The amounts were incurred in connection with the acquisition in May 2003 of Invitel (formerly known as Vivendi Telecom Hungary or Matel) from Vivendi Telecom International by the investor consortium of GMT Communications Partners and AIG Emerging Europe Infrastructure Fund.

The Refinancing consisted of a new €165 million Senior Credit Facility and the issuance of €142 million of Senior Notes due 2012. 

Commenting on the Refinancing, Ian McKenzie, the Chairman of the Board of Invitel, said: "As a result of this transaction, Invitel's debt obligations will better match its cash flow generation profile, reducing the amortization burden on our short and medium term cash flows and increasing our financial flexibility. We look forward to continuing to deliver strong operating performance on the back of the robust in-concession business supplemented by growth outside of our historical concession areas."

Tim Green, one of the founding partners of GMT said: "The transaction is significant for Invitel as it broadens the Company's access to sources of capital and enhances our ability to pursue strategic initiatives. The investor consortium will also benefit in the short-term from the partial repayment of the shareholder loans. The successful Refinancing also reflects the market's endorsement of the quality and strength of the management team recruited since May 2003."

Craig Butcher, head of EMP Europe's Budapest team commented: "This ground-breaking transaction, which represents the third-ever Hungarian high yield bond issue and a first high yield bond by a Central European issuer in over 3 years is a testimony to both the Company's improved performance since the time of the acquisition as well as the increasing acceptance by the main stream lenders and investors of Central European credits generally".

In addition to Chairman Ian McKenzie, work on the successful transaction was lead by the new CEO (Martin Lea) and CFO (Robert Bowker) who began working at Invitel in June and May 2004 respectively. Martin brings 25 years of telecommunications sector experience to Invitel and was previously CEO of the ETL-SEMKO division of Intertek Group (a FTSE 250 company), and Managing Director of UK telecom operator Racal Telecom. Robert brings 12 years of experience in the telecommunications and financial sectors and was previously the CFO of the leading Czech mobile operator Eurotel Praha.

Invitel (previously Vivendi Telecom Hungary)
Founded in 1994, Invitel offers telephony, Internet, and data services to residential and business customers in Hungary. Invitel is the incumbent operator in 9 out of 54 primary service areas, where it has a stable cash generative core telephony business. In the rest of Hungary, which represents a significant growth opportunity following the liberalisation of the telecom market, Invitel is an alternative telecom operator with a national backbone, metropolitan networks and point-to-multi-point access system.

AIG Emerging Europe Infrastructure Fund ("EEIF") with $550 million in commitments is a leading private equity investor in Central and Eastern Europe with presence in London, Budapest and Warsaw. Since its inception in 1999, EEIF has made 11 investments in infrastructure-related companies located in 9 countries of Central Europe. EEIF investment portfolio includes stakes in three mobile telephony operations: Orange (Slovakia), MobiFon (Romania), Oskar (Czech Republic), three cable operators: Aster (Poland), Karneval (Czech Republic) and Telemach (Slovenia).

GMT Communications Partners is Europe's leading private equity specialist in the Communications sector. The partners of GMT have worked together since founding Europe's first Communications fund, Baring Communications Equity Limited, in 1992, and have been influential in developing many successful companies.  These include Casema (Netherlands), De Telefoongids, now called YBR Group (Netherlands), EUSA (Spain), Internet Network Services (U.K.), Media Publications (France), Le Marche du Travail (France), MobiFon (Romania), Quote (Netherlands), Orion Publishing (UK), PEPcom (Germany) and Vivendi Telecom Hungary, now called Invitel (Hungary). GMT closed its latest fund of €365 million at the end of 2000, from which it is still actively investing. www.gmtpartners.com

This announcement is not an offer of securities for sale in the United States.  Securities may not be sold in the United States unless they are registered or are exempt from registration. Matel does not intend to register any portion of this offering in the United States or to conduct a public offering in the United States. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer and that will contain detailed information about Matel and its management, as well as financial statements. Copies of this announcement are not being, and should not be, distributed in or sent into the United States.

It may be unlawful to distribute this announcement in certain jurisdictions. This announcement is not for distribution in Canada, Japan or Australia. This announcement does not constitute an offer of securities for sale in Canada, Japan or Australia.

Stabilisation/FSA
This communication is directed only at (1) persons who are outside the United Kingdom or (2) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the "Order") or (3) high net worth entities and other persons to whom it may be lawfully communicated, falling within Article 49(2) of the Order.

Forward-looking statements
This press release contains forward-looking statements. These statements reflect the current belief of Matel's management as well as assumptions made by, and information available to, Matel. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual future results and developments could differ materially from those set forth in these statements due to various factors. These factors include, among others, changes in the general economic and competitive situation, particularly in Invitel's businesses and markets. In addition, future results and developments could be affected by the performance of financial markets, fluctuations in exchange rates and changes in national and supranational law, particularly with regard to tax regulations. The company assumes no obligation to update forward-looking statements.