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Salzgitter AG

EANS-Adhoc: Salzgitter AG launches an offering of bonds exchangeable into shares of Aurubis AG

  ad-hoc disclosure pursuant to section 15 of the WpHG transmitted by euro
  adhoc with the aim of a Europe-wide distribution. The issuer is solely
  responsible for the content of this announcement.
28.10.2010
Salzgitter, October 28, 2010
Not for publication or distribution in the United States, Australia, 
Canada, Japan or South Africa
Ad-hoc-release according to § 15 WpHG
Salzgitter AG launches an offering of bonds exchangeable into shares 
of Aurubis AG
The Management Board of Salzgitter AG, with the approval of the 
Supervisory Board, resolved today to issue senior unsecured bonds 
exchangeable into existing ordinary bearer shares of Aurubis AG (the 
"Bonds"). The Bonds will be issued by Salzgitter Finance B.V. (the 
"Issuer"), a wholly-owned Dutch subsidiary of Salzgitter AG, and are 
guaranteed by Salzgitter AG. The Bonds (each with a denomination of 
EUR50,000) will be offered in an accelerated bookbuilding to 
institutional investors outside of the U.S. only.
The base offering size will be approximately EUR 250 million (over 
approximately 6 million shares of Aurubis AG initially). The base 
offering size may be increased by up to EUR 25 million by Salzgitter 
AG. In addition, Salzgitter AG has granted the Joint Bookrunners a 
greenshoe option of up to EUR 25 million to cover over-allotments (if
any). The maximum number of underlying shares of Aurubis AG assuming 
exercise of increase and greenshoe options will initially be up to 7 
million, representing approximately 17% of the current share capital 
of Aurubis AG. The issue size can amount to up to approximately EUR 
300 million, depending on the development of the Aurubis AG share 
price during placement.
With this transaction Salzgitter AG diversifies its funding sources 
and intends to use the proceeds from the sale of the exchangeable 
bonds for general corporate purposes.
The Bonds will have a maturity of seven years and are callable by the
Issuer on or after 28 November 2013 if the Aurubis AG share price 
(over a certain period) exceeds 130% of the then applicable exchange 
price. Holders of the Bonds will be entitled to require an early 
redemption of their Bonds on the fifth anniversary of the issue date,
at the principal amount plus accrued interest. The Bonds will be 
issued around 8 November 2010 (the "Settlement Date") at 100% of the 
principal amount. The coupon will be between 1.75%- 2.50 % p.a. and 
will be determined during an accelerated bookbuilding taking place 
today. The exchange price will be set at an exchange premium of 25% 
above the VWAP (Volume Weighted Average Price) of the Aurubis AG 
share on XETRA from the time of launch of the placement until 
pricing, which is expected to occur today. Salzgitter AG intends to 
list the Bonds on the Open Market (Freiverkehr) segment of the 
Frankfurt Stock Exchange. BofA Merrill Lynch, Commerzbank and 
Deutsche Bank are acting as Joint Bookrunners and Lead Managers in 
relation to the transaction.
The commitment of Salzgitter AG to its stake of Aurubis AG is 
underpinned by certain structural features of the Bonds, such as the 
Issuer´s ability to cash settle the Bonds if Bondholders decide to 
exercise their exchange right. This reflects Salzgitter AG´s strong 
interest in further supporting Aurubis AG in its successful 
development which is also of advantage for Salzgitter AG. From the 
date of the announcement of the final terms of the Bonds, BofA 
Merrill Lynch, as stabilisation manager, may over-allot or effect 
transactions with a view to supporting the market price of the Bonds 
at a level higher than that which might otherwise prevail. Such 
stabilising, if commenced, must be brought to an end no later than 5 
November 2010. If commenced, such stabilising may lead to a market 
price of the Bonds which may be higher than the level that would 
exist if no such stabilising measures were taken and may indicate to 
the market a price stability which without such stabilising might not
prevail. However, there is no obligation to engage in such 
stabilisation activities and such stabilisation, if commenced (which 
may not occur before the final terms of the Bonds have been 
announced), may be discontinued at any time. Stabilisation/FSA.
IMPORTANT NOTE - NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, 
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (OR 
TO US PERSONS), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA, OR IN ANY 
OTHER JURISDICTION IN WHICH OFFERS OR SALES WOULD BE PROHIBITED BY 
APPLICABLE LAW
This ad- hoc announcement is for information purposes only and does 
not constitute or form part of, and should not be construed as an 
offer or an invitation to sell, or issue or the solicitation of any 
offer to buy or subscribe for, any securities. In connection with 
this transaction there has not been, nor will there be, any public 
offering of any securities. No prospectus will be prepared in 
connection with the offering of the Bonds. The Bonds may not be 
offered to the public in any jurisdiction in circumstances which 
would require the Issuer of the Bonds to prepare or register any 
prospectus or offering document relating to the Bonds in such 
jurisdiction. The distribution of this ad- hoc announcement and the 
offer and sale of the Bonds in certain jurisdictions may be 
restricted by law. Any persons reading this ad- hoc announcement 
