Recommended Proposals etc

Equest Investments Balkans Ltd
28 March 2008

FINAL



28 March 2008



                       Equest Investments Balkans Limited

                            ('EIB' or the 'Company')



  Recommended proposals for reorganisation of the management structure of the
                                    Company,
  amendments to the articles of association and disapplication of pre-emption
                                     rights



Equest Investments Balkans ('Equest' or the 'Company') today announces that it
has posted a circular to Shareholders to seek approval for the Proposals (as
defined below), together with approval for changes in the Company's articles and
disapplication of the current investment restrictions (the 'Associated Changes')
(the 'Circular').



The recommended proposals follow on from the Board's announcement on 13
September 2007 that it was evaluating a number of strategic options including
changing the nature of the Company from an externally managed fund to an
internally managed holding company, whilst retaining the Key Individuals (being
Kari Haataja, Petri Karjalainen and Georgi Krumov) as the management of the
Company and a further announcement on 26 February 2008 with respect to the Board
signing non-binding heads of terms relating to the proposed changes to the
nature of the Company.



Under the proposals, the existing Investment Management Agreement and Investment
Advisory Agreement will be terminated pursuant to a Termination Agreement and
replaced with a services agreement between Equest Capital Limited ('ECL'), the
Key Individuals and the Company (the 'Services Agreement') and a technical
support agreement between ECL and the Company (the 'Technical Support Agreement
').  The Board is also proposing that the current performance fee arrangement is
terminated and a long term incentive plan ('LTIP') is introduced. The proposed
entry by the Company into the Termination Agreement, the Services Agreement, the
Technical Support Agreement and the LTIP is referred to as  the 'Proposals'.



The Board believes the principal benefits of the Proposals for the Company
include:



•         Securing the commitment of the Key Individuals to devote substantially
all of their time to the Company for an initial term of 4 years subject to carve
outs as set out below;

•         The Key Individuals joining the board of the Company in an executive
capacity, in due course;

•         Procuring direct access to the investment management team and securing
the Company's right to use the 'Equest' brand name'; and

•         Terminating the Company's annual management fee of 2.5 per cent. of
committed capital payable to the Investment Manager (currently some €5.76
million per annum) and replacing it with the Services Agreement and the
Technical Support Agreement, which will, it is expected, provide cost savings of
approximately 50 per cent. of the current annual management fee to the
Shareholders.



The obligations of the Key Individuals under the new arrangements with the
Company shall not preclude the Key Individuals (and their affiliates) from
discharging their existing obligations to Equest Balkan Properties PLC.



The Proposals and Associated Changes are subject to the approval of Shareholders
in general meeting, which has been convened for 25 April 2008.



Should the Proposals be approved by Shareholders and implemented, the Company
would no longer have an investment manager within the meaning of the Irish Stock
Exchange rules regulating investment funds and accordingly, implementation of
the Proposals will be conditional on the delisting of the Ordinary Shares from
the ISE, which is expected as soon as practicable after the General Meeting and,
in any event, no later than 30 November 2008.



The definitions used in this announcement are the same as the ones used in the
Circular.









For further information:


Equest Partners Limited              Petri Karjalainen                   [phone]

                                     Naomi Kora


Financial Dynamics                   Ed Gascoigne-Pees                   [phone]

                                     David Cranmer


Collins Stewart Europe Limited       Hugh Field                          [phone]

                                     Jonny Sloan





Collins Stewart Europe Limited ('Collins Stewart') which is regulated and
authorised by the Financial Services Authority and is a member of the London
Stock Exchange, is acting exclusively for the Company and no one else in
connection with the Proposals and Associated Changes.  Collins Stewart will not
regard any other person as its customer nor be responsible to any other person
for providing the protections afforded to customers of Collins Stewart nor for
providing advice in relation to the transactions and arrangements detailed in
this document


Set out below are edited extracts from the letter to Shareholders from the
Chairman as contained in the Circular.



Introduction


On 13 September 2007, the Board announced that it was evaluating a number of
strategic options including changing the nature of the Company from an
externally managed fund to an internally managed holding company, whilst
retaining the Key Individuals as the management of the Company.



Following consultations with a number of Shareholders, representing a majority
in number of the Company's Ordinary Shares, and with the Company's advisers, the
Board entered into discussions with the (Equest Capital Management Limited the '
Investment Manager') with the goal of reaching agreement on a structure that it
believed would align more closely the interests of Shareholders and the
Investment Manager.



On 26 February 2008, the Board announced that it had signed non-binding heads of
terms relating to proposed changes to the structure of the management of the
Company.



The Board believes that changing the nature of the Company's management in the
manner set out in the Proposals, will ensure the most effective means by which
the Company manages its existing investments and sources new investments, and
will better enable the Company to improve Shareholder value.



