Запись телеконференции: финансовые результаты 3-го квартала 2006 г.

FINANCIAL RESULTS FOR THE THIRD QUARTER AND NINE MONTHS

Alexei Gurin, Chief Executive Officer

John Rose, Head, Investor Relations

I. Preamble

John Rose

Good afternoon and welcome to the conference call to discuss our un audited financial results for the third quarter and nine months ending 30 September 2006, as disclosed in a press announcement earlier today. On hand to answer questions today is our Chief Executive Officer (CEO), Alexei Gurin, along with myself. A copy of today's announcement can be found on our website at www.amtel vredestein.com or www.amtel vredestein.ru. A transcript of this conference call will also be posted to the website in a few days? time.

Before I introduce Alexei Gurin, I am required to read our disclaimer regarding forward looking statements. This conference call may contain forward looking statements regarding future events or the future financial performance of Amtel Vredestein  N. V. These statements are not guarantees of future performance, which is subject to risks, uncertainties and assumptions that cannot be predicted with certainty. Accordingly, actual outcomes and results may differ materially from those expressed in the forward looking statements. Amtel Vredestein  N. V. does not intend to update these statements to reflect actual results.

I will now hand over to Alexei, who will say a few words before we take questions.

Alexei Gurin

II. Third Quarter Highlights

1. The Moscow Tyre Plant

Welcome, everyone. I am very pleased to have an opportunity to answer any questions you might have on our financial results and most recent acquisitions, as well as sharing with you our guidance for the balance of the year. To begin, I would like to provide some context for these results and talk a little about the state of our business and our goals as we conclude 2006 and begin 2007.

Firstly, the company was very active in the third quarter. Our announcement that we planned to acquire the Moscow Tyre Plant (MTP) came as something of a surprise to the market, although this should not have been completely unexpected as anyone who followed the company closely was well aware that we needed additional capacity to satisfy demand for Amtel tyres in Russia. To our credit, we managed to conclude a deal with the Moscow Government and begin production of our tyres in very short order. I am happy to report that production at MTP has already exceeded 60,000 tyres per month in October and is expected to exceed 80,000 tyres per month by the end of November. We believe that the break even point in production is 94,000 100,000 tyres per month. MTP operates very efficiently and is virtually a satellite of our Voronezh tyre factory, from where we ship pre mixed rubber compounds.

We have also moved all our corporate offices to MTP during September and October, which will result in substantial cost savings as early as 2007. For the full year 2007, we expect savings of approximately $2 million in rent alone due to our office move and MTP will contribute to sales, beginning in the fourth quarter.

2. The Acquisition of Pigma

The second significant event to occur during the third quarter was our announcement that we planned to acquire Pigma, a leading auto parts distributor. At about the same time, Pigma announced its acquisition of Megashina, a leading tyre distributor. At the moment, we are in the process of integrating each of these companies into our AV TO unit to create a substantial stand alone distribution and retail organisation. The AV TO unit contributed $12 million in sales during the third quarter. However, a much more significant impact will be felt in the fourth quarter, as we consolidate Pigma and Megashina into our results and we expect contributions from our retail division in the fourth quarter to be in excess of $60 million in sales.

III. Third Quarter and Nine Months Financial Details

1. Net Sales and EBITDA

We have substantially completed our investment programme in Russia and can now focus on building our brands and optimising the efficiency of our operations through consolidation and further cost cutting. Amtel Vredestein?s net sales increased 14% during the third quarter to $198 million versus the third quarter of 2005. Net sales rose by 19% for the first nine months, from $459 million to $548 million versus the same period in 2005. Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) was $22 million for the third quarter and $64 million for the first nine months of 2006, up 36% versus the same period in 2005. Again, this is a strong indicator that management are focused on more than simply top line growth.

2. Core Business Gains

Most important are the gains in our core business of passenger car tyres (PCT), which grew 39% to $332 million in the first nine months and now represent 61% of total sales during the period. Gross profit also improved by 32% to $41 million in the third quarter and was up 43% to $124 million during the first nine months. Gross profit margin increased to 20.7% in the third quarter versus 2005 and to 22.6% for the first nine months. However, this is down from 23.7% in the first half of 2006, primarily as a result of higher raw material costs and a lower average selling price for tyres during the period. We believe that this lower margin in the third quarter versus the second quarter is not indicative of future performance since we are continuing to improve our product mix and we are already seeing improvement in the first quarter. Although we continue to move up the value chain in terms of our product offering in the replacement market, we have also sold higher volumes of smaller sized, lower margin tyres to auto manufacturers, and this has put some pressure on our margins during the third quarter of this year. The gross profit margin has been put under additional pressure by seasonally lower margins at our retail division, AV TO, and shrinking margins at the loss producing Amtel Kuzbass chemical fibre subsidiary in Kemerovo, which the company plans to sell by the first quarter of 2007.

