OREANDA-NEWS. On 20 May 2009 Far East Telecom(RTS: ESPK, MICEX: DLSV, OTCUSA: FEEOY, Frankfurt and Berlin Stock Exchange: D7A),the largest telecommunications operator in the Far East, announced the decision which was adopted at a Board of Directors’ meeting of the Company on April 27, 2009.

The Board of Directors of Far East Telecom has adopted a decision to cancel an extraordinary shareholders meeting that was to be held on the issue “On reorganizing the Company in the form of a spin-off”, the date of which had earlier  been postponed from October 30, 2008 until June 10, 2009.

The reason for postponing the date of the extraordinary shareholders meeting (EGM) was heightened risks of losses which associated with the buyback of shares at the request of shareholders and refinancing risks related to the possibility that the company’s creditors and bondholder could make premature demands to execute obligations. The company’s financial standing could face serious risks in the event that these risks materialize.

The spin-off of the cellular assets of the Magadan and Kamchatka branches into a separate legal entity is still under consideration, but at present the reasons still exist for which in October 2008 a decision was adopted to conduct an extraordinary shareholders meeting with the main issue being the reorganization of the Company.

A decision to reorganize the Company in the form of a spin-off amid the ongoing economic downturn could result in unjustified expenses, which would have a negative impact on the value of Far East Telecom’s assets to the detriment of shareholders’ interests.

The decision to conduct reorganization could be taken at a later time once the financial crisis on capital markets is over.