OREANDA-NEWS. On 19 June 2008 X5 Retail Group N.V, Russia's largest food retailer in terms of sales, announces that it has increased its stake in Pyaterochka store chain in Urals and signed a new franchising agreement to begin roll-out of Pyaterochka stores in Ivanovo and Kostroma regions.

• In accordance with the agreement between X5 and the former owners of Pyaterochka franchisee in Chelyabinsk, X5 has purchased further 24% in the company that operates Pyaterochka stores in Yekaterinburg and Chelyabinsk for approximately USD 11 million (the chain’s sales for 2007 exceeded USD 160 million). As a result, X5’s stake in the business increased to 75%. As per the agreement, X5 has an option to purchase the remaining 25% in 2009. Purchase price will be determined on the basis of the chain’s sales for 2008.

• X5 has signed a new franchising agreement with the Prodmag company (Ivanovo) (hereinafter – “Prodmag”) to develop a chain of Pyaterocka stores in the Ivanovo and Kostroma regions. In accordance with the agreement, Prodmag is obliged to open no fewer than 30 Pyaterochka stores in the Ivanovo and Kostroma regions within two years. Already by the end of 2008 the number of operating Pyaterochka stores in these regions is expected to be close to 20.

In addition to the franchising agreement, the parties have signed a call option agreement enabling X5 to buy-out the chain of Pyaterochka stores opened by Prodmag in the Ivanovo and Kostroma regions. The option is exercisable in 2011, which is in line with the Company’s planned timing for entering these regions. Purchase price will depend on the chain’s performance in 2010.