The company will issue up to RMB 10 bln in 6-year convertible bonds with detachable warrants and a coupon rate of between 0.80% and 1.50% on 20 Jun 2008.

The duration of the warrants is 24 months at an exercise ratio of 2:1 and a strike price of RMB 12.50. Subscribers will receive 160 warrants for every 10 bonds purchased.

Holders of tradeable shares will have rights of first refusal to subscribe up to 99,877,270 bonds accounting for 99.88% of the total planned issued bonds on 20 Jun 2008, with the subscription code of 704019, according to their holdings of record on 19 Jun 2008 after market close. Baosteel Group Co. Ltd, the controlling shareholder of the company, will give up its rights of first refusal for 1,052,600,000 tradeable shares that can be converted from the bonds issuance.

Holders of tradeable shares will still be able to conduct online subscriptions with the subscription code of 733019 through the trading system of the Shanghai Stock Exchange on 20 Jun 2008 from 9:30 am to 11:30 am or from 1:00 pm to 3:00 pm. Each stock account is allowed to have a subscription turnover of up to 50,000,000 bonds.

Institutional investors can conduct offline subscriptions on 20 Jun 2008 and each investor is allowed to subscribe between 10,000 and 50,000,000 bonds.

The pre-established proportion of online vs offline bond subscription is 50:50.


Source: Shanghai Stock Exchange

Date: 20 Jun 2008

CN01/JC/BT/KM