Syktyvkar Tissue Group OJSC (STG) Plans to Conduct its First Initial Public Offering on the MICEX at the End of May This Year

By Syktyvkar Tissie Group Ojsc stg, PRNE
Tuesday, May 10, 2011

MOSCOW, May 11, 2011 - One of the largest tissue enterprises in Russia Syktyvkar Tissue Group
OJSC, plans to conduct its first initial public offering on the MICEX at the
end of May this year.

STG eyes to raise up to RUB700mn by offering up to 30% of its increased
issue capital. Price range is from RUB11.4 to RUB14.5 per share. Order book
is open till May, 24. STG is valued at around RUB2.68bn, or RUB16.65/share
($89.18mn, or $0.55/share) as of the end of 2011. Thus, the participation in
STG's IPO at an offering price within the range of RUB11.4-14.5/share allows
the investors to buy the stock which offers an upside potential of 15%-45% by
the year-end. According to forecasts STG's value will be increased in 2.3
times comparing current level in 3-year period.

Specializing in investment-banking service of small and mid
capitalization companies ALOR INVEST CJSC and Veles Capital Investment
Company are the lead managers of this IPO.

KIT Finance Investment Bank (OJSC), Finam and Otkritie Financial
Corporation are the underwriters. Brokercreditservice (BCS), one of the
largest brokerage companies in Russia, is among agents.

According to Maxim Dremin, ALOR INVEST deputy CEO, almost 60% of active
participants of Russian stock market and over 50% of main session stock
turnover are hold by STG's IPO lead managers, underwriters and agents.
Moreover we expect IPO to be successful and secondary trade to be in good
stock liquidity due to a big free-float for Russian market.

Syktyvkar Tissue Group owns one of the largest tissue factories in
Russia, which produces mainly base paper, toilet tissue, paper towels, and
napkins. In terms of production volume, STG held 8% of the local toilet paper
market (3rd place) and 26% of the local base paper market (1st place) in
2010. The company launched paper napkins and towels production in 2008 and
reached 2% of Russian market in 2010. STG produces tissue of various raw
materials - pulp and scrap paper - and targets diverse residential groups of
both cost-effective and premium segment. Being of high quality, STG's base
paper is also supplied to foreign producers, e.g. to SCA and Metsa Tissue.

STG plans to direct the proceedings raised from IPO to investment program
realization of EUR60mn till 2015. Also the investment program will be
financed via generated profit and obtained loans. The investment program
envisages an upgrade of the existing capacities and the acquisition of new
facilities both in Syktyvkar and Central region. As a result of investment
program STG foresees an increase in sales from RUB1.8bn in 2010 till RUB4.5bn
in 2015 and net profit from RUB93mn till RUB500mn accordingly.

<<During 2008-2010 our production facilities were doubled, sales
increased in 3 times and the company became one of the leaders in the
industry due to successful realization of first stage of investment program,
- STG CEO Mark Reznik said. - So, the next stage of investment program is
going to be effective thereby STG will strengthen its market position and
raise market capitalization>>.

<<It will be the first Russian IPO in this industry. STG business clarity
for the investors and capitalization solid growth potential form a basis for
successful placement>> - said Micahel Zak, IC Veles Capital managing

Company description:

Syktyvkar Tissue Group is one of the biggest Russian pulp and
paper mills, specializing on production of market base paper, toilet paper,
paper towels and napkins. STG launched its production in 1972 as a tissue
division at Syktyvkar Timber Processing Complex - the largest forestry
factory at that time.

Company production facilities are equipped with modern lines
designed by Metso Paper, Fabio Perini, and SDF. STG total floor area is 35
square meters, total staff - 400 persons. Company annual capacity exceeds 50
kilo tons of base-paper and 275 mn standard rolls or 14 mn standard packs.

Currently 100% of STG share capital is held by Sunken Finance
Ltd with a beneficial Sergey Pogorelov. In 2005 Mr.Pogorelov bought
<<Papirus>> LLC as a non-core asset for <<Mondy Syktyvkarsky TPC>> OJSC. Then
<<Papirus>> LLC was renamed into <<Syktyvkar Tissue Group>> LLC and later in
2007 was reorganized into OJSC with issued capital 112.5 mn RUR (112.5 mn

ALOR INVEST, JSC have been operating on the Russian stock
market since 1993 and specializing in a range of financial services to
corporate clients. Company provides brokerage services in all exchanges with
the personalized service and advanced tools, including the commodity market,
organizing bond. Company organizes placement of stocks of public corporations
on market inclusion of shares in the quotation lists. Also ALOR INVEST The
company has National Ratinf Agency individual reliability rating at AA +
(very high reliability, the first level). In 2009, ALOR INVEST organized the
initial public offering of shares of Human Stem Cell Institute, which became
the first IPO in Russia after the crisis and the first IPO in the sector of
innovation and growth companies on MICEX. ALOR INVEST acted as IPO of
Farmsintez, JSC organizer - the largest IPO at the MICEX in 2010.

VELES Capital IC, LLC have been operating in Russian fond
market since 1995 and it is one of the five largest investment companies in
Russia by total turnover of securities. Veles Capital is a group of
companies, which provides services to private and corporate investors in the
stock and corporate finance market, collective investments and development
areas. Veles Capital has the experience and capability to carry out projects
of any complexity in the field of mergers and acquisitions, LBO and MBO
transactions, direct investments, fund raising, IPO. The company successfully
implemented dozens of projects in the market of corporate finance and
strategic investments in Russia and Ukraine. Veles Capital is one of the few
Russian investment companies with the reliability rating of the international
rating agency S&P (rating was first assigned in 2006 and reaffirmed every
year, the level is B-/C/ruBBB, stable outlook). Company has also a National
Rating Agency Rating at the level of AA+ (very high reliability, the first
level, positive outlook, confirmed in 2011).

    Additional information is available at

    Contact persons at ALOR INVEST CJST (tel. +7-495-980-24-98):
    Stanislav Fomenko
    Marina Irkli
    Dmitry Lyutyagin

    Contact persons at IC Veles Capital (tel. +7-495-258-19-88):
    Michael Zak


will not be displayed