Ruukki Group Plc, Stock Exchange Release, 5 June 2008 at 09:50 am. RUUKKI GROUP HAS ENTERED INTO A PRELIMINARY AGREEMENT TO ACQUIRE CHROME ORE AND FERROCHROME OPERATIONS Based on the strategic decision announced on 19 May 2008, Ruukki Group Plc has entered into a preliminary agreement with Kermas Limited to acquire Kermas Limited's chrome ore operations in Turkey and related sales operations in Malta. The operations to be acquired have, at the present, an annual chrome ore production of about 50,000 metric tons of chrome oxide (Cr2O3) per annum, and there is potential for further expansion with the existing mining operations. The furnish capacity is provided based on a contract processing agreement with German producer Elektrowerk Weisweiler GmbH that belongs to the seller's group of companies. The Turkish mining operations have approximately 4 million metric tons of economically mineable probable chrome ore reserves. Based on the actual operating performance of the acquisition target as well as on current ferrochrome market prices and on currency exchange rates, the annualised revenue of the acquisition target totals about EUR 140 million. The number of employees in the target companies totals about 300. According to the preliminary agreement, the initial purchase price is EUR 200 million and the seller will provide Ruukki Group Plc with an EBITDA performance guarantee for the period of 1 July 2008 - 30 June 2012 at the level of EUR 50 million per year. The enterprise value of the operations to be acquired will be based on the future years' actual realised IFRS-based minimum cumulative EBITDA level of EUR 200 million for four years. The parties have agreed on an earn-out component equalling 50% of the amount in excess of the EUR 200,000,000 cumulative EBITDA level for the four-year period starting 1 July 2008. The purchase price is based on an enterprise value of EUR 200 million. Moreover, it is agreed that the consolidated balance sheet as of 30 June 2008 of the business to be acquired will form the basis for any balance sheet adjustment on the purchase price. Ruukki Group Plc will pay EUR 108 million, with additional net debt adjustment if any, to the Seller in cash at the closing of the transaction. Moreover, an additional EUR 92 million of the purchase price, with any net debt adjustment, shall be paid by issuing a convertible loan, the maturity of which is intended to be five (5) years from the subscription. The fixed interest rate for the convertible loan will be four (4) percent per annum. The loan may be converted into new shares in Ruukki Group Plc at EUR 2.30 per share. Conversion may occur after 1 September 2010 and the right to convert would remain for at least two (2) years from such date. In case convertible bond is fully converted into Ruukki Group Plc's shares, altogether 40,000,000 million new Ruukki Group Plc's shares would be issued, which would imply approximately 13.8 % dilution vis-à-vis the current outstanding amount of shares. The issuance of the convertible loan is subject to the approval of shareholders' meeting of Ruukki Group Plc. Any additional earn-out payment will be paid in cash as a lump-sum after the four years' guarantee period. Ruukki Group Plc has decided to initially focus its mineral operations on ferrochrome market. Subject to successful closing of the transaction, it is intended that Kermas Limited will offer all new opportunities in minerals and mining that it is working on now and in the future first to Ruukki Group Plc. The information on the acquisition targets and the operations received by Ruukki Group Plc so far is still preliminary and limited, and thus subject to completion and further investigations and verifications in separate due diligence processes to be conducted by independent advisors and experts. The completion of the transaction is conditional upon fulfilment of certain conditions, which include for example satisfactory due diligence reviews of the operations to be acquired, the seller providing the EBITDA guarantee as described above, receipt of relevant governmental and regulatory approvals and approval of the transaction by the shareholders' meeting of Ruukki Group Plc. Furthermore, the closing of the transaction requires execution of the transaction documents in form and substance satisfactory to both parties. The share purchase agreement is estimated to be signed and the extraordinary shareholders' meeting to be held during August 2008. As the transaction, if finalised, is to be done with a related party, the Board of Directors of Ruukki Group Plc will obtain a fairness opinion of the purchase price from a recognized and independent investment bank. In case the transaction is finalised, Ruukki Group will enter a new business area and new geographical locations, which can significantly alter the group's strategic, operational and financial risks and can have major impact on future financial performance of the group. With regard to the forestry business, the planned Russian sawmill and pulp mill projects will be continued. RUUKKI GROUP PLC BOARD OF DIRECTORS Ruukki Group Plc's shares are listed on OMX Nordic Exchange Helsinki in which the shares of the Company are traded in the mid cap segment, in the industrials sector. For additional information, please contact: Matti Vikkula Chief Executive Officer Ruukki Group Plc Tel. + 358 45 6700 606 www.ruukkigroup.fi This stock exchange release is based on a translation into English of a document written in Finnish. In case of any discrepancies, inconsistencies or inaccuracies, the Finnish version of the release shall prevail.
RUUKKI GROUP HAS ENTERED INTO A PRELIMINARY AGREEMENT TO ACQUIRE CHROME ORE AND FERROCHROME OPERATIONS
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