Results of annual general meeting of OJSC "TNC "Kazchrome" (Kazakhstan) shareholders for 1998

/KASE, Dec.28, 99/ - According to listing requirements OJSC "TNC "Kazchrome" (Almaty, official list of securities, category "B") provided Kazakhstan Stock Exchange (KASE) with protocol of shareholders annual general meeting by the results of 1998 and reports of the Board, Revision commission and auditing report of LLP "Global Audit" (Almaty). At an annual general meeting, which was held on November 26, 1999, shareholders of OJSC "TNC "Kazchrome" approved the report of the Board on financial-economic activities of the company in 1998, report of the Revision commission on accuracy of 1998 financial results, also made the following decisions: - not to charge dividends to common shares due to KZT1,932.7 mln loss; to charge and pay dividends for 1998 to preferred shares at 10% of their par value according to the register of preferred shareholders on April 20, 2000; - to set April 20, 2000 as payment beginning date of 1998 dividends; to approve the list of shareholders for distribution of remaining preferred shares of "TNC "Kazchrome" among the employees of Aksuskii zavod ferrosplavov; - to approve exchange of the objects, which were previously entered into the authorized capital of OJSC "TNC "Kazchrome" (the protocol has no names of the objects - comm. KASE), for the objects of social sphere (treatment centers, hospital, "Ferrosplavshik" hotel, recreation center, clinic, kindergarten etc); - to approve sale of 553,224 shares (7%) to "Prentiss Ventures Incorporation" (Great Britain) and 1,383,110 shares (17.5%) to "Barnstable International Corporation" (Great Britain) (in accordance with the law "On joint stock companies - big deals"); - to assign "Deloitte & Touche" as a company auditor for 1999 among international auditors, and among domestic auditors - LLP "Global Audit"; to approve changes and amendments to the Charter of the company. In addition, new Board of directors was elected at the meeting, which includes: Mashkevich A.A., Jumagalieva R.I., Ibragimov S.T., Ivanov V.M. Jiglov A.N., Kubeev U.K., Erofeev I.E. It is stated in the report of the Board of OJSC "TNC "Kazchrome" (speaker - Zaurbekov Z.G.), that when analyzing the results of industrial and financial- economic activities of the company two factors should be taken into account. The first factor - problems caused by the change of the management of OJSC "TNC "Kazchrome" due to dismissal of "Trans World Group" (TWG) from the management of the company's enterprises in late 1997, and which became apparent in two following aspects: - first, difficult financial-economic situation of the enterprises at the beginning of the year because of predatory management of the companies belonging to TWG (especially, in the second half of 1997); - second, difficulty in selling the products, which was indirectly caused by the change of the management, since it was the third time the company has to conquer Kazakhstani market in last 10 years (first time - after the collapse of USSR, second time - when OJSC "TNC "Kazchrome" was established, the time when ownership changed and so did the management structure). The second factor - economic crisis in world markets for production and consumption of metals (second half of 1998), which was the reason for a sharp decline in demand for metals (first of all for ferroalloys) and decrease in their prices (decrease in price of ferroalloys relative to the beginning of the year: for high-carbon and low-carbon ferrochromium about 20%, for ferrosilicon - about 10%, silicomanganese - 11-22%). It is also said in the report of the Board that despite negative effects of the factors mentioned above, which caused problems with selling products for ferroalloy plants of OJSC "TNC "Kazchrome", the managing company "Kazakhstan Mineral Resources Corporation" was able to maintain its positions in the world market, and also was able to reach growth in commodity ferroalloy production by 4.5% against results of 1997, including: for JSC "Ferrochrome" - 2.5%; for Aksuskii zavod ferrosplavov - 5.1%. In monetary terms production of commodity ferroalloys grew 27.4%, in comparable prices of 1997 - 4.3%. In 1998 for OJSC "TNC "Kazchrome": - production of commodity ferrochromium grew 2.0% to 1997 (63.1% to 1996 and 8.6% to 1995); - production of ferrosilicon, while demand was shrinking in Far East market and antidumping restrictions were existing for exports to USA and European community, was limited to high grade products and reached 69.1% to the level of 1997 (78% to 1996 and 36.1% to 1995); - production of silicomanganese reached 105.3% of the level in 1997 (96.3% to 1996 and 287.2% to 1995); - production of chromium ore (JSC "Donskoi GOK") reached 1.6 mln tons or 89.2% to 1997 (145.1% to 1996 and 66.8% to 1995). Proceeds from sales in 1998 equaled KZT22.8 bln for the whole company, which is 7.6% more than in 1997, including: for Askuskii zavod ferrosplavov - 13.7 bln tenge (7.0% growth); for JSC "Ferrochrome" - 5.3 bln (26.2%); for JSC "Donskoi GOK" - 3.8 bln (9.5%). Despite the facts mentioned above, 1998 was the year of losses for OJSC "TNC "Kazchrome", which was due to insufficient utilization of capacities with restricted sale of products and negative exchange rate differences as a result of outstanding debt on loans received from banks of TWG (Zalogbank, United Global Bank Limited). Total loss of the company reached 1,932.7 mln tenge, including: for Aksuskii zavod ferrosplavov - 825.5 mln; for JSC "Ferrochrome" - 996.1 mln; for JSC "Donskoi GOK" - 111.1 mln. According the protocol of OJSC "TNC "Kazchrome" shareholders general meeting as of November 24, 1999, 6,886 shareholders were registered in the register of the company, including: 42 owners of common shares and 6,826 owners of preferred shares. Auditing report of LLP "Global Audit" made by financial statements of the company for 1998 reads financial statements reflect the financial situation of OJSC "TNC "Kazchrome" in all essential aspects as of January 1, 1999, and results of its financial-economic activities from January 1, 1998 to December 31, 1998.