SeverStal Proposes Substantially Improved Merger Terms To Arcelor

New York (ots/PRNewswire) -

- Mordashov to reduce his equity stake to 25% from 32%

- EUR2 billion improvement to Arcelor shareholders

- Removal of Strategic Committee

- No intention to increase stake above 33% without a full tender
offer

- Information memorandum posted on SeverStal website

SeverStal, the largest Russian steel company, announced today that
it has proposed to the Board of Directors of Arcelor, the world's
number one steel company, to substantially improve the terms of their
merger agreement announced on May 26, 2006. The proposal is in
response to investor feedback provided by Arcelor's shareholders over
the course of the last several weeks.

SeverStal proposes the following changes to the merger agreement:

- Mr. Mordashov will now receive 210 million new Arcelor shares
(previously 295 million), representing approximately 25% of the
enlarged company (previously 32%).

- The Strategic Committee will be eliminated. In return, Mr
Mordashov will be free to vote his shares in line with normal
shareholder practice and the standstill and lockup provisions will be
eliminated

- The cash contribution from Mr. Mordashov of EUR1.25 billion will
no longer be included

- In all other respects, the merger agreement will remain
unchanged

The revised terms are significantly more attractive for Arcelor
shareholders and reflect a valuation of the assets to be contributed
by Mr. Mordashov that is extremely compelling. Based on yesterday's
closing price for Arcelor shares of EUR34.70, the revised terms
represent an acquisition multiple of 3.6x 2005 EBITDA for the
contributed businesses, and a value enhancement of EUR2 billion for
Arcelor shareholders.

In addition, Mr. Mordashov confirms his intention not to increase,
either actively or passively, his shareholding in Arcelor above 33.3%
without making a mandatory tender offer to all shareholders in
accordance with Luxembourg law.

Mr. Alexey A. Mordashov, SeverStal's Chairman and controlling
shareholder, said: "We have met with a large number of Arcelor
shareholders over the past three weeks and discussed the transaction
at great length with them. These shareholders have generally been
very supportive of our value proposition and proposed merger. I have
taken careful note of all the investor feedback and believe that this
enhanced proposal meets their requirements. The improved terms create
outstanding value to shareholders and reflect my continuing belief in
the industrial logic of combining these two superb companies into the
global steel champion".

Information Memorandum

SeverStal has today posted on its website (www.severstal.com), an
information memorandum describing in detail all of the contributed
businesses in the merger transaction. Arcelor shareholders are urged
to review this memorandum carefully.

About SeverStal

SeverStal is the largest Russian steel producer, with 2005 steel
production of 17.1 million tonnes. It is the second largest flat
steel producer in Russia with annual steel production of 10.9 million
tonnes. In addition, SeverStal owns Severstal North America, the
fourth largest integrated steelmaker in the U.S. with 2005 production
of 2.7 million tonnes, and Lucchini, Italy's second largest steel
group with 2005 production of 3.5 million tonnes. The SeverStal Group
is one of the world's lowest cost and most profitable steel
producers, with 2005 EBITDA per tonne of approximately EUR150 per
tonne. SeverStal-Resource owns 70 years of iron ore reserves and 84
years of coal reserves. SeverStal-Resource produces coking coal,
thermal coal, iron ore pellets and iron ore concentrate.

More information

For the latest on the deal - news, views and information, please
visit Severstal Speaks, our in-time updated communication website, at
www.severstal-speaks.com.

Contact for Europe
Marie Rouet +33-6-03-81-51-37
Alpana Kar +33-6-98-18-31-47
Edelman +33-1-56-69-75-74
Severstal@edelman.com
Contact for London
Jonathan Smith +44-7801-144052
Jonathan.smith@edelman.com
Contact for Russia & CIS
Olga Antonova +7-(495)-540-7765 ext. 6447
antonova@Severstalgroup.com

NEW YORK, June 20 /PRNewswire/ --

ots Originaltext: Severstal
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Contact for Europe : Marie Rouet +33-6-03-81-51-37, Alpana Kar
+33-6-98-18-31-47, Edelman +33-1-56-69-75-74, Severstal@edelman.com,
Contact for London: Jonathan Smith +44-7801-144052,
Jonathan.smith@edelman.com, Contact for Russia & CIS: Olga Antonova
+7-(495)-540-7765 ext. 6447, antonova@Severstalgroup.com