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WARSAW, Poland - October 31, 2006 - Netia SA (“Netia” or the “Company”) (WSE: NET), Poland‘s largest alternative provider of fixed-line telecommunications services, announced that based on a decision of the Financial Supervisory Commission dated 13 October 2006, and Art. 81 section 1 subsection 1 of the Law on Public Trading in Securities, Netia hereby amends the prospectus for the Company‘s shares and notes, dated 17 April 2002, with respect to changing the subscription dates applicable to the series III notes and series K shares (the “Prospectus”).

 

The Prospectus amendments referred to herein result from resolution No. 20 concerning amending §5B point 6 of the Company's Statute adopted by the General Shareholders' Meeting of the Company on 29 March 2006 and Resolution No. 5 concerniang the amendments to the Netia Stock Option Plan adopted by the Company‘s Supervisory Board on 8 June 2006.

 

The amendments shall be as follows:

 

 (a)       on the front cover of the Prospectus the following sentence:

 

“The holders of Series II Notes, except for the underwriter, shall be entitled to place subscription orders for Series K Shares at any time between the Series III Notes subscription date until December 31, 2007, at the issue price of PLN 1.”

 

shall be replaced with:

 

“The holders of Series II Notes, except for the underwriter, shall be entitled to place subscription orders for Series K Shares at any time between the Series III Notes subscription date until December 31, 2012, at the issue price of PLN 1.”

 

(b)        on the inside cover of the Prospectus the following sentence:

 

“The validity of the particular parts of the Prospectus shall expire upon the allocation of Series H Shares, the Offered Notes, and the transfer of subscription Warrants, respectively, however, not later than on December 31, 2002, except for those parts of the Prospectus that refer to Series J Shares and Series K Shares, whose validity shall expire on the date on which all issued Series J Shares and Series K Shares have been delivered, however, not later than within three years from the issue date of Series I Notes and Series II Notes, with respect to the parts concerning Series J Shares, and not later than on December 2007 with respect to the parts concerning Series K Shares.”

 

shall be replaced with:

 

“The validity of the particular parts of the Prospectus shall expire upon the allocation of Series H Shares, the Offered Notes, and the transfer of subscription Warrants, respectively, however, not later than on December 31, 2002, except for those parts of the Prospectus that refer to Series J Shares and Series K Shares, whose validity shall expire on the date on which all issued Series J Shares and Series K Shares have been delivered, however, not later than within three years from the issue date of Series I Notes and Series II Notes, with respect to the parts concerning Series J Shares, and not later than on December 2012 with respect to the parts concerning Series K Shares.”

 

(c)        in section 7.3 of Chapter I of the Prospectus, the sentence:

 

“The right to subscribe for Series K Shares shall expire on December 31, 2007, as provided in the Issuer‘s Statute.”

 

shall be replaced with:

 

“The right to subscribe for Series K Shares shall expire on December 31, 2012, as provided in the Issuer‘s Statute.”

 

(d)        in section I of Chapter III of the Prospectus, the sentence:

 

“The share capital increase covering Series J and K Shares shall be effected by way of a conditional issue, and consequently the Issuer‘s actual proceeds and the final unit costs of the issue will only be calculable after the lapse of the respective Series J and K Shares subscription periods, i.e. not later than after three years from the issue date of Series I Notes and Series II Notes, with respect to Series J Shares, and with respect to Series K Shares, after December 31, 2007.”

 

shall be replaced with:

 

“The share capital increase covering Series J and K Shares shall be effected by way of a conditional issue, and consequently the Issuer‘s actual proceeds and the final unit costs of the issue will only be calculable after the lapse of the respective Series J and K Shares subscription periods, i.e. not later than after three years from the issue date of Series I Notes and Series II Notes, with respect to Series J Shares, and with respect to Series K Shares, after December 31, 2012.”

 

(e)        the following text shall be added at the end of subsection 3.2 of Chapter III of the Prospectus:

 

“Resolution No. 20

of the Ordinary General Shareholders' Meeting of Netia  S.A.

dated March 29, 2006

 

1.       The Ordinary General Shareholders' Meeting of the Company hereby revokes §5 B point 6 of the Company Statute and adopts a new §5 B point 6 worded as follows:

 

“The priority right to acquire series "K" shares (warrant) may be executed not later than on December 31, 2012, unless, subject to the Supervisory Board's approval, the Management Board will shorten the period for the execution of the priority right to acquire series "K" shares (warrant) pursuant to a performance stock option plan to be adopted by the Company's Supervisory Board for the Netia Group.”

