OREANDA-NEWS. February 18, 2008. Evraz Group S.A. (LSE: EVR) (”Evraz”) today announced that it has entered into a Share Purchase Agreement (the “Agreement”) with Best Decade Holdings Limited (“Best Decade”) and the shareholders of Best Decade, to acquire from Best Decade up to approximately 51 per cent of the issued share capital of Delong Holdings Limited (“Delong”) over an agreed period of time. This transaction is subject to anti-trust clearance by the Ministry of Commerce (“MOFCOM”) and the State Administration of Industry and Commerce (“SAIC”) of the People’s Republic of China (the “PRC”).

Share Purchase Agreement

The Share Purchase Agreement entered into between Evraz, Best Decade and the shareholders of Best Decade includes an initial sale to Evraz of approximately 10.0 per cent of the issued share capital of Delong (the “Initial Sale”) at S$3.9459 per share (the “Offer Price”).  Best Decade has also granted Evraz a call option to acquire an additional 32.08 per cent of the issued share capital of Delong (the “Call Option”) that is conditional upon the satisfaction of certain conditions.  The Call Option is exercisable between the date of the completion of the Initial Sale and ending after the date following 6 months immediately after 18 February 2008.  Evraz has granted Best Decade a put option with respect to 32.08 per cent of the issued share capital of Delong (the “Put Option”), exercisable between the date immediately after completion of the Initial Sale and ending on the date falling six months immediately after 18 February 2008.  Both the Call Option and the Put Option have a strike price equal to the Offer Price of S$3.9459.

In addition, the beneficial shareholders of Best Decade have signed an undertaking to sell an additional approximately 8.97 per cent of the issued share capital of Delong to Evraz at the Offer Price when certain restrictions in place due to existing financing arrangements are released.

Following completion of these transactions, Evraz will control approximately 51.05 per cent of the issued share capital of Delong.  Best Decade has an interest in approximately 77.08 per cent of the issued share capital of Delong and will retain an interest of approximately 26.03 per cent following this transaction.

In accordance with the Singapore Code on Takeovers and Mergers, Evraz will make a mandatory cash offer for the remaining Delong shares at the Offer Price, upon the exercise of the Call Option or the Put Option.  The maximum consideration payable by Evraz will be approximately US$1,494 million, assuming full acceptance of the mandatory offer, and the exercise of all outstanding warrants.

Evraz expects that Delong will maintain its head office in Beijing and does not envisage any material changes to the management of Delong following the completion of the transactions. The management of both companies are excited about the many areas of synergies between Evraz and Delong arising from technology cooperation, joint procurement as well as cross selling and marketing opportunities.

Commenting, Alexander Frolov, Evraz’s Chairman and CEO, said: “This investment by Evraz in the Chinese steel sector, our first in the Asia Pacific region, is a critical strategic move to expand our global footprint.  The Chinese steel market is the largest and fastest growing in the world.  Delong has an established position in the Hebei province, an important industrial region of China.  Under the leadership of Mr. Ding, Chairman and controlling shareholder of Delong, the company has demonstrated an impressive track record of growth and profitability.  Mr. Ding brings exceptional operational expertise and local market insight and will be a valuable partner for Evraz.”

Mr. Ding, Chairman of Delong, said: “I am proud of Delong's significant accomplishments to date, and believe that this potential combination with Evraz has much to offer both companies. Becoming part of a leading global steelmaker with complementary strengths and markets, we expect to gain scale and more growth opportunities in the current highly competitive steel environment. This combination will provide us with the critical elements, to continue to grow the business including a secure access to raw materials and substantial financial resources. We believe that this transaction will also create new opportunities to share technology, research and development.”

Merrill Lynch (Singapore) Pte. Ltd is acting as exclusive financial advisor to Evraz.  Allen & Gledhill LLP is acting as legal counsel to Evraz.