should inform themselves of and observe any such restrictions.
This ad- hoc announcement does not constitute an offer to sell or a 
solicitation of an offer to purchase any securities in the United 
States. The securities referred to herein (including the Bonds and 
the shares of Aurubis AG) have not been and will not be registered 
under the U.S. Securities Act of 1933, as amended (the "Securities 
Act") or the laws of any state within the U.S., and may not be 
offered or sold in the United States or to or for the account or 
benefit of U.S. persons, except in a transaction not subject to, or 
pursuant to an applicable exemption from, the registration 
requirements of the Securities Act or any state securities laws. This
ad- hoc announcement and the information contained herein may not be 
distributed or sent into the United States, or in any other 
jurisdiction in which offers or sales of the securities described 
herein would be prohibited by applicable laws and should not be 
distributed to United States persons or publications with a general 
circulation in the United States. No offering of the Bonds is being 
made in the United States.
Subject to certain exceptions, the securities referred to herein 
(including the Bonds and the shares of Aurubis AG) may not be offered
or sold in Australia, Canada, Japan or South Africa to, or for the 
account or benefit of, any national, resident or citizen of 
Australia, Canada, Japan or South Africa.  The offer and sale of the 
securities referred to herein has not been and will not be registered
under the applicable securities laws of Australia, Canada or Japan.
In the United Kingdom, this ad- hoc announcement is only being 
distributed to and is only directed at (i) persons who have 
professional experience in matters relating to investments falling 
within Article 19(1) of the Financial Services and Markets Act 2000 
(Financial Promotion) Order 2005 (the "Order") and (ii) high net 
worth entities falling within Article 49(2) of the Order and (iii) 
persons to whom it would otherwise be lawful to distribute it (all 
such persons together being referred to as "relevant persons"). The 
Bonds are only available to, and any invitation, offer or agreement 
to subscribe, purchase or otherwise acquire such Bonds will be 
engaged in only with, relevant persons. Any person who is not a 
relevant person should not act or rely on this ad- hoc announcement 
or any of its contents.
The Joint Bookrunners are acting on behalf of the Issuer and 
Salzgitter and no one else in connection with the securities and will
not be responsible to any other person for providing the protections 
afforded to clients of the Joint Bookrunners, or for providing advice
in relation to the securities.
In connection with the offering of the Bonds, each of the Joint 
Bookrunners and any of their respective affiliates acting as an 
investor for their own account may take up Bonds and in that capacity
may retain, purchase or sell for its own account such securities and 
any securities of the Issuer, of Salzgitter AG or of Aurubis AG or 
any related investments and may offer or sell such securities or 
other investments otherwise than in connection with the offering of 
the Bonds. The Joint Bookrunners do not intend to disclose the extent
of any such investment or transactions otherwise than in accordance 
with any legal or regulatory obligation to do so.
Any offer if made may only be addressed to and directed, in member 
states of the European Economic Area which have implemented the 
Prospectus Directive (each, a "relevant member state"), at persons 
who are "qualified investors" within the meaning of Article 2(1)(e) 
of the Prospectus Directive (Directive 2003/71/EC) and pursuant to 
the relevant implementing rules and regulations adopted by each 
relevant member state ("Qualified Investors").
Each person who initially acquires any Bonds in connection with the 
issuance or to whom any offer of securities may be made will be 
deemed to have represented, acknowledged and agreed that it is a 
Qualified Investor as defined above. In the case of any securities 
being offered to any investor as a financial intermediary as that 
term is used in Article 3(2) of the Prospectus Directive, such 
investor will also be deemed to have represented and agreed that the 
securities acquired by it in the offering have not been acquired on 
behalf of persons in the EEA other than Qualified Investors or 
persons in the UK and other member states (where equivalent 
legislation exists) for whom the investor has authority to make 
decisions on a wholly discretionary basis, nor have the securities 
been acquired with a view to their offer or resale in the EEA where 
this would result in a requirement for publication by the Issuer, 
Salzgitter AG or the Joint Bookrunners of a prospectus pursuant to 
Article 3 of the Prospectus Directive, unless the prior consent of 
the aforementioned parties has been obtained to such offer or resale.
end of announcement                               euro adhoc

Further inquiry note:

Markus Heidler
+49 (0) 5341/21-6105
heidler.m@salzgitter-ag.de

Branche: Iron & Steel
ISIN: DE0006202005
WKN: 620200
Index: Midcap Market Index, MDAX, CDAX, Classic All Share, Prime All
Share
Börsen: Frankfurt / regulated dealing/prime standard
Berlin / free trade
Hamburg / free trade
Stuttgart / free trade
Düsseldorf / free trade
Hannover / free trade
München / free trade

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