K-Mobile loan

complete

The proposed project will consist of (a) a USD 100 million A/B loan where the A-tranche, to be funded by the Bank, will (i) finance new capital investments in KaR-Tel’s network and (ii) refinance short-term banks and/or suppliers credits and the B-tranche, to be financed by commercial banks, will re-finance short-term loans from Kazakh banks (b) approximately USD 130 million of ECA backed vendor provided or arranged financing and internally generated cash, which will finance further new capital investments, refinance other indebtedness and support other operations of K-Mobile. By participating in the project, the Bank will be supporting the expansion of KaR-Tel, the second GSM operator in Kazakhstan. Following its recent acquisition by Vimpelcom of Russia, KaR-Tel is embarking on a fresh round of significant capital expenditures to upgrade its network. The Bank’s financing will allow KaR-Tel to (i) improve the quality of its service and extend its geographical coverage thus making KaR-Tel better competitor (ii) further strengthen competition in Kazkahstan’s mobile market and (iii) encourage further FDI in to the telecoms sector of Kazakhstan. KaR-Tel LLP, operating under brand name K-Mobile, is the second largest GSM network operator in Kazakhstan with over 1 million subscribers and a market share of over 31%. The Company is currently 100% owned by Vimpelcom of Russia through Limnotex, a Cypriot company, which in turn is owned by VimpelCom Finance B.V., a Dutch company, which is wholly owned by VimpelCom. Vimpelcom, a Russian open joint stock company, that is listed on the New York Stock Exchange (symbol: VIP), is the second largest GSM operator in Russia with 28.3 million subscribers as of end of January 2005. The Bank’s proposed syndicated financing will consist of A-tranche of USD 50 million five-year senior loan and B-tranche of USD 50 million three-year loan. The total project cost is estimated at USD 230 million over the next two years of which the Bank will provide USD 100 million. The remaining estimated USD 130 million will be comprised of ECA backed vendor financing and internally generated cash. The project was rated C/0 with a low risk rating. The project is unlikely to involve significant environmental issues. Environmental due diligence has confirmed that the Company is compliant with relevant Environmental, Health and Safety standard and requirements. The Company is required to continue to comply with national and EU EHS standards and requirements as well as submit an annual environmental, health and safety report. None. Kirill Podlipchuk, Director of Treasury KaR-Tel LLP 28g, Timiryazeva St., 480090, Almaty, Kazakhstan E-mail: kirill.podlipchuk@kar-tel.kz