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05.09.06

Demand for OMZ bonds of the 5th issue exceeded supply by 2.5 times.

5 September the 5th issue of OMZ, JSC bonds was placed on MICEX; theissuer is Russias largest heavy engineering specialist. The bidding resulted in the issuers decision to fix the first coupon rate at 8.80% p.a., i.e. the bonds yield as per the three-year offer will total 8.99%.

During the bidding organized to define the first coupon rate, 68 bidswere sold worth the total of RUR 3.7 billion, The bids from investorsoffered rates ranging from 8.65% to 9.50%. The issue was placed duringthe bidding in full.

ZAO Raiffeisenbank Austria is the lead-manager and underwriter of theissue.

Co-lead managers include Morgan Stanley Bank, Vneshtorgbank, DeutscheBank, Bank Soyuz, IG Kapital, and VTB-24.ru.

The bond issue has a total nominal value of RUR1.5 billion, with 5-yearmaturity. The coupon period is six months. Coupon rates for the firstthree years of bonds circulation are 8.80% p.a. For later coupon periods, the rates are to be defined by the issuer. The issuers decision also provided that investors may call for early repayment of the bonds at their nominal value 3 years after the issue was placed.

Additional security for the issue will be provided as irrevocable offerfrom issuers subsidiary JSC Izhorskiye Zavody.

The financing provided by the bond issue will help refinance the 4thbond issue of JSC OMZ, as well as the current loan portfolio of theissuer.

The bond issue will provide OMZ with resources to restructure andstreamline the debt servicing costs, and relieve a part ofcollateralised assets. The total debt of OMZ will not be changed afterthe issue.

United Engineering Plants (OMZ) is Russias biggest company with business focus on heavy engineering, design, construction, sale and technical maintenance of equipment and machinery for nuclear power industry and mining. Yet another mainstream business is production of special quality steel, and outsourcing of industrial facilities. The companys business units include OMZ-Atom (nuclear industry), OMZ-Spetsstal (special quality steel), OMZ-Mining Equipment and Technologies, OMZ-Uralmsh; Side-Business unit of OMZ. Production facilities of OMZ units are located inRussia (Uralmashzavod (Ural Engineering Plant) and Izhorskiye Zavody (Izhora plants)) and the Czech Republic (Skoda Steel and Skoda JS).

The current area of focus for OMZ is ongoing performance of businessprocess optimization program, with the ultimate target to boostefficiency and investment edge of the company. Once implemented, theprogram will have a key effect on the positive performance trend of OMZin 2005.

A leading Russian corporate bonds specialist, Raiffeisenbank has a trackrecord as lead-manager and underwriter of 75 bond issues with the totalnominal value of over RUR215 billion over the period of 2001 to 2006.

ZAO Raiffeisenbank Austria ranks eighth amongst Russias biggest banks by assets as of Q1 2006 (source: Interfax-CEA). The Bank operates 19 offices in Moscow, 5 offices in Saint-Petersburg, regional branches located in Yekaterinburg, Samara, Novosibirsk, Chelyabinsk, Nizhniy Novgorod, and Krasnodar. Moody''s Interfax RatingAgency rated the bank Aaa.ru on the long-term national scale, and assigned it a short-term credit rating of RUS-1. Moody''s Investors Service rated ZAO Raiffeisenbank Austria at D (financial reliability), long-term Baa2, and short-term Prime-2 for deposits in foreign currency.

ZAO Raiffeisenbank Austria is subsidiary of Raiffeisen InternationalBank-Holding AG, which operates one of the leading banking networks inthe EU, with subsidiary banks and leasing companies in 16 markets acrossCEE. Ten million customers are serviced through over 2,700 businessoutlets. Raiffeisen International is a fully consolidated subsidiary ofRaiffeisen Zentralbank Oesterreich AG (RZB), which owns 70 percent ofthe share capital. The remaining 30 percent of the shares are traded onthe Vienna Stock Exchange. Core of the biggest Austria-based bankinggroup Raiffeisen, RZB is a leading corporate and investment bank inAustria.

 

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