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Financial Corporation "Sistema"

November 27, 2012

Sistema announces acquisition of SG-trans OJSC

Moscow, Russia - November 27, 2012- Sistema JSFC ("Sistema", the "Group" or the "Company") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS, today announces that it has signed an agreement to acquire SG-trans OJSC ("SG-trans"), the Russian market's largest independent operator of specialised railcars for transportation of liquefied petroleum gas (LPG). The signing of this agreement follows the Russian Government's approval of the tender to select a purchaser for SG-trans. Sistema will pay a total cash consideration of RUB 22.77 billion for 100% of the equity of SG-trans. The transaction is expected to be completed by the end of November 2012.

This acquisition is in line with Sistema's strategy to develop a strong position in the transportation market. Sistema currently has exposure to a number of transportation companies which own and operate rolling stock comprising more than 19,500 railcars. In August 2012, Sistema's subsidiary ANK Bashneft JSC acquired 50% of the authorised capital of Financial Alliance LLC, a professional railcar operator while in September 2012, Sistema-Venture Capital JSC, a management company and a subsidiary of Sistema, assumed operational management of TLC LLC (Transportno-Logisticheskaya Companiya), one of Russia's leading rail operators.  

Sistema sees a significant value creation opportunity in SG-trans through potential restructuring and optimisation efforts, adjustment to market rates and the exploration of possible strategic options for SG-trans' gas storage and retail segment. Significant synergies will also be realised by combining Sistema's rail investments under one management team and Sistema and Bashneft are considering options as to how this can be most efficiently achieved. Any further announcements on the development of the Group's rail strategy will be made when appropriate.

Mikhail Shamolin, President and CEO of Sistema, commented: "One of our strategic objectives is to create a leading industry player in the transportation sector. We believe Sistema is well positioned to benefit from this acquisition due to SG-trans' leading position in the Russian LPG transportation market and our now combined fleet of 34,500 railcars. The Russian railroad transportation industry is undergoing significant reform which will create a new competitive framework for freight rail transportation. This deal offers high potential for growth and participation in strong market fundamentals, as reflected by the industry's track record for consistently delivering average annual growth in turnover of 6-8% over the past few years. This acquisition is an important step towards increasing our foot print through further strategic opportunities."



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