THIS RELEASE MAY NOT BE RELEASED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.

3 November 2016 09.00 AM EET

SISTEMA FINANCE S.A. LAUNCHES A VOLUNTARY PUBLIC CASH TENDER OFFER FOR ALL SHARES IN HONKARAKENNE OYJ

Sistema Finance S.A. (the “Offeror”) announces that it will make a voluntary public tender offer in cash to purchase all of the issued  Series A shares and Series B shares in Honkarakenne Oyj (Series B shares on Nasdaq Helsinki Ltd. (“Nasdaq Helsinki”): HONBS) (”Honka”) (the ”Tender Offer”). The price offered for each Series A share and each Series B share of Honka validly tendered in the Tender Offer will be EUR 1.50 in cash.

Sistema Finance S.A. is a subsidiary of Sistema PJSFC (“Sistema”) and a part of Sistema Group (Sistema PJSFC together with its subsidiaries). Sistema Group is a  diversified Russian group serving over 150 million customers in the sectors of telecommunications, high technology, banking, retail, wood processing, agriculture, real estate, pharmaceuticals, tourism and healthcare services. Sistema was founded in 1993. Its revenues in 2015 reached approximately EUR 10.4 billion; its total assets equalled approximately EUR 16.3 billion as of 31 December 2015. Sistema’s GDRs and shares are traded on the London Stock Exchange and the Moscow Exchange, respectively.

Mikhail Shamolin, President and Chief Executive Officer of Sistema and Chairman of the Board of Directors of Sistema Finance S.A., says:

"We believe our offer is highly attractive to Honka's shareholders, as Sistema Group is offering a strong premium to the company's market price."

“Honka is one of the world's largest producers of log houses, possessing a well-known premium brand, established distribution channels, and unique technological solutions. The acquisition of Honka is in line with our strategy of creating a global leader in wooden homes production.”

“Together we are a good strategic fit. Honka is commercially active across developed markets globally, and this will provide us with access to new markets. Honka will enhance its access to Russia as one of the largest markets for log houses via Sistema’s subsidiary Segezha Group, its vast resource base and modern woodworking facilities. Sistema also has robust financial resources to invest actively in the future development of the business.”

Emile Wirtz, the Managing Director of Sistema Finance S.A., added:

“Sistema Group plans to further grow Honka’s global operations through expansion of footprint, developing its distribution network in the most attractive markets and offering best in class products to customers globally.”

OFFERED PRICE

The price offered for each Series A share and each Series B share of Honka validly tendered in the Tender Offer will be EUR 1.50 in cash, representing a premium of approximately 14.5 percent compared to the closing price of the Series B shares of Honka on Nasdaq Helsinki on 2 November 2016, the last trading day before the announcement of the Tender Offer.

On the date of this stock exchange release, Honka's share capital amounts to EUR 9,897,936, the number of Series A shares issued and outstanding is 300,096, and the number of Series B shares issued is 4,911,323. The price offered in the Tender Offer has been determined based on the above-mentioned numbers of shares. In the event the number of shares in Honka increases or Honka issues special rights entitling to shares in accordance with Chapter 10 of the Finnish Companies Act (624/2006, as amended) prior to the completion of the Tender Offer, the Offeror reserves the right to adjust the price offered accordingly. The Offeror has purchased 7,213 Series B shares in Honka on November 2, 2016 in ordinary trading on Nasdaq Helsinki and will become a shareholder in Honka following the settlement of such purchase. Sistema or its other subsidiaries have not purchased or hold any shares in Honka at the time of the announcement of the Tender Offer.

BACKGROUND INFORMATION ON SISTEMA, ITS FOREST AND PRODUCTION ASSETS, AND HONKA

Sistema Finance S.A. is a subsidiary of Sistema PJSFC (“Sistema”) and a part of Sistema Group (Sistema PJSFC together with its subsidiaries). Sistema Group is a diversified Russian company serving over 150 million customers in the sectors of telecommunications, high technology, banking, retail, wood processing, agriculture, real estate, pharmaceuticals, tourism and healthcare services. Sistema Group strives to enhance equity value by building market-leading businesses and actively re-investing proceeds into new value-accretive ventures.

Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema’s ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange.

