Hybrid Securities

Vale pays holders of mandatorily convertible notes

Vale has announced that it will pay additional interest to holders of notes mandatorily convertible into ADRs  falling due on 15 June 2012, issued by wholly-owned subsidiary, Vale Capital II – series VALE-2012 and VALE.P-2012.

Holders of notes in the series VALE-2012 will receive additional interest of R$ 1.236080 per note, whereas holders of notes in the series VALE.P-2012 will receive R$ 1.429662 per note. These amounts in Brazilian Reais will be converted into American Dollars according to the Brazilian Real/American Dollar exchange rate applicable on 30 October 2009.

Ex-dividend trading of the notes on the New York Stock Exchange will commence on 16 October 2009. Investors holding notes through an account with the Depositary Trust Company (DTC) will receive payment in accordance with the procedures of DTC and its custodians.

As specified in the prospectus, note-holders will receive additional interest in American Dollars equivalent to the dividends and/or interest on own capital (net of taxes and expenses applicable) received by holders of ADRs – each representing an ordinary/preferential share in Vale, VALE/VALE.P – multiplied by the number of ADRs that they would receive if the notes were converted into ADRs in accordance with the conversion rate specified in the prospectus. For this reason, Board of Administration approval of the distribution of dividends, as announced today, entails the payment of additional interest to note-holders.

¹ quarterly paid

07/06/2009 - Mandatorily Convertible Notes due 2012 - Final prospectus

06/25/2007 - Mandatorily Convertible Notes due 2010 - Final prospectus