Essar Energy Offering Convertible Bonds due 2016

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Essar Energy PLC the India-focused integrated energy company, said it has launched an offering of $500 million of Convertible Bonds due 2016, which may be increased by up to $100 million by way of an increase option prior to pricing and by up to $75 million by way of an over-allotment option granted to the joint bookrunners allowing them to subscribe for the additional Bonds by Jan. 28.

-Company intends to use the net proceeds of the offering primarily to pursue acquisition opportunities of power, coal and oil and gas assets, in line with its stated strategy.

-Proceeds may also be used for general corporate purposes, including to provide financial flexibility for the announced power and oil and gas projects and to refinance existing debt.

-Bonds will be issued at par by the Company’s wholly-owned subsidiary Essar Energy Investment Ltd. and will be guaranteed by the Company.

-Bonds are expected to have a coupon of 3.75% to 4.25% payable semi-annually in arrears and will be convertible into fully paid ordinary shares of the Company.

-Conversion price is expected to be set at a premium of between 30% to 35% to the volume weighted average price of the Ordinary shares on the London Stock Exchange between launch and pricing.

-Essar Global Ltd., the majority shareholder of the Company, has indicated it will not participate in the transaction.

-Essar Global, or EGL, will at pricing enter into an equity swap transaction with Standard Chartered Bank whereby it will acquire an additional economic interest of up to $200 million in Essar Energy’s Ordinary shares.

-Deutsche Bank AG, London Branch and J.P. Morgan Securities Ltd. have agreed to waive the lock up entered into in April 2010 pursuant to the underwriting agreement for the initial public offering of the Company.

-Deutsche Bank AG, London Branch, J.P. Morgan Securities Ltd. and Standard Chartered Bank have been appointed joint bookrunners in respect of the offering.

-Shares closed in London Monday at 557.5 pence valuing the company at GBP7.27 billion.