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Date: Tuesday 26 Aug 2008

LONDON (ShareCast) - The outstanding post-acquisition issues resulting from X5 Retail Group’s takeover of Formata have been resolved, the company said today.

X5, Russia’s largest retailer in terms of sale, has reached agreement with the former shareholders of Formata, the company it acquired in June, over various issues, including property development contracts between Formata and the affiliates of Donson, a company associated with the former shareholders of Formata.

Under the terms of the agreement, the Donson contracts will be unwound and the pre-payments made under the terms of the contracts will be returned to Formata. The pre-payments were for around RUR 3.9bn, roughly equivalent to $160m.

Additionally, the former shareholders of Formata have agreed to pay $40m to X5, representing their compliance with post-completion obligations under the Call Option Agreement dated 11 April 2006.

Simultaneously, the Russian Federal Financial Markets Service has annulled previously registered issues of corporate rouble bonds by Hyperfinance, a subsidiary of Donson. These bonds were originally intend to be guaranteed by Formata and its subsidiaries and thus the annulment effectively removes any continuing obligation on the part of Formata in regard to Hyperfinance bonds.

“We are happy that all the outstanding issues between X5's shareholders have now been resolved,” said Andrei Rogachev, one of the former owners of Formata.

“Remaining the largest minority shareholders in X5, we expect to benefit from the company's enlarged scale and strong exposure to hypermarkets,” Rogachev added.

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