In reference to the questions received from several public media sources concerning the current condition of the JSC Liepājas Metalurgs, the following information has been prepared to properly reflect the Company's activities in the ongoing modernization program. The JSC Liepājas Metalurgs has sought governmental support in the form of a guarantee to be able to continue the ongoing modernization of its production process. Being the largest production company in Latvia and playing a significant social role in the country's life, the JSC Liepājas Metalurgs is continuing negotiations with the commercial banks and the credit insurance institutions on structuring the financing for the implementation of the modernization program. Despite the healthy and stable economic condition of the Company, the appeared crises in the global financial markets is taken its toll; the large commercial banks with whom the JSC Liepājas Metalurgs has been discussing the project have either entirely or partially lost the ability to arrange the financing for the project. In light of such conditions, the governmental support would significantly improve the project's profile in front of the lending banks allowing for the continuation of the already-started modernization program. As a result of the negotiations with large commercial banks, the JSC Liepājas Metalurgs is convinced that a high degree of interest for the modernization program of the Company among the financial institutions remains in the marketplace. However due to the world financial crises, the banks' approach of lending on large corporate projects in Latvia has changed. The inquired governmental support would considerably assist in the process of the loan issuance and expand the list of those financial institutions, including those currently operating in Latvia, who could participate in this opportunity. The pricing and payments related to the modernization program had been evaluated in details and analyzed together with Siemens VAI (the supplier of the new technology and the consortium leader), and verified by a group of professional independent specialists. As a result of this work, it was calculated that LVL 112 million (approximately EUR 160 million) are necessary in order to implement this project. As a result of the proposed modernization, the range of products produced at the JSC Liepājas Metalurgs will be expanded, product quality increased, and production costs decreased, even with the fact that the production capacity will increase. The main goal of the JSC Liepājas Metalurgs is to gain the competitive market advantage that could be realistically achieved, since the Company will become the most state-of-the-art producer in Europe. Certainly, all environmental European Union requirements will be satisfied. The compliance with the European Union environmental regulations could be achieved also by means of investing large sums in the existing technology without replacing it as in case of the modernization program. It is the Company's strong opinion, however, that such an approach would be economically irrational. The receipt from the government guarantee would mean that the JSC Liepājas Metalurgs would continue its ongoing modernization within the shortest time possible. The three existing open-heart (Martin) furnaces are to be replaced with one electric arc furnace together with a construction of appropriate infrastructure. The JSC Liepājas Metalurgs' role in the economic well being and development of the country and city of Liepaja is invaluable. Taxes Paid: Year Amount in millions LVL (mill. EUR) 2003 5.7 (8.11) 2004 7.5 (10.67) 2005 8.7 (12.38) 2006 9.7 (13.80) 2007 13.4 (19.07) Employment:approximately 2500 (the number of the JSC Liepājas Metalurgs employees makes about 7% of the active labor force of Liepaja). Considering the world practice, reviewing studies about similar companies and the analyses, it could be stated that each work position existing at the JSC Liepājas Metalurgs creates on average 3-5 indirect work positions in the organizations servicing or working with the JSC Liepājas Metalurgs. The total employment directly or indirectly related to the production process of the JSC Liepājas Metalurgs hypothetically could result in 15000, which is more than 25% of the total active labor force of the city of Liepaja. The JSC Liepājas Metalurgs own investments in the production development: Year Amount in millions LVL (mill. EUR) 1997 3.4 (4.84) 1998 5.6 (7.97) 1999 3.5 (4.98) 2000 1.7 (2.42) 2001 6.0 (8.54) 2002 5.1 (7.26) 2003 2.2 (3.13) 2004 4.4 (6.26) 2005 17.5 (24.90) 2006 10.2 (14.51) 2007 9.6 (13.66) TOTAL: 65.9 (93.77) Over ten years the Company has remained the largest electricity consumer in the country with the average annual consumption of 130 million KWh, valued at LVL 7 million. The JSC Liepājas Metalurgs is also the largest consumer of natural gas in the country with an average annual consumption of 117 million m3, which cost about LVL 22 million. The part of the total turnover on the railway station of Liepaja attributable to JSC Liepājas Metalurgs amounted to 25% - both in the car number and tones. After any downturn, there is an upside recovery. Therefore, it is necessary already today to take care of tomorrow by using the pricing and demand decline for equipment and services. The question on whether to stop the production is not a consideration for the JSC Liepājas Metalurgs. The Company believes that the plant modernization is only the question of time and price. By remaining a competitive company in the industry, the JSC Liepājas Metalurgs is not planning in the near time entirely or partially stop production. The product sales continue in the traditional markets, increasing the export portion due to the decline in demand observed in the local market. Currently, the Rolling Mill “350/250” is in the annual scheduled maintenance repair involving modernization elements. This work is envisaged to be completed by the first decade of November. The Rolling Mill will restart its continuous operation immediately thereafter in accordance with its regular nonstop working schedule. The financial results of the Company for the first nine months of the year will be published on the Riga Stock Exchange homepage in accordance with the regulation. Currently the Company is working on the budget preparation for the next year.