Obligation ALROSA Financial S.A. 7.75% ( XS0555493203 ) en USD

Société émettrice ALROSA Financial S.A.
Prix sur le marché 100 %  ▼ 
Pays  Russie
Code ISIN  XS0555493203 ( en USD )
Coupon 7.75% par an ( paiement semestriel )
Echéance 02/11/2020 - Obligation échue



Prospectus brochure de l'obligation ALROSA Finance S.A XS0555493203 en USD 7.75%, échue


Montant Minimal 200 000 USD
Montant de l'émission 494 384 000 USD
Cusip L0172MBC3
Description détaillée ALROSA Finance S.A. est une filiale de la société minière russe ALROSA, spécialisée dans le financement et les opérations financières liées à l'extraction et à la commercialisation de diamants.

L'obligation ALROSA Finance S.A. (XS0555493203 / L0172MBC3), émise en Russie pour un montant total de 494 384 000 USD, avec un coupon de 7,75 % payable deux fois par an, échéant le 02/11/2020, a été intégralement remboursée à son prix nominal de 100 %, avec une taille minimale d'achat de 200 000 USD.







ALROSA Finance S.A.
(incorporated as a société anonyme with limited liability in Luxembourg)
US$1,000,000,000 7.750 per cent. Notes due 2020
Unconditionally and irrevocably guaranteed by
"ALROSA" Company Limited
(incorporated in the Russian Federation)
Issue Price 100 per cent.
ALROSA Finance S.A. (the "Issuer"), a private company incorporated with limited liability under the laws of the Grand Duchy of Luxembourg
("Luxembourg") and a subsidiary of ALROSA Finance B.V., a private company incorporated with limited liability under the laws of The
Netherlands, wholly owned by "ALROSA" Company Limited ("ALROSA" or the "Guarantor"), a closed joint stock company organised under
the laws of the Russian Federation (or "Russia"), with the alternate legal name AK "ALROSA" (ZAO), is issuing the US$1,000,000,000 7.750
per cent. Notes due 2020 (the "Notes"). The Notes will be general unsecured and unsubordinated obligations of the Issuer, and will rank senior to
all present and future subordinated obligations and equal to all present and future unsecured obligations of the Issuer. The Notes will be
constituted by a trust deed to be dated 3 November 2010 (the "Trust Deed") made between the Issuer, ALROSA and BNY Corporate Trustee
Services Limited (the "Trustee"). The Notes will be unconditionally and irrevocably guaranteed by ALROSA (the "Guarantee"). This
Guarantee will be unsecured indebtedness of ALROSA and will rank senior to all present and future subordinated obligations and equal to all
present and future unsecured obligations of ALROSA.
Interest on the Notes will accrue from, and including, 3 November 2010 and will be payable in equal instalments semi-annually in arrear on
3 May and 3 November of each year, commencing on 3 May 2011, at the rate of 7.750 per cent. per annum. Payments on the Notes will be made
free and clear of, and without withholding or deduction for or on account of, any taxes imposed by Luxembourg or Russia, to the extent described
under Condition 9 "Taxation" in the terms and conditions of the Notes (the "Terms and Conditions"). Except in certain limited circumstances,
the Notes are not redeemable prior to the Maturity Date. If at any time while any Note remains outstanding a Change of Control occurs (as
defined herein), the Issuer shall, at the option of the holder of any such Note, redeem or purchase such Note on the Change of Control Put Date (as
defined herein) at 100 per cent. of its principal amount together with (or, where purchased, together with an amount equal to) interest accrued to
but excluding the Change of Control Put Date. The Notes will mature on 3 November 2020 (the "Maturity Date").
The Notes will be in registered form, without interest coupons attached, in denominations of US$200,000 and integral multiples of US$1,000 in
excess thereof.
References to the "Group" in this prospectus (the "Prospectus") are to ALROSA and its consolidated subsidiaries, including the Issuer. References
to "Noteholders" are to the persons in whose name each Note is for the time being registered in the relevant register kept by The Bank of New York
Mellon (Luxembourg) S.A. or The Bank of New York Mellon (each, a "Registrar") (or, in the case of a joint holding, the first named thereof).
References to the "Offering" are to the offering of the Notes by the Issuer.
The Prospectus has been approved by the Central Bank of Ireland (the "Central Bank"), as competent authority under the Prospectus Directive
2003/71/EC (the "Prospectus Directive"). The Central Bank only approves this Prospectus as meeting the requirements imposed under Irish and
EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange (the "Irish Stock Exchange") for the Notes
to be admitted to the Official List (the "Official List") and trading on its regulated market. This Prospectus constitutes a "prospectus" for the
