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 Group 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 Group is a diversified business conglomerate operating in the sectors of Steel, Energy, Power, Shipping & Logistics, Telecommunications, Mining & Minerals, and Construction. Essar Group 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.

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