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Altec: Reply To Stock Exchange Query

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Following a relevant request by the Athens Exchange regarding recently published articles in the financial press on our subsidiary company ALTEC TELECOMS, we inform you on the following:
The illegal and improper action by the Hellenic Telecommunication Organization (OTE) to disrupt the provision of interconnection services towards our subsidiary company ALTEC TELECOMS, at the same time when a proposal had already been submitted for the full repayment of its overdue debt, resulted in a huge material and moral loss for the company. This outcome resulted from the fact that from such time the company was unable to smoothly provide services towards its customers, while the damage to the reputation and professional stance of our company led a large number of our subscribers to a mass abandonment of the company, without even repaying their dues for services that had already been provided to such. These events contributed decisively to the further set-back in ALTEC TELECOMS problematic cash flows.
As a final effort for continuity in its operations and aiming at its financial recovery, the management of ALTEC TELECOMS on 25/9/2008 filed for initiating a reconciliation procedure according to article 99 of L. 3588/2007. At the same time, the company submitted a claim for precautionary measures and for the issuance of a temporary order, requesting that OTE be obliged to restore the provision of its services to the minimum required level for the smooth operation of the company, until the certified decision is issued on its agreement with its creditors. The aforementioned reconnection of the companys circuits to the minimum required level was absolutely necessary for the continuity of its operations, in order for the reconciliation procedure to be of practical importance and be applicable.
The request of the company for a temporary order as described above, was heard on 2/10/2008. On the same date, a decision was issued, which did not accept ALTEC TELECOMS request for reconnection of a minimum portion of its circuits, in order for such to continue its operation and maintain its customers. As a result of the rejection of our request, the most significant asset of our company, its clientele, shrank even faster and thus the companys financial position is further deteriorating, as now revenue tends to reach a zero level.
Subsequent to the above, it is now clear that ALTEC TELECOMS could not be able to operate, provide services and maintain revenue, until the issuance of the certified decision on the agreement of the Company with its creditors. As a result, the reconciliation procedure is rendered as void. Therefore, ALTEC TELECOMS waived the legal procedure of the reconciliation request be means of its waiver dated 13/10/2008.
However, due to the aforementioned effective events and based on the current financial position of ALTEC TELECOMS, which is characterized by an overwhelming liquidity problem, it is considered with certainty that the Company will be in a general and permanent inability as regards to meeting its liabilities. The aforementioned overwhelming liquidity problems eventually lead ALTEC TELECOMS to an inevitable situation of imminent cease of payments. For this reason, ALTEC TELECOMS will submit today, 17/10/2008 a request to the relevant Court for bankruptcy, due to an imminent financial weakness according to article 3 paragraph 2 of Bankruptcy Law.
Nevertheless, the Company aims directly, and in any case within the legal time frame provided, to submit before the bankruptcy court a restructuring proposal with the objective to save, rationalize and utilize the company in the best way.
The value of Altec SAs participation in ALTEC TELECOMS amounts to euro 19.6 mn, the receivables of the parent company from ALTEC TELECOMS amount to euro 28.8 mn, the guarantees of the parent towards its subsidiary ALTEC TELECOMS amount to euro 1.2 mn, while the expected income of the parentcompany from activities underway at the subsidiary ALTEC TELECOMS amount to approximately euro 31 mn. The Management considers that the effects of the present situation of ALTEC TELECOMS on the Altec Group will be significant, but will not be capable to create a problem for the continuity of the Groups activities.
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