SSA.L Regulatory News (SSA)

4 Apr 2012 13:00

SISTEMA AND MEMBERS OF THE LOUIS-DREYFUS FAMILY ESTABLISH

A JOINT VENTURE IN THE FARMING BUSINESS IN RUSSIA

Moscow, Russia - April 4, 2012 - Sistema JSFC ("Sistema") (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, today announces that Sistema, along with RZ Agro Ltd., is establishing an agricultural joint venture to be named RZ Agro Holding Ltd. (the "Joint Venture"). RZ Agro Ltd. was created in 2009 and is affiliated with the Sierentz Group, both controlled by certain members of the Louis-Dreyfus family.

As previously disclosed, Sistema acquired two grains and oilseeds farms in the Rostov Region of Russia, with a total acreage of 46,000 hectares. These farms will be contributed to the Joint Venture along with the existing agricultural holdings of RZ Agro Ltd. which consist of the management company Russkaya Zemlya LLC and three grains and oilseeds farms in the Rostov Region with a total acreage of 41,500 hectares.

Upon completion of certain conditions in 2013, Sistema will own 50% in the Joint Venture, with possible adjustments to the valuation of the transaction based on achievement of performance measures.

Completion of the transaction is subject to the satisfaction of certain conditions, including execution of additional agreements and receipt of approval from the Federal Antimonopoly Service, and is expected to occur in the second quarter of 2012.

Mikhail Shamolin, the President and Chief Executive Officer of Sistema, commented: "The strategy of the Joint Venture is to expand its agricultural assets through organic growth and strategic acquisitions, and to create a leading agricultural company in Russia. The Joint Venture will analyse acquisition opportunities in the key production regions of Southern Russia and Central Chernozem with a view to creating efficient clusters with access to domestic and export markets. We are optimistic about the opportunities arising out of cooperation with our Partner, who is bringing its industrial farming and managerial expertise to the Joint Venture."

"We are firm believers in the success of RZ Agro Holding", said Gérard Louis-Dreyfus and Peter Mann, the representatives of the family shareholders of RZ Agro Ltd., "as the grains sector in Russia has tremendous potential due to its low production costs and geographical position in a world of ever-growing population and rising standards of living."

"Our ability to consolidate prime agricultural land into regional clusters, and achieve cost-effective production through a combination of a transparent corporate structure, lean and professional organisation, and selective investments into modern equipment and technologies will be significantly enhanced with the creation of this Joint Venture", said

Stéphane Mac Farlane, Chief Executive Officer of Russkaya Zemlya LLC.

***

For further information please contact:

Sistema is the largest diversified public financial corporation in Russia and the CIS, which invests in and is a major shareholder of companies serving over 100 million customers in the sectors of telecommunications, high technology, oil and energy, radars and aerospace, banking, retail, mass-media, tourism and healthcare services. Founded in 1993, the company reported revenues of US$ 9.0 billion for the third quarter of 2011, and total assets of US$ 42.7 billion as at September 30, 2011. Sistema's global depository receipts are listed under the symbol "SSA" on the London Stock Exchange. Sistema's ordinary shares are listed under the symbol "AFKS" on the MICEX-RTS Stock Exchange, and under the symbol "SIST" on the Moscow Stock Exchange (MSE). Sistema was ranked number 342 in the 2010 edition of the Fortune Global 500 list. Website: www.sistema.com

The Sierentz Group is a group of related legal entities controlled privately by certain members of the Louis-Dreyfus family, through which they conduct commodities-related activities including real asset investments and proprietary trading.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. 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. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do 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 our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities of JSFC Sistema and/or any of its subsidiaries and affiliated companies, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the shares or securities of JSFC Sistema and/or any of its subsidiaries and affiliated companies.

Copyright Business Wire 2012