purposes of the Prospectus (Directive 2003/71/EC) Regulations 2005 (the "Prospectus Regulations") (which implement the Prospectus
Directive in Ireland). References in this Prospectus to the Notes being "listed" (and all related references) shall mean that the Notes have been
admitted to the Official List and have been admitted to trading on the regulated market of the Irish Stock Exchange.
An investment in the Notes involves risks. See "Risk Factors" beginning on page 6.
The Notes and the Guarantee (collectively, the "Securities") have not been, and will not be, registered under the US Securities Act of 1933 (the
"Securities Act") or under any securities laws of any other jurisdiction. The Notes may not be offered or sold within the United States or to, or
for the account or benefit of, US persons (as defined in Regulation S), except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act. The Notes are being offered and sold outside the United States in offshore transactions to
non-US persons in reliance on Regulation S under the Securities Act ("Regulation S") and within the United States to "qualified institutional
buyers" ("QIBs") (as defined in Rule 144A under the Securities Act ("Rule 144A")) in reliance on Rule 144A. Prospective purchasers are
hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by
Rule 144A. For a description of these and certain further restrictions on offers, sales and transfers of the Notes and distribution of this
Prospectus, see "Plan of Distribution" and "Transfer Restrictions".
Notes that are sold to QIBs will be represented by interests in a global registered Note (the "Rule 144A Global Note"), deposited with a custodian
for, and registered in the name of a nominee for, The Depository Trust Company ("DTC") on or about 3 November 2010 (the "Closing Date"). Notes
that are sold in transactions outside the United States in reliance on Regulation S will be represented by interests in a global registered Note (the
"Regulation S Global Note") and together with the Rule 144A Global Note, the "Global Notes"), deposited with a common depositary for, and
registered in the name of a nominee for, Euroclear Bank S.A/N.V. as operator of the Euroclear System ("Euroclear") and Clearstream Banking,
société anonyme ("Clearstream, Luxembourg").
The Notes are expected to be assigned a rating of Ba3 by Moody's Investors Service, Inc. ("Moody's"), BB- by Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. ("S&P") and BB- by Fitch Investor Rating Services ("Fitch"). A rating is not a recommendation to buy, sell
or hold the Notes and may be subject to suspension, reduction or withdrawal at any time by Moody's, S&P or Fitch, as applicable. A suspension,
reduction or withdrawal of the rating assigned to the Notes may adversely affect the market price of the Notes.
Joint Lead Managers and Joint Bookrunners
J.P. Morgan
UBS Investment Bank
VTB Capital
Prospectus dated 1 November 2010


TABLE OF CONTENTS
CERTAIN INFORMATION CONTAINED IN THIS PROSPECTUS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
v
IMPORTANT NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
v
NOTICE TO NEW HAMPSHIRE RESIDENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
vii
LIMITATION ON ENFORCEMENT OF CIVIL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
viii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . .
viii
PRESENTATION OF FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
x
CURRENCIES AND EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
xii
OVERVIEW OF ALROSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
OVERVIEW OF THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
CAPITALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
PRINCIPAL SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121
CERTAIN TRANSACTIONS WITH RELATED PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
122
DESCRIPTION OF EXISTING MATERIAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124
CALCULATION OF RESERVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
REGULATORY MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139
SUMMARY OF THE PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM . . . . . . . . . . . .
162
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
168
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
178
TRANSFER RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
180
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
182
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
184
APPENDIX A -- CERTIFICATION OF DIAMOND DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-1
APPENDIX B -- GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B-1
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
ii