Our net loss was $7 million in the third quarter versus $12 million in 2005 and contributed to a net loss for the first nine months of $20 million, principally due to higher interest expenses. Net debt, including leasing, was $592 million at the end of the third quarter. Working capital increased by $36 million in the third quarter to $268 million as a result of seasonal increases in accounts receivable. It is very important to note that the company remained operating cash flow positive for the period at $15 million cash positive.

IV. Outlook

The company projects, on a historical basis, net sales in excess of $800 million and EBITDA of approximately $100 million in 2006. On a pro forma basis, taking into account all acquisitions and disposals on a full year basis, net sales would be substantially higher. We will begin the New Year with annualised sales in excess of $1 billion. A net loss of $10 12 million is expected for this year, primarily as a result of increased investment costs and interest expenses from our Russian production, distribution and retail expansion programme. The company plans to produce 12.3 million passenger car tyres in 2006 and 14.5 million in 2007, not including tyres expected to be produced at the Voronezh II project, which will begin production by the fourth quarter of 2007. Our message to the market has been consistent for 2006. We have launched certain initiatives deliberately during the past year which have been, by necessity, at the expense of short term profitability. We have been investing in our future and our efforts will deliver sustainable, positive results in 2007 and beyond. We are now ready to take questions.

QUESTIONS AND ANSWERS

Bob Kommers, UBS

Firstly, regarding the EBITDA, you calculate EBITDA in the first half at $42 million. In the attachment, one of the components is interest expenses of $26 million. I wondered how that compared with the $14 million that shows up in the income statement.

Alexei Gurin

In the income statement, we have interest expense that also includes certain foreign exchange (FX) gains. That is why net financing expense is shown as a lower number. In the EBITDA number, we are taking the full real interest expense.

Bob Kommers

Does your EBITDA guidance for the full year include forex gains?

Alexei Gurin

No, it does not include forex gains because in the EBITDA number we include net interest expense, net of any kind of forex gains.

Bob Kommers

My second question is about your full year guidance. How much sales does that include from the Moscow Tyre Plant and does it include any from Pigma and Megashina?

Alexei Gurin

For the Moscow Tyre Plant, we have included virtually zero. For Megashina, Pigma and AV TO, as I said earlier, we expect sales in excess of $60 million.

Bob Kommers

Is the $60 million consolidated for the full year 2006?

Alexei Gurin

No, just for the fourth quarter of this year.

John Rose

On a historical basis.

Alexei Gurin

Yes, on a historical basis. It is definitely historical because we will consolidate those companies for the fourth quarter.

Bob Kommers

What is your guidance net debt at the year end of 2006?

Alexei Gurin

We have not provided any guidance for the year end in terms of our debt level. However, in terms of our debt, all we need to do is to refinance the Moscow Tyre Factory to an amount in the region of $65 million. So far, we have already refinanced about $12 15 million and last Friday we received Sberbank credit committee approval for RUB1.6 billion for seven years at a rate of 10%. In a couple of weeks, I think we will be able to sign a loan agreement and refinance the Moscow Tyre Factory debt. This will increase our overall debt level by approximately $45 million. On the other hand, we have almost completed all the payments related to the Voronezh II project and certain equipment is coming. I believe that $5 10 million in Voronezh II related payments are still outstanding until the end of the year. All in all, therefore, this might lead to an increase in our debt level of about $45 55 million. However, since there was a seasonal increase in our working capital and we are definitely planning to collect cash in the fourth quarter, especially in European operations, this will offset certain debt increases. Therefore, the numbers that I gave earlier are a maximum increase that does not take into account the decrease in working capital overdrafts related to inventory build up.

Bob Kommers

If I may ask, what are your debt covenants? Do they include any measures relating to EBITDA or is the only measure including a new loan of Sberbank, all based on sales multiples of the 0.7 [inaudible]?

