NLMK to divest 100% holdings in LLC Independent Transportation Company to a subsidiary of Universal Cargo Logistics Holding B.V.

On 08 April 2011, the NLMK Board of Directors made the decision to sell NLMK’s 100% holding in Independent Transportation Company LLC (NTK) to UCL Rail B.V., a subsidiary of Universal Cargo Logistics Holding B.V. (UCL Holding). The cash consideration in the transaction is $325 million and assumes that the net debt* of NTK at the completion of the transaction will be around $236 million.

The NLMK Board has received a fairness opinion from Deutsche Bank AG (London). An independent market valuation of the NLMK stake in NTK has been performed by Intercom-Audit JSC, one of the largest independent appraisal firms in Russia.

This divestiture is in line with NLMK’s previously announced strategy aimed at streamlining the Company’s asset structure. NLMK’s NTK stake was classified as a non-core asset by NLMK Board of Directors’ Strategic Planning Committee in April 2010.

NLMK previously signed a long-term agreement with NTK to continue supplying transportation and rail logistics services to NLMK, thus ensuring the Group’s transportation security. NTK will render transportation services to NLMK and other freight owners using rolling stock owned by UCL Holding, one of the largest car fleet owners in Russia. As a result, NLMK’s transportation needs will be fully met. Moreover, the arrangement will result in cost efficiencies for NLMK due to a substantial growth in the scale of business operations of the carrier.

UCL Holding (controlled by Fletcher Group Holdings Limited, NLMK’s majority shareholder), operates over 40 entities in Russia including Plaza-M Toplivnaya Kompaniya (Plaza-M Fuel Company) that operates around 20,000 rail freight gondolas, Sea Port of Saint-Petersburg JSC, a group of stevedoring companies, Taganrog Commercial Sea Port JSC, Tuapse Commercial Sea Port JSC and Universal Transportation Complex LLC at Ust-Luga, as well as Volga Shipping JSC, North-Western Shipping Company JSC and a number of other shipping and shipbuilding companies. UCL Holding offers a comprehensive range of stevedoring, freight by sea and river, passenger river transportation, ship building and ship maintenance, and logistic services.