At the General Meeting, your approval will also be sought for Associated
Changes.



Under the ISE listing rules, the Investment Manager and ECL (of which the
Investment Managers is a wholly owned subsidiary) are considered 'related
parties' and Petri Karjalainen is considered an 'associate' of the Investment
Manager and of ECL. Therefore, the Proposals are considered related party
transactions, requiring Shareholder approval. The proposals for amendments to
the articles and the disapplication of pre-emption rights require Shareholder
approval pursuant to the Articles. The proposal for disapplication of the
Investment Restrictions represents a change in the Company's investing strategy
and, although not expressly required, the Board is nevertheless seeking
Shareholder approval for this change. In addition, the Proposals constitute
related party transactions for the purposes of the AIM Rules however,
Shareholder approval of the Proposals is not required under the AIM Rules.



The Company has received irrevocable undertakings to vote in favour of the
Resolutions to be proposed at the General Meeting from the holders of 9,839,006
Ordinary Shares representing 56.79 per cent. of the total issued share capital
of the Company. However, as the Investment Manager and Petri Karjalainen (being
a related party and an associate of a related party, respectively) and their
associates are ineligible to vote on Resolution 1, the irrevocable undertakings
in respect of Resolution 1 only, represent 54.75 per cent. of the votes that may
be cast by holders of the Ordinary Shares.



Subject to Shareholder approval, the Board's intention is to implement the
Proposals and Associated Changes as soon as reasonably practical after the
General Meeting.



Background


The Company's investment strategy is to make equity or equity related
investments in developing enterprises organised or operating throughout the
Target Region with the objective to provide Shareholder with long term capital
growth.  Since it commenced operations on 14 April 2004, the Company has made
seven investments in companies operating primarily in Bulgaria, two investments
in Romania and two investments in Serbia.  As at 30 September 2007, being the
latest announcement of the Company's Net Asset Value, the Company announced an
unaudited Net Asset Value of €21.07 per Ordinary Share (equivalent to £14.69
based on an exchange rate of 0.697, as at 28 September 2007).



To date, the Company has invested in businesses, which the Investment Manager
believes will benefit from growth in both the economies and disposable income in
the Target Region.  Whilst the Company was established with no sector focus in
relation to its investment portfolio, the Company's investment portfolio is now
broadly concentrated on retail (including TechnomarketDomo), waste management
and infrastructure (including Novera) as well as residential property
developments (including Borovets). The Company and Investment Manager have also
established strong brand recognition in its core market.



The Company is now seeking to continue its growth across the Target Region as an
active and concentrated holding company owning, managing and developing its
principal holdings, and the Board believes that, going forward, this can be
achieved most effectively through the implementation of the Proposals.



In addition to being admitted to the Official List, the Ordinary Shares were
admitted to trading on AIM on 20 December 2006.  At the same time, the Company
raised an additional £43.9 million through a placing of the Ordinary Shares at a
price of £12.10 per Ordinary Share.  Since that time, the Ordinary Shares have
traded within a range of £10.55 and £12.29 per Ordinary Share. The price of the
Ordinary Shares on 27 March 2008, was £10.65, representing a discount to NAV per
Ordinary Share as at 28 September 2007 of 11.98%.



Current trading


During 2007, the Company invested €72.8 million of its own resources, €66.6
million of which was invested in four new investments in Bulgaria, Romania and
Serbia and Montenegro (including all acquisition costs) and €6.2 million of
which was invested in follow on investments in existing portfolio companies.



The Company has utilised a mixture of debt and equity from strategic
partnerships when making acquisitions such that the total acquisition cost of
investments in 2007 was approximately €200 million.  Having invested the net
proceeds of €64.5 million, which it raised at the time of the Company's
Admission to AIM, the Company is now effectively fully invested.



The new investments in 2007 included:


(i)       a strategic holding in the Rila Samokov 2004 AD, a large scale development at Super Borovets
          adjacent to Borovets, Bulgaria's oldest mountain and ski resort;


(ii)      a majority stake in Domo Retail SA, the second largest electronics retail operation in Romania;


(iii)     100% of Novera EAD which owns the principal concessions for waste collection and transportation
          services in Sofia; and


(iv)      a staged investment in the Technomarket branded operations primarily in Serbia and Montenegro but
          also in some neighbouring countries.





As previously announced, the Company has nominated ING Bank as sole bookrunner
and joint lead manager with Raiffeisen Centrobank for a proposed initial public
offering of the TechnomarketDomo Group on the Sofia and/or Bucharest Stock
Exchanges.  This proposed IPO is planned for the first half of 2008 although no
assurances can be made that the IPO will take place in this time frame.



