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LSR Group Successfully Places its Fourth Bond Issue worth RUB 5 Billion

07 August 2008

LSR Group, one of the leading real estate developers and building materials producers in Russia (LSE: LSRG, MICEX, RTS: LSRG), announces that today, on 7 August 2008, it successfully placed its Series 02 bond issue for the amount of RUB 5 Billion.

LSR Group stated a rouble coupon payment of 13.25% for the placement, the lowest rate in the Russian construction and real estate development market recently. 

The successful placement of LSR's bonds was driven by the good financial results of the company for 2007 according to its IFRS statements confirmed by KPMG; positive business dynamics, including a significant growth of revenues in 2007 and the first half of 2008 as well as the company's corporate ratings assigned by Moody's Investors Service - a B1 rating with a Stable Outlook (assigned in July 2007 and confirmed on 30 May 2008), and a B+ rating with a Stable Outlook assigned by Fitch Ratings on 30 May 2008.

The volume of bids received for the bonds exceeded the supply and totalled RUB 5.983 billion. 84 bids were met as a result of the competition.

The proceeds of the bond issue are to be used by LSR Group to refinance and finance its investment projects.

"We believe that given a complicated situation in the international and Russian debt markets the placement of LSR Group's bonds can be considered a great success. Due to the high level of transparency of the Group, its high quality relations with the investors, meticulous credit history in the market as well as the well performed distribution of the issue, the placement attracted a wide range of end investors and involved leading Russian banks, management and investment companies as well as international clients whose demand accounted for nearly 29%," commented Boris Ginzburg, Executive Director, Head of Debt Instruments Department of URALSIB Financial Corporation. 

Elena Tumanova, CFO of LSR Group said:

"The proceeds of the issue will be used to finance our investment programme, primarily our major investment projects aimed at constructing new cement and brick plants as well as to refinance the current portion of our credit portfolio.  We are pleased with the placement results even though the cost of funds raised proved higher than last year when the situation in the financial market was more stable."  

The number of securities issued was five million (5,000,000) bonds. The nominal value of securities is one thousand (1,000) roubles each.

State Registration Number 4-02-55234-E was assigned to the bond issue by the Federal Financial Markets Service on 29 May 2008.

No First Option is granted to the participants and/or other parties.

The interest rates on 2nd and 3rd coupons of the bonds are stated equal to 1st coupon rate. Thus, the issue provides for an offer within 18 months from the placement date.

The issue maturity period is five years. The bonds were placed in an open subscription on ZAO MICEX Stock Exchange and are to be traded on ZAO MICEX Stock Exchange and in the OTC market.

On 6 August 2008, LSR Group was notified by ZAO MICEX Stock Exchange that Series 02 book-entry interest-bearing non-convertible bearer bonds of OJSC LSR Group were included in Quotation List V pursuant to the Issuer's application and the decision of the MICEX Directorate dated 4 August 2008.

The manager of the issue is URALSIB Financial Corporation.

Notes to Editors:

OJSC LSR Group is a diversified construction company founded in 1993 and operating in a number of complementary market segments. Its core business areas are building materials, construction and real estate development. The Group includes enterprises for extraction and processing of aggregates, production and transportation of building materials, and housing construction - from mass market large-panel housing to elite property built after designs made by leading domestic and foreign architects.

LSR Group has operations and offices in a number of cities in the Leningrad Oblast, in St.Petersburg, Moscow, Yekaterinburg,  Lithuania, Latvia, Estonia, Ukraine and Germany. LSR Group employs over 15,000 people.

In 2005 and 2006, the revenues of LSR Group (according to IFRS statements) were US$ 463 million and US$ 777 million respectively. In 2007, the revenues amounted to US$ 1,403 million.

LSR Group has a B1 rating from Moody's Investors Service (outlook - Stable) assigned in July 2007 and confirmed on 30 May 2008 and a B+ rating by Fitch Ratings (outlook - Stable) assigned on 30 May 2008. The Group's shares are listed on MICEX and RTS and on the London Stock Exchange in the form of GDRs since its IPO in November 2007. 

In 2007, LSR Group was awarded 'The Company of the Year' National Award in the 'Construction' category.

For more details please contact:

Press Service, LSR Group
+7 (812) 314-1044

«LSR Group» discloses information on the page on the Internet of LLC Interfax-TsRKI — the news agency accredited by the Central Bank of the Russian Federation to disclosure of information.
Information is available here.

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