Ruukki Group Plc, Stock Exchange Release, 25 May 2009 at 5:00 p.m. RUUKKI GROUP ACQUIRES MOGALE ALLOYS 1. TRANSACTION HIGHLIGHTS Ruukki Group acquires 84.9 % of shares in Mogale Alloys, located in South Africa and having minerals smelting operations. With the transaction Ruukki Group expands its minerals business into South Africa and into new products. Mogale's production facilities are located in South Africa, in the vicinity of Johannesburg. It has a total 96 MVA smelting capacity with 4 furnaces. Mogale produces silico manganese, ferrochrome and stainless steel alloy and has a combined annual capacity of about 100,000 metric tons. The Mogale acquisition is a cornerstone transaction in Ruukki's expansion into South Africa, which is one of the leading areas of minerals production. The Mogale platform provides Ruukki opportunities to pursue related acquisitions into various minerals and alloys operations, such as chrome and platinum assets. Ruukki Group is listed on the NASDAQ OMX Helsinki stock exchange and its Board has decided to seek a secondary listing on the Johannesburg Stock Exchange because of its South African interests. The Board expects the JSE listing to be finalised during 2010. The total purchase consideration is ZAR 2,000 million (about EUR 174 million), of which ZAR 1,200 million is to be paid when the contract is closed, with ZAR 1,125 million going to the vendors and a further ZAR 75 million will be paid into the Mogale Management Trust, set up for Mogale's management remuneration. The balance of the consideration, i.e. ZAR 800 million will be financed by the vendors with ZAR 200 million to be repaid after one year, and ZAR 600 million repaid over the next five years. This includes an additional ZAR 75 million which will be paid into the management trust over five years. Mogale's FY 2008 (audited, IFRS) revenue was ZAR 667 million (EUR 66 m) and EBIT about ZAR 266 million (EUR 26m). During the current financial year, which ends on 30 September 2009, for the first 12 months from the beginning of April 2008 to the end of March 2009, Mogale's revenue (unaudited, IFRS) was ZAR 869 million and EBIT was ZAR 242 million. All conditions precedent were met today, and the transaction has become effective, other than payment which will be made by 30 May 2009. Ruukki will consolidate the acquired business from 1 June 2009. The revised Ruukki Group 2009 EBITDA guidance post-acquisition for the financial year ending 31 December 2009 is the following: Consolidated Group EUR 15.0 million (an addition of EUR 5 million compared to earlier guidance), Minerals segment EUR 15.0 million (an addition of EUR 5 million compared to earlier guidance), Wood Processing segment EUR 5.0 million (unchanged). 2. TRANSACTION DESCRIPTION Transaction Ruukki Group Plc (“Ruukki” and “Company”) has today acquired an 84.9 % stake in Mogale Alloys Limited (“Mogale”). The minority stake in Mogale will be owned by BEE (Black Economic Empowerment) partners. The current BEE partner Mogale Alloys Trust will stay in with its 10 % stake. Moreover, as part of the transaction, a new BEE company, PGR Manganese Limited has been established having 10 % stake in Mogale. Ruukki Groups' South African subsidiary will have 49 % of the PGR Manganese shareholding, with the remaining 51 % being held by two BEE partners (Sebeso Benefication Limited and Leswikeng Minerals & Energy Limited). Acquired business Mogale is located in the vicinity of Johannesburg, South Africa. It has a total smelting capacity of 96 MVA in two DC furnaces and two submerged arc furnaces. Mogale has a proven track record of successful operations and competitive cost structure under various market conditions, and currently produces silico manganese, stainless steel alloy and ferrochrome (so-called charge chrome) with an annual production capacity around 100,000 metric tons. Mogale applies the DC (direct current) furnace technology which was co-developed with Mintek, South Africa's national mineral research organisation, and independently developed further in recent years. Mogale uses the so-called UG2 Reef material, located alongside the South African Bushveld complex, in its ferrochrome production enhancing its cost competitiveness. Purchase consideration The total purchase consideration, at EUR/ZAR rate of 11.50 and taking into account the payments in the trust fund set up for the Mogale management, is about EUR 173.9 million for the 84.9 % share in Mogale, and consists of three payments: (i) ZAR 1,200 million (about EUR 104.3 million) in cash at the closing date, of which ZAR 1,125 million will be paid to the vendors and ZAR 75 million is to be allocated to a trust set up for Mogale management, (ii) ZAR 200 million (about EUR 17.4 million) in cash as unconditional deferred payment on the first anniversary of the closing date, and (iii) ZAR 600 million (about EUR 52.2 million) in cash as conditional deferred payment via a 5-year vendor loan arrangement, which includes ZAR 75 million to be allocated to the Mogale Management Trust. The estimated transaction costs, including e.g. stamp duty on transferring the acquired shares as well as taking into account due diligence expenses, is around EUR 1.3 million. Expansion opportunities and further investments Ruukki South Africa (Proprietary) Limited has been established with immediate effect, and this Ruukki Group subsidiary is the acquirer. This South African base and presence gives opportunities for related acquisitions in South Africa. Ruukki Group is actively surveying opportunities to expand its minerals business via acquisitions, which are especially targeted to utilise tailings or UG2 feeds, and moreover to smelt or refine platinum group metals in addition to current ferrochrome based operations. Revised Group 2009 Guidance Based on current market situation and exchange rates, and assuming Mogale is consolidated into Ruukki Group from 1 June 2009, Ruukki estimates that the Mogale transaction will add around EUR 25 million to Ruukki's minerals business segment revenue for calendar year 2009, and that the acquired business entity will positively contribute to Ruukki's 2009 EBITDA by about EUR 5 million, which hence changes the Ruukki 2009 guidance as follows: -------------------------------------------------------------------------------- | EBITDA | Group Total | Wood Processing | Minerals | | EUR million | | | | -------------------------------------------------------------------------------- | New Guidance | 15.0 | 5.0 | 15.0 | -------------------------------------------------------------------------------- | Old Guidance* | 10.0 | 5.0 | 10.0 | -------------------------------------------------------------------------------- * as published on 26 February 2009 Comment by Ruukki's CEO Alwyn Smit, Chairman and CEO of Ruukki Group comments on the strategic rationale of the Mogale transaction: “As demand recovers, ferrochrome market prices are expected to outperform other minerals, due to limited supply and growing demand. The Mogale transaction expands and diversifies Ruukki's current Turkish and German minerals capabilities of special grade ferrochrome, and gives opportunities to utilise existing sales channels. Ruukki believes that now is a proper time to invest into South Africa, due to the major mineral reserve base in the country, and especially due to electricity supply constraints in South Africa, which will act as a barrier to new entrants at least for the medium-term. Mogale also provides us with a platform on which to build future investments, e.g. related to platinum group metals which we are currently evaluating.” 3. MORE DETAILED TRANSACTION BACKGROUND Strategic Background Ruukki Group specialises in industrial refining of certain natural resources. The Group has two focus areas: Wood Processing and Minerals. The Wood Processing business has strong presence in the northern part of Finland. The Minerals business has mining operations in Turkey, with special grade ferrochrome smelting operations in Germany. During May 2008 Kermas Limited had made an offer to buy all the shares in Mogale. Later in 2008, when Ruukki Group acquired the ferrochrome businesses of Kermas Limited, a memorandum of understanding was signed according to which Kermas committed to offer primarily to Ruukki all the new minerals and mining opportunities it is evaluating or planning. Based on this the Mogale opportunity was offered to Ruukki, and Ruukki has negotiated the deal structure and terms on which it will implement the acquisition. Ruukki Group's Board of Directors agreed in March 2009 in principle, subject to a number of conditions precedent, to proceed with the transaction. These conditions have now been fulfilled. By acquiring the majority shareholding in Mogale, Ruukki significantly strengthens its minerals business unit and enters South Africa, which is one of the most important geographical areas for minerals processing. Target of the Transaction Due Diligence Ruukki has used as part of the preparation process of the Mogale transaction several external experts of which the most significant have been listed below: (i) financial and tax due diligence: Ernst & Young (South Africa); (ii) due diligence on agreements and legal issues and preparation of the agreements: Attorneys-at-law Werksmans Incorporating Jan S. de Villiers (South Africa); (iii) valuation report: Standard Bank Group Limited (South Africa) (iv) fairness opinion: Standard Bank Plc (United Kingdom) (v) environmental due diligence: Golder Associates (South Africa) (vi) market analyses on ferrochrome and other alloys market: Heinz H. Pariser Alloy Metals & Steel Market Research (Germany) Standard Bank Group acted as financial adviser