Capital increase

Referring to the report no 37 of 27.06.2006, the Management Board of Stalexport S.A, informs that on 26.06.2006 it passed the resolution no 82 dated 26.06.2006, in regard to an increase in stock capital of the Company within the target capital by issuing the F series shares with numbers from F 123,602,646 to F 157,762,023, depriving the right to acquire shares by the existing shareholders of the Company and introducing the F series shares with numbers from F 123,602,646 to F 157,762,023 to the turnover on the regulated market of Warsaw Stock Exchange, with the following contents:

On the basis of art. 444-447 and art. 430-433 in connection with art. 453 § 1 of the Code of commercial companies, § 8 passage 2 and 2a of the Company`s Charter, in connection with resolutions of the Supervisory Board of STALEXPORT Joint Stock Company with the seat in Katowice no 16/2005 dated 29.09.2005 ?in regard to fixing the issue price of shares of F series, which will be issued within an increase in stock capital of the Company, within the target capital as well as depriving the right to acquire shares by the existing shareholders of shares of F series and no 22/2005 dated 23.12.2005 in regard to extending the date of binding the consent of the Supervisory Board on issue price and authorizing the Management Board to deprive the right to acquire shares by the existing shareholders of shares of F series; the Management Board of the Company passes the following:

§ 1

1. The stock capital of the Company is increased by the amount of 68,318,756.00 (say: sixty eight million three hundred eighteen thousand seven hundred fifty six) by issuing 34,159,378 (say: thirty four million one hundred fifty nine thousand three hundred seventy eight) ordinary bearer F series shares with numbers from F 123,602,646 to F 157,762,023, of a nominal value of 2 (two) zloty each share.
2. The issue price of shares of F series with numbers from F 123,602,646 to F 157,762,023,amounts to 2 zloty (say: two zloty ) for one share.
3. The F series shares with numbers from F 123,602,646 to F 157,762,023 will participate in the dividend beginning from 1st January 2006.
4. The shares of F series with numbers from F 123,602,646 to F 157,762,023 will be subscribed in private subscription by submitting the offer of subscribing the shares of F series with numbers from F 123,602,646 to F 157,762,023 and its approving the company AUTOSTRADE S.P.A. . established and acting according to the Italian law, with its seat in Rome, entered to the Companies Register in Rome under number 1023691.
5. The shares of F series with numbers from F 123,602,646 to F 157,762,023 will be covered by cash.
6. The subscription agreement of shares o F series with numbers from F 123,602,646 to F 157,762,023 will be concluded till 30.06.2006.
7. The Management Board of the Company:

a) will allot the shares of F series with numbers from F 123,602,646 to F 157,762,023,
b) will fix other detailed conditions of issue of shares of F series with numbers from F 123,602,646 to F 157,762,023in the range not?regulated in this resolution.
§ 2
The Management Board of the Company will execute all proceedings necessary to correctly perform the provisions of this resolution and the stipulations of the law regulations, in particular:
a) will undertake actions aimed at registering the changes in the Company?s Charter in National Judicial Register, which are connected with the increase in stock capital of the Company by the shares of F series with numbers from F 123,602,646 to F 157,762,023,
b) will undertake actions aimed at introducing/admitting the shares of F series with numbers from F 123,602,646 to F 157,762,023to the turnover on the regulated market of Warsaw Stock Exchange.
§ 3
The existing shareholders are deprived of the right to acquire the shares of F series with numbers from F 123,602,646 to F 157,762,023 by the existing shareholders.
§ 4
In connection with an increase in stock capital of the Company within the target capital by the issue of shares of F series with numbers from F 123,602,646 to F 157,762,023 the existing recordings of § 6 and § 7 items 1 of the Charter of the Company are amended as follows.
§6.
The stock capital of the Company amounts to 315,524,046 zloty (say: three hundred fifteen million five hundred twenty four thousand forty six ).
§7.1.
The stock capital of the Company is divided into 157,762,023 (one hundred fifty seven million seven hundred sixty two thousand twenty three) ordinary bearer shares of a nominal value of 2 (two) zloty each, including 8,341,030 (eight million three hundred forty one thousand thirty) A series shares with numbers from A000000001 to number A008341030, 492 796 (four hundred ninety two thousand seven hundred ninety six) B series shares with numbers from B 008341031 to B 8833826, 4,000,000 (four million) D series shares, 94,928,197 (ninety four million nine hundred twenty eight thousand one hundred ninety seven) E series shares with numbers from E 12 833 827 to number 107 762 023 and 50,000,000 (say: fifty million) shares of F series with numbers from F 107,762,024 to F 157,762,023. 
§ 5
It is decided to supplement the resolution passed by the Management Board by the following opinion:
The opinion of the Management Board on depriving the right to acquire the shares of F series with numbers from F 123,602,646 to F 157,762,023 by the existing shareholders and the mode of fixing the issue price
The Management Board of the company STALEXPORT S.A. with seat in Katowice, acting under art. 433 § 2 of Commercial companies code presents its opinion on depriving the right to acquire the shares of F series with numbers from F 123,602,646 to F 157,762,023 by the existing shareholders and the mode of fixing the issue price of the shares of F series with numbers from F 123,602,646 to F 157,762,023

The Management Board of STALEXPORT S.A. for the few last years has been systematically executing approved in 2002 ?the Programme of executing the strategy of STALEXPORT S.A. in the years 2002-2007 under the condition of the arrangement proceedings.
According to the approved plan the execution of the repayment of the arrangement and off-arrangement liabilities is the most important task of the Company. The arrangement proceedings, which covered the liabilities in the amount of 605 m zloty and the restructuring of the off-arrangement liabilities in the amount of 251 m zloty, gave the possibility for further functioning of STALEXPORT S.A. The company systematically met its arrangement and off-arrangement liabilities. Till today 11 out of 20 arrangement instalments have been paid.

The off-arrangement liability towards the State Treasury by virtue of guarantees for Huta Ostrowiec ( ca 78 m zloty) still remains to be additionally repaid, the repayment od which will commence in the second half of 2008. The interests on above mentioned liability are repaid currently. While the liabilities of STALEXPORT S.A. in the amount of 35,574,868.89 zloty towards the Bank syndicate, by virtue of guarantee of credits drawn by Walcownia Rur Jedność Sp. z o.o. in Siemianowice Śląskie, will be settled in non-cash form, through the issue of shares subscribed in exchange for the in-kind contribution. The matter of the possible liability towards the State Treasury by the same virtue is not settled till today, which ? according to the best knowledge of the Management Board  is estimated at maximum ca 88 m zloty.

Such considerable financial burdens affect the diminishing of the working capital, and the same limit the possibility of generating the trade incomes.
Analysing the existing situation of the Capital Group of STALEXPORT it should be stated that the main tasks for the near years are:

• repayment of the restructured liabilities,
• the matter of effectiveness through the organisational organistaion of the ditribution network and the development of the production and processing activity,
• increasing the s