This Prospectus comprises a prospectus for the purposes of the Prospectus Directive and for the purposes of giving
information with regard to the Issuer, ALROSA, the Notes and the Guarantee that is necessary to enable investors to
make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the
Issuer and ALROSA.
The Issuer and ALROSA accept responsibility for the information contained in this Prospectus. To the best of the
knowledge and belief of each of the Issuer and ALROSA (each of which has taken all reasonable care to ensure that
such is the case), the information contained in this Prospectus is in accordance with the facts and does not omit
anything likely to affect the import of such information.
None of the Managers named under "Plan of Distribution" (the "Managers") nor any of its affiliates nor any person
acting on its behalf makes any representation or warranty, express or implied, or accepts any responsibility as to the
accuracy or completeness of the information contained in this Prospectus.
The Issuer and ALROSA are providing this Prospectus only to prospective purchasers of the Notes. You should read
this Prospectus before making a decision whether to purchase the Notes. You must not use this Prospectus for any
other purpose.
In addition, the distribution of this Prospectus may be restricted by law in certain jurisdictions, about which
restrictions you agree to inform yourself. By accepting delivery of this Prospectus you agree to the foregoing
restrictions.
The Issuer and ALROSA have prepared this Prospectus and are solely responsible for its contents. You are
responsible for making your own examination of the Group's business and your own assessment of the merits and
risks of investing in the Notes. By purchasing the Notes, you will be deemed to have acknowledged that:
·
you have reviewed this Prospectus;
·
you have had an opportunity, in connection with making an informed investment decision with respect to the
Notes, to request additional information that you need from the Issuer and ALROSA; and
·
the Managers (as defined below) are not responsible for, and are not making any representation to you
concerning, the Group's future performance or the accuracy or completeness of this Prospectus or otherwise in
connection with this Offering.
In making an investment decision, you should rely only on the information contained in this Prospectus. The Issuer,
ALROSA and the Managers have not authorised any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not rely on it. No person is authorised to
give any information or to make any representation not contained in this Prospectus and any information or
representation not so contained must not be relied upon as having been authorised by or on behalf of the Issuer and
ALROSA or the Managers.
None of the Issuer, ALROSA or the Managers or any of their respective representatives is making any
representation to you regarding the legality of your investment under relevant investment or similar laws or
providing you with any legal, business, tax or other advice in this Prospectus. You should consult with your own
advisers, as needed, to assist you in making your investment decision and to advise you whether you are legally
permitted to purchase the Notes.
Neither the delivery of this Prospectus nor the offer, sale or delivery of any Note shall in any circumstances create
any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change,
in the condition (financial or otherwise) of the Issuer or ALROSA since the date of this Prospectus. You must
comply with all laws that apply to you in any place in which you buy, offer or sell any Notes or possess this
Prospectus. You must also obtain any consents and approvals that you need in order to purchase any Notes. Neither
the Issuer and ALROSA nor the Managers are responsible for your compliance with these legal requirements.
Unless otherwise stated to the contrary, you should not assume that the information contained in this Prospectus is
accurate as of any date other than the date on the front cover of this Prospectus.
"ALROSA", "Brillianty ALROSA", "ALROSA-Nyurba", "Severalmaz" and "Almazny Dvor" are ALROSA's most
important trademarks and trade names. All other trademarks and trade names referred to in this Prospectus are the
property of their respective owners.
The Issuer and ALROSA are offering to sell the Notes only in places where such offers and sales are permitted.
IN CONNECTION WITH THE ISSUE OF THE NOTES, UBS LIMITED, ACTING AS THE STABILISING
MANAGER (THE "STABILISING MANAGER") (OR PERSONS ACTING ON BEHALF OF THE
iii


