Essar Energy : Posting of Second Circular

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

13 May 2014

Offers for Essar Energy plc: Publication of a further circular to shareholders and convertible bondholders and change of recommendations by the Independent Committee of the Board of Essar Energy plc

On 14 March 2014, Energy Bidco Holdings Limited ("EGFL Bidco"), a wholly-owned subsidiary of Essar Global Fund Limited ("EGFL"), announced its firm intention to make offers for Essar Energy plc ("Essar Energy" or the "Company") at 70 pence per Essar Energy Share and at 80 per cent. of the principal amount of each Essar Energy Convertible Bond, together with accrued and unpaid interest (together, the "Offers").

On 11 April 2014, EGFL Bidco announced the publication of an offer document containing the full terms and conditions of the Offers.

On 25 April 2014, the Independent Committee announced the publication of a circular to Essar Energy Shareholders and Essar Energy Convertible Bondholders, setting out its views on the Offers.

On 9 May 2014, EGFL Bidco announced that it had waived all outstanding conditions to the Shares Offer, and that both Offers had become wholly unconditional. EGFL Bidco also announced that it had extended the Offers until the next closing date, which will be 1.00 pm (London time) on 23 May 2014.

Publication of Second Independent Committee Circular

The Independent Committee is today announcing that a further circular (the "Second Independent Committee Circular"), setting out the views of the Independent Committee on the Offers in light of these developments, is being sent to Essar Energy Shareholders and, for information only, to persons with information rights and participants in the Essar Energy Employee Stock Option Plan and Essar Savings Related Share Option Scheme.

In addition, Essar Energy Convertible Bondholders will be notified via Euroclear Bank or Clearstream, Luxembourg with how they can obtain a copy of the Second Independent Committee Circular, should they wish to and are so entitled.

Revised Recommendation in Respect of the Shares Offer

Essar Energy Shareholders should note that the Second Independent Committee Circular contains a revised recommendation from the Independent Committee in respect of the Shares Offer.

The Independent Committee, which has been so advised by Greenhill and J.P. Morgan Cazenove, continues to believe that the Shares Offer materially undervalues Essar Energy and its future prospects, and is therefore not capable of recommendation by the Independent Committee based on its value. In providing their advice to the Independent Committee, J.P. Morgan Cazenove and Greenhill have taken into account the commercial assessments of the Independent Committee. Greenhill is providing independent financial advice to the Independent Committee for the purposes of Rule 3 of the Code.

However, despite the Independent Committee's view on valuation, because the Shares Offer is now wholly unconditional, Essar Energy Shareholders who do not accept the Shares Offer will be faced with the risks and uncertainties associated with delisting, re-registration and refinancing outlined more fully in the Second Independent Committee Circular. Reluctantly, the Independent Committee therefore believes that Essar Energy Shareholders should now seriously consider accepting the Shares Offer.

EGFL Bidco's announcement of 9 May 2014 stated that the Shares Offer will remain open until the next closing date, which will be 1.00 pm (London time) on 23 May 2014. Because the Shares Offer is now wholly unconditional, EGFL Bidco is under no obligation to extend the Shares Offer beyond that time. Essar Energy Shareholders who wish to accept the Shares Offer should therefore ensure that their completed Form of Acceptance (or, in the case of Essar Energy Shares held in uncertificated form, their electronic acceptance) is received by this time in accordance with the procedure set out in the Offer Document.

Essar Energy Shareholders who anticipate greater value in the Essar Energy Shares in the future whilst recognising and being willing to accept the risks associated with remaining as an investor in an unlisted company controlled by EGFL may wish to remain as shareholders in Essar Energy.

Revised Recommendation in Respect of the Bonds Offer

Essar Energy Convertible Bondholders should note that the Second Independent Committee Circular contains a revised recommendation from the Independent Committee in respect of the Bonds Offer.

In its announcement of 9 May 2014, EGFL Bidco noted that the redemption right under Condition 7(f) of the Essar Energy Convertible Bonds will become exercisable. This means that Essar Energy Convertible Bondholders will, by following the redemption procedure set out in Condition 7(f), be able to exercise their right to redeem their Essar Energy Convertible Bonds at their full principal amount plus accrued interest pursuant to Condition 7(f).

