OJSC KEGOC (Kazakhstan): remarks and conclusion of KASE listing commission

/IRBIS, June 28, 00/ - Listing commission of KASE presented remarks and basic conclusion on inclusion of OJSC KEGOC bonds in category "A" of the official list of securities The report is published for the attention of potential investors. KASE LISTING COMPLIANCE REQUIREMENTS - CATEGORY "A" According to the balance sheet of OJSC KEGOC as of April 1, 2000, the shareholders capital of the company amounts to KZT68,470,599 th or $482,527 th (at the rate of KZT141.90 per dollar). OJSC KEGOK as independent legal entity was found three years ago. The financial statements of OJSC KEGOK for 1997, 1998 were assessed by Arthur & Andersen (Almaty, Kazakhstan) and appropriate conclusion was made in this respect. For year 1999, the company received auditing report over its financial statements from KPMG Janat (Almaty, Kazakhstan). According to financial statements, made in compliance with Kazakhstan accounting standards, the results of the company's activity in 1997 are following: 1997 - profit of KZT118.53, 1998 - loss of KZT2.18 bln, 1999 - loss of KZT4.86 bln. The auditors of Arthur & Andersen and KPMG Janat confirm above stated results of KEGOC activity. According to "Securities listing regulation", clause 3.3 (3) shareholders capital of KEGOC exceeds minimal required amount of $100 mln for inclusion into category "A" of the official list of securities. KEGOC registered emission of bonds on the sum of $2,500,000 or 25,000bonds. The register is maintained by the independent registrar - LLP Kazregistr (Almaty). OJSC Kazkommerts Securites (Almaty) took all responsibilities for conducting of the market-maker's activity for these bonds. Constituent documents of the company do not contain any standards that could restrict the rights of the owners for their transfer (detachment). LISTING COMMISSION REMARKS KEGOC was incurring losses in the last reported year as well as for a total sum of last three years. This could be confirmed by independent auditors of "Big five" list. Following financial sanctions passed by Almaty municipal court were not fulfilled by KEGOC in 1999: - Kazakhtelecom brought suit against KEGOC for use of the former's money (principal debt - KZT54,968,029 ) and accrued penalty on principal in the amount of KZT9,248,116; the decision was suspended by the Head of the Supreme court on Dec. 12, 1999; - LLP Astana Securities's suit against KEGOC in amount of $498,879; supervision appeal is being currently considered by the Presidium of the Supreme Court. REASONS FOR INCLUSION INTO KASE LISTING OJSC KEGOC is a natural monopolist in the field of transmission and distribution of electrical power. The ratio of raised funds by way of bonds' issue to sales volume is insignificant and equals to 0.04. There are no funds OJSC KEGOC have previously borrowed (credits). Independent auditors of KPMG Janat company note that OJSC KEGOC is functioning company and it will be able to pay off all debts at a proper payment date in case of normal operating mode. Despite the losses the company has continued to incur since 1998, its current assets exceed current liabilities by KZT2,956,333 mln. The company's top officials are still keen to restore the profitability and liquidity as well as to achieve positive results in unsolved legal, regulatory issues and the issue of capital market accessibility (from appendix 17 of the audited financial statements for 1999). CONCLUSION OF THE KASE LISTING COMMISSION In a view of above mentioned and on the grounds of presented reports the Listing Commission considers that it is possible to admit registered discount bonds (NIN - KZ73LAIVAA09) of open joint-stock company "Kazakhstan Electricity Grid Operating Company" - OJSC KEGOC into circulation in the Exchange under the category "A" of the official list of securities.