TENDER OFFER FOR NOTES DUE 2018 AND 2019

Date: 31 May 2016

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION TO ANY PERSON LOCATED OR RESIDENT IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT. OTHER RESTRICTIONS APPLY (SEE "OFFER AND DISTRIBUTION RESTRICTIONS" BELOW).

TENDER OFFER FOR NOTES DUE 2018 AND 2019

NLMK Group ("NLMK"), the largest steel producer in Russia and a leading international steel company, notes the announcement by Steel Funding Limited (the "Offeror") a special purpose vehicle established for the purpose of issuing of debt instruments for financing loans to NLMK, that it has today launched invitations to holders of the outstanding notes detailed in the table below, issued by it for the purpose of financing a corresponding loan to NLMK (each of the series of Notes referred to below, a "Series", and all outstanding notes of all Series together, the "Notes"), to tender their Notes for purchase by the Offeror for cash (each such invitation, an "Offer" and, together, the "Offers") at a purchase price equal to U.S.$1,036.25 per U.S.$1,000 in principal amount of the U.S.$800,000,000 4.45 per cent. Loan Participation Notes due 2018 (U.S.$707,585,000 outstanding principal amount, Regulation S: Common Code: 080863284, ISIN: XS0808632847; Rule 144A: Common Code: 078395052, ISIN: US85812PAB94, CUSIP: 85812PAB9) and U.S.$1,045.00 per U.S.$1,000 in principal amount of the U.S.$500,000,000 4.95 per cent. Loan Participation Notes due 2019 (U.S.$470,714,000 outstanding principal amount, Regulation S: Common Code: 078393432, ISIN: XS0783934325; Rule 144A: Common Code: 061917110, ISIN: US85812PAA12, CUSIP: 85812PAA1).

The Offeror proposes to purchase any and all of the Notes that are validly tendered in the Offers and accepted for purchase by the Offeror, although the Offeror (acting jointly with NLMK) reserves the right, in its sole discretion, to extend, re-open, withdraw or terminate the Offers and to amend or waive any of the terms and conditions of the Offers, including any increase in the Purchase Price for any Series of Notes, at any time after the announcement of the Offers. The Offeror will also pay accrued and unpaid interest in respect of all Notes validly tendered and accepted for purchase by the Offeror, from (and including) the interest payment date for the relevant Series immediately preceding the Settlement Date to (but excluding) the Settlement Date (such payment, "Accrued Interest Payment").

Description of the Notes	Common code/ISIN for Regulation S Notes	Common code/ISIN/CUSIP for Rule 144A Notes	Outstanding principal amount	Minimum Denomination	Purchase Price	Amount subject to the Offers
U.S.$800,000,000 4.45 per cent. Loan Participation Notes due 2018 (the "2018 Notes")	080863284/ XS0808632847	078395052/ US85812PAB94/ 85812PAB9	U.S.$707,585,000	U.S.$ 200,000	U.S.$1,036.25 per U.S.$1,000 in principal amount of 2018 Notes	Any and all
U.S.$500,000,000 4.95 per cent. Loan Participation Notes due 2019 (the "2019 Notes")	078393432/ XS0783934325	061917110/ US85812PAA12/ 85812PAA1	U.S.$470,714,000	U.S.$ 200,000	U.S.$1,045.00 per U.S.$1,000 in principal amount of 2019 Notes	Any and all

 

Capitalised terms used in this announcement but not otherwise defined have the meanings given to them in the tender offer memorandum dated 31 May 2016 ("Tender Offer Memorandum").

The Offers to purchase the outstanding Notes are subject to the terms and conditions contained in the Tender Offer Memorandum. The Offeror is not under any obligation to accept for purchase any Notes tendered pursuant to an Offer. The acceptance for purchase by the Offeror of Notes tendered pursuant to the Offers is at the sole discretion of the Offeror and tenders may be rejected by the Offeror for any reason.

