Archangel Diamond Corporation Continues Its Discussions With Russian Federal Anti-Monopoly Service

Archangel Diamond Corporation Continues Its Discussions With Russian Federal Anti-Monopoly Service

Archangel Diamond Corporation announced on October 29, 2008 that, in connection with its proposed acquisition of a 49.99% equity interest in OAO Arkhangelskoe Geologodobychnoe Predpriyatie (“AGD”) from OAO LUKOIL described in the Corporation’s news release dated April 16, 2008, Archangel had received a conditional consent for such acquisition from the Russian Government Commission for control over foreign investment pursuant to the Russian law on foreign investment in strategic assets. The Conditional Consent will not become effective unless Archangel enters into an ancillary agreement with the Russian Federal Anti-Monopoly Service (“FAS”). The ancillary agreement contains an obligation on the Archangel subsidiary which is to acquire the AGD shares which requires that diamonds extracted from the Grib pipe are processed in Russia in volumes to be agreed with the Russian Government. Discussions have been taking place between Archangel and FAS relating to the terms of such ancillary agreement and the Conditional Consent and are still continuing.

There can be no assurance that Archangel and FAS will be able to reach agreement on a final version of the ancillary agreement and there can be no assurance that one party would not unilaterally decide at any time to treat such discussions as at an end.

Archangel continues to seek FAS approval of the Transaction pursuant to the Russian Competition Law.

The condition precedent relating to the receipt by Archangel of all approvals and consents which are required inter alia under the FISS Law for the Transaction and the provisions of the various transaction agreements entered into between the parties in April 2008 is still outstanding and has not been satisfied. The condition precedent relating to the receipt by Archangel of the consent of FAS to the Transaction under the Russian Competition Law also remains outstanding and has not been satisfied.

Given the above, investors in common shares of Archangel are advised to exercise caution.

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