RZ Agro Holding of RZ Agro

On April 4, 2012 JSC AFK Sistema announced creation of RZ Agro Holding Ltd company. - the joint venture (JV) with the RZ Agro Ltd. company founded in 2009 and affiliated with Sierentz Group. RZ Agro Ltd company. and Sierentz Group are under control of several members of the family of Louis-Dreyfus.

As it was announced earlier, JSC AFK Sistema purchased in the Rostov region two economy on cultivation of grain and oil-bearing crops with a total area of land bank about 46 thousand hectares. These farms will be entered to the joint venture as a contribution of JSC AFK Sistema. RZ Agro Ltd. will enclose in the joint venture the existing agro-industrial holding which includes management company Russkaya Zemlya LLC and three economy in the Rostov region on cultivation of grain and oil-bearing crops with a total area of land bank about 41.5 thousand hectares.

At accomplishment by 2013 of certain conditions, JSC AFK Sistema will own 50% of shares of authorized capital of the joint venture. Asset valuation within the transaction can be corrected depending on achievement of production indicators.

Completion of the transaction is caused by accomplishment of a number of conditions, including performance of the separate agreements connected with the transaction and receiving approval from Federal Antimonopoly Service which is expected in the second quarter 2012.

"The development strategy of joint venture assumes accumulation of cropland by the organic growth and strategic acquisitions for the purpose of creation of the leading agricultural company in Russia. In the further joint venture will analyze a possibility of acquisition of the land plots in key zernoproizvodyashchy regions – in the south of Russia and in the Central Black Earth that will allow to create effective agricultural clusters with access to the internal and external markets, – the President of AFK "Sistema" Mikhail Shamolin noted. – We with optimism look at cooperation with our partner in the joint venture capable to introduce modern agro-industrial and managerial technologies in business".

"We firmly believe in success of RZ Agro Holding, - Gérard Louis-Dreyfus and Peter Mann, representatives of shareholders of RZ Agro Ltd emphasized. – The sector of production of grain in Russia has huge potential owing to low cost value and a unique geographical location of Russia and also taking into account growth of number and the standard of living of the population in the world".

"Creation of the joint venture considerably will increase our opportunities for consolidation of the best arable lands in regional agricultural clusters and also will allow to increase production efficiency thanks to a combination of a transparent corporate structure, professionalism of management, cost reduction and increase in investments into modern technologies and the equipment", - Stéphane Mac Farlane, SEO of Russian land company said.