Elkem

Share Issue/Capital Change • Mar 12, 2018

Elkem ASA - Announcement of terms for the initial public offering

Elkem ASA - Announcement of terms for the initial public offering

NOT FOR DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OF AMERICA AND THE DISTRICT OF COLUMBIA) (THE "UNITED STATES"), AUSTRALIA, CANADA OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.

Oslo, 12 March 2018. With reference to the announcement of 26 February 2018 regarding the intention to list the shares of Elkem ASA ("Elkem" or the "Company", OSE ticker code "ELK") on the Oslo Stock Exchange and the contemplated initial public offering (the "Offering"), Elkem has resolved to launch the Offering and will apply for a listing of its shares on the Oslo Stock Exchange. Subject to approval of the listing application and a successful completion of the Offering, the shares of Elkem are expected to be admitted to listing and commence trading on an "if issued/if sold" basis (i.e. conditional trading) on the Oslo Stock Exchange on or about 22 March 2018. Unconditional trading is expected to commence on or about 26 March 2018.

The Offering:

The Offer Shares (as defined below) are expected to be sold at a price between NOK 29 and NOK 35 per Offer Share, corresponding to an equity value (following issuance of the New Shares (as defined below)) of between approximately NOK 16,858 million and NOK 19,270 million. The final offer price per Offer Share may, however, be set above or below this indicative price range.

The Company intends to raise gross proceeds of NOK 5,200 million by issuing up to 179,310,344 new shares (the "New Shares") in the Offering. The Company will use the net proceeds from the New Shares to (i) finance the acquisition of Jiangxi Bluestar Xinghuo Organic Silicones Co. Ltd. and Bluestar Silicon Material Co. Ltd. and (ii) reduce the Elkem group's long-term interest bearing debt.

Further, up to 71,657,143 existing shares (the "Sale Shares") will be offered by the Company's sole shareholder, Bluestar Elkem International Co., Ltd. S.A. (the "Selling Shareholder" or "Bluestar"). In addition, the Managers (as defined below) may elect to over-allot a number of additional shares equaling up to approximately 15% of the number of New Shares and Sale Shares to be sold in the Offering (the "Additional Shares" and, together with the New Shares and the Sale Shares, the "Offer Shares"). The Selling Shareholder will grant Morgan Stanley & Co. International plc, on behalf of the Managers, an option to borrow a number of shares in the Company equaling the number of Additional Shares to facilitate such over-allotment, as well as an over-allotment option to purchase from the Selling Shareholder at the final offer price a number of shares equaling the number of Additional Shares to cover any over-allotments made in connection with the Offering. The over-allotment option may be exercised, in whole or in part, within a 30-day period commencing the day on which "if issued/if sold" trading in the Company's shares on the Oslo Stock Exchange commences.

The Company will receive the proceeds from the sale of New Shares, while the Selling Shareholder will receive the proceeds from the sale of Sale Shares and any shares sold under the over-allotment option.

After completion of the Offering, it is expected that the free float of Elkem will be minimum 40% of the shares in the Company if the over-allotment option is not utilized, and minimum 46% if the over-allotment option is utilized in full. The Selling Shareholder will remain a significant shareholder after the Offering, holding between 54% and 60% of the shares in the Company, depending on whether the over-allotment option is exercised.

The Company, the Selling Shareholder senior employees of the Company will enter into customary lock-up arrangements with the Managers that, without the prior written consent from the Joint Global Coordinators, will restrict their ability to issue, sell or dispose of Shares, as applicable, for a period of 365 days from the date of delivery and payment for the Offer Shares, which is expected to take place on or about 26 March 2018.

Offering details

The Offering consists of:

- An Institutional Offering, in which Offer Shares are being offered (a) to institutional and professional investors in Norway, (b) investors outside Norway and the United States, subject to applicable exemptions from prospectus and registration requirements, and (c) in the United States to QIBs, as defined in, and in reliance on Rule 144A of the U.S. Securities Act or another available exemption from registration under the U.S. Securities Act. The Institutional Offering is subject to a lower limit per application of NOK 2,000,000.

- A retail offering, in which Offer Shares are being offered to the public in Norway subject to a lower limit per application of an amount of NOK 10,500 and an upper limit per application of NOK 1,999,999 for each investor. Investors who intend to place an order in excess of NOK 1,999,999 must do so in the Institutional Offering. Multiple applications by one applicant in the Retail Offering will be treated as one application with respect to the maximum application limit.

All offers and sales outside the United States will be made in compliance with Regulation S of the U.S. Securities Act.

Prospectus

The further details of the Offering and the terms thereof are set out in the prospectus prepared by the Company in connection with the Offering and dated 9 March 2018 (the "Prospectus"). Copies of the Prospectus will only be distributed to individuals who are eligible to participate in the Offering. The Prospectus and the application form for the retail offering will, subject to regulatory restrictions in certain jurisdictions, be available at: www.elkem.com, www.abgsc.no, www.carnegie.no and www.nordea.no/elkem from 09:00 (CET) on 12 March 2018. Hard copies of the Prospectus may be obtained free of charge at the offices of Elkem at Drammensveien 169, N-0277 Oslo, Norway or by contacting one of the Managers (as defined below).

