settlement expected in early July 2012. The Offer is open to all eligible shareholders. To the extent that more than 170 million Severstal shares are tendered by Lybica and by any Severstal shareholders, acceptances will be pro-rated.

 

Lybica will tender all of its Severstal shares (including GDR) into the Offer. These would suffice to satisfy the Offer in full. To the extent that Alexey Mordashov, Severstal’s CEO and majority shareholder, participates in the Offer, directly or indirectly, he has committed to transfer all of his pro rata allocation rights in favour of Lybica. Correspondingly, Alexey Mordashov will not receive any cash as a result of the Offer nor will he reduce his ownership in the Company.

 

Chris Clark, Chairman of Severstal’s Board of Directors, said: “At the time of Nordgold separation Severstal committed to cancel the vast majority of the Company shares owned by Lybica. The Offer enables Severstal to follow through on this commitment.”