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November 20, 2003

Far EastTelecom places bonds valued at Rub 1 bln

Far Eastcompleted placement of a bond issue on MICEX on November 19, 2003.

During the first half of the day, an auction was held for the purpose of establishing the rate of the 1st coupon. All in all, 57 bids were submitted for a total of Rub 925.61 mln. Coupon sizes indicated in the bids varied from 14% to 16.5%. Finally, it was fixed at 14.5% and 53 bids worth Rub 896.711 were processsed. The rest of the bonds – 103,289 – were placed after the auction was completed, during the pre-placement period. Hence, the entire issue of bonds (1 mln) was placed within one day.

Yield to maturity amounted to 14.74%, yield to two years – 15.726%. As a result, the premium for the secondary bond market of traditional telecommunications companies stood in the range of 103 basis points (STC) to 229 basis points (Central Telecom - 2). Average premium on all seven circulating issues of Svyazinvest’s subsidiaries amounted to 1.33%.

Main specifications of the issue:

Numberofbonds– 1,000,000

Par value of one bond – Rub 1,000

Maturity– 1,092 days

Interest is paid out once every six months, and annual coupon rates are as follows:

1st and 2nd (maturity 1 year) – 14.5%

3rd and 4th (maturity 2 years) – 15%

5th and 6th (maturity 3 years) – 13%

The company announced a put option on the bonds, at par value upon the expiration of two years in circulation.

The placement came off successfully, according to Alexei Skrylnikov, Head of the Securities Division of the Securities and Capital Markets Department. Changes in the market’s sentiments were quickly adjusted to, factored into the issue’s conditions, while the placement itself was performed in the shortest term. Alexei Skrylnikov noted that demand for the bonds was satisfactory, and that Far Eastwill try to thank the investors that participated in the initial placement by placing the bonds into secondary circulation before New Year.

Trust Investment Bank is the issue’s arranger, underwriter, and payment agent, and ABK Investment Company is the financial consultant.




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