STABILISING MANAGER) MAY OVER-ALLOT THE NOTES OR EFFECT TRANSACTIONS WITH AVIEW
TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH
MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING
MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) WILL UNDERTAKE
STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON
WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE NOTES IS
MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE
EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE
ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE
CONDUCTED BY THE RELEVANT STABILISING MANAGER (OR PERSONS ACTING ON BEHALF
OF THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND
REGULATIONS.
iv


CERTAIN INFORMATION CONTAINED IN THIS PROSPECTUS
In this Prospectus, ALROSA relies on and refers to publicly available information released by official and unofficial
sources other than ALROSA. These sources include, but are not limited to, the Central Bank of Russia (the "CBR"),
research reports, analyst reports, press releases, securities filings and industry publications, including the US
Geological Survey Minerals Handbook, Diamond Intelligence Briefs, Rapaport, International Diamond
Consultants, publications prepared by the De Beers Group ("De Beers"), International Diamond Exchange
("IDEX") and IHS Global Insight. Although ALROSA believes that this information is reliable, it has not
independently verified this information and cannot guarantee its accuracy and completeness. In addition, some of
the information contained in this Prospectus has been derived from official data published by the Russian
Government (the "Russian Government"). Official statistics and other data published by Russian federal, regional
and local governments are substantially less complete or transparent than those of Western countries. Official
statistics may also be compiled on the basis of methodologies different from those used in Western countries.
ALROSA accepts responsibility for accurately reproducing such information from the relevant sources. As far as
ALROSA is aware and is able to ascertain from information published by the relevant sources, no facts have been
omitted which would render the reproduced information inaccurate or misleading.
This Prospectus includes market data and industry forecasts and projections that have been obtained from internal
surveys, market research, publicly available information and industry publications. Industry publications generally
state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy
and completeness of such information are not guaranteed. The forecasts and projections are based on industry
surveys and the preparers' experience in the industry, and there is no assurance that any of the forecasts or
projections will be achieved. Similarly, ALROSA believes that the surveys and market research others have
performed are reliable, but ALROSA has not independently verified this information.
In addition, this Prospectus describes certain facts regarding the Group's diamond reserves and expected ability to
continue mining at current production levels. See "Business -- Diamond Reserves" and "Appendix A --
Certification of Diamond Deposits". Although this information has been certified by the Federal Subsoil Use
Agency of the Ministry of Natural Resources of the Russian Federation (the "Ministry of Natural Resources") and
the Ministry of Finance of the Russian Federation (the "Ministry of Finance", and collectively with the Ministry of
Natural Resources, the "Ministries"), the Notes have not been guaranteed by the Ministries or by any other agency
or political subdivision of Russia, and do not represent obligations of any such body.
In addition, ALROSA has included its own estimates, assessments, adjustments and judgements in preparing some
market information, which have not been verified by an independent third party. These estimates include, among
others, ALROSA's estimate of its share of total world production in carats and as a multiple of average market prices
and its share of diamond production in Russia. Market information included herein is unless otherwise attributed
exclusively to a third party source, to a certain degree subjective. Market information prepared by other sources may
differ materially from the market information included herein.
The contents of ALROSA's websites do not form any part of the content of this Prospectus.
The language of the Prospectus is English. Certain legislative references and technical terms have been cited in their
original language in order that the correct technical meaning may be ascribed to them under applicable law.
IMPORTANT NOTICE
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer, ALROSA or the
Managers, to subscribe or purchase any of the Notes in any jurisdiction. The distribution of this Prospectus and the
Offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this
Prospectus comes are required by the Issuer, ALROSA and the Managers to inform themselves about and to observe
any such restrictions.
United Kingdom
This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom
or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it
may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being
referred to as "Relevant Persons"). The Notes are only available to, and any invitation, offer or agreement to
subscribe, purchase or otherwise acquire such Notes is only made to Relevant Persons. Any person who is not a
Relevant Person should not act or rely on this document or any of its contents.
v


