O'key Regs Regulatory News (OKEY)

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN WHOLE OR IN PART IN THE UNITED STATES, CANADA, AUSTRALIA, RUSSIA OR JAPAN

This announcement is an advertisement and not a prospectus. Investors should not subscribe for or purchase any shares or other securities referred to in this announcement except on the basis of information contained in the prospectus (the "Prospectus") which is published today by O'KEY Group S.A. in connection with an offering of global depository receipts representing ordinary shares in the Company and the admission of the global depository receipts to the Official List (the "Official List") of the U.K. Financial Services Authority (the "FSA") and to trading on the London Stock Exchange plc's regulated market. Such prospectus will be made available to the public in accordance with the Prospectus Directive 2003/71/EC, including free of charge at the registered office of O'KEY Group S.A at 23 rue Beaumont, L-1219 Luxembourg, Grand Duchy of Luxembourg. In the event of any discrepancy between this announcement and the Prospectus, the Prospectus will prevail. It is not the purpose of this announcement to provide, and you may not rely on this announcement as providing, a complete and comprehensive analysis of the Company's financial or commercial position or prospects.

 2 November 2010

O'KEY GROUP S.A. ANNOUNCES PRICING OF OFFERING AT

U.S.$11.00 PER GLOBAL DEPOSITARY RECEIPT

O'KEY Group S.A. ("O'KEY" or the "Company"), one of the largest retail chains in Russia, today announces the price (the "Offer Price") for the offering (the "Offering") of its ordinary shares ("Shares") in the form of global depositary receipts (each representing one Share) ("GDRs") which will be admitted to trading on the London Stock Exchange plc's regulated market. The Offer Price has been set at U.S.$11.00 per GDR.

Patrick Longuet, Chief Executive Officer of O'KEY Group, said:

"I am delighted to welcome our new investors. It has been a pleasure to receive such a warm welcome from the financial community in so many geographies, particularly at a time of uncertainty in the global financial markets. We are confident that we have the skills as well as the capacity to deliver on our strategy for further growth and the O'KEY team looks forward to working for the benefit of all our shareholders."

The Offering

The Offering comprises 38,141,031 Shares offered in the form of GDRs. Each GDR represents one Share. The Offering is being made to institutional investors internationally outside the United States under Reg S, and to Qualified Institutional Buyers inside the United States under Rule 144A of the 1933 Securities Act.

The Company has granted Goldman Sachs International and VTB Capital plc an Over-allotment Option to purchase up to 3,796,500 Shares in the form of GDRs at the Offer Price for a period of 30 days following pricing of the Offering. 15,186,000 Shares in the form of GDRs will be sold by the Company, not including those to be sold by the Company pursuant to the exercise of the Over-allotment Option, and 3,416,850, 8,261,019 and 11,277,162 Shares in the form of GDRs will be sold by Caraden Limited, Barleypark Limited and Brookvalley Limited (the "Selling Shareholders"), respectively in the Offering. Following the Offering the total number of shares issued will be 268,286,000 (prior to any exercise of the Over-allotment Option), implying a market capitalisation of U.S.$2,951 million.

The net proceeds which the Company is expected to receive from the Offering are expected to be U.S.$161 million (assuming no exercise of the Over-Allotment Option). The Company intends to use up to U.S.$149 million of the net proceeds to finance further expansion of its hypermarket and supermarket footprint in Russia over the next several years and the remainder for general corporate purposes. For purposes of optimizing its cash management and interest expense in the near-term, the Company will temporarily use a portion of the net proceeds to reduce its outstanding short-term indebtedness, which would be drawn upon as needed to fund its expansion strategy.

The Company expects that conditional trading through the International Order Book (the "IOB") will commence on a ''when and if issued'' basis on or about 2 November 2010, and unconditional trading through the IOB will commence on or about 5 November 2010. Admission of the GDRs to the Official List and to trading on the London Stock Exchange plc's regulated market is expected to occur on or about 8.00am UK time on 5 November 2010. The Closing Date is expected to be on or about 5 November 2010.

 Company Highlights

O'KEY is one of the leading food retailers in Russia. Its primary retail format is the modern Western European hypermarket. It also operates a supermarket format to complement its hypermarkets. In 2009, O'KEY:

Ø Was the third largest Russian (excluding multinationals) food retailer in terms of revenue;

Ø Achieved one of the highest revenues and EBITDA per square metre of selling space among Russian food retailers (excluding multinationals);

Ø Was rated as the strongest brand among St. Petersburg food retailers, according to an A.C. Nielsen study of May 2010.

The Company opened its first hypermarket in St. Petersburg in 2002 and has enjoyed continuous growth in this market, one of the most competitive markets in Russia in terms of modern food retail penetration.

