Tender Offer

Tender Offer

Bank of Georgia

JSC BANK OF GEORGIA ANNOUNCES TENDER OFFER FOR
LOAN PARTICIPATION NOTES ISSUED BY BG FINANCE B.V.

NOT FOR DISTRIBUTION TO ANY PERSON RESIDENT AND/OR LOCATED IN THE UNITED STATES

This announcement does not constitute an invitation to participate in the Invitation (as defined herein) in or from any jurisdiction in or from which, or to or from whom, it is unlawful to make such offer under applicable securities laws or otherwise. The distribution of this announcement in certain jurisdictions (in particular the United States, the United Kingdom, Italy, France and Belgium) may be restricted by law. See “Jurisdictional Restrictions” below. Persons into whose possession this document comes are required by the Joint Dealer Managers, Bank of Georgia and the Issuer to inform themselves about, and to observe, any such restrictions. No action that would permit a public offer has been or will be taken in any jurisdiction by the Joint Dealer Managers, Bank of Georgia or the Issuer.

London, 19 April 2011.

Joint Stock Company Bank of Georgia (“Bank of Georgia”) hereby announces that it is inviting holders of the outstanding U.S.$200,000,000 9.0 per cent. Loan Participation Notes due 2012 (the “Notes”) issued by BG Finance B.V. (the “Issuer”) to submit offers (“Offers”) to tender their Notes to Bank of Georgia for cash (the “Invitation”). Bank of Georgia will determine the Purchase Price and the aggregate principal amount of Notes to be purchased in accordance with a modified Dutch auction procedure.

The Invitation is being made upon the terms and subject to the conditions contained in the invitation for offers dated 19 April 2011 (the “Invitation for Offers”) prepared in connection with the Invitation, and is subject to the jurisdictional restrictions set out below. Capitalised terms used in this announcement and not otherwise defined have the meanings ascribed to them in the Invitation for Offers.

Description of the Notes	Â	Outstanding Principal Amount(1)	Â	ISIN/Common Code	Â	Maturity Date	Â	Minimum Purchase Price	Â	Maximum Invitation Amount
U.S.$200,000,000 9.0 per cent. Loan Participation Notes due 2012		U.S.$200,000,000		XS0283756624/ 028375662028375662		8 February 2012		U.S.$1,040 per U.S.$1,000 principal amount		U.S.$100,000,000 principal amount
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(1) Bank of Georgia currently holds approximately 26.16% of the aggregate principal amount of Notes outstanding, being U.S.$52,318,000 in aggregate principal amount. The Notes currently held by Bank of Georgia will not be subject to the Invitation. Bank of Georgia intends to cancel the Notes it currently holds together with all Notes purchased by Bank of Georgia pursuant to the Invitation promptly on or after the Settlement Date.

Rationale for the Invitation

Bank of Georgia is, among other objectives, currently seeking to optimise its liability portfolio and reduce the cost of its debt. To support these objectives, Bank of Georgia wishes to use available cash to reduce the amount of its outstanding debt. Bank of Georgia has determined that only a portion of the aggregate principal amount of the Notes currently outstanding is to be purchased pursuant to the Invitation. The Notes purchased pursuant to the Invitation will be tendered for cancellation by the Issuer on behalf of Bank of Georgia.

Modified Dutch Auction Procedure

Bank of Georgia is not committed to accept any tenders of the Notes and will determine a purchase price for the Notes (the “Purchase Price”), which will not be less than the Minimum Purchase Price, that it will pay to holders whose tenders are accepted pursuant to the Invitation via a modified Dutch auction procedure.

Bank of Georgia proposes to accept for purchase an aggregate principal amount of Notes no greater than the Maximum Invitation Amount of U.S.$100,000,000 (the “Maximum Invitation Amount”).

If the aggregate principal amount of the Notes validly tendered at or below the Purchase Price exceeds the Maximum Invitation Amount, Bank of Georgia will purchase Notes so tendered and not withdrawn, in the following order of priority:

• first, Notes tendered by way of a Non-Competitive Offer, subject to possible pro-ration;
• secondly, Notes tendered by way of a Competitive Offer at a price below the Purchase Price; and
• thirdly, Notes tendered by way of a Competitive Offer at a price equal to the Purchase Price, subject to possible pro-ration.

Notes offered pursuant to Offers at an Offer Price higher than the Purchase Price will not be accepted.

Holders of Notes whose Offers are accepted by Bank of Georgia will receive the Purchase Price together with Accrued Interest, even if they made a Non-Competitive Offer or an Offer specifying a price lower than the Purchase Price. Each tender of Notes reduced on a pro rata basis will be rounded down to the nearest U.S.$1,000 principal amount, provided that no Offer shall be accepted in this manner where the acceptance of prorated Notes under the Offer would result in a residual amount of Notes totalling less than U.S.$100,000 principal amount.

