Market announcement
Järvevana
Category
Other price sensitive information
Date
14.03.2008 14:33:08
Title
Announcement of restructuring of the company
Message
At a joint meeting on 14 March 2008 the Supervisory Board and the Management Board of the company decided to restructure the company by separating business activities from criminal proceedings related to land swap transactions. Restructuring is the best remedy to preserve sustainable construction companies and protect the interests of shareholders and employees in the drawn-out criminal proceedings related to land swap, the executives of the company found. With criminal proceedings that started in 2005 delayed, uncertainty and speculations in the media have had substantial impact on company's business and affect company's and shareholders' rights. Latest signal for changes was the decision made by Latvian government agency Jaunie tris Brani on 13 March 2008 that, by ignoring presumption of innocence and common procurement practices, excluded AS Merko Ehitus and group's daughter company SIA Merks from the construction tender for Latvian National Library because of the suspicion in the land swap criminal proceedings. The company has approached legal and financial advisers to develop alternatives for the restructuring of the company and to assess legal and economic impact of the implementation of those measures that might include sale of business activities, split of the company or sale of assets. Management will present its proposals about group's restructuring to shareholder's latest by 15 April 2008. The Supervisory Board and the Management Board of AS Merko Ehitus decided that AS Merko Ehitus transfers to suspected company's bank account 300 million kroons or gives other guarantees to fulfil liabilities of AS Merko Ehitus related to criminal proceedings, whereby with 250 million kroons a theoretically maximum amount, due in case of conviction, is guaranteed and 50 million kroons are for covering the costs related to the proceedings. The company involved in criminal proceedings will be managed by Toomas Annus, Chairman of the Supervisory Board of AS Merko Ehitus. Current step is made in the best interest of shareholders and in other hand to guarantee in maximum terms possible claims against AS Merko Ehitus. AS Merko Ehitus and Toomas Annus, company's Chairman of the Supervisory Board, confirm to the shareholders that, contrary to suspicions, they have not given any bribes and thus intend to resort to all legal measures to protect themselves against suspicions. AS Merko Ehitus confirms that during the restructuring the company respects in best possible way the interests of shareholders, employees and creditors and protects the interests of all company's partners. AS Merko Ehitus has requested from the Tallinn Stock Exchange a suspension on trading in shares of the company until the restructuring proposal is disclosed. Tõnu Toomik CEO +372 6 805 105