Alexei Gurin

Firstly, we do not have any covenants with Sberbank, as far as I remember, although the loan agreement has not been signed yet, as I mentioned. The only covenants that we have related to our financial performance are with credit link note (CLN) holders and the Amsterdam Trade Bank. Both covenants are related to sales. We have received a waiver from Sociйtй Gйnйrale related to EBITDA to interest ratio.

Bob Kommers

Could you indicate what your current shareholder structure is?

Alexei Gurin

Unfortunately, I cannot comment on that because all we know is what is available publicly.

John Rose

It hasn?t changed substantially from the annual report. You can see that online.

Bob Kommers

There have been press reports that Alfa had around 25% of the shares and that Mr Gupta?s stake had been reduced by 28%. Are those comments that you deny at this stage?

John Rose

No, the issue is this. We do not know exactly where all of these stakes are held. Some of them are in the GDR programme and some are held in the nominee arrangement. We therefore only know exactly what those stakes are based on when they vote on those shares. We have seen that activity at the time of the annual general meeting (AGM) and a special extraordinary general meeting (EGM) in September. As we understand anecdotally, at least, Alfa has approximately a 25% interest in the company.

Alexei Gurin

As an Executive Board director, I have seen and signed certain documents related to transactions between Amtel Luxembourg and Alfa Bank that lead me to believe that you might be right in your conclusion. On the other hand, I cannot make any official statement because, as John rightly mentioned, it has not been reflected in the books yet.

John Rose

We can only go from our own register.

Lawrence Watts, ING Private Bank

I have two questions. The first relates to the credit link notes you have outstanding, which I think you have already referred to. My understanding is that some of that note may have been put back to you. Could you clarify precisely how much is outstanding? Related to that, given that there is a rather large bullet payment to be made in June next year, could you talk a little about your refinancing plans for that?

Alexei Gurin

First of all, I do not know why you are coming to the conclusion that any CLN could be put back to us. The only covenant that we have in a CLN agreement is debt to sales ratio, with sales being defined on a pro forma basis. We are certainly significantly below overall covenant level.

Lawrence Watts

I could clarify that, if you want.

Alexei Gurin

We are not in a breach. Secondly, in terms of outstanding CLNs, during the put option period in July this year, about $20 million in CLNs were put back to us. At the moment, therefore, there are 155 million CLNs outstanding.

Lawrence Watts

That was the figure I was looking for.

Alexei Gurin

In terms of refinancing, our retail division is about to register a RUB 3 billion bond issue with the Russian authorities. This bond will be for three years, with a one and a half year put option and we expect it to come to the market and be sold in the middle of December. The purpose of the bond is primarily to refinance CLNs. This is approximately $1,215 million and I had in fact expected the bond to be registered today. It may already be registered, but we will have an official announcement on it by the end of this week.

Veronika Lyssogorskaya, ING

First of all, I have a question for clarification. The historical basis means that for 2006 you do not include the Moscow Tyre Plant. Is that right?

John Rose

Correct.

Veronika Lyssogorskaya

For 2005, do you include Krasnoyarsk.

Alexei Gurin

For 2005, we include Krasnoyarsk, Volgograd and all the factories that we owned last year.

Veronika Lyssogorskaya

I then have a question on the top line. It seems that growth has slowed down because in nine months you had 19% growth and in the third quarter you had only 14%. Could you please comment on that?

Alexei Gurin

That is a good question. I cannot come to the same conclusion as you because I think you need to look deeper into the numbers. The increase in percentage points does not give the full picture because you need to compare apples with apples. I will come back to you during this call or in the next couple of days to clarify that and provide you with a more detailed picture. In any case, I would not jump to the conclusion that our sales have slowed. In fact, it is the opposite. Sales of passenger car tyres, where we are really focusing and making all the investment, have increased quite substantially by 39%, as I have already mentioned. We are deliberately decreasing production and sales of certain types of tyres that we either stopped manufacturing last year or are in the process of getting rid of. Another comment I would make is that sales of chemical fibres have decreased and that spoils the picture of overall sales a little.

Veronika Lyssogorskaya

I understand. When do you book the peak of winter tyre sales? Do you book it in the third or fourth quarter?

Alexei Gurin

That is more of an accounting question rather than a question related to the business. I think we book it evenly. We have not done any kind of pre sales, as you might be referring to in your question. That is why I mentioned in my comments that we are expecting sales that will be close to $250 260 million for the remainder of the year, which implies that sales in manufacturing will be close to the results of the third quarter of this year.

Veronika Lyssogorskaya

I see. I was just trying to understand if you expect huge sales.