The Company's investment in the TechnomarketDomo group is held through its 75%
indirect holding of TechnomarketDomo Group B. V. ('TechnomarketDomo').



Technomarket, the Bulgarian operations of TechnomarketDomo and the largest
electronics retailer and wholesaler in Bulgaria, performed well during 2007 and
the unaudited financial results for the 9 months ended 30 September 2007 showed
a 26% increase in sales compared to the corresponding period in 2006.



Domo, the Romanian operations of TechnomarketDomo, which was acquired in October
2007 through the acquisition by TechnomarketDomo of a 75% interest in Domo,
achieved significant growth during 2007. The unaudited financial results of Domo
for the 9 months ended 30 September 2007 showed a 55% increase in sales compared
to the corresponding period in 2006.



Summary of the Proposals and Associated Changes


Under the Proposals, the Investment Management Agreement and the Investment
Advisory Agreement will be terminated pursuant to the Termination Agreement, and
replaced with the Services Agreement and the Technical Support Agreement with
effect from the delisting of the Company's Ordinary Shares from the ISE (the
'Effective Date'). Furthermore, as part of the Proposals, the Board is proposing
that a Long Term Incentive Plan be introduced to replace the current performance
fee arrangements as further described below.



The Board believes the principal benefits of the Proposals for the Company
include:


(i)       securing the commitment of the Key Individuals to devote substantially all of their time to the
          Company for an initial term of four years renewable on an annual basis thereafter. As part of this
          commitment, the Key Individuals will agree not to raise any new external funds to be managed by
          them. This commitment is subject to a carve out for their existing obligations to Equest Balkan
          Properties PLC and for other non-competing businesses;


(ii)      the Key Individuals joining in due course the board of the Company in an executive capacity;


(iii)     procuring direct access to the investment management team and operating platform of the Investment
          Manager and securing the Company's right to use the 'Equest' brand name; and


(iv)      terminating the Company's annual management fee of 2.5 per cent. of committed capital payable to
          the Investment Manager (currently some €5.76 million per annum) and replacing it with the Services
          Agreement and the Technical Support Agreement, which will, it is expected, provide cost savings of
          approximately 50 per cent. of the current annual management fee to the Shareholders.



It is also expected that additional costs savings may be achieved over time from
the termination of contracts with other third party service providers associated
with a fund structure.



The Company is categorised and regulated as an investment fund under the ISE
listing rules and as an 'investing company' under the AIM Rules. The Directors
believe that such a categorisation is unfavourable as certain investors are
unwilling to invest in companies which are classified as funds. If the Proposals
are approved and implemented, the Directors believe that a wider group of
institutional and other investors will consider investing in the Company.



In consideration for terminating the existing management arrangements (including
the current performance fee arrangements), the Investment Manager will receive:


(i)       Ordinary Shares in the Company representing 5% of the Ordinary Shares currently in issue (on a
          fully diluted basis); and


(ii)      warrants to purchase Ordinary Shares representing approximately 3% of the Ordinary Shares currently
          in issue (on a fully diluted basis).



The Ordinary Shares issued to the Investment Manager as part of the Proposals
will be subject to lock-up arrangements and exercise of the warrants will be
subject to the conditions outlined in Part II of the circular.



The annual management fee of 2.5% of committed capital payable by the Company to
the Investment Manager will in effect cease to be payable from 26 February 2008
(being the date on which the heads of terms were signed by ECL and the Company)
and will be replaced by new compensation arrangements for senior management
(including the Key Individuals). The current performance fee arrangements will
be terminated with effect from 31 December 2007 and replaced with a new
long-term incentive plan (the 'LTIP') which would become effective from 1
January 2008 and aimed at incentivising the Company's management. For the
avoidance of doubt, the Investment Manager will not receive any separate payment
of any performance fee to 31 December 2007.



In addition to the Proposals, the Board is seeking your approval for the
Associated Changes which include:


(i)       changes to the Articles including: the removal of the current requirement for the Board to propose
          at the 2011 annual general meeting of the Company a resolution to the effect that the Company
          ceases to continue as then constituted; the removal of the restriction on the Company issuing
          Ordinary Shares at a discount to NAV whilst granting Shareholders pre-emptive rights over all
          issues of new Ordinary Shares; the quorum requirements for the Company's Shareholder meetings; and


(ii)      removal of the current investment restrictions in relation to the spread of risk in the Company's
          investment portfolio.



The currently proposed management arrangements are of a medium term nature and
the Board intends that the Company will eventually move away from these
arrangements to employ directly all of its directors and to set the directors'
remuneration on the basis of recommendations of a remuneration committee to be
established by the Board. As a result, the Board may seek to agree with ECL and
the Key Individuals an early termination of the Services Agreement and the
Technical Support Agreement and, for this purpose, no further Shareholder
approval shall be required.



