The buyback will be carried out in accordance with the procedure of buying back shares, as stipulated by the Board of Directors. All shareholders (owners of ordinary and preference shares) can participate in the procedure, regardless of the number of shares they hold. The shares shall be bought back in the following order:

– category (type) of shares to be bought back: ordinary and preference type “A” registered shares having a nominal value of 1 RUB each.

– number of shares to be bought back: up to 7,585,730 ordinary registered shares and up to 616,329 preference type “A” registered shares.

– buyback price for each share: 1,407 RUB for one ordinary share and 1,286 RUB for one preference type “A” share.

– form and term of payment: the shares shall be paid in cash, in roubles, within 7 business days from the date the shares are credited to the Company account in the Company’s register of shareholders.

– share buyback period: from 1 June 2011 to 22 July 2011 (inclusive). Applications to participate in the share buyback must be submitted from1 June 2011 to 20 June 2011 (inclusive).

As a result, the buyback amount shall correspond to up to 5% of Baltika’s share capital. A maximum of RUB 11.5bn will be used for the buyback.

The combination of interim dividends and share buybacks is a common international practice and well-regarded among international investors. The Board of Directors believes that this combination of an interim dividend and a buyback at a premium is in the interests of Baltika shareholders.

The low liquidity of Baltika shares has made it difficult for shareholders to exit their investment in the company. The buyback will give shareholders an opportunity to exit their investments in a cost-effective way and will allow shareholders, in particular, sell their shares at a premium to the market price, without transaction costs, broker fees, exchange services or commissions, and other costs, related to market share sales. The sales of shares directly to the company allows potential risks, connected with sales of shares to third parties, to be minimized.

In accordance with legislation, the shares bought during the buyback should be sold at market price or cancelled with a corresponding decrease of the share capital of the company within12 months after the buyback.

The Company’s issued share capital consists of 151,714,594 ordinary shares and 12,326,570 type “A” preference shares. The nominal value of each ordinary and preference share is RUB 1. The Company’s issued share capital totals RUB 164,041,164.

For the last several years the Company’s shares (ordinary and preference) have been traded on stock exchanges and over-the-counter markets. The shares are traded on two Russian trade stock exchanges: the RTS Exchange (since 2001) and Moscow Inter-Bank Currency Exchange (since 2003). At present the Company’s shares in circulation on the stock exchanges are included in the section of the List of ‘Securities allowed to circulate but not included in the quotation lists.’