Alexei Gurin

No, we do not do any kind of a pre sales but simply normal seasonal sales.

John Rose

That is why you need to see the fourth quarter results before you can really analyse the sales for the year.

Alexei Gurin

For example in our European division Vredestein is really running a little behind its budget in terms of sales, EBITDA and net profit. European operations are about $5 million below the budget in terms of EBITDA and about $4 million net income below the budget. On the other hand, we expect our European operations to catch up with the budget and plans in the remainder of the year for the full year.

Veronika Lyssogorskaya

Is my understanding correct that out of this $250 260 million in the fourth quarter you expect, $60 million will be from retail operations?

Alexei Gurin

Yes.

Veronika Lyssogorskaya

Could you also please comment on your retail plans? Are you still planning to have 200 outlets by the first quarter of 2007?

Alexei Gurin

That is a good question. In terms of number of outlets, we changed our strategy to a certain extent because we are looking more at the profitability of our operation and size of our retail outlets rather than the number of outlets. On top of that, following the acquisition of Pigma, we also picked up approximately 1,500 retail clients to whom we supply auto parts and to whom we will also supply tyres. It is possible to convert some of those retail stores to our own stores, on a franchise basis. Therefore, if we targeted just the number of the stores, we could report 200 or perhaps 300 I do not know exactly how many can be converted, albeit on a franchise system. However, the target is not the number of stores, but the square footage of our retail space and the profitability per square foot.

Veronika Lyssogorskaya

Does this mean that you are not planning a further large expansion of your retail?

Alexei Gurin

No, that is incorrect. As of now, we have 115 retail outlets. In the last couple of months, we have acquired about 10 and have opened one in Moscow, which is quite a large retail outlet in excess of 2,000 square metres. That is the kind of store we want to open, acquire or build in the future.

Veronika Lyssogorskaya

Do you still have any quantitative plans for next year or for 2008 in terms of how many new outlets you want to open?

Alexei Gurin

No. We have not finalised our plan because, as I mentioned earlier, our plans have changed to a certain extent after the acquisition of Pigma and Megashina. After the acquisition of a company that is very strong in logistics and wholesale, the platform of our retail business has changed significantly. Not only can we deliver our own goods to our own stores, but we can also deliver, distribute and process quite a lot of stock keeping unit (SKUs). As I have already mentioned, we can process close to 30,000 different SKUs in terms of auto parts, accessories and so on, and sell those goods not just to our own retail outlets, but also to retail outlets owned by someone else.

Veronika Lyssogorskaya

Do you have any latest numbers on brand awareness of Vredestein and Amtel in Russia?

Alexei Gurin

No. I think it is still the same number we mentioned during the last conference call.

John Rose

I think we are expecting some new numbers this month, but I will have to get back to you on that.

Veronika Lyssogorskaya

Thank you.

Alexei Gurin

We do it twice a year and after this fall, we will get the number.

Veronika Lyssogorskaya

The problem is that the latest number I have is for November 2005, which is probably out of date.

Ron Smith, Alfa Bank

As I think most of the balance sheet issues have been covered, I would like to drill down a bit into the progress of your underlying tyre business. First of all, you noted in the release that A brand tyre sales were up to 49,000 versus 4,000 for the comparable period last year. Of course, this time last year you were just starting to introduce Vredestein, so the two numbers are probably not that comparable. However, could you give us some detail on the uptake of Vredestein tyres, especially going into the winter season? How are they being accepted and where are they selling?

Alexei Gurin

Thank you, it is always good to hear from you. You are right with the number. For the full year, we expect to sell in excess of 130 140,000 tyres of the Vredestein brand in Russia, primarily ultra high performance tyres and in terms of market acceptance, I think the tyres are being accepted quite well. On the other hand, we are having some problems which are related to product mix. We do not have enough product in all sizes that we really need and can sell. In terms of winter tyres, at the Enschede Vredestein facility we do not manufacture a lot of spike or studded tyres that are really needed for the Russian market. We only offer one type that is studded  Icetrac. That makes it difficult to compete against market leaders such as Conti, Nokian and Michelin in this type of product. We hope and believe that we can substantially overcome this deficiency in 2007, when we plan to more than double the number of Vredestein branded tyres that we sell in the Russian market. We are also planning to start manufacturing Vredestein branded tyres in 2007 in Russia, not only for the European market but also for our local home market, which will definitely make sales more efficient in terms of margins because we will not need to pay custom duty.