Since 2005, O'KEY has also been developing its presence outside of St. Petersburg, focusing primarily on large cities in Russia with a population of over 500,000 (including the Moscow region). As at 30 June 2010, the Company operated 52 stores in 18 cities across the North-Western, Southern, Central and Siberian regions of the Russian Federation. This included 32 hypermarkets with an aggregate selling space of approximately 242,500 square metres and 20 supermarkets with an aggregate selling space of approximately 24,000 square metres.

In 2009, the Company reported revenues of RUR 67.9 billion and EBITDA1 of RUR 5.9 billion. In the first half of 2010, revenue grew by 21% year-on-year in Rouble terms reaching 38.3 billion, on the back of improving profitability levels overall.

O'KEY seeks to capitalise on the potential growth of the underpenetrated Russian food retail market by leveraging its key competitive strengths, which include:

Ø Competitive differentiation through a pleasant and convenient shopping environment and a compelling value proposition to customers;

Ø Strong customer loyalty and brand recognition in St. Petersburg serving as a blueprint for replicating O'KEY's successful customer-focused model elsewhere;

Ø Demonstrated capacity to expand both organically and through store acquisitions;

Ø Well-balanced real estate portfolio providing flexibility in roll-out of stores, property management and financing;

Ø High efficiency of operations; and

Ø Highly skilled and experienced professional management with international and local retailing knowledge and expertise.

For further information please contact:

No offer or invitation to purchase or subscribe for Shares or GDRs in the Company is being made at this time.

The contents of this announcement, for which O'KEY Group S.A. (the "Company") is solely responsible, have been approved by Goldman Sachs International, which is authorised and regulated in the United Kingdom by the Financial Services Authority, solely for the purposes of Section 21(2)(b) of the United Kingdom Financial Services and Markets Act 2000 ("FSMA"). 

Each of Goldman Sachs International and VTB Capital plc (together, the "Joint Global Coordinators") is acting exclusively for the Company and no one else in relation to the proposed offer of the Company's securities and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for giving advice in relation to the proposed offer or any other matters referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Goldman Sachs International or VTB Capital plc by the FSMA or the regulatory regime established thereunder, each of Goldman Sachs International and VTB Capital plc accepts no responsibility whatsoever for the contents of this announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Shares or GDRs or the proposed offer. Goldman Sachs International and VTB Capital plc accordingly disclaim all and any liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.

The offering and the distribution of this announcement and other information in connection with the offering may be restricted by law in certain jurisdictions 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 any such restriction may constitute a violation of the securities laws of any such jurisdiction.

The information contained herein is restricted and is not for publication, distribution or release, directly or indirectly, in or into the United States of America, Canada, Australia or Japan. This announcement does not constitute or form part of any offer to sell or solicitation of an offer to purchase or subscribe for securities in the United States. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to US persons unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available. No public offering of the securities will be made in the United States.

This announcement and any offer mentioned herein if made are only addressed to and directed at persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) ("Qualified Investors"). In addition, in the United Kingdom, this announcement is being distributed only to, and is directed only at, (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) persons falling within Article 49(2)(a) to (d) (''high net worth companies, unincorporated associations etc.'') of the Order and (iii) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This announcement must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this announcement relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the Untied Kingdom, Qualified Investors, and will be engaged in only with such persons.

This communication includes "forward-looking statements." All statements other than statements of historical facts included in this communication, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as of the date of this announcement. The Company expressly disclaims any obligations or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any changes in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Information in this communication cannot be relied on as a guide to future performance. The price and value of the securities can go down as well as up. Persons needing advice should contact a professional adviser.

The Underwriting Agreement grants to the Managers the Over-Allotment Option. In connection with the Offering, Goldman Sachs International as Stabilising Manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot GDRs or effect other stabilising transactions with a view to supporting the market price of the GDRs at a level higher than that which might otherwise prevail in the open market. However, the Stabilising Manager is not required to enter into such transactions and such stabilisation transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings in the GDRs on the London Stock Exchange plc's regulated market and ending no later than 30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilisation, if commenced, may be discontinued at any time, without prior notice. In no event will measures be taken to stabilise the market price of the GDRs above the Offer Price. Except as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilising transactions conducted in relation to the Offering.

This announcement is not a public offer or advertisement of GDRs in the Russian Federation, and is not an offer, or an invitation to make offers, to purchase, sell, exchange or transfer GDRs in the Russian Federation. The GDRs have not been and will not be registered in Russia and are not intended for "offering", "placement" or "circulation" in Russia (each as defined in Russian securities laws).

1 EBITDA is defined as adjusted earnings before interest, tax, depreciation and amortisation, gains or losses from revaluation and disposal of non-current assets and assets held for sale, losses from impairment and write-offs of assets, foreign exchange gains and losses

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