Reconstruction Proposals

Baring Emerging Europe Trust PLC
12 November 2002


 
                 The Baring Emerging Europe Trust PLC
                     Reconstruction Proposals

The Board of The Baring Emerging Europe Trust PLC (the 'Company') announces that
final details of the reconstruction are being made available today. Two
extraordinary general meetings of the Company and a separate meeting
of warrantholders will be convened in order to consider proposals for the
reconstruction of the Company pursuant to a scheme under section 110 of the
Insolvency Act 1986 (the 'Scheme').

A circular has today been sent to shareholders and warrantholders, which
contains details of the proposed Scheme. The Scheme involves the voluntary
winding-up of the Company, with ordinary shareholders being offered the choice
of electing to rollover all or part of their shareholdings in the Company (the
'Rollover Option') into a newly incorporated closed-end investment company
called Baring Emerging Europe PLC (which, in order to avoid confusion with the
Company, is referred to below as 'Newco') or to realise all or the remainder of
their shareholdings for cash. The costs of the Scheme and a further discount of
two per cent. (up to a maximum aggregate discount of US$2 million) will be borne
in aggregate by shareholders that elect to receive cash under the Scheme.

Newco has the same investment policy and investment manager as the Company,
which has produced annualised compound growth in undiluted net asset value per
share of 17 per cent. since its launch in 1994 to 30 April 2002, and its
undiluted net asset value per share has increased 18.5 per cent. between 1
January 2002 and 31 October 2002. The investment manager believes that the
prospects for growth in the emerging European economies in which Newco may 
invest remain compelling.

The Newco board has adopted a firm policy with regard to the market rating of
its shares. At all times, the Newco board will seek to limit any discount to net
asset value per share at which Newco shares trade to a level significantly lower
than the 12 per cent trigger level referred to below, using as necessary the
share repurchase authority which it is intended should have been granted to the
Newco directors on the day that dealings commence in Newco shares. Due to
certain legal requirements the use of the share repurchase authority is
effectively subject to confirmation by the High Court, which will be sought at a
hearing on 18 December 2002 (the expected first day of dealings in Newco
shares). The authority permits repurchases of up to 15 per cent. of Newco's
shares; it is intended to seek Newco shareholders' approval for the renewal of
this authority every year at Newco's annual general meeting, and at an earlier
extraordinary general meeting if necessary. Furthermore, if the average closing
mid-market price of Newco's shares in the period of 90 days prior to the
publication of preliminary results each year represents a discount to net asset
value per share which exceeds the 12 per cent. trigger level, Newco will
(subject to receiving the necessary shareholder approval) offer to repurchase,
by way of tender available to all Newco shareholders, up to 15 per cent. of the
outstanding issued share capital at 95 per cent. of net asset value (after
taking account of expenses including the costs of selling investments in order
to fund the repurchase).

The Board believes that the Scheme is in the interests of shareholders generally 
because:

• shareholders may choose either to retain an equity exposure to
  emerging Europe markets through the Newco portfolio and/or receive cash;

• those shareholders who are subject to UK capital gains tax should be able to 
  rollover their investment in the Company into Newco shares without 
  crystallising an immediate charge to UK capital gains tax;

• shareholders that elect for the Rollover Option will benefit from a transfer 
  of value from those shareholders electing for cash which should more than 
  offset the costs of launching Newco; and

• for those shareholders who realise some or all of their investment, the 
  proposals provide the opportunity to receive cash at close to net asset value.

The Scheme is conditional inter alia on the passing of all resolutions to be
proposed at the two extraordinary general meetings and on holders of not less
than 10,000,000 ordinary shares electing for cash. The Rollover Option is also
conditional on elections for this option being such that not less man 17.5
million Newco shares would be in issue if the Scheme became effective and on
those shares being admitted to listing and to trading on the London Stock
Exchange.

The separate proposal to be put to warrantholders at the warrantholders meeting
will, if approved, allow them to participate in the Scheme, by electing either
to subscribe for the Company's ordinary shares in order to participate in the
Rollover Option and/or receive a cash distribution and/or apply the cash
distribution which would otherwise be payable as a subscription for Newco shares
at the issue price of the Newco shares under the Rollover Option. If 
warrantholders do not approve this proposal, they will receive cash in 
accordance with their existing entitlements, but the Scheme may nevertheless 
become effective if it is approved by shareholders. The Board believes that the
proposal is in the best interests of warrantholders generally because it will
allow them either to receive cash in a timely manner and in an amount broadly
equivalent to that which they would otherwise be entitled and/or to acquire
Newco shares in a tax efficient manner and/or to maintain their exposure to
emerging European markets by applying their cash entitlement in subscription for
Newco shares.

The first extraordinary general meeting has been convened for 11:30 a.m. on 5
December 2002. At that meeting resolutions will be proposed to sanction the
Scheme and amend the articles of association to give effect to the Scheme. The
second extraordinary general meeting has been convened for 11:30 a.m. on 17
December 2002, at which resolutions will be proposed to wind up the Company,
appoint liquidators and confer appropriate powers on them. The separate meeting
of warrantholders has been convened for 11:35 a.m. (or as soon thereafter as the
first extraordinary general meeting shall have concluded or adjourned) on 5
December 2002. The warrantholders' proposal to participate in the Scheme
referred to above will be put to warrantholders at that meeting.

If the Scheme is approved, it is expected to become effective on 17 December
2002 following the second extraordinary general meeting and dealings in Newco
shares are then expected to commence on 18 December 2002.

Copies of the circular and an accompanying prospectus for Newco have been
submitted to the UK Listing Authority, and will be available for inspection at
the UK Listing Authority's Document Viewing Facility, which is situated at:

Financial Services Authority 
25 The North Colonnade
Canary Wharf 
London E14 5HS 

Telephone: [phone]
 
Enquiries:
Michael Nokes          Company Secretary          020 7762 8405
Ronald Watt            Baring Asset Management    020 7214 1858
Howard Myles           Ernst & Young LLP          020 7951 5324

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