A member of the Sistema Group – GC Segezha LLC ("Segezha Group" or “Segezha”) – is one of Russia's largest vertically integrated forest holding companies with a full cycle of logging and advanced wood processing. Segezha comprises forest, wood processing and pulp and paper assets in Russia and Europe, and operates in 12 countries. Segezha's production facilities are located in 8 countries and in 6 Russian regions. The company's products are sold in 89 countries. Segezha's enterprises employ approximately 13,000 employees. Segezha is the largest forest user in the European part of Russia, with the total area of leased forest of more than 7 million hectares. 95 percent of its products are certified. In 2016, comprehensive forest regeneration will cover 21,000 hectares of forests. Segezha is the largest producer of paper sack in Russia (with a market share of approximately 52 percent) and the second largest in Europe (with a market share of approximately 16.5 percent); the largest producer of quality unbleached sack paper in Russia (with a market share of approximately 71 percent) and the fourth largest producer in the world. Segezha is also the fifth largest producer of large-size birch plywood in Russia and seventh largest producer globally; it is also the largest producer of sawn timber in Russia (approximately 900,000 cubic meters/year) and the largest  producer of laminated log houses in Russia (capacity of approximately 37,000 cubic meters/year). Segezha’s production capacity in glued wooden constructions is approximately 65,000 cubic meters/year. Segezha's official website is www.segezha-group.com. All estimates of Segezha’s market position set out in this paragraph are based on estimates of Segezha Group.

Segezha's wholly-owned subsidiary – JSC Sokol Woodworking Plant (the "Sokol Plant") – is the largest woodworking plant in the European region of Russia and the first enterprise in the country to develop manufacturing process of laminated logs house-building. In 2013, the Sokol Plant successfully completed a project to significantly increase its added-value wood processing capacity, seen as a priority investment initiative in forest exploitation in Russia. The comprehensive upgrade enabled the Sokol Plant to reach a capacity of up to approximately 180,000 cubic meters of dried lumber, approximately 65,000 cubic meters of glued wooden constructions and approximately 37,000 cubic meters of laminated log houses. All the installed equipment is modern and produced in the EU (including Finland). In addition, the Sokol Plant has the right to wood resources with allowable cut of approximately 365,000 cubic meters per year. The Sokol Plant's 2015 financials were the following: total sales – approximately RUB 2 billion (approximately EUR 29.4 million), and EBITDA – approximately RUB 255 million (approximately EUR 3.8 million).

Honka is one of the global leaders in production of log houses with offices in more than 30 countries. The company's headquarters and production facilities are in Finland. With more than 50 years in operation, Honka has built over 85,000 wooden homes in 50 countries. It produces more than 3,500 log homes annually. In 2015, 58 percent of the company's production was sold outside Finland and Baltic countries and Honka’s total sales exceeded EUR 39 million. Honka homes are designed by in-house architectural team that prides itself on unique expertise in design and architecture. The company invests more than EUR 300,000 annually in new design solutions. The high quality and environmental standards of Honka's products are certified by the Programme for the Endorsement of Forest Certification (PEFC). 

THE TENDER OFFER IN BRIEF

The offer period under the Tender Offer is expected to commence on or about 11 November 2016 and to run for approximately five (5) weeks. The Offeror reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Tender Offer.

The completion of the Tender Offer will be subject to the satisfaction or waiver by the Offeror of the following conditions:

1. the valid tender of shares representing, together with any other shares otherwise acquired by the Offeror prior to or during the offer period, more than 67 percent of each of the issued Series A shares and each of the Series B shares of Honka on a fully diluted basis;
2. the receipt of all necessary regulatory approvals, permits and consents, including without limitation any competition law clearances, and that any conditions set in such permits, consents or clearances  are reasonably acceptable to the Offeror;
3. no legislation or other regulation having been issued or decision by a competent court or regulatory authority, including the Finnish Financial Supervisory Authority, having been given that would wholly or partly prevent the completion of the Tender Offer or result in a material adverse change in respect of Honka and its subsidiaries, taken as a whole;
4. no information made public by Honka being materially inaccurate, incomplete, or misleading, and Honka not having failed to make public any information that should have been made public by it under applicable laws and regulations;
5. no fact or circumstance having arisen after the announcement of the Tender Offer that constitutes a material adverse change in respect of the general affairs, business, assets, financial condition, results of operations or prospects of Honka and its subsidiaries, taken as a whole;
6. Honka not having passed a resolution that would materially impact the rights attached to the Series A shares and/or the Series B shares in Honka;
7. Honka not having agreed upon a competing transaction involving all or a material part of the business and/or assets of Honka that would frustrate the purpose of the Tender Offer; and
8. Honka having taken all steps necessary to permit the transfer in the Finnish book-entry securities system of Series A shares validly tendered in the Tender Offer to the Offeror in connection with the completion of the Tender Offer.