The Offers will be funded with the proceeds of the issuance of new series of loan participation notes (the "New Notes") offered by the Offeror (the "Financing Condition"). Accordingly, the Offers are subject to the satisfaction of the Financing Condition at or prior to the Settlement Date, as described in Tender Offer Memorandum.

Introduction to and Rationale for the Offers

On the terms and subject to the conditions contained in the Tender Offer Memorandum, the Offeror invites Noteholders (subject to the Offer and Distribution Restrictions contained herein) to tender their Notes for purchase by the Offeror at the relevant Purchase Price together with Accrued Interest.

The purpose of the Offers is to enable the Offeror to acquire, subject to the satisfaction of the Financing Condition, all the outstanding Notes that are validly tendered in the Offers. Together with the contemplated issuance of the New Notes, this would have the effect of extending the maturity profile of a portion of the NLMK's indebtedness.

The Offeror has entered into an agreement with NLMK under which it will procure the purchase of the Notes that are validly tendered in the Offers and accepted for purchase by the Offeror. The purchases of such Notes by the Offeror will be financed with funds it receives from NLMK (which will in turn obtain such funds from the net proceeds of the issuance of the New Notes) pursuant to such agreement, and all such purchased Notes will be cancelled and a corresponding portion of the principal amount of the relevant loan to NLMK (together with accrued interest) shall be deemed repaid.

Purchase Prices and Acceptance Amount

The Offeror will pay for each Series of Notes validly tendered and accepted by it for purchase pursuant to the relevant Offer a purchase price per U.S.$1,000 in principal amount of Notes (for each Series of Notes, a "Purchase Price").

If the Offeror decides to accept valid tenders of the 2018 Notes for purchase pursuant to the relevant Offer, it will accept for purchase all of the 2018 Notes that are validly tendered (the aggregate principal amount of such validly tendered and accepted 2018 Notes being the 2018 Notes Acceptance Amount) with no pro rata scaling.

If the Offeror decides to accept valid tenders of the 2019 Notes for purchase pursuant to the relevant Offer, it will accept for purchase all of the 2019 Notes that are validly tendered (the aggregate principal amount of such validly tendered and accepted 2019 Notes being the 2019 Notes Acceptance Amount) with no pro rata scaling.

Allocation of the New Notes

The Offeror will, in connection with allocations of the New Notes, consider among other factors whether or not the relevant investor seeking an allocation of the New Notes has validly tendered or indicated a firm intention to tender the Notes pursuant to the Offers, and if so the aggregate principal amount of the Notes tendered or intended to be tendered by such investor. When considering allocations of the New Notes, the Offeror intends to look favourably upon those investors who have, prior to the allocation of the New Notes tendered the Notes. However, the Offeror is not obliged to allocate the New Notes to an investor which has validly tendered the Notes pursuant to the Offers. Any allocations of the New Notes, while being considered by the Offeror as set out above, will be made in accordance with customary new issue allocation processes and procedures. For the avoidance of doubt, in the event that a Noteholder validly tenders the Notes pursuant to the Offers, then such Tender Instruction will still remain valid in respect of the tendering of such Notes irrespective of whether such Noteholder receives all, part or none of an allocation of the New Notes for which it has applied.

Indicative Timetable for the Offers

The expected timetable of events will be as follows:

Date		Action
31 May 2016		Commencement of the Offers Offers announced by way of announcements on the relevant Notifying News Service(s), through the Clearing Systems and via the website of the Irish Stock Exchange. Tender Offer Memorandum available from the Offer Website run by the Information and Tender Agent: http://sites.dfkingltd.com/nlmk.
8 June 2016 at 13:00 hours, London time		Expiration Deadline Deadline for receipt by the Information and Tender Agent of all valid Tender Instructions in order for Noteholders to be able to participate in the Offers.
On or about 9 June 2016		Announcement of Acceptance and Results As soon as practicable following the Expiration Deadline, the Offeror will announce whether the Financing Condition is expected to be satisfied and if so, the announcement by the Offeror of: (i)    in respect of the 2018 Notes, whether the Offeror will accept valid tenders of the 2018 Notes pursuant to the Offer and if so accepted, the 2018 Notes Acceptance Amount; and (ii)   in respect of the 2019 Notes, whether the Offeror will accept valid tenders of the 2019 Notes pursuant to the Offer and if so accepted, the 2019 Notes Acceptance Amount.
On or about 17 June 2016		Settlement Date Subject to the satisfaction (or, if applicable the waiver) of the Financing Condition, expected Settlement Date for the Offers.

