Black Sea Property AS

Business and Financial Review • May 12, 2017

BLACK SEA PROPERTY AS: AHELOY BEACH RESORT CONSTRUCTION WELL UNDERWAY - FIRM PLANS FOR OPENING TO TOURISTS IN MAY 2018

BLACK SEA PROPERTY AS: AHELOY BEACH RESORT CONSTRUCTION WELL UNDERWAY - FIRM PLANS FOR OPENING TO TOURISTS IN MAY 2018

The construction works on the Aheloy Beach Resort

(the "Resort") is in steady progress and is made in

accordance with the agreed quality requirements and the

outlined time-schedule. As previously announced, all 175

units in building N are now fully constructed with

furnishing soon to be completed. The construction works on

building M is expected to be completed by 15 July 2017. The

major landscaping works for the land surrounding buildings

P, N and M are expected to be completed in July 2017,

however the final touches on landscaping works is an ongoing

process and is expected to be completed in April 2018.

Further, the construction works on building P, the

commercial space of the Resort and the reception areas are

expected to resume in September 2017.

Black Sea Property AS ("BSP" or the "Company") has, together

with our local partner, resolved to target for opening of

the Resort to tourists in May 2018. At that time, the Resort

will consist of 602 units. The Company will dedicate

significant resources in preparing the Resort for its

operational state, and will inter alia establish a

management company to handle operation and management of the

Resort and recruit a General Hotel Manager.

As previously announced, the Company has intended to acquire

additional apartments in the Resort from the bankruptcy

estate of the initial developer, Aheloy Residence OOD

("Aheloy Residence") through an auction process handled by

local bailiffs. EPO Aheloy OOD ("EPO Aheloy"), a subsidiary

of the Company and the holding company for the Resort, has

recently been announced as the winner of the auction for 99

apartments in the Resort (distributed between buildings L, P

and N) and as winner of the auction for approximately 10,000

square meter of land in an area close the Resort. The

purchase price for these assets will be paid through set-off

of EPO Aheloy's receivable towards Aheloy Residence. Certain

other creditors of Aheloy Residence has objected against

procedural matters related to the auction process and the

decision to announce EPO Aheloy as the winner of the

auctions may, thus, be overruled. However, the Bulgarian

legal counsel of the Company does not expect these

objections to be successful. A new auction regarding land

and apartments in the K building is expected to be held

during Q2 2017.

Over the years, there have been several disputes between

Aheloy Commercial AD (the company owning the commercial

areas of the Resort) and Aheloy Residence (and related

company Zlatarsko OOD). A new court proceeding will commence

on 13 June 2017. The case relates to a dispute concerning

payment of approximately 11.2 million Bulgarian Leva plus

accrued interest and expenses under a share purchase

agreement that Aheloy Commercial considers to be cancelled

and is an extension of previous court cases. The Company

owns 48% of the shares in Aheloy Commercial AD. It is

important to emphasize that Aheloy Commercial AD is a

company with limited liability, and therefore no payment can

be claimed from the Company in this dispute. For further

information on the previous court cases, please refer to the

admission document issued by the Company on 11 January 2016.

As there has historically been several disputes and court

cases related to the Resort, the Company expects this to

continue for a period going forward. The Company is working

in close co-operation with our Bulgarian legal counsel to

handle all such matters and to find a solution for the

commercial assets at the Resort and believes that a

satisfactory solution will be found.

A solution for water & sewage and electricity has still not

been reached for the Resort. Unfortunately, these processes

has been delayed and the Company is working towards starting

the infrastructure construction process in September 2017.

The Bulgarian holiday property market has experienced an up-

swing recently, as political factors in Turkey and North

Africa implies that Bulgaria is considered a safer

destination and also offers more competitive prices than

Greece. Holiday property in Bulgaria is also currently

attracting a wider range of buyers from around the world

than previously. The Company anticipates that these trends

will affect the Resort positively going forward.

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.