Additional information on SHAHARMUNAIGAS OJSC first issue bonds

/IRBIS, Feb 16, 01/ - On February 19, 2001 the trades in first issue coupon bonds of SHAHARMUNAIGAS OJSC (Almaty, KZ75KASICA50; SMGZb1; $100; $30 mln; Jan 18, 01 - Jan 18, 06; annual coupon at 13.0% APR) will open at the Kazakhstan Stock Exchange (KASE). The fact that these securities passed the KASE listing under category "A" on January 19 was reflected in the news of Kazakhstani weekly analytical newspaper PANORAMA (#3 of Jan 26, 01), and this information was prepared by the information agency for financial markets IRBIS (Almaty), as well as a number of various news of the agency. After the news has appeared in the press, the issuer made several remarks to the agency for inaccuracies and errors found in the material. After analyzing the comments of SHAHARMUNAIGAS OJSC, the agency IRBIS considers it necessary to publish the following. As it was informed, the bond issue volume is USD30 mln, while paid authorized capital of the issuer is KZT3.625 mln ($25 th. at current official rate), shareholders' equity is KZT1,593.6 mln ($11 mln) and book value of the assets at KZT1,597.6 mln ($11 mln) as of Oct 1, 00. The agency IRBIS considers it advisable for potential investors to put an emphasis on the fact that the amount of bond issue exceeds the shareholders' equity of SHAHARMUNAIGAS OJSC three times. However, it was not mentioned that the bonds have been issued with a collateral. Proprietary rights of SHAHARMUNAIGAS OJSC on Kultuk oil deposit site (Beineu district of Mangistau region), whose reserve estimates were published in the materials of the IRBIS, are used as a collateral of the bonds. The agency IRBIS presents the investors the possible liquidity assessment of this asset. By describing the activities of the issuer, the agency IRBIS have mentioned in its news, that both Munaigas OJSC and SHAHARMUNAIGAS OJSC have not conducted any works at Kultuk deposit site yet, meaning the works related to the extraction of the oil. Particularly, it was said that "in 1998 and 1999 the companies took the stock of the wells, developed rehabilitation projects of the site and environmental protection of the site". Based on the company's information, the complete list of the works done by the issuer and its founder is intended to obtain the license for using the mineral resources: sign a contract with the government body who is in charge of such matters; making a project documentation of the works to be done at the site; its approval by the Central Commission on the developments under the Ministry of energy, industry and trade; conduct environmental surveys on the site; assess the impact on the environment and obtain the permission of the Ministry of natural resources and environment protection. The term "rehabilitation of the site" was used by the agency improperly, since Kultuk deposit site has not been used before and therefore, it is intact, which, in the opinion of the issuer, is the most attractive feature of the project. The word "rehabilitation" used in the news of the IRBIS meant the restoration of the wells drilled earlier on the site. Besides, the agency IRBIS made a mistake in the characteristics of Kultuk deposit site. Particularly, it was said "the depth of the water-oil contact from the surface", whereas in the materials provided by the issuer it is absolute level of the water-oil contact (minus 2,893 m and minus 3,202 m for corresponding productive layers). Kultuk deposit site is located at minus 23 m of the sea level. Thus, actual level of the contacts that should be opened at the drilling, differs from that noted by the IRBIS by this figure, which is hardly principal for the assessment of investment attractiveness of the site and the project itself. Also, it should be noted that the management of SHAHARMUNAIGAS OJSC bears the responsibility for the reliability of the information presented to the KASE in the forms of different documents during the listing process, and not for the reliability of the data published by the IRBIS, as it was mentioned by the agency. Now, SHAHARMUNAIGAS OJSC meets the listing requirements of the KASE in order for its bonds to be entered into official list of the Exchange under category "A". At the same time, the process of passing the listing revealed imperfections in a number of normative documents of the Exchange and made it necessary to make changes in them, which are currently done. This is a natural process for young stock market of Kazakhstan and it is done in order to optimize the normative base, which regulates the classification of financial instruments based on their investment properties.