Unsecured debut loan for Russian telecom-giant

RZB Group and three partners mandated. MTS receives USD 600 million forgeneral corporate purposes.

On 30 September 2004, RZB Group headed by Raiffeisen ZentralbankOesterreich AG (RZB-Austria), ABN AMRO Bank N.V. (ABN AMRO), HSBC Bankplc (HSBC) and ING Bank N.V. (ING) have signed banks into the debut USD600 million Syndicated Amortising Term Loan Facility for MobileTeleSystems OJSC (MTS). This is the first entirely unsecured loantransaction attracted by a Russian corporate borrower of this size andtherefore a benchmark deal.

The facility was fully underwritten by the above banks already at theend of July, together with Bank Austria Creditanstalt AG and CommerzbankAG that joined ahead of general syndication as sub-underwriters. Intotal, 25 banks participate in the syndicate. The proceeds will be usedfor general corporate needs of the borrower including the refinancing ofexisting indebtedness. Due to a 20% over-subscription, the amount wasincreased to USD 600 million. The syndication was highly successfuldespite the current volatility in the Russian banking and corporatemarket. The success of the deal highlights both a strong credit qualityand market position of MTS as well as an outstanding professionalcompetence of the arranging banks.

MTS is a leading provider of mobile cellular communications services inthe Russian Federation and Ukraine, employing technology based primarilyon the GSM platform. In 2003, the Company generated net revenues of USD2.55 billion and had a subscriber base of 16.7 million (13.4 millionthereof in Russia) as of 31 December 2003, making it the largest mobileoperator in both Russia and Ukraine in terms of net revenues andsubscribers.

MTS''s strategic shareholders are T-Mobile, a wholly-owned subsidiary ofDeutsche Telekom and AFK Sistema, a Russian financial and industrialholding.

RZB is the central institution of the Austrian Raiffeisen Banking Group,the country''s most powerful banking group. RZB is a leading corporateand investment bank in Austria and also considers CEE as its homemarket, where, via its wholly owned subsidiary Raiffeisen InternationalBank-Holding AG (Raiffeisen International), it operates a network of 15subsidiary banks with more than 800 banking outlets, as well as tworepresentative offices, in 16 markets of the region.