Management reorganisation


Under the Termination Agreement, on the Effective Date, the Investment Manager
and ECL will terminate the existing Investment Management Agreement in
consideration for the issue by the Company to ECL of:


(i)       941,540 Ordinary Shares (the 'Consideration Shares') representing 5% the Ordinary Shares currently
          in issue  (on a fully diluted basis); and


(ii)      warrants entitling the holder to purchase 564,925 Ordinary Shares representing approximately 3% of
          the Ordinary Shares currently in issue (on a fully diluted basis) (the 'Warrants').



The Warrants will be granted by the Company under a warrant instrument (the
'Warrant Instrument') and will be exercisable at any time after the expiry of 12
months from 1 January 2008 on the condition that the NAV per Ordinary Share
reported immediately prior to the exercise of the Warrants is not less than the
audited NAV per Ordinary Share as at 31 December 2007 (the 'High Water Mark').
For the avoidance of doubt, for the purposes of calculating the High Water Mark,
the Net Asset Value per Ordinary Share prior to the proposed exercise date of
any Warrants shall be calculated as follows:



Net Asset Value per Ordinary Share equals (Net Asset Value) divided by total
number of Ordinary Shares in issue minus the number of Consideration Shares.
(The Consideration Shares shall not be counted in the total number of Ordinary
Shares for the purposes of calculating the NAV per Ordinary Share prior to the
exercise of the Warrants).



In the event of a new issue of Ordinary Shares prior to the issue of the
Consideration Shares and/or exercise of the Warrants, ECL shall be entitled to
subscribe pro rata to its share of such new issue of Ordinary Shares as if the
Consideration Shares and the Ordinary Shares issuable upon exercise of the
Warrants had been issued to ECL.



In addition, the Board, the Investment Manager and ECL have agreed that the
Consideration Shares, the Existing Shares and any Ordinary Shares issued on
exercise of the Warrants shall be subject to lock-up arrangements until 31
December 2011 further details of which are set out in Part II of the circular.



As part of the approval of the termination of the Investment Management
Agreement, the Board is requesting the Shareholders' specific approval for the
allotment of the Consideration Shares and the Ordinary Shares to be issued upon
exercise of the Warrants. The market value of the Consideration Shares and the
Ordinary Shares to be issued upon exercise of the Warrants is equivalent to
£16,043,852 based on a share price of £10.65 per Ordinary Share at the close of
business on 27 March 2008.



The Consideration Shares will only be issued following delisting from the ISE
and both the Consideration Shares and any Ordinary Shares issued upon exercise
of the Warrants will rank parri passu with the issued Ordinary Shares including,
without limitation, for dividend or interest. An application will be made for
the Consideration Shares, once issued, and any Ordinary Shares issued on
exercise of the Warrants, to be admitted to trading on AIM.



The Company will not be issuing share certificates in respect of the
Consideration Shares and any Ordinary Shares issued on exercise of the Warrants.
The Consideration Shares and any Ordinary Shares issued on exercise of the
Warrants will be held in registered and book-entry form.



Services Agreement with the Key Individuals and ECL


Under the Proposals, on termination of the Investment Management Agreement the
Company will enter into the Services Agreement with the Key Individuals and ECL.



Pursuant to the Services Agreement, ECL will procure that the Key Individuals
and other senior managers are made available to the Company to perform such
services as the Company may reasonably request and that the Key Individuals
shall devote substantially all of their professional time and attention  to the
affairs of the Company for an initial term of four years, which shall renew
automatically for successive one year terms unless either party gives to the
other written notice of termination at least six (6) months prior to the end of
each anniversary.



The Key Individuals will be subject to certain non-compete and non-solicitation
covenants more particularly described in Part III of the circular.  In addition,
ECL and the Key Individuals will be obliged to present any new business
opportunities they identify in the Target Region and which are within the remit
of Company's investment objective and strategy, as set out in the Admission
Document, to the Company on a pre-emptive basis.





ECL and/or the Key Individuals shall be allowed to own (directly or indirectly)
interests in other businesses.  If these businesses could compete with the
Company, these ownership interests will be subject to a cap of 5% aggregate
ownership or such higher percentage as may be approved by the Board. The Board
shall act reasonably in considering any request for approval of ownership
interests exceeding 5% and, for this purposes, any of the Key Individuals who
are on the Board shall not be included in the consideration of the matter by the
Board.



The Key Individuals shall be permitted to continue to provide consulting
services to Equest Balkan Properties PLC, including assuming the position of
non-executive directors and 'key individuals' as set out in the Admission
Document of Equest Balkan Properties PLC dated Dec 2005.