Ron Smith

I also have some questions about winter tyre sales in Germany. Can you give us any detail on that, in the light of the somewhat compelling story you were telling us about the insurance requirements in Germany and that there may even be a shortage of winter tyres in Europe? Are you seeing that and how are sales going? Especially since you said that Vredestein had come a little under its budget for the third quarter, I was curious to know whether that had anything to do with weather issues or anything else in the country.

Alexei Gurin

Yes, the story is still valid. Winter tyres are selling very well in the European markets, specifically in the German market. The only deficiency that we have there is the deficiency of the product  simply the lack of product. In terms of Vredestein results and European sales overall, one of the problems was that in the first half of 2006 we were below the budget in terms of the number of Vredestein tyres manufactured at our Kirov facility. Instead of 350,000 tyres that were budgeted for for the first half, we only manufactured something in the region of 50 60,000. As a result, the Enschede factory was forced to change its plans in terms of product mix and has started manufacturing 13, 14 and 15 inch tyres. Additionally, there was also a late launch of the new tyre, Sessanta, in Enschede and that also contributed to a certain backlog in terms of our Enschede facility.

Ron Smith

Going back to Kirov, what is the run rate you are seeing now and do you have data for the Vredestein tyres? You mentioned on our visit there that you were aiming to make and ship 300 350,000 in the second half of the year, or at least this winter, and ship them to Europe.

Alexei Gurin

That is correct and we have basically already fulfilled this plan. Since the end of November we have been able to say with 99% accuracy that we will accomplish those plans and reach our objective of manufacturing close to 350,000 tyres of the Vredestein and Maloya brands and ship them to Europe. So far, the run rate is about 60,000 tyres on a monthly basis.

Ron Smith

I think you have more or less covered all my questions. Thank you.

Bob Kommers

I just had a follow up question regarding Pigma. You mentioned in the press release that you spent about $158 million on the expansion of the AV TO business and, as far as I can recall, you spent about $70 million on the tyre retailers so far. Am I right, therefore, to conclude that you spent about $80 90 million on the Pigma acquisition?

Alexei Gurin

You are off significantly. We spent at least three times less on the Pigma acquisition. On the other hand, we purchased quite a lot of real estate related to the purchase of retail outlets, where transactions were completed in the third quarter of this year.

Bob Kommers

What exactly does the $158 million that you mention in your press release relate to? Is it anything more than what you have paid for the acquisitions and the bill for the tyre retailers?

Alexei Gurin

Your question is completely clear. However, do not forget that when we buy businesses, we pay for real estate, inventory and, in certain cases, good will, especially if retail outlets are not owned, but rented. In this case, then, just off the top of my head, we spent about $40 50 million on real estate, about $30 million on inventory, plus a certain amount on good will, that is reflected in our balance sheet. We also spent about an additional $35 million on the Pigma acquisition.

Bob Kommers

Do those numbers include any assumed debt? Is that on a [inaudible] basis?

Alexei Gurin

Yes, there is an assumption of debt as well.

Bob Kommers

Thank you.

Gairat Salimov, Troika Dialog

I would like to come back to the issue of covenants. Could you please give more details on this? I read in Interfax that the total debt of the company should not exceed 70% of its sales or there would be some action from CLN holders. Your debt is currently reported at $586 million, excluding leasing. Could you please comment on whether this will be down or do you plan to have sales above $837 million? Perhaps I just have incorrect information.

Alexei Gurin

It is good to hear from you as we have not spoken for some time. I really regret that you are getting your information from a source like Interfax, although I respect Interfax very much. I would suggest that you call us and talk to John or me in order to find out what the outstanding net debt is. As we report now, our outstanding net debt is $592 million and our covenant in terms of CLNs is that our debt should be below 70% of sales, with sales defined on a pro forma basis. Our sales on a pro forma basis will therefore be significantly in excess of $1 billion for this year. That is why we are not breaching any kind of covenant.

Gairat Salimov

That was an important point for me.

John Rose

The covenant also includes all acquired or disposed businesses. They are taken into account.

Max Risman, SCM

I just have some questions following up on some of the credits issues. You said that you were going to do the bond issue on the retail sub level. Once you refinance your CLN, where do you expect interest expense to pan out?

Alexei Gurin

Do you mean interest on the retail side?

Max Risman

Total interest expense for the company.

Alexei Gurin

Do you mean what the total interest expense would be for the full year?

