OREANDA-NEWS. On 10 June 2008 Southern Telecommunications Company (“UTK”), the principal fixed-line telecommunications provider for Russia’s Southern Federal District reported that the Company placed in full its 5-year credit linked notes (CLNs) worth RUR 3.5 bln at  98.154% of nominal value The yield rate to the 12-month call option equaled 11% per annum. The coupon rate was set at 9% per annum. The issue provides for a buyback option three years after the placement date and the Borrower’s right to revise the interest rate. 50% of the CLN issue is to be repaid in 4.5 years.

Renaissance Capital is the CLN arranger, MDM Bank is the co-arranger. RCF investment company acts as the Financial Consultant.

A road-show in Moscow, London, Geneva and Zurich preceded the placement. The investment community showed a great interest to the CLN issue and placed 22 bids, 60% of which were from investors from Russia, 26% - from the United Kingdom, 7% - from continental Europe and 7% - from off-shore areas. During the course of the placement, demand exceeded the issue volume.

The Company plans to use the money accumulated from the CLN floatation to refinance its obligations and to turn some short-term obligations into long-term commitments.

Deputy Director General – Director for Economics and Finance of Southern Telecommunications Company Alexander Dobryakov noted that the Company was satisfied with the CLN placement results as well as with the well-organized work of the Arranger and the Financial Consultant. “The Company was a success to float its first rouble CLN issue on the international capital market in accordance with the approved financial strategy till 2012. We are happy with the CLN placement results and thank the CLN Arranger Renaissance Capital and our Financial Consultant RCF investment company for their effective and well-organized work", - Alexander Dobryakov stated.

Vice-President for debt markets of Renaissance Capital Maria Khabarova commented: “Our task was not very simple, The CLN placement of Southern Telecommunications Company was the largest among the Russian borrowers from the beginning of the year (valued at about USD 150 million). Demand on the part of foreign investors was mainly attributable to the credit quality of the Issuer and faith in further strengthening of a Russian rouble on the money market, that increased the attractiveness of credit notes for investors. Southern Telecommunications Company prepared and held the meetings at a very high level. We thank our client and the Financial Consultant RCF for constructive work at all stages of the project implementation".

"This loan of STC is the second successful placement of inter-regional telecoms’ credit notes on the international debt market and the first rouble loan of Svyazinvest subsidiaries on the foreign market", – Partner of RCF investment company Agaron Papoyan said. -  We are satisfied with good work of the CLN Arranger and would like to mention high professionalism of the Company’s management”.