General

The complete terms and conditions of the Offers are set forth in the Tender Offer Memorandum, which will be sent to Noteholders at their request. Noteholders are urged to read the Tender Offer Memorandum carefully.

NLMK and the Offeror have retained Deutsche Bank AG, London Branch, ING Bank N.V., London Branch, J.P. Morgan Securities plc and Société Générale to act as Joint Dealer Managers for the Offers.

Operational Procedure Description

In order to participate in the Offers, Noteholders must validly tender their Notes by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Information and Tender Agent prior to 13:00 hours, London time, on 8 June 2016 (such a date and time, as may be extended, the "Expiration Deadline"). Tender Instructions must be submitted electronically in accordance with the procedures of the relevant Clearing System, and shall be irrevocable, according to the terms and conditions, contained in the Tender Offer Memorandum.

If you need further information about the Offers, please contact the Joint Dealer Managers or the Information and Tender Agent.

Offer Website:  http://sites.dfkingltd.com/nlmk

 

Contact Details:

THE OFFEROR

Steel Funding Limited
Pinnacle 2

Eastpoint Business Park

Dublin 3
Ireland

 

JOINT DEALER MANAGERS

Deutsche Bank AG, London Branch
Winchester House

1 Great Winchester Street

London EC2N 2DB

United Kingdom

For information by telephone:

+44 20 7545 8011

Attention: Liability Management Group

Email: liability.management@db.com

 

ING Bank N.V., London Branch

60 London Wall

London EC2M 5TQ

United Kingdom

For information by telephone:

+44 20 7767 5107

Attention: Global Debt Syndicate

Email: liability.management@uk.ing.com

 

J.P. Morgan Securities plc
25 Bank Street

Canary Wharf

London E14 5JP

United Kingdom

For information by telephone:

+44 20 7134 2468

Attention: Liability Management

Email: em_europe_lm@jpmorgan.com

 

Société Générale
10 Bishops Square

London E1 6EG

United Kingdom

For information by telephone:

+44 20 7676 7579

Attention: Liability Management

Email: liability.management@sgcib.com

THE INFORMATION AND TENDER AGENT

D.F. King Ltd.
Email: nlmk@dfkingltd.com
Website: http://sites.dfkingltd.com/nlmk

In London:

125 Wood Street
London EC2V 7AN
United Kingdom
Telephone: +44 20 7920 9700

In New York:

48 Wall Street, 22nd Floor
New York, New York 10005
United States
Telephone: +1 212 269 5550

Toll-Free (US only) (800) 820-2412

In Hong Kong:

Suite 1601, 16/F, Central Tower
28 Queen's Road Central
Hong Kong
Telephone: +852 3953 7230

Enquiries:

Media contact info:

Sergey Babichenko

+7 (495) 411-77-10

babichenko_sy@nlmk.com 

Investor Relations contact info:

