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The Government of the Republic of Serbia

In the service of citizens

JTI buys Senta Tobacco Industry

Belgrade, 8 May 2006

Serbian Minister of Finance Mladjan Dinkic and Senior Vice President of Japan Tobacco International (JTI) Mitsuomi Koizumi have signed today a contract on the sale of state-owned shares in the Senta Tobacco Industry for the price of €27.5 million.

Thus, JTI acquired 98.45% of shares in the Senta Tobacco Industry (DIS). Minister Dinkic told a press conference following the signing ceremony that JTI will pay DIS €253 per share, which is six times its book value.

Dinkic announced that JTI will immediately invest €2.5 million in the Senta factory so that within 12 months it can be prepared for production, adding that apart from 74 current employees, DIS will hire another 100 workers.

According to Dinkic, the sale contract will bring around €14 million to the state, whereas almost 500 small shareholders will get approximately €10 million. This is of great significance for Senta, as well as the fact that in the next five years, JTI is conditioned not to outsource production.

JTI Senior Vice President Mitsuomi Koizumi said that Serbia will play an important role in the company's strategy regarding the Southeast European market and voiced expectation that their first investment in the Serbian market will be an incentive to other Japanese investors.

Executive President of JTI's Geneva Office Thomas McCoy announced their plans to invest around €100 million for development purposes in the Serbian market. He added that with this investment they will begin with quality cigarette production for the Serbian market and later for export as well.