?With this correction the Company changes the Stock Exchange Announcement
published on March 27, 2020. Stock Exchange Announcement text: " The court has
set a date to present the reorganisation plan to the court for approval by June
1, 2020." will be replaced as following "The court has set a date to present the
reorganisation plan to the court for approval by May 25, 2020. "
AS Baltika's comment on the change: Two dates are important for Baltika's
reorganization plan - the deadline for creditors to vote set by the
reorganization adviser is 20 May 2020 and the deadline for submitting the plan
to the court is 25 May 2020. All documents and correspondence prescribed for
creditors by the law have been based on these dates, i.e creditors have been
provided with the correct information.
The date of June 1, 2020 was stated in the company's stock exchange announcement
of March 27, 2020 and was based on preliminary information. Later, this
information was clarified and further official communication to creditors was
based on the specified dates. No creditor has approached to AS Baltika with
concerns that they are confused about the dates.
Aktsiaselts BALTIKA (hereinafter ?Baltika") informs that Baltika submitted an
application for the commencement of reorganisation proceedings to Harju County
Court on March 25, 2020 and on March 26, 2020 the court decided to initiate
reorganisation proceedings.
As stated in the Baltika`s stock exchange announcement on March 19, 2020, the
coronavirus COVID-19 is having a significant negative impact on the financial
results and liquidity of Baltika Group. COVID-19 has had the greatest impact so
far on the activities of Baltika Group in Lithuania, where all stores have been
closed since March 16 due to orders given by the Lithuanian government. The
Estonian government has ordered all shopping malls in Estonia to be closed as at
March 27. Latvian stores face restrictions limiting opening hours during the
weekdays and are closed on weekends. In addition, non-recurring expenses related
to the restructuring (mainly regarding the cessation of production in Estonia)
of Baltika Group have also had a negative impact on the financial results and
liquidity of Baltika Group. As a result of these circumstances, Baltika Group is
having solvency problems, which according to Baltika are temporary by them
nature.
In order to overcome the above mentioned difficulties, Baltika has applied for
the commencement of reorganisation proceedings. Baltika is in the opinion that
in the current situation reorganisation of the company is the best way to
protect the rights and interests of the shareholders, the employees, the
creditors and the partners of Baltika. The company believes that as a result of
the reorganisation proceedings and the measures taken in these proceedings,
Baltika will be able to overcome its economic difficulties and restore its
liquidity, improve profitability and ensure its sustainable management. This is
also supported by the restructuring and efforts to improve business model which
have already been made by Baltika Group, such as cessation of production
operations in Estonia and thereby reducing production costs, and various other
measures to reduce fixed costs.
If reorganisation of Baltika is successfully completed and the company`s
financial difficulties overcome, it will be possible to continue with the
activities of Baltika and retain several valuable jobs. In addition, the
successful reorganisation of the company would help to ensure the durability of
the Estonian design industry, as Baltika Group is the only Estonian fashion
company that exports much of its production and offers professional work in the
field of industrial fashion.
Following the commencement of the reorganisation proceedings, Baltika must
prepare a reorganisation plan. The court has set a date to present the
reorganisation plan to the court for approval by May 25, 2020. The
reorganisation plan will be prepared in consultation with Baltika's main
partners. The reorganisation plan specifies which reorganisation measures will
be implemented, including the impact of the reorganisation on the creditors. The
reorganisation plan is accepted by way of voting of the creditors. The final
decision on whether to approve the plan is up to the court. The reorganisation
only concerns AS Baltika, not any other Baltika Group entities.
Maigi Pärnik-Pernik
Member of the Management Board
maigi.parnik@baltikagroup.com
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