Severstal will issue documentary interest based irredeemable bonds payable to bearer by public subscription. Subject to centralized storing each bond will be worth 1,000 rubles. The maturity date for bonds is set on the 1,456 day from the date of flotation at the Moscow Interbank Currency Stock Exchange. The bonds issue will be arranged by the Industrial and Construction Bank and Troika Dialogue Investment Company. Coupons will be payable to bearer every sixth months in 8 coupon periods. Interest rate for the 2,3 and 4th coupons will be that of the first coupon. Interest rates for 5,6,7,8 coupons will be set by the Board of Directors of Severstal.

“Funds obtained through these bonds will allocated for financing of the company’s investment programs and developing Severstal’s business,” aid Anatoly Kruchinin, general director.

Severstal’s investment plan for 2003 is valued at 7 billion rubles. It involves upgrading

and reconstruction of equipment along the entire technology chain, construction of the hot dip galvanizing line and a number of other items.

This investment program is aimed at improving product quality and expanding product offering, which is expected to find support in the markets. Severstal plans to increase output up to 8.7 million tonnes in 2003.

Anatoly Kruchinin noted that bonds will help company to receive borrowed financing.

“Entering capital markets is important to us. It will help us streamline the costs of borrowing and diversify its sources. Besides that the four year maturity term will help us restructure and stretch out our credit portfolio,” he said.

“Drawing financing through bonds is not going to affect our financial stability, because the share of borrowed capital doesn’t exceed 10%”, said Kruchinin. He confirmed that Severstal intends to obtain credit rating by leading international rating agencies soon.

13 Febrary 2003