Timeline and offer period

The bookbuilding period for the institutional offering will commence on 12 March 2018 at 09:00 (CET) and run until 14:00 (CET) on 21 March 2018. The application period for the retail offering will commence on 12 March 2018 at 09:00 (CET) and run until 12:00 (CET) on 21 March 2018. The bookbuilding period and the application period may be shortened or extended at any time, but will in no event expire prior to 12:00 (CET) on 19 March 2018 or be extended beyond 14:00 (CET) on 29 March 2018. In the event of a shortening or an extension of the bookbuilding period and the application period, the allocation date, the payment due date and/or the date of delivery of Offer Shares may be changed accordingly, however, the date of the listing and commencement of conditional, and later unconditional, trading on the Oslo Stock Exchange may not necessarily be affected.

The final number of Offer Shares and the final price per Offer Share will be determined by the Company and the Selling Shareholder, in consultation with the Managers, after completion of the bookbuilding period in the institutional offering.

Conditions for the Offering

Completion of the Offering is conditional upon the board of directors of the Oslo Stock Exchange, in a meeting to be held on or about 15 March 2018, approving Elkem's application for listing of its shares and the satisfaction of the conditions for admission to trading set by the Oslo Stock Exchange, which are expected to be that (a) Elkem raises an amount of at least NOK 4,300 million in new equity by the sale of New Shares in the Offering, (b) Elkem will have in excess of 500 shareholders, each holding shares with a value of more than NOK 10,000 and (c) there will be a minimum free float of the shares of 25%.

Completion of the Offering will further be conditional upon (i) the Company and the Selling Shareholder, in consultation with the Managers, having approved the offer price and the allocation of the Offer Shares to eligible investors following the bookbuilding process, (ii) the board of directors resolving to issue New Shares, (iii) the Company, the Selling Shareholder and the Managers having entered into the underwriting agreement as described in the Prospectus and satisfaction of the conditions included in the underwriting agreement, and (iv) the underwriting agreement not having been terminated.

There can be no assurance that the above conditions will be satisfied. If the above conditions are not satisfied, then the Offering may be revoked or suspended.

ABG Sundal Collier ASA and Morgan Stanley & Co. International plc are acting as Joint Global Coordinators and Joint Bookrunners, Carnegie AS, Citigroup Global Markets Limited and Nordea Bank AB (publ), filial i Norge are acting as Joint Bookrunners, in connection with the IPO (collectively, the "Managers").

Advokatfirmaet Thommessen AS and Linklaters LLP are acting as legal counsels to Elkem and Bluestar. Advokatfirmaet Schjødt AS and Shearman & Sterling (London) LLP are acting as legal counsels to the Managers.

For further queries, please contact:

Morten Viga, CFO

Tel: +47 416 09 752

Odd-Geir Lyngstad, Head of Investor Relations

Tel: +47 976 72 806

About Elkem

Founded in 1904, Elkem is one of the world's leading suppliers of silicon-based advanced materials with operations throughout the entire value chain from quartz to specialty silicones, as well as attractive market positions in specialty ferrosilicon alloys and carbon materials. Headquartered in Oslo, the company's 27 production sites (including a plant under construction) and extensive network of sales offices and agents around the world ensure proximity to customers and access to attractive end markets. Elkem's over 6,000 skilled employees and significant R&D activities provide a solid basis for further technology-driven growth and optimization. Helge Aasen has been the CEO since 2009.

About Bluestar

Bluestar is a leading company in the new chemical materials, basic chemical engineering, animal nutrition and environmental science sectors. It is a subsidiary of China National Chemical Corporation, a state-owned company that is one of China's leading chemical companies.

IMPORTANT INFORMATION

These materials are not for distribution, directly or indirectly, in or into the United States, Australia, Canada or Japan. These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in any jurisdiction where such offer or sale would be unlawful and the announcement and the information contained herein are not for distribution or release, directly or indirectly, in or into such jurisdictions.

The shares mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"), and may not be offered or sold in the United States absent registration or exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any shares referred to herein in the United States. Any shares sold in the United States will be sold only to qualified institutional buyers (as defined in Rule 144A under the Securities Act) pursuant to Rule 144A or another exemption from registration under the Securities Act.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order or (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50, and 50A respectively of the Order or (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2003/71/EC (this Directive together with any implementing measures in any member state, the "Prospectus Directive") only to those persons who are qualified investors for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person or qualified investor may act or rely on this document or any of its contents.

This announcement does not constitute a prospectus and nothing herein contains an offering of securities. No one should purchase or subscribe for any securities in the Company, except on the basis of information in any prospectus published by the Company in connection with the potential offering and admission of such securities to trading and official listing on Oslo Børs. Copies of any such offering memorandum will, following publication, be available from the Company's registered office.

The Managers and their affiliates are acting exclusively for the Company and no-one else in connection with the intended offering. They will not regard any other person as their respective clients in relation to the intended offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the intended offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the contemplated offering, the Managers and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such shares and other securities of the Company or related investments in connection with the contemplated offering or otherwise. Accordingly, references in the prospectus, if published, to the shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, such Managers and any of their affiliates acting as investors for their own accounts. The Managers do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Shares have been subject to a product approval process, which has determined that they each are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Shares may decline and investors could lose all or part of their investment; the Shares offer no guaranteed income and no capital protection; and an investment in the Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. Conversely, an investment in the Shares is not compatible with investors looking for full capital protection or full repayment of the amount invested or having no risk tolerance, or investors requiring a fully guaranteed income or fully predictable return profile.

The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offering.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Shares.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the Shares and determining appropriate distribution channels.

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and that can be identified by words such as "believe", "expect", "anticipate", "intends", "estimate", "will", "may", "continue", "should", and similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.