TIDM53HZ

RNS Number : 6058M

Kazanorgsintez S.A.

18 August 2011

Director's Report The directors present their annual report and the financial statements for the year ended December 31, 2010.

1. ACTIVITIES AND REVIEW OF THE DEVELOPMENT OF THE BUSINESS

The object of the Company is the granting of loans or other forms of financing directly or indirectly in whatever means to Kazan Open Joint Stock Company <<Organichesky sintez>> (e.g. including, but not limited to, by subscription of bonds, debentures, other debt instruments, advances, the granting of pledges or the issuing of other guarantees of any kind to secure the obligations of Kazan Open Joint Stock Company <<Organichesky sintez>>).

The Company may finance itself in whatever form including, without being limited to, through borrowing or through issuance of listed or unlisted notes and other debt instruments (e.g. including but not limited to bonds, notes, loan participation notes and subordinated notes) including under stand alone issues, medium term note and commercial paper programmes.

The Company may also:

- grant security for funds raised, including notes and other debt instruments issued, and for the obligations of the Company; and

- enter into all necessary agreements, including, but not limited to underwriting agreements, marketing agreements, management agreements, advisory agreements, administration agreements and other contracts for services, selling agreements, deposit agreements, fiduciary agreements, hedging agreements, interest and/or currency exchange agreements and other financial derivative agreements, bank and cash administration agreements, liquidity facility agreements, credit insurance agreements and any agreements creating any kind of security interest.

In addition to the foregoing, the Company can perform all legal, commercial, technical and financial investments or operation and in general, all transactions which are necessary or useful to fulfill its objects as well as all operations connected directly or indirectly to facilitating the accomplishment of its purpose in all areas described above, it being understood that the Company will not enter into any transaction which would cause it to be engaged in any activity that would be a regulated activity of the financial sector.

On the October 26, 2006 the Company has issued Loan participation notes in amount of USD 200,000,000 which proceeds has been used to grant the Loan to Kazan OJSC.

In April 2009 an Event of Default has occured under Clause 15.3 of the Loan Agreement due to the failure of Kazan JSC "Organichesky sintez" (the Borrower) to make a payment of principal in respect of its indebtedness on the April 2009 payment date. Following deterioration of the business and financial conditions for the Borrower's operations the Borrower has taken steps to postpone the repayment of principal amounts and any accrued interest. This restructurisation has been completed in February 2010 by inviting Investors to offer to sell any or all of the Notes held by them and to vote in favour of the Extraordinary Resolutions, as described in the Tender and Consent Memorandum. The Eurobonds redemption was in the amount of USD 89.259.000 and as a result the principal amount that remains in circulation is in the amount of USD 100.834.000 since March 2010. The maturity of the Notes originally was March 19, 2011 and has been extended to March 19, 2015 which is the same day as the repayment Date of the Loan.

The total expenses of EUR 9,065,743 are represented mainly by interest payable and similar charges of EUR 9,020,066

The total income of EUR 9,065,743 are represented mainly by other interest receivable and similar income of EUR 9,020,066

2. RESULTS AND ALLOCATION

The result for the year ended is nil.

3. POST BALANCE SHEET EVENTS

There were no important events since the year end which could influence the presentation of the current financial statements.

4. PROPOSAL

We propose the approval of the annual financial statements as well as the proposed allocation of the results and to give full discharge to the board of directors and independent auditor for their mandates during the year to December 31, 2010.

To see the full 2010 financial statements, please click on the link below.

http://www.rns-pdf.londonstockexchange.com/rns/6058M_1-2011-8-18.pdf

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR BGGDILXBBGBI

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