Essar Energy Convertible Bondholders who have not accepted the Bonds Offer will therefore have the right to redeem their bonds at a premium to the price offered under the Bonds Offer, whereas Essar Energy Convertible Bondholders who accept or have accepted the Bonds Offer will be unable to redeem their bonds pursuant to Condition 7(f).

The Independent Committee, which has been so advised by J.P. Morgan Cazenove and Greenhill, therefore recommends that all remaining Essar Energy Convertible Bondholders reject the Bonds Offer.

In providing their advice to the Independent Committee, J.P. Morgan Cazenove and Greenhill have taken into account the commercial assessments of the Independent Committee. Greenhill is providing independent financial advice to the Independent Committee for the purposes of Rule 3 of the Code.

Documents published on website

Copies of the Second Independent Committee Circular will be available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on the Company's website at http://www.essarenergy.com/ by no later than 12 noon (London time) on 14 May 2014.

Essar Energy is also announcing that, in accordance with Rule 26.2 of the Takeover Code, the Company's website has been updated to include the written consents of J.P. Morgan Cazenove and Greenhill to the inclusion in the Second Independent Committee Circular of their respective names in the form and context in which they appear.

Terms and expressions used in this announcement shall, unless the context otherwise requires, have the same meanings as given to them in the Second Independent Committee Circular.

Ends

For further information on Essar Energy, please visit www.essarenergy.com.

If any Essar Energy Shareholder requires assistance or has any questions about the Shares Offer, such Essar Energy Shareholder should contact the shareholder helpline on 020 3284 1534 (from overseas +44 20 3284 1534). The shareholder helpline will be available between 9.00 a.m. and 5.00 p.m. (London times) Monday to Friday excluding bank holidays. Calls to the shareholder helpline (a London-based number) will be charged at standard operator rates or included in any inclusive call time, if applicable. Calls from outside the UK will be charged at applicable international rates. Please note that the shareholder helpline cannot provide any financial, legal or tax advice or advice on the merits of the Shares Offer, or provide assistance in relation to the Bonds Offer.

Alternatively, please contact:

Essar Energy

Deepak Maheshwari                                                   +91 22 6660 1207 or +91 22 6660 1224

Mark Lidiard                                                                +44 20 7408 8714 or +44 7554 440421

Jonathan Miller                                                           +44 20 7408 8728 or +44 7810 848087

Brunswick

Andrew Mitchell, Mike Smith or Azhar Khan              +44 20 7404 5959

J.P. Morgan Cazenove

Barry Weir or Jamie Riddell                                        +44 20 7742 4000

Greenhill & Co.

Anthony Parsons or Edward Rowe                              +44 20 7198 7400

J.P. Morgan Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority. J.P. Morgan Securities plc is authorised in the United Kingdom by the PRA and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. J.P. Morgan Limited and J.P. Morgan Securities plc, conduct their UK investment banking business as J.P. Morgan Cazenove. J.P. Morgan Limited and J.P. Morgan Securities plc are acting respectively as financial advisor and corporate broker exclusively for Essar Energy and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Essar Energy for providing the protections afforded to clients of J.P. Morgan Limited or J.P. Morgan Securities plc, nor for providing advice in relation to any matter referred to herein.

Greenhill & Co. International LLP ("Greenhill") is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Greenhill is acting as financial advisor exclusively for Essar Energy and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Essar Energy for providing the protections afforded to clients of Greenhill, nor for providing advice in relation to any matter referred to herein.

Availability of hard copies

A copy of this announcement will be made available subject to certain restrictions relating to persons resident in restricted jurisdictions on the Company's website at http://www.essarenergy.com/ by no later than 12 noon (London time) on 14 May 2014.

You may request a hard copy of this announcement by contacting Deepak Maheshwari (on +91 22 6660 1207 or +91 22 6660 1224) or Mark Lidiard (on +44 20 7408 8714 or +44 7554 440421). You may also request that all future documents, announcements and information to be sent to you in relation to the offer should be in hard copy form.