Severstal Announces Agreement to Acquire WCI Steel

OAO Severstal, one of the world’s leading metals and mining companies, today announced that it has reached a binding agreement to purchase WCI Steel, a market leader in the production of value-added steel products based in Warren, Ohio.

According to the terms of the agreement, Severstal will acquire all outstanding equity of WCI for a total cash consideration of US$140 million, implying an enterprise value of US$327 million based on outstanding net debt as of April 30, 2008. The transaction is expected to be immediately accretive to earnings.

WCI’s Board of Directors has recommended the transaction to its shareholders. Shareholders representing a majority of WCI’s diluted shares outstanding have irrevocably consented to the transaction. The acquisition has the full support of the United Steel Workers (“USW”).

WCI’s total annual steel-making capacity of 1.22 million metric tons is focused on high-quality, custom flat-rolled steel for use in demanding applications. Together with Severstal’s current US operations in Dearborn, Michigan, Columbus, Mississippi, and the recently acquired Sparrows Point in Baltimore, Maryland, WCI will grow the Company’s North American leadership in the high-quality flat-rolled steel segment for the automotive, appliance, furniture, construction and energy markets.

The complementary nature of WCI’s manufacturing facility and product offering to Severstal’s existing US assets creates potential synergies that together with strong steel industry fundamentals leave WCI poised to add value across Severstal’s US platform.

Gregory Mason, CEO of Severstal International and COO of OAO Severstal, commented, “This acquisition is aligned with Severstal’s disciplined approach to growing our US business while creating shareholder value. It solidifies our position as the fourth largest steel producer in the US by raising Severstal’s total US capacity to just under 11 million metric tons per year. The addition of WCI to Severstal’s family will enhance our custom product capabilities and create opportunities to increase profitability in both the short- and long-term.”

The acquisition is subject to customary closing conditions, including the receipt of all necessary government and regulatory approvals, and is expected to close in late 2Q / early 3Q08.

Citi and Raymond James are acting as financial advisors to Severstal on this transaction. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Severstal.

About Severstal:

OAO Severstal is an international metals and mining company with a listing on the Russian Trading System and the London Stock Exchange. Incorporated in 1993, the company focuses on high value added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. In 2007, Severstal produced 17.5 million tons of steel. Revenues were $15.2 billion and EBITDA was $3.7 billion. EPS was $1.92.

For further information:

Severstal Dmitry Druzhinin, Investor Relations +7 495 540 7766 Taylor Rafferty Michael Henson +1 212 889 4350 (o)

+1 917 902 0767 (m)

Source: OAO Severstal