The Key Individuals shall be permitted to have executive appointments with ECL
and its affiliates.



The Key Individuals shall be permitted to assume the position of director of any
other companies provided such companies do not compete with the Company and,
further provided, that such appointments are in a non-executive capacity.



The Key Individuals shall be permitted to own, directly or indirectly, and/or
manage property developments in and outside the Target Region.



The Board believes that the compensation arrangements are in line with senior
management compensation arrangements for comparable listed investment holding
companies. The Board has resolved to establish a remuneration committee,
consisting of independent non-executive directors, which shall review the
compensation arrangements on an annual basis.



The total compensation under the Services Agreement shall be €2.4 million per
annum. Such compensation shall be reviewed by the remuneration committee on an
annual basis and may be increased at the discretion of the remuneration
committee.  In the event that the services of any two of the Key Individuals are
no longer procured by ECL, the total compensation payable under the Services
Agreement shall be reduced by 25 per cent. until such time as ECL procures the
services of a suitable replacement for at least one of such Key Individuals.



In addition to entering into the Services Agreement, the Key Individuals shall
also be available for appointment to the board of the Company for the duration
of the Services Agreement.



Technical Support Agreement with ECL


Under the Proposals, the Company and ECL have agreed to enter into the Technical
Support Agreement for an initial term of one year, renewable on an annual basis
thereafter. Pursuant to the Technical Support Agreement, ECL shall provide or
procure the provision of back office technical support and other services
necessary for the Company's day to day operations such as office premises in
various locations, IT, administrative and finance services. The Board envisages
that such back office functions will gradually be brought in-house and the
Company will have the right to terminate or scale back certain services under
the Technical Support Agreement. In particular, the Board and the Key
Individuals will endeavour to bring all finance functions in-house as soon as
practicable. The consideration payable to ECL under the Technical Support
Agreement shall represent ECL's actual cost of providing the services (without
any profit or mark up in favour of ECL) and is not expected to exceed €480,000
in the first year of the agreement.



Long Term Incentive Plan


Under the Proposals, the Board is proposing that the current performance fee
arrangement is terminated and a LTIP is introduced which is intended to provide
transparent alignment of interests between the Key Individuals and other senior
managers, and the Shareholders.



Currently, the Investment Manager is entitled to a performance fee determined
during successive periods of 24 months (the 'Performance Period').  The current
performance fee is for the period ending 31 December 2008. The current
performance fee is equal to 20 per cent. of the excess of the Closing NAV per
Ordinary Share at the end of each Performance Period over (i) €17.86 (being the
higher of (a) the last Net Asset Value per Ordinary Share published prior to
Admission, and (b) the placing price of £12.10 per Ordinary Share at Admission)
increased at a rate of 8 per cent. per annum on a compounding basis up to the
end of the relevant Performance Period; (ii) the Closing NAV per Ordinary Share
at the end of the immediately preceding Performance Period (after taking into
account any Performance Fee paid in respect of that Performance Period); and
(iii) a high watermark, which shall be the highest Closing NAV per Ordinary
Share at the end of any previous Performance Period in respect of which a
Performance Fee was last earned.  For this purpose 'Closing NAV per Ordinary
Share' shall be the average of (i) the Net Asset Value per Ordinary Share at the
end of that Performance Period (before making an accrual for the relevant
Performance Fee) and (ii) the volume weighted average price per Ordinary Share
calculated for the 3 months immediately prior to the end of the Performance
Period converted to Euro at the Euro/Sterling exchange rate prevailing at the
end of the relevant Performance Period.  Further details on the current
performance fee is outlined at paragraph 3.1 at Part VII of the circular.



The Board is proposing that pursuant to the LTIP, ECL shall be entitled to an
incentive fee (the 'Incentive Fee') in certain circumstances, more particularly
described below. The first period for calculating an Incentive Fee would begin
on 1 January 2008 and end on 31 December 2008; each subsequent incentive period
would be a period of twelve months ending on 31 December (an 'Incentive
Period'). The LTIP shall be in place for an initial term of four years and
thereafter shall remain in operation until termination of the Services
Agreement.



The payment of any Incentive Fee by the Company under the LTIP will be subject
to:


(i)       the achievement of a performance hurdle condition: the Closing Combined Value per Ordinary Share at
          the end of the relevant Incentive Period must exceed an amount equal to the NAV per Ordinary Share
          as at 31 December 2007 increased by the Margin on an annual compounding basis up to the end of the
          relevant Incentive Period (the 'Incentive Hurdle'); and


(ii)      the achievement of a high water mark: the Closing Combined Value per Ordinary Share at the end of
          the relevant Incentive Period must be higher than the highest Closing Combined Value per Ordinary
          Share at the end of an Incentive Period in respect of which an Incentive Fee, if any, was last
          earned (the 'Incentive High Water Mark').



