Arco Vara: Enforcement proceedings instituted against Arco Vara's associate Arco HCE OÜ

To recover a loan of over 12 million euros, Danske Bank A/S has initiated enforcement proceedings against Arco HCE OÜ, which is a 50% subsidiary of Arco Investeeringute AS that is a wholly-held subsidiary of Arco Vara AS. The object of the proceedings is to exercise a mortgage created for the benefit of Danske Bank on a property located at Ahtri 3 in Tallinn.

Arco Investeeringute AS has agreed to stand surety for the bank loan of Arco HCE to the extent of 1,917,349.46 euros. As at 31 December 2012 the entire amount of the surety was provided for. Accordingly, the enforcement proceedings will have no impact on the group's financial position or financial performance.

The management board and shareholders of Arco HCE are of the opinion that the initiation of the enforcement proceedings was not legitimate.

Arco HCE is a project company established for the development of a property at Ahtri 3 in Tallinn. The company's only asset is the property at Ahtri 3. From 2007 to 2012 the shareholders of Arco HCE invested over 20 million euros in the development of the property and the development operations are still in progress.

The shares in Arco HCE are held, in equal proportions, by Arco Investeeringute AS and U.S. Real Estate Management OÜ.

Egert Paulberg Financial Controller Arco Vara AS Tel: [phone] [e-mail]