Pricing of US$475 million senior unsecured convertible bonds due 2017

Pricing of US$475 million senior unsecured convertible bonds due 2017

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN, THE RUSSIAN FEDERATION, CYPRUS OR INTO OR FROM ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE, NOR A SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR THE RUSSIAN FEDERATION. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

Severstal Announces the Pricing of US$475 Million Senior Unsecured Convertible Bonds due 2017

OAO Severstal ("Severstal", the "Company") (LSE: SVST; MICEX-RTS: CHMF) is pleased to announce the pricing of US$475 million principal amount of senior unsecured convertible bonds due 24 September 2017 (the "Bonds") which are convertible into Global Depositary Receipts ("GDRs") listed on the London Stock Exchange, each representing one ordinary share of Severstal (the "Offering"). The Bonds will be issued by Holdgrove Limited (the “Issuer”) and will be guaranteed by Severstal (the “Guarantor”).

The net proceeds from the Offering will be used by companies within the Severstal group primarily for the refinancing of their existing indebtedness and for general corporate purposes.

The Bonds priced with a coupon of 1.00 per cent per annum payable semi-annually in arrear, and a yield to maturity of 2.00 per cent per annum. The conversion price was set at US$19.08, a premium of 45 per cent above the reference price of US$13.1580. The conversion price of the Bonds is subject to standard convertible market anti-dilution adjustments.

The Bonds will be issued at 100 per cent of their principal amount and, unless previously redeemed, converted or cancelled, will mature on 24 September 2017 at the accreted redemption price of 105.231 per cent of their principal amount. The Issuer will have the option to redeem all of the Bonds at any time after 15 October 2015 at the accreted principal amount at such time together with accrued interest, if the value of the GDRs deliverable on conversion of the Bonds exceeds 140 per cent of the accreted principal amount of the Bonds over a specified period. Holders of the Bonds will have the option to require an early redemption of their Bonds on 24th September 2015, at the accreted principal amount at such time plus accrued interest.

Bondholders will have the right to convert their bonds into GDRs of Severstal at any point from 41 days after the issue date up to the close of business on the seventh dealing day prior to the final maturity date.

Severstal will make an application for the Bonds to be listed on the PSM segment of the London Stock Exchange some time after settlement of the Offering.

The Bonds will be offered and sold outside the United States in reliance on Regulation S of the US Securities Act 1933, as amended.

Citigroup Global Markets Limited and Deutsche Bank AG, London Branch are acting as Joint Bookrunners and Joint Lead Managers in connection with the Offering.

 

About OAO Severstal (LSE: SVST; MICEX-RTS: CHMF):

ОАО Severstal is one of the world’s leading vertically integrated steel and steel related mining companies, with assets in Russia, the USA, the Ukraine, Latvia, Poland, Italy, Liberia and Brazil. Severstal’s ordinary shares are listed on MICEX-RTS and the company’s GDRs are traded on the LSE. Severstal reported revenue of US$7,397 million and EBITDA of US$1,226 million for H1 2012 and US$15,812 million and US$3,584 million for FY 2011 respectively and a net profit of US$2,035 million for FY2011 and of US$582 million for H1 2012. Severstal’s crude steel production in 2011 reached 15.3 million tonnes.

Important Notice:

THIS DOCUMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS DOCUMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL. THE SECURITIES MENTIONED IN THIS DOCUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED IN THE UNITED STATES UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTION.

NO ACTION HAS BEEN TAKEN BY THE ISSUER, THE GUARANTOR, THE JOINT LEAD MANAGERS OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE SECURITIES OR POSSESSION OR DISTRIBUTION OF THIS DOCUMENT OR ANY OFFERING OR PUBLICITY MATERIAL RELATING TO SUCH SECURITIES IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES ARE REQUIRED BY THE ISSUER, THE GUARANTOR AND THE JOINT LEAD MANAGERS TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS.