The Closing Combined Value per Ordinary Share shall be calculated as the sum of
A and B where:


A =       50% of the Net Asset Value per Ordinary Share at the end of the relevant Incentive Period (before
          making an accrual for the relevant Incentive Fee); and


B =       50% of the volume weighted average price per Ordinary Share calculated for the 3 months immediately
          prior to the end of the relevant Incentive Period (as quoted by Bloomberg) converted to Euro at the
          Euro/Sterling exchange rate prevailing at the end of the relevant Incentive Period.



The Margin shall be the average of:


(i)       the annual rate of  interest on 5-year government bonds issued by the Republic of Bulgaria; and


(ii)      the annual rate of interest on 5-year government bonds issued by the Republic of Romania,


          as at the end of the relevant Incentive Period.



In respect of the first Incentive Period, if the Incentive Hurdle is met, the
Incentive Fee will be an amount equal to 20 per cent. of the excess of the
Closing Combined Value per Ordinary Share at 31 December 2008 over the Incentive
Hurdle.



In respect of subsequent Incentive Periods, if the Incentive Hurdle is met and
the Incentive High Water Mark is exceeded, the Incentive Fee will be an amount
equal to 20 per cent. of the excess of the Closing Combined Value per Ordinary
Share at the end of the relevant Incentive Period over the higher of:


(i)       the Incentive Hurdle;


(ii)      the Closing Combined Value per Ordinary Share at the end of the immediately preceding Incentive
          Period (after adjusting for any Incentive Fee paid in respect of that Incentive Period); and


(iii)     the Incentive High Water Mark.



The terms of the LTIP shall be adjusted as is appropriate in the event that
there is a further issue of Ordinary Shares, a repurchase of Ordinary Shares or
other capital reorganisation of the Company. Further details of the adjustments
are set out in Part V of the circular.



The Company shall pay the Incentive Fee in Ordinary Shares (together with an
amount equal to VAT, if any, thereon). The Company shall issue Ordinary Shares
to ECL ('LTIP Shares') based on the following formula:



Number of Ordinary Shares issued equals (Amount of Incentive Fee for the
relevant Incentive Period) divided by (the Closing Combined Value per Ordinary
Share at the end of the relevant Incentive Period).


(i)       LTIP Shares will be issued within 90 days of the end of each annual Incentive Period and shall be
          subject to lock-up arrangements  as described in detail in Part V of the circular;


(ii)      The Company shall have the right, at its absolute discretion, to pay the Incentive Fee in cash
          instead of in LTIP Shares; and


(iii)     The Company reserves the right to, at its absolute discretion, make market purchases of Ordinary
          Shares for the purpose of paying the Incentive Fee to ECL.





Since new Ordinary Shares to be issued under the LTIP may be issued at a price
that is below NAV per Ordinary Share, as part of the approval for the LTIP, the
Board is seeking your approval, as a separate resolution, to issue such new
Ordinary Shares to ECL at a price below NAV per Ordinary Share without having to
comply with any pre-emption rights under the Articles.



Implications of the Proposals on the Irish Stock Exchange Listing


Should the Proposals be approved by Shareholders and subsequently implemented,
the Company would no longer have an investment manager within the meaning of the
ISE rules regulating Investment Funds. Accordingly, implementation of this
Resolution will be conditional on the delisting of the Ordinary Shares from the
ISE.



Under the rules of the ISE, a delisting takes effect twenty Business Days
following an announcement of the intention to delist being made by the Company.
The Ordinary Shares will continue to be admitted to trading on AIM.



Shareholders should note that, in the event that the Ordinary Shares are
delisted from the ISE, the Company will no longer be subject to the continuing
obligations and other rules and regulations (including the mandatory investment
restrictions) contained in the Listing Rules. As a result, Shareholders will not
have the benefit of the protections afforded by virtue of the Company's
compliance with those rules and regulations.  Moreover, the Ordinary Shares may
remain traded only on AIM. AIM is not a regulated market within the meaning of
the European Parliament and Council Directive on markets in financial
instruments (No. 2004/39/EC).



Following delisting from the ISE, transfers of Crest Depositary Interests
('CDIs') representing Ordinary Shares through CREST will be subject to UK stamp
duty reserve tax at the rate of 0.5% of the value of the consideration for the
transfer. Transfers of Ordinary Shares through Euroclear should not be subject
to UK stamp duty or stamp duty reserve tax on the assumption that no instrument
of transfer is executed within the UK and provided that Ordinary Shares are not
registered in any register of the Company kept in the UK and the Company's
central management and control is exercised solely outside the UK.



