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Brookfield makes USD150m preferred equity investment in GrafTech

An affiliate of Brookfield Asset Management is to acquire USD150 million of 7 per cent convertible preferred shares of GrafTech International in a private offering. The investment agreement follows the letter of intent announced by GrafTech on 29 April, 2015.

The convertible preferred share issuance, which was unanimously approved by GrafTech’s Board of Directors, is expected to close once customary closing conditions, including applicable regulatory approvals, are satisfied.

Under the terms of the investment agreement, upon issuance, the convertible preferred shares will be issued in two series, Series A shares and Series B shares. The series A shares will be immediately convertible into GrafTech common shares equal to approximately 19.9 per cent of the currently outstanding shares of GrafTech common stock, at a conversion price of $5.00 per common share, subject to customary anti-dilution adjustments. The series B shares will become convertible into common shares equal to approximately 2 per cent of the currently outstanding shares only upon approval by GrafTech stockholders in accordance with New York Stock Exchange requirements. If approved, the two series will be combined into one series.

Both series of convertible preferred shares are entitled to dividends at a 7 per cent annual rate. Dividends will be cumulative and will accrue until paid. The proceeds from the sale of the convertible preferred stock, together with other cash and credit resources of the Company, will be used to repay the Company’s senior subordinated notes due to mature in November 2015.

Pursuant to the investment agreement, Brookfield will designate two directors to be appointed to the Company’s Board. With the addition of these directors, the GrafTech Board will be expanded from seven to nine.

Additional details regarding the private offering are available in the Company’s filings with the Securities and Exchange Commission.

As previously announced, the GrafTech Board unanimously approved a separate letter of intent for a possible tender offer by Brookfield to acquire outstanding shares of GrafTech common stock. GrafTech and Brookfield continue to negotiate terms for a definitive agreement regarding a potential tender offer. There can be no assurance that any definitive agreement regarding a potential tender offer will be signed or that a tender offer transaction will be launched or consummated.

JP Morgan Securities LLC is serving as financial advisor to GrafTech on both the convertible preferred issuance and the potential tender offer, and Withers LLP and Willkie Farr & Gallagher LLP are serving as legal counsel in connection with the convertible preferred share issuance and negotiations regarding the potential tender offer.

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