United States
The Notes and the Guarantee have not been and will not be registered under the Securities Act, and may not be
offered or sold within the United States or to, or for the account or benefit of, US persons within the meaning of
Regulation S, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements
of the Securities Act. The Notes are being offered and sold outside the United States in offshore transactions to non
US persons in reliance on Regulation S and within the United States to QIBs in reliance on Rule 144A. Prospective
purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of
Section 5 of the Securities Act provided by Regulation S and Rule 144A. For a description of these and certain
further restrictions on offers, sales and transfers of the Notes and the distribution of this Prospectus, see "Plan of
Distribution" and "Transfer Restrictions".
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), ANY STATE SECURITIES COMMISSION IN THE
UNITED STATES OR ANY OTHER US REGULATORY AUTHORITY, NOR HAVE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENCE IN THE UNITED STATES.
Russia
The Notes are securities of a foreign issuer under Russian law. The Notes are not eligible for initial offering and
circulation in Russia and no sale, exchange or transfer of the Notes may take place in Russia or to any Russian
person or entity. The information provided in this Prospectus is not an offer, or an invitation to make offers, to sell,
exchange or otherwise transfer the Notes in Russia or to any Russian person or entity. The information contained in
this Prospectus does not constitute an advertisement of the Notes in Russia and must not be passed on to third parties
or otherwise be made publicly available in Russia.
The Managers have represented, warranted and agreed that they have not offered, sold, exchanged or otherwise
transferred, and will not offer, sell, exchange or otherwise transfer as part of their initial distribution or at any time
thereafter, any Notes to or for the benefit of any persons (including legal entities) resident, incorporated, established
or having their usual residence in Russia, or to any person located within the territory of Russia unless and to the
extent otherwise permitted under Russian law. Information provided in this Prospectus is not an offer, or an
invitation to make offers, to sell, exchange or otherwise transfer the Notes in Russia.
vi


NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS
BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ("RSA 421-B")
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER
RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING, NEITHER ANY SUCH FACT NOR THE FACT
THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR ATRANSACTION MEANS
THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY
OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE
PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.
vii


LIMITATION ON ENFORCEMENT OF JUDGMENTS
Substantially all of ALROSA's directors and executive officers reside in Russia. All or a substantial portion of their
and the Group's assets are located in Russia. As a result, it may not be possible for you to:
·
effect service of process outside Russia upon substantially all of ALROSA's directors and executive officers; or
·
enforce non-Russian court judgments obtained against ALROSA or substantially all of its directors and
executive officers in non-Russian courts in any action, including actions under the civil liability provisions of
US securities laws.
In addition, it may be difficult for you to enforce, in original actions brought in courts in jurisdictions located outside
the United States or the United Kingdom, respectively, liabilities predicated upon the United States securities laws
or English law, as applicable.
Judgments rendered by a court in any jurisdiction outside Russia will generally be recognised and enforced by
courts in Russia if (i) an international treaty providing for the recognition and enforcement of judgments in civil
cases exists between Russia and the jurisdiction where the judgment is rendered and/or (ii) a federal law providing
for the recognition and enforcement of foreign court judgments is adopted in Russia. Even where such a treaty or
federal law exists, Russian courts could nonetheless refuse to recognise and/or enforce a foreign court judgment on
the grounds provided in such treaty and/or in Russian legislation in effect at the moment when such recognition
and/or enforcement is sought. No federal law or international treaty exists between either of the United Kingdom or
the United States and Russia directly providing for the recognition and enforcement of foreign court judgments in
civil and commercial cases generally.
In the absence of an applicable treaty, a final judgment rendered by a foreign court may still be recognised and
enforced by a Russian court on the basis of reciprocity, if courts of the country where the foreign judgment is
rendered have previously enforced judgments issued by Russian courts. While some Russian courts have recently
recognised and enforced English court judgments on these grounds, the existence of reciprocity must be established
in each case at the time the recognition and enforcement of a foreign judgment is sought, and it is not possible to
predict whether in the future a Russian court will recognise and enforce a judgment issued by a foreign court,
including an English court, on the basis of reciprocity.
The Trust Deed will be governed by English law and will provide the option for disputes, controversies and causes of
action brought by any party thereto against ALROSA to be settled by arbitration in accordance with the LCIA Rules in
London, England. Russia and the United Kingdom are parties to the United Nations (New York) Convention on the
Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the "New York Convention"). However, it may be
difficult to enforce arbitral awards in Russia due to a number of factors, including:
·
a contradiction between the arbitral award and a judgment rendered earlier by a Russian court on the same issue;
·
a contradiction of the arbitral award with Russian legislation;
·
the lack of experience of the Russian courts in international commercial transactions and enforcement of arbitral
awards; and
·
official and unofficial political resistance to the enforcement of awards against Russian companies in favour of
foreign parties.
See "Risk Factors -- Risks Related to the Legal and Regulatory Environment in Russia -- Russia's unpredictable
acknowledgement and enforcement of foreign court judgments or arbitral awards give rise to significant
uncertainties".
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes statements that may be considered to be "forward-looking statements" within the meaning of
the US Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained
in this Prospectus, including, without limitation, those regarding the Group's future financial position and results of
operations, strategy, plans, objectives, goals and targets, future developments in the markets in which the Group
participates or seeks to participate, and any statements preceded by, followed by or that include the words "believes",
"expects", "aims", "intends", "plans", "will", "may", "anticipates" or similar expressions or the negative thereof, are
forward-looking statements. These forward-looking statements include, amongst other things, statements concerning:
·
estimates of future production for specific operations;
·
estimates of future production costs and other expenses for specific operations;
viii


·
estimates of future capital expenditures and other cash needs and expectations as to the funding thereof;
·
statements as to the projected development of certain diamond deposits, including estimates of development and
other capital costs, financing plans for these deposits and expected production commencement dates;
·
estimates of future costs and other liabilities for certain environmental matters;
·
estimates of remaining years of diamond production based on current reserves levels; and
·
estimates of certain tax liabilities.
The forward-looking statements included in this Prospectus involve known and unknown risks, uncertainties and
other factors which may cause the Group's actual results, performance, achievements or industry results to be
materially different from any future results, performance or achievements expressed or implied by such forward-
looking statements. These forward-looking statements are based on numerous assumptions regarding present and
future business strategies and the environment in which the Group will operate in the future. You should be aware
that a number of important factors could cause the industry's or the Group's own actual results or performance to
differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-
looking statements, including, amongst others:
·
the Group's ability to obtain additional financing in the future;
·
the Group's ability to adapt its business to Russia's changing regulatory environment and to implement and
successfully execute ALROSA's strategy;
·
the Group's ability to complete existing and future projects on schedule and within budget;
·
losses from operational hazards and uninsured risks;
·
risks related to the Group's business development, operations and financial condition;
·
the Group's ability to obtain, maintain and renew the permits, licences and other governmental authorisations
required to conduct its operations;
·
legal, political and regulatory compliance risks relating to the Group's operations;
·
risks relating to the Guarantor's obligations under put option agreements relating to certain oil and gas assets;
·
inflation, interest rate and exchange rate fluctuations;
·
the effects of, and changes in, the policy of the Russian Government;
·
the effects of changes in laws, regulations, taxation or accounting standards or practices;
·
acquisitions or divestitures;
·
technological changes;
·
the effects of international political events on the Group's business; and
·
the Group's success in managing the risks of the aforementioned factors.
This list of important factors is not exhaustive. Additional factors that could cause actual results, performance or
achievements to differ materially include those discussed under "Risk Factors". When considering forward-looking
statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of
the political, economic, social and legal environment in which the Group operates. Such forward-looking statements
speak only as of the date on which they are made, and the Issuer and ALROSA do not undertake any obligation to update
or revise any of them, whether as a result of new information, further events or otherwise. The Issuer and ALROSA do
not make any representation or warranty that the results anticipated by such forward-looking statements will be achieved.
ix


