LenSpetsSMU finalized Russia's first successful transaction on a change in Eurobond parameters (press release of the company)

04.03.2009

PRESS RELEASE
LSS’ Noteholders voted all in favor on March 3, 2009 to approve a decision on a change in the parameters of the issue of CLN.

LSS reached an understanding on the cancellation of put-option in April 2009, the prolongation of CLN’s until August 2010 and a softening of the regime of the observance of financial covenants. Borrower also obtained the call-option of credit notes, which made this financial tool more flexible. From its side, LSS agreed to increase the annual rate from 9.75% to 12% and to establish an amortization payment schedule.

The change in the parameters of the release of credit notes was the restraining action aimed at increasing stability in the holding under current global financial crunch. It was initiated for the optimization of credit portfolio on the company, and this aim was achieved successfully.

There is today every reason to say that, for the first time in Russia, a transaction has successfully been brought to a truly mutually beneficial result with respect to a change of parameters in the issue of Eurobonds. The change in the parameters of credit notes did not require the assignment any pledges, sale of shares or warrants from LSS.

As a result, LSS has today the lowest leverage of all Russia’s public construction companies, both in relative and absolute terms.

The professionalism, reliability and creditworthiness of the company are noted by the international rating agency Standard & Poor's.LSS has a ‘B’ rating, and a ‘stable’ outlook. In December 2008 S&P reduced Russia’s rating and that of a number of important Russian companies, while the rating of LSS was confirmed. At present, this is the highest rating of any construction company in Russia and Eastern Europe.

The satisfactory state of the company is further affirmed by the fact that the Russian Central Bank included LSS in its list of organizations whose securities can be assumed as a guarantee on credit extended to commercial banks. (Russian Central Bank’s communication №177-T of 25.12.2008)

The success of the transaction on the change in Eurobond parameters was the result of coordinated and highly professional actions taken by the financial service of LSS and all participants in the process, including arranger ING, joint arranger ROSBANK, and legal adviser Herbert Smith.

CONTACT DETAILS:

Mikhail Dukhovny, Director of the Department for Corporate Communication

tel. (812) 348-21-25, e-mail: dukhovny_m@lenspecsmu.ru

Viktor Vasenev, Deputy CFO

tel. (812) 348-09-95, e-mail: vasenev_v@lenspecsmu.ru