Updated April 28, 2008

   Zelenograd factory Angstrem controlled by Mezhprombank cofounder Sergey Veremeenko received €815 million loan from Vnesheconombank (VEB) to purchase equipment at AMD and to construct the microelectronic production in Russia. Sergey Veremeenko does not hide the support of the president administration has helped him to get the loan.

But market participants say Vnesheconombank has lent Angstrem money under risky terms.

   Zelenograd microelectronic factory Angstrem was given the €815 million loan from Vnesheconombank, as it became known.

Director for Vnesheconombank information policy department Andrey Mazurov reported that "the transaction is approved, the loan agreement is signed, and the first money has been transferred". Mr. Mazurov renounced to name the sum amount Angstrem has received adding that it is "a considerable sum". He also did not specify for what reasons was taken the decision to give the loan.

   Mezhprombank cofounder Sergey Veremennko, who controls more than 50% Angstrem stocks,

was quoted as saying that €339 million given by VEB would be spent to buy some equipment and technologies from AMD company for the production of chips with a 0,13 micron feature size.

It would be possible to produce the wide range of products at suchlike production line, including SIM-cards, chips for credit cards and biometric passports, microprocessors used in electronics etc. German company M+W Zander specializing in production complexes construction receives the bigger part of the rest money.

This company will be engaged in the construction of "net room" and other required infrastructure.

The loan security is 100% Angstrem-T stocks. Mr. Veremeenko explained the receipt of VEB loan was mainly predetermined by the support of the Russian state authorities.

"We applied for a loan three years ago. Since then the project parameters, as well as the required investments volume, have been changed once or even twice, but we have finally waited till the decision about funding has been taken. Our project was mainly supported by the state authorities, including president Vladimir Putin and first vice prime minister Sergey Ivanov". According to his words, the term of the project recoupment is six-seven years.

Within this period Angstrem will increase the turnover form the current $50 million to $600-800 million a year, and the annual volume of microchips sales will total 15 000 units.

   The polled market participants say VEB dec ision to credit such project

is rather risky. Former Sitronics president Yevgeny Utkin asserts the cost of Angstrem assets "approximately corresponds the cost of land and buildings located within their property". Angstrem production occupies around 6 ga area. Director for Swiss Realty Group development Ilya Shershnev estimates the cost of 1 ga of land, where Angstrem factory is located, at $5 million.

    Director of Electronics Publishing House Ivan Pokrovsky considers the state has mainly taken the risks related to this project.

"According to our estimations, Angstrem turnover is around ten times less than the loan sum it has received. If even the bank has taken into account the project prospects, the decision looks rather ambiguous.

Angstrem has to compete with Sitronics after the factory construction. And the latter has already launched the chips production with 0,18 micron feature size".

   Sitronics is currently waiting for the state decision concerning around $2,2 billion funding for another microelectronic factory construction. Trust Investment Company analyst Pavel Pikulev considers VEB decision to give loan

to Angstrem logic. "VEB has the state bank for development status, and that, in particular, implies investments into the country high priority industries, including microelectronics.

I think the decision has been taken under the order foremost, given by the state authorities, but not under the investments recoupment".