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Raiffeisenbank Arranges Restructuring of OOO Top-Kniga Bonds

The second bond issue of OOO Top-Kniga was restructured on December 17, 2008. ZAO Raiffeisenbank was an arranger and adviser for the restructuring.

The bond of OOO Top-Kniga with a total par value of RUB 1.5 bn was arranged on December 14, 2006. The issue's terms and conditions included a put option at par on December 17, 2008.

Due to adverse conditions in the financial markets in recent months and limited possibilities for refinancing in the financial markets, Top-Kniga approached investors with a proposal to restructure the bond issuance.

As a result, a restructuring agreement totaling RUB 1.2 bn was signed by more than 30 bondholders of OOO Top-Kniga. As of the date of the offer, there were outstanding bonds totaling RUB 1.3 bn at par value.

The restructuring plan proposed:

1) redeeming 25% of the bonds owned by investors on a pro rata basis on the day of the offer (December 17, 2008);

2) a depreciable redemption of the remaining bonds in four equal, quarterly installments in March, June, September and December 2009;

3) a 20% per annum semi-annual coupon rate until the bonds are redeemed (for 5-8 coupon periods);

4) additional covenants for the Company for new loans, dividends, warranties, etc.;

5) a personal warranty from G. A. Lyamin, the majority owner of the Company, to the bondholders in the form of a public irrevocable offer.

Nikita Patrakhin, Head of Corporate Finance and Investment Banking Division at ZAO Raiffeisenbank, said: «It is objective that in the current market situation, which is rather difficult, many companies face a huge refinancing problem. This deal has proved that even during an economic crisis a company has a chance to reach an agreement with its bond investors and find solutions that are advantageous both for the issuer and investors, who will eventually receive bonds of higher quality (in terms of credit risk) and enjoy greater confidence in repayment. There is no doubt that the investors' willingness to cooperate with Top-Kniga and their consent to the proposed terms and conditions demonstrate their high regard for the issuing company's business model and its resistance to the financial crisis.»

Top-Kniga is the largest book selling company in Russia, accounting for nearly 12% of Russia's retail book market. Its income for first three quarters of 2008 exceeded RUB 6.9 bn. Top-Kniga's retail network comprises 550 stores in five different formats across Russia, as well as in Ukraine, Kazakhstan, and Uzbekistan.

Raiffeisenbank is recognized as a leader on the Russian corporate bond market. In 2001-2008 Raiffeisenbank acted as a lead manager or co-manager for 146 corporate bond issues with a total nominal value of RUR 485 billion.

ZAO Raiffeisenbank is a subsidiary of Raiffeisen International Bank-Holding AG. Raiffeisenbank is the largest foreign-owned bank in Russia, ranking 8th in terms of assets among top Russian banks based on 3Q 2008 results (Interfax-CEA). According to Interfax-CEA, ZAO Raiffeisenbank ranked 4th in Russia in terms of private deposits and 6th in consumer lending in Russia based on 3Q 2008 results.

Raiffeisen International operates one of the largest banking networks in CEE. 17 markets in Europe's growth region are covered by subsidiary banks, leasing companies and a range of other financial service providers. 14.6 million customers are serviced in more than 3,100 business outlets. Raiffeisen International is a fully consolidated subsidiary of Raiffeisen Zentralbank Osterreich AG (RZB), which owns more than two-thirds of the common stock. The remainder is in free float, the shares are listed on the Vienna Stock Exchange. RZB is a leading corporate and investment bank in Austria and the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group.

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