Bank of Georgia reserves the right, in its sole and absolute discretion, not to accept any Offers, not to purchase any Notes, or to modify in any manner any of the terms and conditions of the Invitation (including, but not limited to, purchasing more than the Maximum Invitation Amount, subject to applicable law).

Cash to be Received for Notes

Holders of Notes whose offers to tender are accepted by Bank of Georgia, subject to any pro-ration, will receive for each U.S.$1,000 principal amount of Notes purchased (subject to a minimum of U.S.$100,000 principal amount):

• the Purchase Price; and
• an amount in cash in United States dollars equal to the accrued but unpaid interest for the period from and including the most recent interest payment date for the Notes up to (but not including) the Settlement Date (“Accrued Interest”).

Participating in the Invitation

To tender Notes pursuant to the Invitation, a holder should deliver, or arrange to have delivered on its behalf, only through Euroclear or Clearstream, Luxembourg and in accordance with the requirements of such clearing system, a valid Electronic Offer Instruction that is received by the Tender Agent by the Expiration Time.

Holders are advised to check with any bank, securities broker or other intermediary through which they hold Notes whether such intermediary must receive instructions to participate in the Invitation before the deadlines specified in the timeline below.

Expected Transaction Timeline

Date and time (all times Central European Time)	Â	Event
19 April 2011		Launch Date Commencement of the Invitation and distribution of the Invitation for Offers.
		Â
6 May at 5:00 p.m.		Expiration Time Invitation expires unless Bank of Georgia extends it or terminates it earlier in its sole discretion.
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By no later than 2:00 p.m. on 9 May 2011		Price Announcement Date Bank of Georgia announces whether it will accept any Offers, and, if so, the aggregate principal amount of Notes to be repurchased, the Purchase Price and pro-ration factor, if any, for the Notes.
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11 May 2011 (two Business Days after the Price Announcement Date), or as soon as practicable thereafter		Settlement Date Bank of Georgia pays the Purchase Price plus Accrued Interest in respect of any Notes being purchased.

Further Information

A complete description of the terms and conditions of the Invitation is set out in the Invitation for Offers. Citigroup Global Markets Limited and VTB Capital plc are the Joint Dealer Managers for the Invitation.

Requests for information in relation to the Invitation should be directed to:

JOINT DEALER MANAGERS

Citigroup Global Markets Limited
Citigroup Centre, Canada SquareCitigroup Centre, Canada Square
Canary WharfCanary Wharf
London E14 5LBLondon E14 5LB
United KingdomUnited Kingdom
Attention: Liability Management GroupAttention: Liability Management Group
Tel: [phone]Tel: [phone]
E-mail:E-mail:[e-mail]

VTB Capital plc
14 Cornhill14 Cornhill
London EC3V 3NDLondon EC3V 3ND
United KingdomUnited Kingdom
Attention: Global Head of SyndicateAttention: Global Head of Syndicate
Tel: [phone]Tel: [phone]
Email:Email:[e-mail]

Requests for information in relation to the procedures for offering Notes in the Invitation and the submission of Electronic Offer Instructions should be directed to:

THE TENDER AGENT

Lucid Issuer Services Limited
Leroy HouseLeroy House
436 Essex Road436 Essex Road
London N1 3QPLondon N1 3QP
United KingdomUnited Kingdom
Tel: [phone]Tel: [phone]
Attn: Lee Pellicci / Thomas ChoquetAttn: Lee Pellicci / Thomas Choquet
Email:Email:[e-mail]

A copy of the Invitation for Offers is available to eligible persons upon request from the Tender Agent.

The Joint Dealer Managers do not take responsibility for the contents of this announcement and none of Bank of Georgia, the Issuer, the Joint Dealer Managers, the Tender Agent, the Trustee or any of their respective directors, employees or affiliates makes any representation or recommendation whatsoever regarding the Invitation, or any recommendation as to whether holders should tender Notes in the Invitation. This announcement must be read in conjunction with the Invitation for Offers. No Invitation to acquire any Notes is being made pursuant to this announcement. Any such Invitation is only being made in the Invitation for Offers and any such acquisition or acceptance of Offers should be made solely on the basis of information contained in the Invitation for Offers. This announcement and the Invitation for Offers contain important information which should be read carefully before any decision is made with respect to the Invitation. If any holder is in any doubt as to the action it should take, it is recommended to seek its own advice, including as to any tax consequences, from its stockbroker, bank manager, solicitor, accountant or other independent adviser.

Jurisdictional Restrictions

This announcement and the Invitation for Offers do not constitute an offer to buy or a solicitation of an offer to sell any Notes, and offers of Notes will not be accepted from holders, in any jurisdiction in which such offer or solicitation is unlawful. In any jurisdiction where the securities or other laws require the offer to be made by a licensed broker or dealer and in which either Dealer Manager or any of it affiliates is so licensed, the Invitation shall be deemed to be made on behalf of Bank of Georgia in such jurisdictions by such Joint Dealer Manager or such affiliates (where it is so licensed), as the case may be.

