Meeting of ALROSA Supervisory Board

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On March 16, 2012, a meeting of ALROSA Supervisory Board was held in Moscow chaired by Ilya Yuzhanov.

The Supervisory Board considered preparing for the probable privatization of ALROSA’s shares belonging to the Russian Federation and the Republic of Sakha (Yakutia).

The Supervisory Board decided to address to the Government of the Russian Federation the proposal as follows: when preparing a decision on the privatization of the shares of ALROSA being the federal property, first, the Government should take into account position of ALROSA’s Supervisory Board that deems the compulsory retention of the controlling interest to be indispensable (the Russian Federation must retain 25%+1 share, and the Republic of Sakha (Yakutia) must retain 25%+1 share); and second, it should coordinate preparing privatization decisions with respect to ALROSA together with the Republic of Sakha (Yakutia), with due account for the factors as follows:

– OJSC ALROSA is a local economic mainstay, budget revenue generating and socially significant enterprise for the Republic of Sakha (Yakutia), and the complete withdrawal of the Russian Federation from ALROSA’s authorized capital entails the risk of failure to guarantee the Company’s continuing socially responsible policy;

– the complete withdrawal of the Russian Federation from ALROSA’s authorized capital will result in the necessity to redeem the USD 1 billion Eurobonds placed in 2010 and mature in 2020 from their holders, which will deteriorate ALROSA’s macroeconomic indicators, including the progress rate and completeness of the investment program;

– the Law of the Republic of Sakha (Yakutia) “On management and disposal of the shares issued by ALROSA being the state property of the Republic of Sakha (Yakutia)” stipulates for a restricted reduction of the participation interest of the Republic of Sakha (Yakutia) in the Company’s authorized capital – the governmental bodies of the Republic must ensure that the Republic retains not less than 25 percent plus one (1) voting share of OJSC ALROSA as the state property.

The Supervisory Board approved the following key parameters of the possible privatization of ALROSA’s shares being the federal property and the property of the Republic of Sakha (Yakutia), namely:

– privatization with the compulsory preservation of state control over ALROSA’s activities exercised together by the Russian Federation and the Republic of Sakha (Yakutia);

– coherent, in terms of events and event dates, privatization of seven (7) percent of ALROSA’s shares being the federal property, and privatization of seven (7) percent of ALROSA’s shares being the property of the Republic of Sakha (Yakutia);

– possible terms of sale of the shares subject to privatization shall be conditioned by readiness and relevance of ALROSA’s IFRS statements for 1H2012, or for 2012.

The Supervisory Board approved the initial (maximum) price of auditors’ services at the open tender “For the right to make a contract for carrying out the statutory audit of ALROSA Group consolidated financial statements in compliance with the International Financial Reporting Standards following the results of 2012” – to be RUB 36 million, the VAT not included.

The Supervisory Board members approved the “Regulation on the procedures of internal control over financial and economic activities of OJSC ALROSA” and the new version of the “Regulation on the Audit Committee at the Supervisory Board of OJSC ALROSA”.

This page was last updated on 16 March 2012 at 15.04