 

2.       In connection with the above change of the Company's Statue the Ordinary Shareholders' Meeting hereby authorizes the Management Board of the Company to take all actions necessary to change the rules of the distribution of series III notes as well as series "K" shares, described in the Polish prospectus of Netia's shares and notes dated April 17, 2002, within the scope of the adopted change of the Company's Statute, including, in particular, the change of the date for subscribing for series III notes as well as the date for subscribing for series "K" shares in execution of the rights resulting from series III notes.”

 

(f)        in section 23.4.4 of Chapter III of the Prospectus the following text:

 

“The disposal of Series III Notes by the bought-deal underwriter to the entitled persons shall be executed from the first business day following the day of allocation of Series III Notes to the bought-deal underwriter by the Issuer‘s Management Board up until December 31, 2007. Orders placed for Series III Notes shall be accepted from the first day following the day of allocation of Series III Notes to the bought-deal underwriter by the Issuer‘s Management Board up until December 31, 2007.”

 

shall be replaced with:

 

“The disposal of Series III Notes by the bought-deal underwriter to the entitled persons shall be executed from the first business day following the day of allocation of Series III Notes to the bought-deal underwriter by the Issuer‘s Management Board up until December 31, 2012. Orders placed for Series III Notes shall be accepted from the first day following the day of allocation of Series III Notes to the bought-deal underwriter by the Issuer‘s Management Board up until December 31, 2012”; and

 

the sentence:

 

“If by December 31, 2007, the bought-deal underwriter receives correctly placed and paid up orders for all Series III Notes acquired by the bought-deal underwriter, then such date on which the bought-deal underwriter receives orders for all Series III Notes shall be deemed the closing date of the Series III Notes disposal period.”

 

shall be replaced with:

 

“If by December 31, 2012, the bought-deal underwriter receives correctly placed and paid up orders for all Series III Notes acquired by the bought-deal underwriter, then such date on which the bought-deal underwriter receives orders for all Series III Notes shall be deemed the closing date of the Series III Notes disposal period.”

 

(g)        in section 24.5.2 of Chapter III of the Prospectus, the sentence:

 

“Subscription orders for Series K Shares in exercise of the rights attached to Series III Notes shall be accepted from the day Series III Notes are credited to the securities accounts until December 31, 2007.”

 

shall be replaced with:

 

“Subscription orders for Series K Shares in exercise of the rights attached to Series III Notes shall be accepted from the day Series III Notes are credited to the securities accounts until December 31, 2012.”

 

(h)        in section 4.1 of Chapter IV of the Prospectus, the sentence:

 

“The priority right to acquire Series K Shares may be exercised note later than on December 31, 2007, unless the Management Board shortens, subject to the Supervisory Board‘s consent, the period within which the right to acquire Series K Shares may be exercised under the New Stock Option Plan for the Netia Group, which has been adopted by the Supervisory Board.”

 

shall be replaced with:

 

“The priority right to acquire Series K Shares may be exercised note later than on December 31, 2012, unless the Management Board shortens, subject to the Supervisory Board‘s consent, the period within which the right to acquire Series K Shares may be exercised under the New Stock Option Plan for the Netia Group, which has been adopted by the Supervisory Board.”

 

(i)         in section 4.3.2 of Chapter VI of the Prospectus, the sentence:

 

“The New Stock Option Plan shall enter into force subject to and upon the completion of the Restructuring, an shall expire on December 31, 2007 .”

 

shall be replaced with:

 

“The New Stock Option Plan shall enter into force subject to and upon the completion of the Restructuring, an shall expire on December 31, 2012 .”

 

(j)        the following text shall be added at the end of Schedule No. 2 to the Prospectus:

 

 

“Resolution No. 20

of the Ordinary General Shareholders' Meeting of Netia  S.A.

dated March 29, 2006

 

 

1.      The Ordinary General Shareholders' Meeting of the Company hereby revokes §5 B point 6 of the Company Statute and adopts a new §5 B point 6 worded as follows:

 

“The priority right to acquire series "K" shares (warrant) may be executed not later than on December 31, 2012, unless, subject to the Supervisory Board's approval, the Management Board will shorten the period for the execution of the priority right to acquire series "K" shares (warrant) pursuant to a performance stock option plan to be adopted by the Company's Supervisory Board for the Netia Group.”

 

2.       In connection with the above change of the Company's Statute the Ordinary Shareholders' Meeting hereby authorizes the Management Board of the Company to take all actions necessary to change the rules of the distribution of series III notes as well as series "K" shares, described in the Polish prospectus of Netia's shares and notes dated April 17, 2002, within the scope of the adopted change of the Company's Statute, including, in particular, the change of the date for subscribing for series III notes as well as the date for subscribing for series "K" shares in execution of the rights resulting from series III notes.”