MMK closes transaction on acquisition of 82.6% of Belon coal company

OJSC “Magnitogorsk Iron and Steel Works” (MMK) announces that it has closed the transaction to get effective control over 82.6% of OJSC “Belon” (Belon) – one of the leading coal concentrate producers in Russia.

At the final stage of the transaction MMK increased its stake in Onarbay Enterprises Ltd, which owns 82.6% of the Russian coal-producing company Belon, from 50% to 100%.

Key transaction highlights:

• MMK obtains control over Belon, increasing its stake in the company to 82.6%

• The transaction secures stable coking coal supplies to MMK for its steel smelting operations, including supplies of deficit coal grades

• The acquisition will allow to continue implementing the investment programme of Belon

• Supplies from Belon will account for the bulk of MMK requirement of coking coal concentrate

Victor Rashnikov, Chairman of the MMK Board of Directors, stated: “This transaction brings MMK self-efficiency in strategically important input material to a new level. We are sure that this acquisition will strengthen our competitiveness in the current situation and in the long-term prospect”.

Structure of the transaction:

In March 2008 MMK acquired 50% interest in Onarbay Enterprises Ltd, which owed 82.6% of the share capital of Belon. In October 2009 MMK’s share in Onarbay Enterprises Ltd was increased to 100%.

As the result, the structure of the Belon share capital is as follows: 82.6% belongs to Onarbay Enterprises Ltd (MMK owns 100% of shares), and 17.4% are in free float on Russian stock exchanges.