Black Sea Property AS

Regulatory Filings • Nov 12, 2018

BLACK SEA PROPERTY AS: STATUS UPDATE NOVEMBER 2018 – RESORT HAS BEEN RENAMED TO SUNRISE GARDENS

BLACK SEA PROPERTY AS: STATUS UPDATE NOVEMBER 2018 – RESORT HAS BEEN RENAMED TO SUNRISE GARDENS

As previously communicated, Black Sea Property AS ("BSP" or the "Company") aims for opening of its partly owned resort in Aheloy, Bulgaria (the "Resort"), for the summer season of 2019. It has now been decided to rename the Resort to Sunrise Gardens.

The Company is pleased to inform that an agreement for connection to the electrical grid has now been signed between EPO Aheloy (the development company for the Resort) and the local electrical company EVN. It is expected that the Resort will be supplied with power to buildings P, N and M within May 2019. Delivery of power to the remaining buildings of the Resort will be implemented upon completion of the various buildings.

We are also pleased to inform that necessary permissions for supply of fresh water and access to sewage systems has been granted, however subject to an appeal period. Upon expiry of the appeal period, EPO Aheloy expects to receive a building permit for construction of a sewage pipeline. The intention is to complete the connection to the fresh water supply and sewage systems in early 2019. Further with regards to fresh water and sewage systems, EPO Aheloy has signed an agreement for construction of the onsite collection and a pumping station and work related to this is expected to begin shortly.

With regards to the construction works, the exterior construction of building L is almost fully completed. The inspection of the construction work on buildings N, M and P has shown that the entrepreneur has not completed all work according to agreement. The Company and its Bulgarian partner has therefore decided to change entrepreneur for the remaining construction works. In this respect, an agreement has been signed with local construction management firm Tremex to ensure that construction and installation works related to the reception building, the second pool and onsite sewage piping are finished according to plans. Tremex is a related party of our Bulgarian partner, Mr. Boyan Bonev. The final settlement with the original entrepreneur and entry into an agreement with the new entrepreneur may imply higher costs than budgeted, but the extent of this is currently too early to estimate.

The EUR 3 million construction loan from UniCredit Bulbank has still not been disbursed due to formal issues related to satisfaction of the conditions for disbursement, including conversion of debt to equity in EPO Aheloy and establishment of mortgages. The last conditions for disbursement are expected to be satisfied shortly with disbursement of the funds in the end of November 2018. Due to the delayed disbursement of the funds, EPO Aheloy will initiate discussions with the bank to postpone a downpayment of EUR 1 million related to earlier construction loans that falls due in December 2018.

We further refer to the stock exchange notice published by the Company on 10 September 2018 regarding, inter alia, claims by Zlatarsko EOOD towards Aheloy Commercial AD. As stated therein, Zlatarsko EOOD had submitted an appeal against the decision of the first instance court in the matter. This appeal has now been rejected. Consequently, there are currently no ongoing court proceedings related to the Resort.

For further information please contact:

Egil Melkevik, Chairman

Tel: +47 90 77 09 76

E-mail: egil.melkevik@imenco.com

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 Aheloy Beach Resort. Aheloy Beach Resort is a partially-completed project and will upon completion comprise over 1,000 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 Aheloy Beach Resort, to realize the project's added value through the sale of residential units and hotel operations.