LNTA.L Regulatory News (LNTA)

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LENTA LAUNCHES A PRIMARY CAPITAL INCREASE OF APPROXIMATELY $150 MILLION TO

FURTHER ACCELERATE EXPANSION; EBRD TO SELL $100-150 MILLION WORTH OF GDRS

St. Petersburg, Russia; 20 October 2015 - Lenta Ltd (LSE: LNTA / LNTR, MOEX: LNTA); "Lenta" or the "Company"), one of the largest retail chains in Russia, is pleased to announce the launch of a capital increase via an accelerated book build placement (the "Placing") of global depositary receipts ("GDRs") representing newly issued shares in the Company raising approximately $150 million to further support the acceleration of its new store expansion programme.

Additionally, the European Bank for Reconstruction and Development ("EBRD") has informed the Company that it is planning to monetize a portion of their shareholding by selling $100 million worth of GDRs as part of this capital market transaction, with an option to increase this sale to $150m.

Rationale for the Placing

· Lenta's first half of 2015 financial results, and its third quarter trading results, have confirmed that even in the current challenging economic environment Lenta's low price / low cost business model and distinctive price-led customer proposition continues to deliver rapid sales growth and robust returns on investment in both new and like-for-like stores

· Following Lenta's capital increase in March 2015, the Placing is commensurate with Lenta's overall strategy for long-term growth combined with strong investment returns and a well-funded balance sheet, enabling Lenta to further accelerate its organic growth and capitalize on the opportunities afforded by current market conditions to further step up its store expansion plans

· Lenta believes that the current economic conditions are conducive to further accelerating its organic growth, in part as real estate prices have become more attractive and some competitors have curtailed their growth plans

· Lenta has proven its ability to deliver rapid expansion and continuously exceed its store opening targets, having opened 45 hypermarkets since the beginning of 2014. The Company has already upgraded its hypermarket opening guidance for 2015 to 30 stores, its second positive guidance update for 2015 following the successful placing of primary capital in March

· The Company's dedicated development teams have continued to make substantial progress building up Lenta's land bank and new store pipeline for 2016 and beyond. Lenta currently owns 30 land plots and is party to 20 rental and co-investment arrangements to support the new store pipeline

· While Lenta has substantial undrawn debt facilities available and rating agencies have recently re-affirmed the Company's strong financial position (upgrades to 'BB-' with a "Stable" outlook from S&P's and to "Ba3" with a "Stable" outlook from Moody's; "BB-" by Fitch Ratings), the enhanced financial flexibility afforded by the Placing enables Lenta to further accelerate the pace of its organic growth and raise its store opening targets for 2016 and beyond

· The projected net proceeds from the Placing are equivalent to 0.4x adjusted H1 LTM EBITDA at current exchange rates and will enable Lenta to continue to maintain its leverage level comfortably below 3.0x with significantly higher levels of capital expenditure

· While Lenta' s primary growth strategy is focused on organic growth, the financial flexibility created by the Placing also enhances Lenta capacity to pursue opportunities to acquire existing stores from competitors should attractive opportunities arise

The accelerated bookbuilding process will be launched immediately following this announcement.

Credit Suisse Securities (Europe) Limited, J.P. Morgan Securities plc and VTB Capital plc are acting as Joint Global Coordinators and Joint Bookrunners in connection with the Placing. The timing of the closing of the process, pricing and allocations are at the discretion of the Company and the Joint Global Coordinators.

Lock-ups

There will be a lock-up period of 90 days for the Company, Luna Inc. (the investment vehicle of TPG) and the EBRD in relation to their respective shareholdings in the Company following the Placing.

Updated guidance

Conditional upon successful completion of the Placing and the additional financial flexibility afforded by the capital increase, Lenta will be positioned to increase certain of its previously announced growth targets and therefore to update its 2016 guidance as follows:

· Lenta to open at least 40 new hypermarkets in 2016 versus previous guidance of at least 32, significantly more hypermarkets than it has ever opened in a single calendar year

· Sufficient additional specific opportunities for own-store construction in 2016 have been identified, accordingly this increase in 2016 guidance is based solely on expected organic growth

· Looking ahead, Lenta expects to pursue a similar or higher rate of organic growth of new hypermarket openings in 2017 and beyond.

Lenta has previously updated its guidance for 2015 which is not contingent on the Placing. For 2015, Lenta has increased its store opening guidance for 2015 to at least 30 hypermarkets and 10-15 supermarkets (unchanged from previous supermarkets guidance). The previously communicated sales growth and capital expenditure guidance for 2015 remain unchanged.

Lenta expects that as a result of the further acceleration of growth enabled by the capital increase, the Company will significantly exceed its previously communicated goal of doubling selling space over the three years to December 2016.