to Ruukki. In addition, as part of the evaluation of the target of the transactions the vendors have given Ruukki access to a report on Mogale's environmental issues prepared by Cameron Cross Inc. (South Africa). Ruukki has also received the South African competition authorities' approval for the Mogale transaction. Structure of the Transaction Ruukki Group has established a new subsidiary Ruukki South Africa (Proprietary) Limited which will in the Mogale transaction acquire the following shares: a) directly 17.7 % of shares in Mogale Alloys (Proprietary) Limited b) indirectly, i.e. shares in companies that have stakes in Mogale: 100.0 % of shares in PGR 17 Investments (Proprietary) Limited 22.0 % of shares in Dezzo Trading 184 (Proprietary) Limited 49.0 % of shares in PGR Manganese (Proprietary) Limited The vendors, i.e. the sellers of the shares, include for example Mr. Johan Oosthuizen, CEO of Mogale, and Metmar Limited, which is a listed entity. Ruukki announced earlier during mid 2008 that Kermas Limited, a major shareholder in Ruukki, had offered Ruukki the opportunity to acquire Mogale shares based on a memorandum of understanding between Kermas and Ruukki, but Kermas is not a counterparty to the final Mogale transaction. Ruukki Group's effective ownership after the transaction is following: -------------------------------------------------------------------------------- | Directly | 17.70 % | -------------------------------------------------------------------------------- | Indirectly via PGR 17 | 34.60 % | -------------------------------------------------------------------------------- | Indirectly via Dezzo | 27.70 % | -------------------------------------------------------------------------------- | Indirectly via PGR Manganese | 4.90 % | -------------------------------------------------------------------------------- | Total effective stake | 84.90 % | -------------------------------------------------------------------------------- The remaining 15.10 % is effectively held by Mogale Alloys Trust and PGR Manganese (Pty) Ltd's major shareholders, both of which are controlled or owned by black entrepreneurs or Mogale's employees. Hence, in the transaction, South African Black Economic Empowerment legislation has been taken into account. Since Ruukki South Africa (Pty) Ltd will cede 40 % of the shares, and rights thereby, of Mogale, PGR 17 and Dezzo it acquires as collateral for the unpaid portion of the purchase consideration, at inception the effective unpledged ownership interest of Ruukki is the following: -------------------------------------------------------------------------------- | Directly | 10.62 % | -------------------------------------------------------------------------------- | Indirectly via PGR 17 | 20.76 % | -------------------------------------------------------------------------------- | Indirectly via Dezzo | 16.62 % | -------------------------------------------------------------------------------- | Indirectly via PGR Manganese | 4.90 % | -------------------------------------------------------------------------------- | Total unpledged stake | 52.90 % | -------------------------------------------------------------------------------- Description of the Target of the Transaction, Business Mogale was originally Palmiet Chrome Corporation (“Palmiet”) a wholly owned subsidiary of Samancor Chrome Limited (“Samancor”). Palmiet commenced operations in 1963 and was closed by Samancor in August 2001. In November 2002, Micromatica 553 (Pty) Ltd, (“Micromatica”) a consortium, led by Johan Oosthuizen, entered into a rental agreement for Palmiet's furnace with the purpose of toll smelting chromite for Samancor and operations formally resumed in February 2003. In June 2003 Micromatica changed its name to Mogale. In April 2004 Mogale started toll smelting of silico manganese, and in March 2005 Mogale purchased the facility from Samancor. The production facilities currently comprise: - One 44MVA DC plasma-arc furnace with a production capacity of 50,000 tons Cr-Ni-Fe (Stainless steel alloy) per annum; - Two open 20MVA submerged -arc furnaces with combined capacity of 48,000 tons silico manganese per annum; - Mogale has also constructed an additional 12MVA DC furnace with a steady state capacity of 12,000 tonnes of High Grade Nickel alloy, per annum. This furnace is due to start commissioning in 2009. Mogale is unique in that it is able to produce a number of products which enables it to be flexible in changing market conditions and to minimise the risk of fluctuating market conditions. These products include: - Chromium- iron-nickel alloy (Stainless steel alloy) - Charge Chrome - Silico manganese - High Grade Nickel alloy Mogale has over the years expanded its market base and currently has clients in the United States, Brazil, China, India, Nigeria, South Africa and a