Black Sea Property AS

Capital/Financing Update • Aug 22, 2022

Black Sea Property AS: Operational and financing update

Black Sea Property AS: Operational and financing update

Reference is made to earlier stock exchange notices from Black Sea Property AS (the "Company", and together with its consolidated subsidiaries, the "Group"), including the stock exchange notice dated 26 June 2022 regarding the planned opening of the Sunrise Gardens Resort (the "Resort").

The Resort opened for business on 3 July 2022 and has since then operated with a family and kids club concept, with between 400 – 600 guests per day since opening. The number of visitors per day is expected to decline going forward, with closing for the season around mid-September. The feedback from the visitors has been very positive, and the Company is satisfied with the Resort's operations so far.

The Group is also looking into the possibility of using the Resort to accommodate Ukrainian refugees at the Resort after the end of the season, i.e. from the end of September. This would allow the Group to utilize the Resort also in the off-season. If the Group and the Resort is appointed for accommodating refugees, the Group will receive a fixed fee per day per refugee from the Bulgarian government and the accommodation program is expected to have a duration of approximately 5 months.

As also disclosed in earlier stock exchange notices, the financing of the Company and the Group is still a material risk factor. The Group currently has approximately EUR 6 million in bank debt from UniCredit Bulbank, and under this agreement the Group shall make a down-payment of principal of EUR 3 million in December 2022, as well as payment of incurred interest. The Company and its local partner, Boyan Bonev, has held several meetings with the bank in order to negotiate a plan for extend maturity or at least delaying the principal payment, but without success.

The Group has previously received a loan offer from another Bulgarian bank, for a loan in the amount of EUR 12 million. The loan offer was subject to various conditions being met prior to disbursement of funds, which has not been met as of the date hereof. Following receipt of this loan offer, the war in the Ukraine has also severely affected the bank's willingness to provide loans for businesses within the tourism sector. The Company therefore deems it unrealistic that it will be able to utilize this loan offer.

The Group has also incurred construction costs over the last 6 months, which have been funded by Boyan Bonev. The funding provided by Boyan Bonev over the last 6 months amount to approximately EUR 2.5 million, and given the 75/25 ratio of ownership split of the Resort between the Group and Boyan Bonev, the Company must provide EUR 7.5 million to equal out the ownership contributions. If the Company is able to raise EUR 7.5 million, that would both equal out the ownership contribution, fund the down-payment of EUR 3 million to UniCredit Bulbank and have sufficient capital to finalize the Resort for the summer season of 2023.

Both the Company and the Group consequently has a significant capital need, and the Company is constantly exploring options to raise capital, including a potential 1-year bridge financing option. In the short-term, the Company expects to raise a smaller amount in equity or loans to fund operations in Norway for the upcoming six-month period.

For further information, please contact:

Egil Melkevik, Chairman

Tel: +47 90 77 09 76

E-mail: em@ms-solutions.no

About Black Sea Property AS:

Black Sea Property AS is a real estate company with holdings in a real estate project on the Black Sea

coast called Sunrise Gardens. Sunrise Gardens Resort is a partially completed project and will upon completion comprise approximately 950 apartments as well as significant commercial space. Black Sea Property AS owns indirectly 75% of the project. Black Sea Property AS will work to finalize Sunrise Gardens Resort, to realize the project's added value through the sale of residential units and hotel operations.