Press release

Ljubljana, 3 December 2015 – SIJ – Slovenska industrija jekla, d.d. (hereinafter: SIJ d.d. or the company) hereby provides a detailed explanation of the process of the capital increase and the acquisition of Perutnina Ptuj d.d. and Holding PMP d.d.

As we have already publicly announced, yesterday, 2 December 2015, a police investigation took place at the company's headquarters. However, the aim of the investigation was solely to obtain documentation related to the suspected criminal acts of third parties not connected with SIJ d.d. SIJ d.d. is not a suspect in the proceedings and no proceedings are being carried out against the company. Furthermore, none of the employees of SIJ d.d. are among the suspects, no one was detained, while none of the homes of the employees of SIJ d.d. were searched.

The police investigation lasted about 4 hours and finished at 3 p.m. The investigation was fair and management ensured the constructive participation of the company's employees. The investigators were given access to the requested materials and documents related to their investigation. The Board of Directors looks forward to the swift conclusion of the investigation as it aims to avoid unfounded doubts concerning the legality of the operations of SIJ d.d. and its subsidiaries.

At the same time, the company wishes to announce that the pending takeover procedures are continuing as planned. The preparation of the spin-off plan announced in connection with the demerger of investments in Perutnina Ptuj d.d. and Holding PMP d.d. into a separate new company (in accordance with Article 623 of the Companies Act) also continues as planned. On the proposal of the Board of Directors and the Supervisory Board, on 1 December 2015 the Ljubljana District Court issued the resolution that the audit of the spin-off shall be carried out by Deloitte Revizija d.o.o., Ljubljana. The spin-off will subsequently be approved by the Supervisory Board and the General Meeting, which is expected to be convened later this month. 

In connection with the capital increase of Perutnina Ptuj d.d. (hereinafter: PP) and the takeover process, some inaccurate information has been circulating in the public domain over the past few days which we would like to refute, or for which we would like to provide a more detailed explanation.

First, the Securities Market Agency (SMA) did not initiate any formal proceedings against SIJ d.d., as was incorrectly claimed in the media. At the regulator's request, in September the company provided a detailed explanation in connection with the Call option agreement relating to shares in Holding PMP d.d. (hereinafter: Holding PMP); no further requests or formal procedures were initiated (which the Agency would have had to initiate had it encountered any irregularities). On the contrary: the SMA gave SIJ d.d. its approval to issue a takeover bid for all available shares in Holding PMP and approved the takeover prospectus, which the company aims to issue later this week.

Second, misquoted prices of PP and Holding PMP shares have appeared in the media, along with allegations that individual shareholders of Holding PMP have received higher payments for SIJ d.d.'s entry into the shareholder structure of Perutnina Ptuj, compared to the other shareholders (EUR 8). We would like to explain that the assets of Holding PMP are not only comprised of PP shares but also of other assets, which can be seen from publicly available records (AJPES). We would therefore like to stress that the price offered for the capital increase of PP, as well as the price offered for the takeover of Holding PMP, are both fair and reflect the realistic value of both companies. In the capital increase process, SIJ d.d. was selected as the most favorable bidder. SIJ d.d. not only offered EUR 8 per PP share, but also a EUR 40 million capital increase, which will allow PP to significantly deleverage and thus more easily develop and operate in the future. The process of selecting an entity to provide a capital increase to PP was not "closed" as was claimed yesterday in the media, but was conducted in a transparent manner by BNP Paribas, which assembled seven bids, two of which were binding.

Third, the option agreement between SIJ d.d. and individual shareholders of Holding PMP was agreed under the terms of a suspensive condition and entered into force after speculation about it first appeared in the public domain. From the point of view of SIJ d.d., this agreement cannot be open to question. SIJ d.d. reported and informed the conclusion of the call option agreement and the acquisition of a significant shareholding promptly and correctly, in accordance with all relevant legislation; the latter is also supported by the already-mentioned fact that SIJ d.d. successfully provided a capital increase to PP and obtained approval of its takeover bid for the outstanding shares of Holding PMP.

We wish to point out that SIJ d.d. operates transparently, legally and in a socially responsible manner. The Group regularly fulfils its obligations towards its business partners, employees, government (payment of taxes, contributions and other dues) and its 

First, the Securities Market Agency (SMA) did not initiate any formal proceedings against SIJ d.d., as was incorrectly claimed in the media. At the regulator's request, in September the company provided a detailed explanation in connection with the Call option agreement relating to shares in Holding PMP d.d. (hereinafter: Holding PMP); no further requests or formal procedures were initiated (which the Agency would have had to initiate had it encountered any irregularities). On the contrary: the SMA gave SIJ d.d. its approval to issue a takeover bid for all available shares in Holding PMP and approved the takeover prospectus, which the company aims to issue later this week.

Second, misquoted prices of PP and Holding PMP shares have appeared in the media, along with allegations that individual shareholders of Holding PMP have received higher payments for SIJ d.d.'s entry into the shareholder structure of Perutnina Ptuj, compared to the other shareholders (EUR 8). We would like to explain that the assets of Holding PMP are not only comprised of PP shares but also of other assets, which can be seen from publicly available records (AJPES). We would therefore like to stress that the price offered for the capital increase of PP, as well as the price offered for the takeover of Holding PMP, are both fair and reflect the realistic value of both companies. In the capital increase process, SIJ d.d. was selected as the most favorable bidder. SIJ d.d. not only offered EUR 8 per PP share, but also a EUR 40 million capital increase, which will allow PP to significantly deleverage and thus more easily develop and operate in the future. The process of selecting an entity to provide a capital increase to PP was not "closed" as was claimed yesterday in the media, but was conducted in a transparent manner by BNP Paribas, which assembled seven bids, two of which were binding.

Third, the option agreement between SIJ d.d. and individual shareholders of Holding PMP was agreed under the terms of a suspensive condition and entered into force after speculation about it first appeared in the public domain. From the point of view of SIJ d.d., this agreement cannot be open to question. SIJ d.d. reported and informed the conclusion of the call option agreement and the acquisition of a significant shareholding promptly and correctly, in accordance with all relevant legislation; the latter is also supported by the already-mentioned fact that SIJ d.d. successfully provided a capital increase to PP and obtained approval of its takeover bid for the outstanding shares of Holding PMP.

We wish to point out that SIJ d.d. operates transparently, legally and in a socially responsible manner. The Group regularly fulfils its obligations towards its business partners, employees, government (payment of taxes, contributions and other dues) and its shareholders. Our operations are subject to a very strict corporate governance policy, taking into account the best international practices. SIJ does not act as a classic "holding", but as a contractual group and thus directly and actively manages the key business functions of all its subsidiaries. The results of SIJ are a clear reflection of the success of the corporate governance policy. In the last two years, SIJ has been ranked among the most profitable steel groups in the world. SIJ d.d. also intends to transfer these good corporate governance practices to PP after completion of the takeover procedure.

We are aware of the fact that these circumstances reflect negatively on the reputation, not only of PP, but also of SIJ d.d. We thus wish to point out that the company cannot assume responsibility for the acts of third persons, who are the subject of the ongoing criminal investigation. In consideration of the above, as well as international practice concerning management's responsibility for the reputation and credibility of the companies they manage, it is hard to imagine that PP and its management can function normally in these circumstances. We thus expect the Board of Directors of PP to assume its responsibility and offer its resignation.

For more information please contact:

Dr. Denis Mancevič, Director of Corporate Communications

Email: denis.mancevic@sij.si