The Offeror reserves the right to withdraw the Tender Offer in the event that any of the above conditions to completion is not fulfilled.

The Tender Offer will be financed through the Offeror group's existing cash balances and/or internal financing arrangements and no third party financing is required by the Offeror to complete the Tender Offer. The Tender Offer is thus not conditional upon obtaining any external financing for the Tender Offer.

The detailed terms and conditions of the Tender Offer and information on how to accept the Tender Offer will be included in the tender offer document expected to be published by the Offeror on or about 11 November 2016.

The Offeror has undertaken to follow the recommendation regarding the procedures to be complied with in takeover bids (Helsinki Takeover Code) issued by the Finnish Securities Market Association as referred to in the Finnish Securities Market Act.

The Tender Offer is subject to regulatory requirements, including obtaining consent from the antimonopoly authorities of the Russian Federation. Based on the current estimate of the Offeror, competition law clearances in other jurisdictions are not needed. 

The Offeror reserves the right to buy shares of Honka before, during and/or after  the offer period in public trading on Nasdaq Helsinki or otherwise.

ADVISORS

Evli Bank Plc acts as the arranger of the Tender Offer. White & Case LLP acts as the legal advisor to the Offeror in connection with the Tender Offer.

MEDIA AND PRESS

The Offeror will hold a press conference regarding the Tender Offer at 11:30-12:30 EET 3 November 2016 at Sokos Hotel Presidentti, Eteläinen Rautatiekatu 4, Helsinki, Finland.

Further information:

Sistema Investor Relations

Yury Krebs

tel. +7 (495) 730 66 00

E-mail: y.krebs@sistema.ru

Media contacts:

Matti Saarinen

Kreab

tel. +358 40 505 0667

E-mail: matti.saarinen@kreab.com

INFORMATION REGARDING HONKA

Honkarakenne Oyj (“Honka”) is one of the global leaders in the production of log houses with offices in more than 30 countries. The company's headquarters and production facilities are in Finland. With more than 50 years in operation, Honka has built over 85,000 wooden homes in 50 countries. It produces more than 3,500 log homes annually. In 2015 58 percent of the company's production was sold outside Finland and Baltic countries; and Honka’s total sales exceeded EUR 39 million. Honka homes are designed by in-house architectural team that prides itself on unique expertise in design and architecture. The company invests more than EUR 300,000 annually in new design solutions. The high quality and environmental standards of Honka's products are certified by the Programme for the Endorsement of Forest Certification (PEFC). Series B shares of Honka are listed on the Nasdaq Helsinki. www.honka.com

INFORMATION REGARDING SISTEMA FINANCE S.A. AND SISTEMA GROUP

Sistema Finance S.A. is a subsidiary of Sistema PJSFC (“Sistema”) and a part of Sistema Group (Sistema PJSFC together with its subsidiaries). Sistema Group is a diversified Russian group serving over 150 million customers in the sectors of telecommunications, high technology, banking, retail, wood processing, agriculture, real estate, pharmaceuticals, tourism and healthcare services. Sistema was founded in 1993. Its revenues in 2015 reached approximately EUR 10.4 billion; its total assets equalled approximately EUR 16.3 billion as of 31 December 2015. Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema’s ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange. www.sistema.com.

THIS RELEASE MAY NOT BE RELEASED OR OTHERWISE DISTRIBUTED, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.

THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN OFFER OR INVITATION TO MAKE A SALES OFFER. INVESTORS SHALL ACCEPT THE TENDER OFFER FOR THE SHARES ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN A TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE EITHER AN OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY APPLICABLE LAW OR WHERE ANY TENDER OFFER DOCUMENT OR REGISTRATION OR OTHER REQUIREMENTS WOULD APPLY IN ADDITION TO THOSE UNDERTAKEN IN FINLAND.

THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND, WHEN PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS WILL NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OF INTERSTATE OR FOREIGN COMMERCE OF, OR ANY FACILITIES OF A NATIONAL SECURITIES EXCHANGE OF, THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. THE TENDER OFFER CANNOT BE ACCEPTED BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG.