LSRG.L Regulatory News (LSRG)

THIS PRESS RELEASE AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN, OR INTO, DIRECTLY OR INDIRECTLY, THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS), CANADA, JAPAN, AUSTRALIA or the russian federation OR TO ANY OTHER JURISDICTION WHERE SUCH AN ANNOUNCEMENT WOULD BE UNLAWFUL. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES, AUSTRALIA, CANADA, JAPANor the russian federation

This press release is not a prospectus but an advertisement. Investors should not subscribe for any securities referred to in this announcement except on the basis of information in the prospectus to be published by LSR Group in connection with the Offering of Shares and GDRs. Copies of any prospectus may be obtained at the offices of LSR Group.

For immediate release

LSR Group announces equity offering

Today, on 19 April 2010, LSR Group ("LSR" or the "Company"), (LSE: LSRG; MICEX, RTS: LSRG), announces a global offering of up to US$773 million in the form of ordinary shares and Global Depositary Receipts ("GDRs") representing ordinary shares ("Offering").

The shares and GDRs will be offered via Streetlink, a limited liability company organized under the laws of Cyprus and beneficially owned by Andrey Molchanov as well as by Andrey Molchanov personally (together, the "Selling Shareholders"). At the same time, Streetlink has committed to subscribe to subsequent new share issuance by LSR Group, reinvesting up to $515mm of proceeds through exercise of its pre-emptive rights in the open subscription process as described below ("Open Subscription").

The shares and GDRs will be offered within an indicative price range of US$10-11 per GDR and equivalent to US$50 - US$55 per ordinary share. Five GDRs represent interest in one ordinary share. The final offer prices will not be below the foregoing ranges, although they may be set above these ranges.

Following the Offering, the Company will offer for subscription up to 16,042,508 new shares through Open Subscription. Streetlink commited to exercise its pre-emptive rights to subscribe in the Open Subscription using all of the net proceeds it receives from the sale of shares and/or GDRs in the Offering.

The existing holders of ordinary shares as at 5 March 2010 ("Record Date") have statutory pre-emptive rights to subscribe for the new shares to be issued in the Open Subscription.The price per share for existing holders of ordinary shares as of Record Date may be up to 10% less than for other investors in the Open Subscription, but not less than the price established in the Offering (less offering costs borne by Streetlink). The maximum aggregate gross proceeds received by the Company for the new shares to be purchased by Streetlink in the Open Subscription will be approximately US$515 million. As at Record Date, Streetlink controlled 58.38% of LSR Group.

The Company's existing holders of GDRs will not have pre-emptive rights to participate in the Open Subscription and are invited to participate in the Offering. The Company and the Selling Shareholders will take into account, in the allocation of the GDRs, the ownership interests of the existing holders of GDRs.

The Company intends to use the proceeds it receives in the Open Subscription

- to repay approximately US$300 million of its outstanding indebtedness, subject to its use of such proceeds to fund favorable acquisition opportunities;

- to fund the expansion of its real estate development business through acquisition of land plots;

- to finance existing developments and general building materials capital expenditure, and for other general corporate purposes.

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The Company, the Selling Shareholders, the Senior Management have agreed, subject to customary exceptions, to enter into a lock-up agreement for a period of 90 days following completion of the Offering.

Goldman Sachs International and J.P. Morgan Securities Ltd. are acting as Joint Global Coordinators, and together with VTB Capital, as Joint Bookrunners in connection with the Offering.

Commenting on today's announcement, Igor Levit, CEO of LSR, said:

"LSR is a rapidly developing company, strongly positioned in an industry that is expected to make a strong contribution to Russia's economic recovery. Raising equity capital is an excellent way of both raising financing to enable us to execute our strategy and allowing investors to participate in our growth going forward."

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Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.

Neither these materials nor any copy of it may be taken or transmitted into the United States, Australia, Canada, Japan or the Russian Federation. These materials do not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The offer and the distribution of these materials and other information in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

These materials are not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933. The Company has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States.

This communication is not an invitation nor is it intended to be an inducement to engage in investment activity for the purpose of section 21 of the Financial Services and Markets Act 2000 (as amended) of the United Kingdom. To the extent that this communication does constitute an inducement to engage in any investment activity included within this press release, it is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2000/71/EC (this Directive together with any implementing measures in any member state, the "Prospectus Directive") only to those persons who are investment professionals for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person may act or rely on this document or any of its contents.

Information contained in this communication does not constitute an advertisement or an offer of any securities in Russia and must not be passed on to third parties or otherwise be made publicly available in Russia. Any global depositary receipts have not been and will not be admitted to public placement or public circulation in Russia and may not be offered to any person in the Russian Federation except as permitted by Russian law.