Moscow, Russia - 16 October 2008 – In response to recent media speculation about Sistema-Hals and its potential exposure to the current global credit crisis, the Board of Sistema-Hals wishes to clarify the following:

• Sistema-Hals currently has USD1.2 billion of debt of which only around 20% is short-term debt,    approximately USD20 million of which falls due for repayment before the end of 2008.  Repayment terms for most (c. USD700 million) of the long-term debt extends to 2012.
• Sistema-Hals’ immediate priority is not servicing its debt but financing its construction programme
• The company is currently finalising its strategy, action plan and budget for 2009 developed in response to the current market conditions.  The strategy will enable Sistema-Hals to exploit its core competitive advantage, in particular its diversified and high-quality portfolio of residential and commercial real estate projects as an alternative source of financing its construction program. In addition, Sistema-Hals continues to look at possible strategic partnerships for a number of its most capital-intensive projects in case of further deterioration of the market situation. The final strategy is due to be announced in November following its approval by the Board of Directors in late October.

Sergei Shmakov, President of Sistema-Hals, commented:

“The global liquidity crisis which is affecting markets around the world, including the Russian real estate sector, has necessitated a prudent review of the priorities in our investment programme.  Taking a pragmatic approach, we are analysing different scenarios of further evolution of the market conditions and developing appropriate action plans,  based on of the Company’s competitive advantages, such as scale of business,  diversified portfolio of high quality projects, alternative sources of financing and  experience of the new management team.  Given the attractive, long term fundamentals of the Russian real estate market, and Sistema-Hals’ key strengths, we believe that the company is well placed to ride out current market turbulence and continue its development in a medium term perspective.”