Lenta's Chief Executive Officer, Jan Dunning said:

"Lenta has continued to make strong progress over the last year and is well on track to open at least 30 hypermarkets in 2015, leveraging our low price / low cost business model and our strong track record to capitalize on growth opportunities in the Russian market today. Returns on investment in our new stores have remained consistently strong and we see ample opportunities to accelerate our growth even further in the current climate.

The proceeds of the capital increase will provide us with further financial flexibility to accelerate our store opening programme to at least 40 hypermarkets in 2016 and similar or higher numbers of hyper market openings in 2017 and beyond.

With this further acceleration of our new store openings, we expect to significantly exceed our target of doubling net selling space over the three years to December 2016."

***For further information, please visit www.lentainvestor.com, or contact:

About Lenta

Lenta is one of the largest retail chains in Russia and the country's second largest hypermarket chain (in terms of 2014 sales). The Company was founded in 1993 in St. Petersburg. Lenta operates 122 hypermarkets in 63[1] cities across Russia and 27 supermarkets in the Moscow region, with a total of approximately 787,804 sq.m. of selling space. The average Lenta hypermarket store has selling space of approximately 6,200 sq.m. The Company operates six hypermarket distribution centres.

The Company's price-led hypermarket formats are differentiated in terms of their promotion and pricing strategies as well as their local product assortment. The Company employed approximately 30,655[2] people as of 30 June 2015.

The Company's management team combines a mix of local knowledge and international expertise coupled with extensive operational experience in Russia. Lenta's largest shareholders include TPG Capital and the European Bank for Reconstruction and Development, both of which are committed to maintaining high standards of corporate governance. Lenta is listed on the London Stock Exchange and on the Moscow Exchange and trades under the ticker: 'LNTA'.

A brief video summary on Lenta's business and its Big Data initiative can be seen here.

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Credit Suisse, J.P. Morgan and VTB Capital are acting exclusively for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of this press release) as their client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to their client.

Information contained herein is not an offer, or an invitation to make offers, to sell, purchase, exchange or otherwise transfer securities in the Russian Federation to or for the benefit of any Russian person or entity, except to the extent permitted under Russian securities laws. This document is not an advertisement in connection with the "placement" or "public circulation" (as both terms are defined under Russian securities law) of any securities and securities are not intended for "placement" or "public circulation" in the Russian Federation, in each case unless otherwise permitted under Russian securities laws. Neither securities nor a prospectus relating to such securities has been or will be registered with the Central Bank of Russia.

The Placing has not been approved or licensed by the Central Bank of the United Arab Emirates ("UAE"), the Securities and Commodities Authority of the UAE and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai Financial Services Authority ("DFSA"), a regulatory authority of the Dubai International Financial Centre ("DIFC"). The Placing does not constitute a public offer of securities in the UAE, DIFC and/or any other free zone in accordance with the Commercial Companies Law, Federal Law No 2 of 2015, DFSA Markets Law DIFC Law No. 1 of 2012, Markets Rules and NASDAQ Dubai Rules, accordingly, or otherwise. The global depositary receipts may not be offered to the public in the UAE and/or any of the free zones.

This document does not, and is not intended to, constitute an invitation for an offer of any investment or financial product in the State of Qatar (including the Qatar Financial Centre) and accordingly should not be construed as such. By receiving this document the person or entity to whom it has been provided understands, acknowledges and agrees that (i) neither this document nor any product referred to in it has been registered, considered, approved or authorised by the Qatar Central Bank, the Qatar Financial Markets Authority, the Qatar Financial Centre Regulatory Authority or any other authority or agency in the State of Qatar; (ii) neither Lenta nor EBRD has been authorised or licensed by any such authority to market or sell any products or interests referred to in this document within the State of Qatar; and (iii) all applications in relation to this document should be received, any agreement concluded and any allotments made, from outside Qatar. No marketing of any financial products or services has or will be made from within the State of Qatar. The interests have not been offered, sold or delivered and will not be offered, sold or delivered at any time directly or indirectly in the State of Qatar. This document shall not form the basis of, or be relied on in connection with, any contract in Qatar. Neither Lenta or EBRD nor persons representing them are, by distributing this document, advising individuals resident in the State of Qatar as to the appropriateness of investing in these financial products. Nothing contained in this document is intended to constitute investment, legal, tax, accounting or other professional advice in, or in respect of, the State of Qatar.

This document may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements.

Any forward-looking statements made by or on behalf of Lenta speak only as at the date of this announcement. Subject to its legal and regulatory obligations, neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward looking statements contained in this document to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

In no circumstances shall the provision of this document imply that no negative change may occur in the business of the Company after the date of provision of this document, or any date of amendment and/or addition thereto.