Proposed amendments to the Articles and disapplication of pre-emption rights -
conditional on implementation of the Proposals



Proposed amendments to the life of the Company



The Articles require that, at the Company's annual general meeting to be held in
2011, the Board must propose a resolution to the effect that the Company ceases
to continue as then constituted. If Shareholders resolve by simple majority that
the Company shall cease to continue as then constituted, the Board will be
required to formulate proposals to be put to the Shareholders in respect of the
reorganisation, unitisation, reconstruction or winding up of the Company.  In
view of the Proposals, the Board is proposing to remove all limitations on the
continued existence of the Company under the Articles.



Proposed amendments to the Board's authority to issue shares



Currently the Board has authority to issue shares on such terms as they deem fit
subject to the following limitation: any shares proposed to be allotted and
issued at a discount to Net Asset Value per Ordinary Share must be authorised by
a Shareholders' resolution or must be offered to the then current Shareholders
on a pro-rata basis. The Board is proposing to replace the current provisions
with provisions that will require all new shares of the Company to be offered to
the then current Shareholders on a pro rata basis to their shareholding in the
Company, with the exception of (i) shares to be allotted and issued pursuant to
the LTIP and any employees' share schemes (if any), (ii) preference shares or
other shares with limited rights to participate in a distribution of income or
(iii) any shares which are to be allotted and issued pursuant to an offer or an
agreement that has been made/entered into prior to the amendment to the
Articles, unless the Shareholders determine otherwise by passing an Ordinary
Resolution.



Disapplication of pre-emption rights



In addition, simultaneously with the adoption of the amended and restated
Articles, the Board is seeking your approval for a disapplication of pre-emption
rights over 1,826,589 Ordinary Shares (being 10% of the total number of
currently issued Ordinary Shares together with the Consideration Shares) until
the next annual general meeting of the Company when the Board intends to seek a
renewal of such authority.



The above changes to the Articles and the disapplication of pre-emption rights
under the so amended and restated Articles are conditional on the passing and
implementation of the Proposals.



Proposed amendments to the Articles - unrelated to the Proposals



The Board is proposing a number of amendments to the Articles in respect of the
quorum requirements for Shareholder meetings. These proposed amendments are
unrelated to the Proposals. Therefore, the implementation of such changes will
not be conditional on approval of the Proposals.



Currently, in respect of Shareholder meetings, the Articles require a quorum of
two Shareholders together holding no less than 25 per cent. of the votes of the
Ordinary Shares entitled to vote on the resolution(s) to be considered at the
meeting present in person or by proxy. The Board considers that the 25 per cent.
shareholding requirement is impractical and not within the constitution of most
companies that are similar in structure and size to the Company. Therefore, the
Board is proposing that the required quorum for a meeting of Shareholders will
be two Shareholders entitled to vote on the resolution(s) to be considered at
the meeting and attending the meeting in person or by proxy.



Removal of the restrictions on the Company's investing strategy - conditional on
implementation of the Proposals



As an investment fund, the Company has adhered to the general principle of risk
spreading in respect of its investments. The Company's investment restrictions
provide that:


(i)       not more than 20 per cent. of the Company's gross assets will be exposed to the creditworthiness or
          solvency of a single counterparty;


(ii)      the Company will not loan or invest more than 20 per cent. of the value of its gross assets in the
          securities of any one issuer;


(iii)     the Company will not invest directly in physical commodities; and


(iv)      no more than 10 per cent., in aggregate of the value of the gross assets of the Company may be
          invested directly in real property, (together, the 'Investment Restrictions').





The Board believes that the Company's investment objective of achieving
long-term growth of capital is better served without the requirement to comply
with the Investment Restrictions. The Board proposes to implement its own risk
management and corporate governance procedures, which shall be consistent with
those of other internally managed holding companies similar in nature and size
to the Company. Accordingly, it is proposed that, conditional on the
Shareholders approving the Proposals and delisting from the ISE as a result of
implementing the Proposals, the general principle of risk spreading through
adherence to the Investment Restrictions should no longer apply to the Company's
investment strategy.



In addition, under its current investment strategy, the Company is precluded
from taking management control over the entities owning the underlying
investments of the Company. The Board is proposing that this restriction is
removed from the Company's investment strategy to allow the Company to become
more closely involved in the daily operations of its investments, should it wish
to do so.



In the event that the Investment Restrictions referred to above are removed, the
Company would, in theory, be free to invest all or substantially all of its
assets in a single investment subject to compliance only with the Company's own
risk management and corporate governance procedures as referred to above.



Expected Effective Date for the Proposals and Associated Changes



The Board intends to implement the Proposals and the Associated Changes as soon
as reasonably practical after the General Meeting and no later than 30 November
2008.



