New York: Essar Steel Holdings Limited (Essar) today announced that it has informed the Board of Directors of Esmark Incorporated (Esmark) that Essar is withdrawing its offer to purchase all of the outstanding shares of Esmark at US$19 per share. On the invitation of Esmark and their financial advisor UBS, Essar participated in a bidding process for the acquisition of Esmark.

After following all legal procedures and a transparent bid process set by the Esmark Board of Directors and UBS, Essar entered into a memorandum of agreement to acquire all the outstanding shares of Esmark for a cash purchase price of US$17 per share, which it subsequently increased to US$19 per share. Essar also extended a US$110 million loan to Esmark, which helped Esmark address a potential default.

Essar has been in discussion with the United Steelworkers Union (USW) throughout the process. During the process Essar learned of a supposed understanding between the USW and OAO Severstal, a Russian Steel concern. Essar has been at a disadvantage in not knowing the terms of the USW’s agreement with Severstal. Essar continued to reach out to the USW offering to assume the Basic Labor Agreement and immediately commence negotiations on renewal of that agreement. The USW has continued its support of Severstal and further, this week has assigned its right-to-bid to Severstal as well.

On June 22, 2008, an arbitrator determined that the memorandum of agreement entered into by the company violated Esmark’s Basic Labor Agreement with the USW and should be set aside. Essar is disappointed with this decision and believes it is contrary to legal opinions it received on the validity and enforceability of the memorandum of agreement provided by both Esmark and Essar’s legal counsel.

Given the USW’s continued strong support of Severstal and along with Essar’s belief that its $19.00 bid reflects a full and fair value for Esmark, Essar, based on the recent developments, has determined to withdraw from the bidding process. This is also in keeping with Essar’s principled and disciplined approach toward any acquisition.

Commenting on the development, Mr. Shashi Ruia, Chairman, Essar Global said, “Essar’s vision is to be a major steel producer integrated from mining to finished products with a global footprint. Essar will continue to focus on the North America market, and remains committed to increase its capacity to about 25 million tons globally by 2012. This will be achieved both through building greenfield projects as well as brownfield development of world class low-cost assets. Having acquired Algoma and Minnesota Steel last year, Essar will continue to pursue M&A transactions internationally and will look at opportunities consistent with its vision” he said.

Throughout the process, Essar’s discussions with Esmark’s Board of Directors, management, the USW and all stakeholders were very cordial.

Essar wishes the Esmark’s Board of Directors, management and employees, the USW, and Severstal the very best going forward.

About Essar
Essar is a part of the multi-billion dollar Essar Global Limited (EGL). EGL is a diversified business conglomerate operating in the sectors of Steel, Energy, Power, Shipping & Logistics, Telecommunications, Mining & Minerals, and Construction. EGL has a firm value of approximately USD 50 billion and employs 38,000 people worldwide. More than 6000 people of Essar’s workforce are in the Americas.

Privately owned and professionally managed, EGL has an excellent track record, having succeeded in the capital intensive and competitive manufacturing sectors. Better focus through integration, incorporation of state-of-the-art technology and innovative in-house research has made Essar Global a leading player in each of its businesses.

For more information, contact:
Madhu Vuppuluri, President, Essar-Americas, at +1 212 758 5520
Keith Dorman, Burson Marsteller, +1 412 874 0502
Manish Kedia, Sr. Vice President, Essar, India at +91 98197 30092
B Ganesh Pai, General Manager, Essar, India at +91 98197 30225
William Clutterbuck, Maitland, UK: +44 207 379 5151

NOTE TO EDITORS

Essar Steel is a global producer of steel operating out of India, North America, the Middle East and Asia. It is a fully integrated flat carbon steel manufacturer - from iron ore to ready-to-market products. It has a current capacity of 8.5 million tons. Essar successfully acquired Algoma Steel in Sault Ste Marie, Canada, in 2007, where following a capital expenditure program and incorporating improved work processes, it has increased production from 2.5 MTPA to 3.4 MTPA in just 10 months.

Essar Energy operates a fully integrated oil company of international size and scale in India. Its assets include development rights in proven oil & gas blocks, a 12 million tons per annum refinery, currently being expanded to 34 million tons per annum, and over 1,500 fuel stations across India. Plans are under way to increase exploration acreage, further acquire / build oil refineries internationally, and open a total of 5,000 fuel stations.

Essar Power operates five power generation plants with a capacity of 1,200 megawatts. Its portfolio includes gas and coal fired plants and renewable energy sources. Essar is currently increasing its generation capacity to 6000 MW of coal and gas fuelled plants, with an investment of approximately USD 5 billion. It also plans to enter the power transmission and distribution markets.

Essar Telecommunications is the single largest investor (with a 33% interest) in Vodafone-Essar, a joint venture with Vodafone Group and one of India’s largest cellular service providers, with 46 million subscribers, currently adding 2 million subscribers every month. Essar owns ‘The MobileStore’, India’s largest national retail chain of mobile phone stores. Essar has a major presence in the telecom infrastructure space with one of the largest investments in tower companies. Essar operates India’s 4th largest business process outsourcing business operating under the Aegis brand, with 20 centers spread across USA and India staffed by over 20,000 employees.

Essar Ports, Shipping & Logistics is a comprehensive, end-to-end player in maritime transportation, ports and terminals, logistics, contract drilling and allied services. It is a global shipping and logistics provider with sea and surface transportation services, oilfield drilling services, dry and liquid terminals, tankage and associated pipelines.

Essar Projects is a global engineering procurement and construction company based in Dubai with offices in India and China. The Essar Engineering Center specializes in detailed engineering and design for large projects. Global Supplies specializes in procurement. Construction executes projects for industrial plants, civil & irrigation projects, pipe laying – offshore and onshore, marine construction and highways and expressways. Heavy Engineering Services manufactures pressure vessels, reactors, vacuum vessels and cranes. Essar Constructions undertakes projects on a turnkey basis, with a pipeline division certified at ISO 9001.

Essar Mining & Minerals owns iron ore and coal mines in India and overseas. It has acquired the U.S. based Minnesota Steel that has iron ore reserves of approximately 1.5 billion tons.