Ukrainian Steel Makers Merge

DONETSK, Ukraine, July 1, 2010 /PRNewswire/ --

- Metinvest Group and Ilyich Steel Plant Decide to Consolidate Assets

Ilyich Steel Plant and Metinvest Group decided to merge assets following the talks about potential cooperation and consolidation of efforts to overcome the consequences of the global financial crisis. The aggregate production potential will make 20m tonnes of steel per year after the consolidation.

The partnership will include all businesses of Ilyich Steel Plant with OSC Ilyich Iron and Steel Works of Mariupol being the major asset. Metinvest Group will join the partnership with its Ingulets Ore Mining and Processing Plant, Krasnodonugol mining group, Avdeyevka Coke and Chemical Plant, Khartsyzsk Pipe Plant as well as provide investment to development of modernization of the Ilyich Plant to the amount of USD 2 billion. After completion of the merger, the share of Metinvest Group will make 75%, while 25% will remain under control of Ilyich Steel Plant headed by Vladimir Boyko. The further steps and the final format of partnership will be clear after the legal examination is over and all permissions of regulatory agencies in Ukraine and internationally have been obtained. The agreements will be formalized in full compliance with the current laws.

Metinvest Group will participate in acquisition of additionally issued shares of Ilyich Stal and OSC Ilyich Iron and Steel Works of Mariupol as a first step in the merger process.

"The partnership with Ilyich Plant is an important step in realization of our long-term strategy aimed at strengthening the vertical integration of Metinvest and achieving the maximum increase in production of high-quality yet low-cost steel", said Igor Syry, CEO of Metinvest Holding. "We expect to get strong synergies, firstly, by optimizing the modernization programmes at our steel assets, raising the production efficiency and improving our market position. We estimate that the aggregate production potential will make 20m tonnes of steel per year. The merger will help to reinforce the position of the national mining and metals industry in the global markets, which is a keystone to the growth of Ukraine's economy and higher economic security."

Profile:

Metinvest is an international vertically-integrated mining and metals group of companies. Production facilities of Metinvest allow the enterprises both to satisfy their own needs in raw materials, liquid steel and semi-finished products and to be a key supplier for many other Ukrainian and European companies, as well as Asian businesses. The shareholders of Metinvest Group are SCM Group (75%) and Smart Group (25%) that manage the company on the partnership principle.

Metinvest Holding is the managing company of Metinvest Group.

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SOURCE METINVEST HOLDING