The funds from the bond placement are planned to be utilized to refinance the debt under the previous bond issues and to finance the long term investment programs of the Company’s subsidiaries.

The offering price of Series 02 bonds with a fixed coupon is fixed to be 100% of the par value. The circulation period shall be seven years. The issue documents provide for a flexible offer of the bond redemption at par value. The bond coupons to be paid bi-annually. The first coupon rate to be determined on a competitive basis on the first day of the bond placement and to be fixed for the entire period until either the bond redemption or execution of the first option. Any subsequent coupon rates to be determined and noted to investors in compliance with the procedure and dates as established in the issue documents.

The offering price of Series 03 bonds with a variable coupon is fixed to be 100% of the par value. The circulation period shall be five years. The bond coupons to be paid quarterly . The coupon rate is pegged to the MosPrime money-market rate. The credit spread to be determined on a competitive basis on the first date of the bond placement and to be fixed for the term until redemption. The issue documents provide for call and put options

Placement of the bonds shall be started not earlier than two weeks following the announcement of the information on the bond issue state registration and the procedure of obtaining access to the information included in the prospectus of the securities issue.

Mechel Trading House OOO acts as the guarantor under the bond loan.

JS Bank “Gazprombank” (CJSC) is appointed to be the manager of the issue.

The first Mechel OAO bond issue was accomplished in 2004.