AFK Sistema : Investment in forestry and pulp and paper

Investment in forestry and pulp and paper

Moscow, Russia - April 4, 2014 - Sistema JSFC ("Sistema") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS, today announces that its subsidiary LLC LesInvest has signed legally binding agreements with the Bank of Moscow to acquire 100% of OJSC Segezha Pulp and Paper Mill and 100% of LLC Derevoobrabotka-Proekt (the "Group") together with all debt obligations to the Bank of Moscow on debt free cash free basis. The closing of this transaction is contingent upon the approvals of relevant anti-monopoly authorities. The transaction is expected to be completed by the end of the third quarter of 2014. 

The Group is the largest manufacturer of sack paper and paper sacks in Russia and the second largest producer of paper sacks in Europe. It is also one of the largest manufacturers and exporters of timber products and ply wood in Russia. In 2013, the Group's estimated revenue and EBITDA amounted to approximately RUB 20.9 billion and RUB 2.4 billion respectively, according to the management accounts. Export accounted for 54% of the Group's total revenue. 

Mikhail Shamolin, President and CEO of Sistema, commented: 

"The companies we have acquired are leaders in their industries and offer exciting prospects. They generate stable cash flow and have substantial turnaround potential, which Sistema is well placed to realise. We intend to maximise shareholder value by restructuring the businesses, introducing a number of efficiency measures, modernising production and expanding into new export markets." 

Further details on this transaction can be found in the presentation available on www.sistema.com 

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

Sistema is the largest publicly-traded diversified holding company 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$ 35.9 billion for the full year of 2013, and total assets of US$ 43.2 billion as at December 31, 2013. 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 Moscow Exchange. Sistema was ranked number 308 in the 2013 edition of the Fortune Global 500 list. Website: www.sistema.com

The Company is not an investment company, and is not and will not be registered as such, under the U.S. Investment Company Act of 1940.

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. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. 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.