Proposed additional listings on other stock exchanges



As all of the investments of the Company are concentrated in the Target Region
and as the Company and the Investment Manager enjoy strong brand recognition in
their core markets, the Board believes that the Company and its Shareholders
would benefit from the listing of the Company's Ordinary Shares on one or more
stock exchanges located within the Target Region. Accordingly, the Board
continues to explore the possibility of listing the Company's Ordinary Shares on
the regulated stock exchanges of Sofia and/or Bucharest on or after delisting
from the ISE.



Furthermore, the Board is exploring the desirability and implications of the
Company discontinuing under the laws of the BVI and continuing under the laws of
another jurisdiction. Such discontinuance/continuance would be undertaken in
order to better facilitate the listing of the Company's Ordinary Shares on the
regulated stock exchanges of Sofia and/or Bucharest.



In addition, the Board will consider the benefits of a listing of the Ordinary
Shares on the Channel Islands Stock Exchange which, although not a regulated
market within the meaning of the European Parliament and Council Directive on
markets in financial instruments (No. 2004/39/EC), is a recognised stock
exchange for certain purposes.



It should be noted that the implementation of any of the Resolutions and the
delisting of the Ordinary Shares from the ISE are not conditional on any such
listings being obtained nor on the Company re-domiciling.



Borrowings



The Company has no borrowing restrictions under the Articles and to-date any
borrowings have been undertaken by its subsidiaries on a basis which limits any
recourse of lenders to the subsidiary borrowing entity. If the Proposals are
implemented and in the light of the other proposed changes to the nature of the
Company, going forward, the Board expects to use debt financing by means of
inter alia, secured or unsecured bank borrowings, private debt placements or
listed debt instruments at the level of both the Company and its subsidiaries.



General Meeting



The Proposals and Associated Changes are subject to the approval of Shareholders
in general meeting, which has been convened for 25 April 2008, at which the
following resolutions will be put to the vote of the Shareholder:



Resolution 1 To: (i) approve the Proposals, (ii) grant authority to the Board to
allot and issue the Consideration Shares, (iii) grant authority to the Board to
allot and issue any Ordinary Shares upon exercise of the Warrants, (iv) grant
authority to the Board to allot and issue any Ordinary Shares under the LTIP and
(v) agree that ECL shall be deemed in respect of any issues of new Ordinary
Shares to hold its then shareholding in the Company plus the Consideration
Shares and the Ordinary Shares to be issued upon exercise of the Warrants;

Resolution 2  To approve the removal of restrictions on the Company's investing
strategy

Resolution 3  Subject to and conditional on passing Resolutions 1 and 2, to
approve the amendments to the Articles and disapplication of pre-emption rights
over 1,826,589 Ordinary Shares (being 10% of the total number of currently
issued Ordinary Shares together with the Consideration Shares); and

Resolution 4  To approve the proposed unconditional changes to the Articles.



Voting undertakings



The Company has received irrevocable undertakings to vote in favour of the
Resolutions to be proposed at the General Meeting from the holders of 9,839,006
Ordinary Shares representing 56.79 per cent. of the total issued share capital
of the Company. However, the Investment Manager, which currently holds 647,010
Ordinary Shares, and Petri Karjalainen, who currently holds 73,700 Ordinary
Shares, are ineligible to vote (as being a related party and an associate of a
related party, respectively), and will take all reasonable steps to ensure that
none of their associates vote, on Resolution 1. As a result, the irrevocable
undertakings in respect of Resolution 1 only, represent 54.75 per cent. of the
votes that may be cast by holders of the Ordinary Shares.



Recommendation



In compliance with both rule 10.6.2 of the ISE listing rules (which prohibits
any director who is an associate of the 'related party' from taking part in the
Boards' consideration of the related party matters) and regulation 71
(Directors' Interests - General Prohibition on Voting) of the Articles, Petri
Karjalainen has not taken part in the Board's consideration of the Proposals.



The Independent Directors, who have been advised by Collins Stewart, consider
the Proposals fair and reasonable in respect of the Shareholders as a whole.  In
providing its advice, Collins Stewart has taken into account the Independent
Directors' commercial assessment of the proposals set out in the circular.



In addition, in compliance with AIM Rule 13, the Independent Directors consider,
having consulted with the nominated adviser, Collins Stewart, that the terms of
the Proposals are fair and reasonable insofar as the Shareholders are concerned.


Accordingly, the Independent Directors unanimously recommend that you vote in
favour of the Proposals and all the Directors unanimously recommend that you
vote in favour of the Associated Changes.



This announcement has been issued through the Companies Announcement Service of

                           The Irish Stock Exchange.




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