At an auction on MICEX earlier today OMZ set the annual coupon rate for the 4-7 coupons of its ruble bonds at 14.25%. As a result OMZ bought back 226,404 bonds, which represents 25% of the total bond issue.

OMZ currently has 900 million rubles of local bonds outstanding which were placed in March 2003. These mature in February 2009, pay semi-annual coupons and feature an auction rate re-set mechanism. The bond is putable at the option of holders on each auction-reset date as well as on 1 September 2005, at par. The first three semiannual coupon rates are equal and were determined via an auction on the date of placement at 13%p.a. The fourth through seventh semiannual coupons will also be equal (@14.25%p.a.). The final five semiannual coupons will be equal and will be determined via an auction to be held on the date of payment of the seventh coupon.

In preparation for the auction OMZ reserved 900 million rubles. In accordance with the terms of the issue both existing and potential investors could participate in the auction. A syndicate of banks led by Raiffeisen Bank Austria participated in the auction and acquired part of the bond issue. In addition to the syndicate organizer, the syndicate included Vneshtorgbank, Alfa Bank, Bank Soyuz, Bank AK Bars and Impexbank.

“We are happy with the results of the auction and consider 14.25% to be a fair rate for the current market conditions. I would like to point out that OMZ was prepared to buy back 100% of the bond issue and we are happy that our investors trust us and consider the situation at the Company to be stable” said Mr. Filatov, OMZ’s CFO.

For further information please contact Marina Nacheva, Head of Investor Relations, on (++7095) 974 6021 or by e-mail at mnacheva@omz.ru