number of countries in Europe. This has enabled Mogale to establish itself in these markets as a producer of high quality products and also minimises the risk of changes in market conditions. Mogale has a 33.0% stake in Nuco Chrome Bophuthatswana that has certain chrome ore resources in South Africa. Description of the Target of the Transaction, Historical Economic Information Information related to income statement and balance sheet of Mogale has been presented below. Mogale has applied IFRS from financial year 2008. The financial year (abbreviated “FY” in tables below) of Mogale has been from 1 April to 31 March, but the current ongoing financial year is from 1 April 2008 to 30 September 2009, in other words eighteen months, hence YTD 3/2009 below reflects the actual results according to Mogale's unaudited management accounts until end of March 2009. All figures below are first represented in thousand South African Rands (ZAR), and thereafter separately in EUR thousand: -------------------------------------------------------------------------------- | INCOME STATEMENT | YTD 3/2009 | FY 08 | FY 07 | | | (12 months) | (12 months) | (12 months) | -------------------------------------------------------------------------------- | ZAR '000 | management | IFRS, audited | IFRS, audited | | | accounts, | | | | | unaudited | | | -------------------------------------------------------------------------------- | Revenue | 869 617 | 667 701 | 417 019 | -------------------------------------------------------------------------------- | Other income | 0 | 6 160 | 717 | -------------------------------------------------------------------------------- | Cost of sales | -459 930 | -293 151 | -248 205 | -------------------------------------------------------------------------------- | Operating expenses | -167 214 | -114 541 | -80 528 | -------------------------------------------------------------------------------- | Operating profit | 242 473 | 266 170 | 89 002 | -------------------------------------------------------------------------------- | Net interest (received)/paid | 5 255 | -331 | -12 999 | -------------------------------------------------------------------------------- | Profit before tax | 247 728 | 265 839 | 76 003 | -------------------------------------------------------------------------------- | Taxes | -98 817 | -79 176 | -18 665 | -------------------------------------------------------------------------------- | Profit after tax | 148 911 | 186 662 | 57 339 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | BALANCE SHEET | 31.3.2009 | 31.3.2008 | 31.3.2007 | -------------------------------------------------------------------------------- | ZAR '000 | unaudited | audited | audited | -------------------------------------------------------------------------------- | Assets | | | | -------------------------------------------------------------------------------- | Non-Current Assets | | | | -------------------------------------------------------------------------------- | Property, plant and equipment | 158 081 | 126 942 | 93 081 | -------------------------------------------------------------------------------- | Investments | 54 | 5 254 | 2 095 | -------------------------------------------------------------------------------- | | 158 135 | 132 195 | 95 176 | -------------------------------------------------------------------------------- | Current Assets | | | | -------------------------------------------------------------------------------- | Inventories | 91 394 | 67 930 | 45 782 | -------------------------------------------------------------------------------- | Receivables | 73 902 | 118 753 | 60 409 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 60 816 | 109 217 | 5 356 | -------------------------------------------------------------------------------- | | 226 112 | 295 899 | 111 547 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total Assets | 384 247 | 428 095 | 206 723 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity and Liabilities | | | | -------------------------------------------------------------------------------- | Share Capital | 1 | 1 | 1 | -------------------------------------------------------------------------------- | Retained earnings | 181 363 | 261 176 | 80 202 | -------------------------------------------------------------------------------- | Total equity | 181 364 | 261 177 | 80 203 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | | -------------------------------------------------------------------------------- | Loans | 11 773 | 11 605 | 57 318 | -------------------------------------------------------------------------------- | Deferred tax liability | 115 004 | 16 187 | 12 752 | -------------------------------------------------------------------------------- | | 126 777 | 27 792 | 70 069 | -------------------------------------------------------------------------------- | Current liabilities | | | | -------------------------------------------------------------------------------- | Loans | 0 | 17 667 | 0 | -------------------------------------------------------------------------------- | Payables | 76 106 | 121 459 | 56 450 | -------------------------------------------------------------------------------- | | 76 106 | 139 127 | 56 450 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 202 883 | 166 919 | 126 520 | -------------------------------------------------------------------------------- | Total Equity and Liabilities | 384 247 | 428 096 | 206 723 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW | 4/2008- | 4/2007-3/2008 | 4/2006- | | | 3/2009 | | 3/2007 | -------------------------------------------------------------------------------- | ZAR '000 | unaudited | audited | audited | -------------------------------------------------------------------------------- | Profit before tax | 247 728 | 265 839 | 76 003 | -------------------------------------------------------------------------------- | Adjustments to profit | 33 083 | 20 243 | 43 715 | -------------------------------------------------------------------------------- | Changes in working Capital | 106 483 | -53 911 | -41 983 | -------------------------------------------------------------------------------- | Income taxes and interests | -121 626 | -40 749 | -16 107 | -------------------------------------------------------------------------------- | Cash flow from operations | 265 668 | 191 422 | 61 628 | -------------------------------------------------------------------------------- | Cash flow from investing | -49 052 | -55 756 | -17 754 | | activities | | | | -------------------------------------------------------------------------------- | Cash flow from financing | -265 017 | -30 612 | -41 143 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash flow | -48 401 | 105 054 | 2 731 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR/ZAR | 12,39 | 10,12 | 9,04 | -------------------------------------------------------------------------------- | INCOME STATEMENT | YTD 3/2009 | FY 08 | FY 07 | | EUR ‘000 | (12 months) | (12 months) | (12 months) | -------------------------------------------------------------------------------- | | Management | IFRS, audited | IFRS, audited | | | accounts, | | | | | unaudited | | | -------------------------------------------------------------------------------- | Revenue | 70 213 | 65 977 | 46 111 | -------------------------------------------------------------------------------- | Other income | 0 | 609 | 79 | -------------------------------------------------------------------------------- | Cost of sales | -37 135 | -28 967 | -27 444 | -------------------------------------------------------------------------------- | Operating expenses | -13 501 | -11 318 | -8 904 | -------------------------------------------------------------------------------- | Operating profit | 19 577 | 26 301 | 9 841 | -------------------------------------------------------------------------------- | Net interest (received)/paid | 424 | -33 | -1 437 | -------------------------------------------------------------------------------- | Profit before tax | 20 002 | 26 268 | 8 404 | -------------------------------------------------------------------------------- | Taxation | -7 979 | -7 824 | -2 064 | -------------------------------------------------------------------------------- | Profit after tax | 12 023 | 18 445 | 6 340 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR/ZAR | 12,61 | 12,81 | 9,70 | -------------------------------------------------------------------------------- | BALANCE SHEET | 31.3.2009 | 31.3.2008 | 31.3.2007 | -------------------------------------------------------------------------------- | EUR '000 | | | | -------------------------------------------------------------------------------- | Assets | | | | -------------------------------------------------------------------------------- | Non-Current Assets | | | | -------------------------------------------------------------------------------- | Property, plant and equipment | 12 532 | 9 908 | 9 595 | -------------------------------------------------------------------------------- | Investments | 4 | 410 | 216 | -------------------------------------------------------------------------------- | | 12 536 | 10 318 | 9 811 | -------------------------------------------------------------------------------- | Current Assets | | | | -------------------------------------------------------------------------------- | Inventories | 7 245 | 5 302 | 4 720 | -------------------------------------------------------------------------------- | Receivables | 5 859 | 9 269 | 6 227 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 4 821 | 8 525 | 552 | -------------------------------------------------------------------------------- | | 17 925 | 23 096 | 11 499 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total Assets | 30 462 | 33 414 | 21 311 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity and Liabilities | | | | -------------------------------------------------------------------------------- | Share Capital | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Retained earnings | 14 378 | 20 386 | 8 268 | -------------------------------------------------------------------------------- | Total equity | 14 378 | 20 386 | 8 268 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | | -------------------------------------------------------------------------------- | Loans | 933 | 906 | 5 909 | -------------------------------------------------------------------------------- | Deferred tax liability | 9 117 | 1 263 | 1 315 | -------------------------------------------------------------------------------- | | 10 050 | 2 169 | 7 223 | -------------------------------------------------------------------------------- | Current liabilities | | | | -------------------------------------------------------------------------------- | Loans | 0 | 1 379 | 0 | -------------------------------------------------------------------------------- | Payables | 6 033 | 9 480 | 5 819 | -------------------------------------------------------------------------------- | | 6 033 | 10 859 | 5 819 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 16 084 | 13 029 | 13 043 | -------------------------------------------------------------------------------- | Total Equity and Liabilities | 30 462 | 33 414 | 21 311 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EUR/ZAR | 12,39 | 10,12 | 9,04 | -------------------------------------------------------------------------------- | CASH FLOW | 4/2008-3/200 | 4/2007-3/2008 | 4/2006-3/2007 | | EUR '000 | 9 | | | -------------------------------------------------------------------------------- | | unaudited | audited | audited | -------------------------------------------------------------------------------- | Profit before tax | 20 002 | 26 268 | 8 404 | -------------------------------------------------------------------------------- | Adjustments to profit | 2 671 | 2 000 | 4 834 | -------------------------------------------------------------------------------- | Changes in working Capital | 8 597 | -5 327 | -4 642 | -------------------------------------------------------------------------------- | Income taxes and interests | -9 820 | -4 027 | -1 781 | -------------------------------------------------------------------------------- | Cash flow from operations | 21 450 | 18 915 | 6 814 | -------------------------------------------------------------------------------- | Cash flow from investing | -3 960 | -5 509 | -1 963 | | activities | | | | -------------------------------------------------------------------------------- | Cash flow from financing | -21 398 | -3 025 | -4 549 | | activities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash flow | -3 908 | 10 381 | 302 | -------------------------------------------------------------------------------- Employees Mogale had 258 employees in total in its employment in March 2009. The management team of Mogale is committed to continue in managing the business post-transaction. Purchase Consideration Ruukki Group Plc pays the vendors the following purchase consideration: (i) ZAR 1,125,000,000 (about EUR 97,826,000 based on current exchange rate of EUR/ZAR at around 11.50) as purchase consideration in cash at the closing date; and (ii) ZAR 150,000,000 (about EUR 13,043,000) as management incentives in cash into a trust from which ZAR 75,000,000 remuneration will be paid when the transaction is closed and another ZAR 75,000,000 five years after closing; and (iii) ZAR 200,000,000 (about EUR 17,391,000) on the first anniversary of the closing date in cash as unconditional deferred payment, and (iv) ZAR 600,000,000 (about EUR 52,174,000) in cash as conditional deferred payment via a 5-year vendor loan arrangement carrying South African prime interest rate (currently 12.00 % per annum) which includes the other ZAR 75,000,000 management incentive to be paid over five years mentioned above. As security for the unpaid purchase consideration (in total ZAR 800,000,000 at inception) Ruukki South Africa (Pty) Ltd cedes in securitatem debiti and pledges to the Mogale vendors all right, title and interest whatever in respect of the ceded shares including, all rights, dividends, the right to vote or other benefits which may currently exist or which may arise in the future. The ceded shares refer to 40 % of the shares of Dezzo, PGR 17 and Mogale that Ruukki South Africa (Pty) Ltd acquires. The ceded shares shall be released pro rata in relation to the aggregate obligations settled and aggregate