Sergey Takhiev

+7 (495) 915 1575

tahiev_sa@nlmk.com

NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world. NLMK's metal products are used in various industries, from construction and engineering to the manufacturing of power-generating equipment and offshore wind turbines. NLMK's production assets are located in Russia, Europe, and the United States. The Company's steel production capacity exceeds 17 million tonnes per year, of which about 16 million tonnes are produced in Russia. NLMK has the most competitive cash cost among global manufacturers and one of the highest profitability levels in the industry. The company generated $8 billion in revenue, $1.95 billion in EBITDA and a net profit of $967 million in 2015. Net Debt/EBITDA ratio is 0.56. NLMK's ordinary shares are traded on the Moscow Stock Exchange (MICEX-RTS, ticker symbol: NLMK), and its global depositary shares are traded on the London Stock Exchange (ticker symbol: NLMK:LI). The company's investment credit rating is BBB-. For more information on NLMK Group www.nlmk.com/en

 

OFFER AND DISTRIBUTION RESTRICTIONS

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

United Kingdom

The communication of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offers is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of "investment professionals" (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Financial Promotion Order")) or persons who are within Article 43(2) of the Financial Promotion Order or any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order.

France

The Offers are not being made, directly or indirectly, to the public in France. Neither this announcement, the Tender Offer Memorandum nor any other documents or materials relating to the Offers have been or shall be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d'investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiés) other than individuals, in each case acting on their own account and all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code Monétaire et Financier, are eligible to participate in the Offers. This announcement, the Tender Offer Memorandum and any other document or material relating to the Offers have not been and will not be submitted for clearance to nor approved by the Autorité des Marchés Financiers.

Ireland

No action shall be taken in Ireland with respect to the Notes otherwise than in conformity with:

(a)     with the provisions of the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3) (as amended, the "MiFID Regulations"), including, without limitation, Regulations 7 (Authorisation) and 152 (Restrictions on advertising) thereof, any codes of conduct made under the MiFID Regulations, and the provisions of the Investor Compensation Act 1998 (as amended);

(b)     with the provisions of the Companies Act 2014 (as amended, the "Companies Act"), the Central Bank Acts 1942 - 2014 (as amended) and any codes of practice made under Section 117(1) of the Central Bank Act 1989; and

(c)     the Market Abuse (Directive 2003/6/EC) Regulations 2005 (as amended) (as replaced with effect from 3 July 2016 by the Market Abuse Regulation (EU 596/2014)) and any rules issued by the Central Bank of Ireland under Section 1370 of the Companies Act.

Italy

None of the Offers, this announcement, the Tender Offer Memorandum or any other documents or materials relating to the Tender Offer have been or will be submitted to the clearance procedure of the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian laws and regulations.

The Offers are being carried out in Italy as exempted offers pursuant to article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the "Financial Services Act") and article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended.

Noteholders, can tender some or all of their Notes pursuant to the Offers through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with the Financial Services Act, CONSOB Regulation No. 16190 of 29 October 2007, as amended from time to time, and Legislative Decree No. 385 of September 1, 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority.

Each intermediary must comply with the applicable laws and regulations concerning information duties vis-à-vis its clients in connection with the Notes or the Offer.

Russia

This announcement, the Tender Offer Memorandum or any other document or material relating to the Offers is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia to or for the benefit of any Russian person or entity, and does not constitute an advertisement or offering of any securities in Russia within the meaning of Russian securities laws. Information contained in this announcement, the Tender Offer Memorandum or any other document or material relating to the Offers is not intended for any persons in Russia who are not "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 ("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.

Switzerland

The Offers do not constitute a public offering of securities pursuant to article 652a or article 1156 of the Swiss Federal Code of Obligations. The information presented in this document does not necessarily comply with the information standards set out in the SIX Swiss Exchange listing rules.

General

Neither this announcement, the Tender Offer Memorandum nor the electronic transmission thereof constitutes an offer to buy or the solicitation of an offer to sell Notes (and tenders of Notes for purchase pursuant to the Offers will not be accepted from Noteholders) in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require an Offer to be made by a licensed broker or dealer and any of the Joint Dealer Managers or any of their affiliates is such a licensed broker or dealer in any such jurisdiction, such Offer shall be deemed to be made by the Joint Dealer Managers or such affiliate, as the case may be, on behalf of the Offeror in such jurisdiction.