PRESENTATION OF FINANCIAL INFORMATION
This Prospectus includes audited consolidated financial statements of the Group as of and for the years ended
31 December 2009 and 2008 (the "2009/2008 Group Financial Statements") and as of and for the years ended
31 December 2008 and 2007 (the "2008/2007 Group Financial Statements" and together with the 2009/2008 Group
Financial Statements, the "Audited Group Financial Statements") as well as unaudited condensed consolidated
interim financial statements of the Group as of and for the three and six months ended 30 June 2010 and 2009 (the
"Interim Financial Statements", and together with the Audited Group Financial Statements, the "Group Financial
Statements"). The Group Financial Statements included in the Prospectus have been prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). The
Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 "Interim
Financial Reporting". The Rouble is the functional and presentation currency for the Group Financial Statements. The
Group Financial Statements and the Group's financial information included elsewhere in this Prospectus have, unless
otherwise noted, been presented in Roubles.
In addition, this Prospectus includes audited stand-alone financial statements of the Issuer for the years ended
31 December 2009 and 2008 (the "Issuer's Financial Statements"), prepared in accordance with the Luxembourg
legal and regulatory requirements relating to the preparation of annual accounts ("Luxembourg GAAP"). The euro
is the functional and presentation currency for the Issuer's Financial Statements. The Issuer's Financial Statements
and the Issuer's financial information included elsewhere in this Prospectus have, unless otherwise noted, been
presented in euros.
In this Prospectus, diamond sales figures expressed in Roubles have been calculated net of value added tax ("VAT")
and export duties. See "Management's Discussion and Analysis of Financial Condition and Results of Operations --
Sales".
Certain figures included in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown
as totals in certain tables may not be the arithmetical aggregation of the figures that precede them, and figures
expressed as percentages in the text may not total 100 per cent., when aggregated.
The Group also presents EBITDA, adjusted EBITDA, net debt and total debt, which are not specifically defined
under IFRS. These measures may not be comparable to other similarly titled measures of other companies and are
not measurements under IFRS or other generally accepted accounting principles, and they should not be considered
as substitutes for the information contained in the Group Financial Statements.
Impact of New Accounting Standards and reclassifications
In its 2009/2008 Group Financial Statements, the Group adopted new accounting pronouncements, as required by
IFRS, resulting in changes to the presentation of certain financial information in its financial statements as required
by IFRS. As a result, certain information presented in the 2009/2008 Group Financial Statements is presented on a
different basis from the information presented in the 2008/2007 Group Financial Statements.
The Group implemented the following accounting standards as at 1 January 2009 and reflected the related changes
in its 2009/2008 Group Financial Statements. Financial statements for prior periods, including the 2008/2007
Group Financial Statements, were not required to be and were not restated for these changes and accordingly may
not be presented on a directly comparable basis:
·
International Financial Reporting Standard 8 ("IFRS 8") "Operating Segments": beginning with the period
ended 31 December 2009, the Group now reports seven segments, being Diamonds segment, Transportation,
Social infrastructure, Construction activity, Trading, Electricity production and Other Activities. Previously, the
Group had reported one segment, being Diamonds. This presentation has been applied in the 2009/2008 Group
Financial Statements. The 2008/2007 Group Financial Statements are not required to be and have not been
restated for this change in presentation of segments;
·
International Accounting Standard 1 ("IAS 1") (revised) "Presentation of Financial Statements": as from
1 January 2009, the Group has elected to present one statement; a statement of comprehensive income which
will also include all non-owner changes in equity, such as the revaluation of available for sale investments. This
is not a material change in presentation. This presentation has been applied in the 2009/2008 Group Financial
Statements. The 2008/2007 Group Financial Statements are not required to be and have not been restated for this
change in presentation of segments.
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