The distribution of the Invitation for Offers is restricted by law in certain jurisdictions. Persons into whose possession the Invitation for Offers comes are required to inform themselves of and to observe any of these restrictions.

The Invitation does not constitute, and may not be used in connection with, an offer to buy Notes or a solicitation to sell Notes by anyone in any jurisdiction in which such an offer or solicitation is not authorised or in which the person making such an offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make an offer or a solicitation. Neither Bank of Georgia, the Issuer nor the Joint Dealer Managers accepts any responsibility for any violation by any person of the restrictions applicable in any jurisdiction.

United States

The Invitation is not being made and will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, email and other forms of electronic transmission) of interstate or foreign commerce of, or any facility of a national securities exchange of, the United States, and no Offer of Notes may be made by any such use, means, instrumentality or facility from or within the United States, or to U.S. persons or by persons located or resident in the United States. Accordingly, copies of the Invitation for Offers and any other documents or materials relating to the Invitation are not being, and must not be, directly or indirectly, mailed or otherwise transmitted, distributed or forwarded in or into the United States, or to U.S. persons or to persons located or resident in the United States. Any purported Offer of Notes resulting directly or indirectly from a violation of these restrictions will be invalid and Offers of Notes made by a person located or resident in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal located or resident in the United States will not be accepted.

Each holder of Notes participating in the Invitation will represent that it is not located in the United States and is not participating in the Invitation from the United States or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in the Invitation from the United States. For the purposes of this paragraph, United States means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.

United Kingdom

The communication of the Invitation for Offers and any other documents or materials relating to the Invitation is not being made and such documents and/or materials have not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom, and are only for circulation to persons outside the United Kingdom or to persons within the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)) or within Article 43(2) of the Order, or to other persons to whom it may lawfully be communicated in accordance with the Order.

Italy

None of the Invitation, the Invitation for Offers or any other documents or materials relating to the Invitation have been or will be submitted to the clearance procedure of the Commissione Nazionale per le Società e la Borsa (“CONSOB”) pursuant to Italian laws and regulations, and therefore the Invitation may only be made or promoted, directly or indirectly, in or into the Republic of Italy (“Italy”) pursuant to an exemption from the rules governing public purchases or exchange offers (offerte pubbliche di acquisto o scambio) as defined in article 1, paragraph 1, letter v of Italian Legislative Decree no. 58 of February 24, 1998, as amended (the “Financial Services Act”).

Accordingly, the Invitation is not addressed to, and neither the Invitation for Offers nor any other documents, materials or information relating, directly or indirectly, to the Invitation can be distributed or otherwise made available (either directly or indirectly) to any person in Italy other than:

(i) to qualified investors (investitori qualificati) pursuant to article 34-ter, paragraph 1, letter (b), of CONSOB Regulation No. 11971 of 14 May 1999, as amended from time to time (the “CONSOB Regulation”) acting on their own account; or

(ii) in any other circumstances where an express exemption from compliance with the restrictions on public purchases or exchange offers applies pursuant to the Financial Services Act or the CONSOB Regulation.

Belgium

Neither the Invitation for Offers nor any other documents or materials relating to the Invitation have been submitted to or will submitted for approval or recognition to the Belgian Banking, Finance and Insurance Commission (Commission bancaire, financière et des assurances/Commissie voor het Bank-, Financie- en Assurantiewezen) and, accordingly, the Invitation may not be made in Belgium by way of a public offering, as defined in Article 3 of the Belgian Law of 1 April 2007 on public takeover bids or as defined in Article 3 of the Belgian Law of 16 June 2006 on the public offer of placement instruments and the admission to trading of placement instruments on regulated markets (together, the “Belgian Public Offer Law”), each as amended or replaced from time to time. Accordingly, the Invitation may not be advertised and the Invitation will not be extended, and neither the Invitation for Offers nor any other documents or materials relating to the Invitation (including any memorandum, information circular, brochure or any similar documents) has been or shall be distributed or made available, directly or indirectly, to any person in Belgium other than “qualified investors” in the sense of Article 10 of the Belgian Public Offer Law (as amended from time to time), acting on their own account. Insofar as Belgium is concerned, the Invitation for Offers has been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Invitation. Accordingly, the information contained in the Invitation for Offers may not be used for any other purpose or disclosed to any other person in Belgium.

France

The Invitation is not being made, directly or indirectly, to the public in the Republic of France (“France”). Neither the Invitation for Offers nor any other documents or materials relating to the Invitation have been or shall be distributed to the public in France and only (i) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d’investissement de gestion de portefeuille pour compte de tiers) and/or (ii) qualified investors (investisseurs qualifiées) other than individuals in each case acting on their own account, all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 to D.411-3 of the French Code monétaire et financier, are eligible to participate in the Invitation. The Invitation for Offers has not been and will not be submitted for clearance to nor approved by the Autorité des Marchés Financiers.