Max Risman

No. In other words, you are paying nine [and change?] on the sale end. What are you are expecting [inaudible]?

Alexei Gurin

What do we expect on the bond? I cannot comment on that. Only the market can tell what will be expected of the bond and how good the sales of the bond will be. The future will tell. We have certain projections, but I do not think that this is the right place or time to discuss this.

Max Risman

Presumably, it will be more than you are paying on sale end?

Alexei Gurin

Not necessarily. As I have already mentioned, we have seven year, $1.6 billion financing from Sberbank at 10% in roubles. I would therefore expect interest to be on a coupon on the bank[?] to be close to the interest we will pay for the Sberbank loan.

Max Risman

When do you expect that issue to hit the market?

Alexei Gurin

We expect it to be sold in the middle of December. Rosbank is the underwriter.

Max Risman

It will be the middle of December. Are you going to call CLN at that time or will you wait until maturity?

Alexei Gurin

No, we will not call CLN. I do not think it is possible technically to call CLN; we will simply wait until CLN expires. On the other hand, if the CLN price drops in the market, we will buy CLN in the open market.

Max Risman

Could you please tell me what percentage of PPE is pledged now?

Alexei Gurin

What percentage of what?

Max Risman

Machinery, equipment, plant and so on.

Alexei Gurin

I think that is very difficult to say because while I can tell the number relating to how our fixed assets are reflected in the books and how much is pledged, I do not think that will provide a clear picture. Banks are usually asking people to pledge assets and equipment that are clearly identifiable and more or less new. If you really need the number  although I do not understand why you would need it  we will be able to provide it. John will take care of that.

Max Risman

The reason I am asking is to try to figure out whether this retail bond that you are planning to place will be a pure unsecured obligation or whether you will have it secured.

Alexei Gurin

We are going to market this issue in the first half of December. If you are interested, you will be able to get all the answers from Rosbank and from the company. However, to avoid keeping you waiting, I can tell you now that in terms of securitisation, the bond will not be secured but there will be guarantees provided by the companies that hold real estate, for example, and other fixed assets in our retail group.

Max Risman

Will it therefore be secured by the retail group? I do not quite understand the difference.

Alexei Gurin

Our retail group consists of three companies: Megashina, Pigma and AV TO. The issuer will be Pigma, our wholesale distributor and logistics operator. However, these bonds will be secured by AV TO, who hold all the real estate and they will also be secured by other companies that hold other assets.

Max Risman

It is going to be guaranteed by these companies, but the bond will not be secured on the assets that belong to the company.

Alexei Gurin

I think we are spending too much time on this issue that might not be of interest to other participants.

Max Risman

The reason I am asking, and the reason why this issue could be interesting, is that I am just trying to understand, given that as far as I know you have been using some leasing mechanisms and so on, whether you think you are in compliance with the negative pledge language in the sale end?

Alexei Gurin

Absolutely. Absolutely. If you have any questions, I will ask our lawyers to provide you with a detailed answer.

Max Risman

I would like that.

Alexei Gurin

Please send your question to Mr. Rose and we will provide you with a reply.

Max Risman

Great. Thank you very much.

Alexei Gurin

You are welcome.

Ron Smith

If I understood you correctly, in some of the earlier questions you were talking about the fact that you are still working on refinancing the MTP debt and that after that happens, your net debt, if I understood correctly, will go up by $45 55 million by the end of the year. Am I to understand that the Moscow Tyre Plant debt is not yet on the books although the acquisition has taken place?

Alexei Gurin

In effect, it is partially on the books because we have provided the Moscow Tyre Factory with certain funding that was used to refinance existing debt. The amount of this funding is approximately $12 15 million. We borrowed money in order to do these transactions – it was a series of transactions. Therefore, this debt is partially effectively reflected or sitting in our books.

Ron Smith

I understand. I was a little surprised when I first saw the net debt number, which was lower than I had been expecting, given the Moscow Tyre Plant acquisition. I had one final question. You were talking about CLN being put back during the put window. What was the final level of CLNs outstanding?

Alexei Gurin

It was 155 million.

As there are no further questions, the only closing comment I have is to thank you for your participation. I think that this has been the most interesting conference call we have had this year, at least in terms of number of participants and questions. I hope that we have provided full and clear answers to those questions and if anyone is not satisfied with our answers, please send your comments to Mr Rose or me and we will do our best to provide you with more detailed information. Thank you very much.