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North-West Telecom

December 18, 2002

OJSC North-West Telecom obtained permission from FCSM to increase the number of its level I ADRs

The Russian Federal Commission for the Securities Market (FCSM) granted permission on December 3, 2002, for OJSC North-West Telecom to include additional 186,656,700 shares into its Level I ADR program. The permission relates to shares, issued by North-West Telecom during the merger of regional wireline operators in North-West Russia.

One ADR of North-West Telecom represents 50 shares of its common stock.

Earlier the FCSM permitted North-West Telecom to convert up to 536,718,850 shares of its common stock into American depository receipts. Thus the overall number of Company’s shares which may be converted into ADRs totals 723,375,550.

OJSC North-West Telecom Deputy General Director – Director for Corporate Governance Nikolai Bredkov commented:

“The decision of North-West Telecom to develop its Level I ADR program has two main objectives. It is a step forward to improving investment attractiveness and transparency of OJSC North-West Telecom and part of our strategy to strengthen Company’s position on international capital markets.

We expect that liquidity of North-West Telecom securities and their attractiveness for investors will improve and bring about growth in Company’s market capitalization after completion of the merger.”

Additional information:

Under U.S. securities laws shares of non-US corporations are not allowed to trade on U.S. exchanges or OTC. An ADR is a dollar-denominated negotiable certificate that represents ownership of shares in a non-U.S. company and serves as a tool for non-U.S. companies to get access to U.S. capital markets.

ADR programs are classified into so called “levels”. Level I programs don’t offer the issuer the opportunity to raise new capital and are used by companies seeking to trade their securities in the U.S. OTC market. Level II and III programs imply listing and trading of securities on U.S. exchanges, and Level III ADR programs give issuers the opportunity to raise capital through public offering of securities to U.S. investors.

Russian securities regulation requires that issuer’s shares in the form of ADRs don’t exceed 75% of its shares outstanding (in par value terms).

North-West Telecom launched its Level I ADR program in 2000. One ADR of North-West Telecom represents 50 shares of its common stock. J.P. Morgan is the Depositary Bank for the program.

 

 

 

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