outstanding balance. For the ZAR 600,000,000 vendor loan Ruukki South Africa (Pty) Limited pays interest (at South African prime rate, currently 12.00 % per annum) from the date when Mogale's furnaces have been successfully commissioned and all governmental licences, permits, authorisations or permissions which are necessary to operate the furnaces are in place. The vendor loan is split into four tranches: ZAR 125,340,000 related to 12 MVA DC furnace; ZAR 158,220,000 related to 40 MVA DC furnace; ZAR 158,220,000 related to 20 MVA arc furnace; ZAR 158,220,000 related to 20 MVA arc furnace; The vendor loan shall be paid back in cash in equal monthly instalments over five years. Ruukki South Africa (Pty) Limited is entitled to repay the loan capital and any interest at any point in time without giving notice to the Mogale vendors. Interest on the loan begins only after Mogale has received all permits and licences needed to operate its furnaces. Financing of the Purchase Consideration Ruukki is able to finance and it has planned to fund the purchase consideration from its cash reserves, but might later finance some portion of it with debt. Additional possible investments in the targets of the transaction may be financed from Ruukki's cash reserves. Fairness Opinion Standard Bank Plc has given Ruukki Group Plc's Board of Directors an opinion stating that the total purchase consideration payable related to the acquisition of 84.9 % stake in Mogale is fair and reasonable from a financial point of view. Risks and Uncertainties Ruukki has limited prior business know-how, experience or background information on minerals business, chrome and manganese ore business in general and in South Africa, which exposes Ruukki to new risks. Mogale currently does not have all the registrations, permits or licences in place related to environmental or other operational issues, partially due to the fact that Mogale has constructed a new DC furnace which has not yet started production. Hence, there are uncertainties on timing of start-up and on costs of compliance. Mogale management has already filed an environmental management plan with the help of external experts, and Ruukki is committed to target best practice solutions in all environmental issues. Temporal delays or a need to adapt the business activities or management to correspond to the requirements for a listed company may occur in integrating acquired entities into Ruukki. The prices of input and output prices relevant to Mogale operations are determined according to supply and demand in world markets. In particular, changes in global stainless steel industry demand characteristics may have a significant effect to the profitability of Mogale. Changes in exchange rates affect Ruukki's purchase consideration's EUR counter value, and can to major extent influence Mogale's underlying profitability. The scope of the due diligence inspections that have been performed before the transaction may be imperfect due to the schedule and other limitations. The transaction shall, if materialized, require use of own cash reserves from Ruukki, and possibly later also external bank financing. The payment of the purchase consideration will significantly affect the balance sheet position of Ruukki. It shall also be taken into account that South African exchange control legislation may limit Ruukki's ability to repatriate profits out of South Africa. Ruukki has taken into account in the agreements and in the transaction's structure the risks related to Mogale acquisition to the extent possible including for example representations and warranties from the sellers. Since Mogale also has other products than ferrochrome in its product mix, this diversifies Ruukki's minerals business operations, and creates a platform that gives more flexibility to respond to changes in market circumstances. Ruukki - Group Structure after the Transaction At the moment Ruukki Group has two reporting segments: wood processing and minerals. Mogale will be consolidated into the minerals business segment. Schedule and Time of Coming into Force The execution of the transaction shall commence immediately. The Exchange Control department of the South African Reserve Bank (EXCON) has given its approval for the transfer of cash into South Africa. ESPOO, ON 25 MAY 2009 RUUKKI GROUP PLC BOARD OF DIRECTORS Ruukki Group specialises in industrial refining of certain natural resources. The Group has two focus areas: Wood Processing and Minerals. Ruukki Group Plc's shares are listed on Nasdaq OMX Helsinki in which the shares of the Company are traded in the mid cap segment, in the industrials sector. For additional information, please contact: Alwyn Smit Chairman of the Board and CEO Ruukki Group Plc Telephone +358 50 442 1663 / +41 7960 19094 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 shall prevail.