THIS DOCUMENT AND THE OFFER WHEN MADE ARE ONLY ADDRESSED TO AND DIRECTED, IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHICH HAVE IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE"), AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC) (INCLUDING ANY AMENDMENTS THERETO, INCLUDING DIRECTIVE 2010/73/EU, TO THE EXTENT IMPLEMENTED IN EACH RELEVANT MEMBER STATE) ("QUALIFIED INVESTORS"). EACH PERSON WHO INITIALLY ACQUIRES ANY SECURITIES OR TO WHOM ANY OFFER OF SECURITIES MAY BE MADE WILL BE DEEMED TO HAVE REPRESENTED, ACKNOWLEDGED AND AGREED THAT IT IS A "QUALIFIED INVESTOR" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (INCLUDING ANY AMENDMENTS THERETO, INCLUDING DIRECTIVE 2010/73/EU, TO THE EXTENT IMPLEMENTED IN EACH RELEVANT MEMBER STATE).

IN ADDITION, IN THE UNITED KINGDOM, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS DOCUMENT MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA OTHER THAN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS COMMUNICATION RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. STABILISATION- FSA.

THIS DOCUMENT AND INFORMATION CONTAINED THEREIN IS NOT AN OFFER, OR AN INVITATION TO MAKE OFFERS, TO SELL, EXCHANGE OR OTHERWISE TRANSFER SECURITIES IN THE RUSSIAN FEDERATION TO OR FOR THE BENEFIT OF ANY RUSSIAN PERSON OR ENTITY AND DOES NOT CONSTITUTE AN ADVERTISEMENT OR OFFERING OF SECURITIES IN THE RUSSIAN FEDERATION WITHIN THE MEANING OF RUSSIAN SECURITIES LAWS. INFORMATION CONTAINED IN THIS DOCUMENT IS INTENDED ONLY FOR PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 51.2 OF THE FEDERAL LAW NO. 39-FZ "ON THE SECURITIES MARKET" DATED 22 APRIL 1996, AS AMENDED (THE "RUSSIAN QIS") AND MUST NOT BE DISTRIBUTED OR CIRCULATED INTO RUSSIA OR MADE AVAILABLE IN RUSSIA TO ANY PERSONS WHO ARE NOT RUSSIAN QIS, UNLESS AND TO THE EXTENT THEY ARE OTHERWISE PERMITTED TO ACCESS SUCH INFORMATION UNDER RUSSIAN LAW. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED IN RUSSIA AND ARE NOT INTENDED FOR "PLACEMENT" OR "CIRCULATION" IN RUSSIA (EACH AS DEFINED IN RUSSIAN SECURITIES LAWS) UNLESS AND TO THE EXTENT OTHERWISE PERMITTED UNDER RUSSIAN LAW.

THIS DOCUMENT DOES NOT CONSTITUTE INVESTMENT ADVICE OR A RECOMMENDATION UNDER CYPRUS LAW, NOR DOES IT CONSTITUTE AN OFFER OR ADVERTISEMENT OF SECURITIES IN CYPRUS, IT IS NOT INTENDED TO BE AND MUST NOT BE DISTRIBUTED VIA INFORMATION DISTRIBUTION CHANNELS OR TO THE PUBLIC IN CYPRUS, NOR (WHEN DISTRIBUTED BY A DULY LICENSED INVESTMENT FIRM ESTABLISHED OR OPERATING THROUGH A BRANCH IN CYPRUS) TO ANY PERSON IN CYPRUS OTHER THAN A “PROFESSIONAL CLIENT” AS DEFINED IN THE LAW ON INVESTMENT SERVICES AND ACTIVITIES AND REGULATED MARKETS (LAW NO. 144 (I) 2007).

THIS DOCUMENT MAY NOT BE USED FOR ANY INVITATION OR SOLICITATION PURPOSES FOR OR IN CONNECTION WITH THE SALE, MARKETING, OFFERING OR ACQUISITION OF THE SECURITIES IN CIRCUMSTANCES UNDER WHICH IT IS UNLAWFUL UNDER CYPRUS LAWS TO MAKE SUCH AN INVITATION OR SOLICITATION.