The Board of Directors of OJSC VolgaTelecom has adopted a resolution to increase its charter capital up to Rub. 1,639, 916, 475 (up from the current amount of Rub 583,387,500) by issuing additional common shares (with a nominal value of 5 rubles each).  The total number of shares to be issued is 158,479,418 for a value of Rub 792,397,090 and 52,826, 377 type A preferred shares worth Rub 264,131,885.   

These shares are to be issued as part of the company's authorized shares by swapping 10 shares in the merged entities (under the mega-regional merger process) of Volga regions operators.  

OJSC VolgaTelecom has approved the issue prospectus of the company's common shares in the amount of 158,479,418 (with a nominal value of 5 rubles each) for a total of Rub 792,397,090 and 52, 826,377 type A preferred shares worth Rub 264,131,885.  In addition, the Board of Directors of OJSC VolgaTelecom passed a resolution to issue bonds worth Rub 90,260,600.  The bonds are to be placed by swapping the bonds of the three merging entities (Elektrosvyaz, Orenburg region, Saratovelektrosvyaz and Elektrosvyaz Ulyanov region).  

OJSC VolgaTelecom will soon submit all the required documents to the Federal Securities Committee of the Russian Federation.  Following registration of the issue the company will be required to go through the process of delisting the merging entities from the State Register of Legal Entities and swapping the shares of merged entities into the stocks and bonds of OJSC VolgaTelecom.  Following the completion of these procedures 10 telecommunications operators will continue to operate as a single corporate entity formed on the basis of OJSC VolgaTelecom and its branches.  

OJSC VolgaTelecom is slated to commence operations as a mega-regional telecom operator at the beginning of 2003.  

ZAO Gamma Capital will act as the financial consultant throughout the Volga region merger process.

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The corporate entities involved in the mega-regional merger process are as follows:  

OJSC VolgaTelecom (previously known as Nizhegorodsvyazinform) is to act as the parent company for leading telecom operators in four republics and six regions across the Volga federal district.  The merging entities include Kirovelektrosvyaz, Martelecom Marii El Republic, Svyazinform Republic of Mordovia, Elektrosvyaz Orenburg region, Svyazinform Penza region, Svyazinform Samara region, Saratovelektrosvyaz, Elektrosvyaz Ulyanov region, Udmurt Telecom, and Svyazinform Chuvash Republic.  The decision to initiate the merger of OJSC Nizhegorodsvyazinform was adopted by the shareholders of the company at a shareholders meeting held on November 9, 2001.  This was preceded by shareholders meetings, which were held by the merging entities, which joined the resolution to merger with OJSC Nizhegorodsvyazinform.