OIAG PRESS RELEASE

Final stage of voestalpine privatisation

OIAG commissions complete conversion of exchangeable bond

By the end of August 2005, OIAG will have completely sold its remaining shares in voestalpine. This step brings an important chapter in the history of Austrian privatisation to a successful conclusion. Today voestalpine is one of the country's most successful industrial enterprises, once again reporting a record result for the previous financial year.

Premature redemption of voestalpine exchangeable bond

On the strength of the exceptional development of voestalpine’s business and the resulting excellent performance of it shares, individual investors have been calling for the premature conversion of the bonds into shares ever since February 2005. Investors’ right to demand redemption before the bonds reach maturity is anchored in the terms of the exchangeable bonds issued on 15 per cent of voestalpine shares. More than 85 per cent of the outstanding bonds had already been redeemed by today's date.

If the 15 per cent threshold is underrun – equivalent to a 2.25 per cent holding in voestalpine AG – as issuer of the exchangeable bonds OIAG is entitled to premature repayment of the bond only until 25 August 2005. This so-called “clean-up” makes it possible for OIAG to repay all outstanding bonds not converted into voestalpine shares prior to expiry of the last conversion deadline at a nominal amount plus accrued interest. 19 August 2005 was determined as the last day on which the right to convert these bonds into voestalpine shares could be exercised. In view of the attractive price level of voestalpine shares, OIAG assumes that all investors will exercise their conversion rights prior to this date.

The exchangeable bond was issued in September 2003 during the privatisation of voestalpine. The conversion price of the bond was specified as EUR 41.275, with a term to maturity of three years. The bond carried an option from OIAG for redemption in either cash or in shares, whereby the Supervisory Board of OIAG opted for shares in September 2004. One of the primary criteria on which this decision was based was the existence of core Austrian shareholder structures as defined in the privatisation mandate. These structures were formed during the course of privatisation and still exist unchanged. Today around 45 per cent of voestalpine is in the hands of Austrian institutional and private investors, and more than ten per cent is held by the voestalpine employee fund.

Attractive and flexible financial instrument

In the case of voestalpine, the exchangeable bond once again proved to be an attractive financial instrument offering a high degree of flexibility. Apart from a very attractive conversion price when the bond was issued – it contained a 27 per cent premium on the stock exchange price at the time of EUR 32.50 – and the option on redemption, by reinvesting the proceeds of the issue and earning dividend payments, OIAG was able to achieve significantly higher earnings than would have been possible with a share placement.

In the case of both voestalpine and Telekom Austria, for which an exchangeable bond was also issued, share performance since the issue has reflected the positive impetus generated by the use of this innovative financial instrument as the government gradually disposed of its investment. Over and above this, OIAG also broke new ground in Austria by using an instrument that was attractive and flexible to both issuer and investors.

voestalpine today: successful global player

Today voestalpine is one of the most successful companies in its sector. The privatisation of the company on the Vienna Stock Exchange created the conditions that made it possible to maintain its independence whilst at the same time permanently strengthening the company thanks to the excellent performance of its management. And last, but not least, more than 500 new jobs have been created since the last step towards privatisation was taken in September 2003: the number of employees has risen by 54 per cent since the first privatisation measure in the year 1995.

The wide-ranging investment programme “Linz 2010” has enhanced the appeal of Linz as an industrial location and attracted increased investment in research and development. The Austrian capital market also received a boost as a result of this privatisation via the stock exchange. Today voestalpine is one of the eight leading shares in the ATX, and investors have seen their investment almost treble since the shares were first quoted on the stock exchange in 1995.

Vienna, 20 July 2005

Further Information:
OIAG Corporate Communications
Anita Bauer
Mob.: +43 664 13 40 333
anita.bauer@oiag.at