Echo Investment S.A.

M&A Activity • Jun 13, 2017

The Management Board of Echo Investment S.A. (the "Company")informs that on 12 June 2017 the Company together with its controlledentities, i.e. "Grupa Echo" Sp. z o.o. and FORUM 60 Fundusz InwestycyjnyZamkniętyasthe sellers, (collectively, the "Sellers"), and the entitycontrolled by Griffin Premium RE. N.V. ("Griffin Premium"),i.e. IB 14 Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych, actingas the buyer, (the "Buyer"), signed annex no. 2 ("AnnexNo. 2 to the Preliminary Share Sale Agreement") to the preliminaryshare sale agreement dated 9 March 2017, concerning the sale of 100%shares in the companies: Projekt Echo - 114 Sp. z o.o. ("ProjektEcho") and Elissea Investments Sp. z o.o. ("Elissea",and together with ProjektEcho, "Project Companies"), being,respectively, the general partner and the limited partner of West GateII - Projekt Echo - 114 Spółka z ograniczoną odpowiedzialnością sp.k. ("WestGate II") (the "Preliminary Share Sale Agreement").West Gate II is the owner of the property in Wrocław, where theconstruction of an office and service building under the name of "WestLink" (the "Building") is carried out. The Companyannounced the conclusion of the Preliminary Share Sale Agreement in itscurrent report no. 5/2017 from 14 March 2017 (the "Initial Report").

Based on Annex No. 2 to the Preliminary Share SaleAgreement,inter alia, the Sellers granted to the Buyer powers ofattorney authorising the Buyer to conclude the final agreement for theacquisition of 100% shares in the Project Companies (the "FinalAgreement") in execution of the Preliminary Share Sale Agreement.

Additionally, the Buyer received proposal to acquirebonds with a total nominal value and an issue price of EUR 18,000,000,issued under private placement by the entity controlled by the Company(the "West Link Bonds"), and the proposal was subsequentlyaccepted by the Buyer. The maturity date of the West Link Bonds is 31December 2018, however, the earlier redemption of West Link Bonds ispossible if,inter alia, the Final Agreement is concludedearlier. West Link Bonds will be redeemed by means of payment of theamount equal to the nominal value of each bond plus accrued interest.The West Link Bonds bear interest at a fixed interest rate in the amountand under the terms stipulated in the West Link Bonds issue terms. TheWest Link Bonds are unsecured bonds. The nominal value of the West LinkBonds will be,inter alia, offset with the sale price of 100%shares in the Project Companies.

The parties also agreed that the initial sale priceof 100% shares in the Project Companies would total EUR 18,000,000(taking into account the formula regarding calculation of the pricepresented in sec. 1.6 of the Initial Report, i.e. the price will beestablished as follows (i) the quotient of NOI (i.e. the differencebetween the operating income and undeductable operating costs) of theBuilding and 6.873%, which amounted to EUR 36,060,000 on the day ofconclusion of the Preliminary Share Sale Agreement, (ii) plus theestimated working capital and cash amount and (iii) decreased by thedebt amount of the Project Companies and West Gate II, where it isestimated that the debt amount will amount approx. EUR 18,000,000). Thepayment of the price for the shares in the Project Companies will bemade through remittances (przekaz) between the Sellers and theBuyer and by offsetting the receivables of one of the Sellers for thepayment of the price for the shares in the Project Companies againstthe Buyer's receivables for the redemption of the West Link Bonds.

In exchange for subscription of the West Link Bondsand for the payment of EUR 18,000,000 by the Buyer to one of theSellers,the Sellers granted to the Buyer irrevocable powers of attorneyauthorising the Buyer to conclude the Final Agreement in execution ofthe Preliminary Share Agreement (the "Powers of Attorney").The Buyer will be entitled to exercise the Powers of Attorney in theevent of:

(i)failure, despite a request, to concludethe Final Agreement; and

(ii)occurrence of one of the events ofdefault listed in the West Link Bonds documentation.

In addition, the Management Board of the Companyinforms that on 12 June 2017, the Company, Griffin Premium and GriffinPremium's subsidiary, GPRE Management sp. z o.o. ("GPREManagement"), signed annex no. 2 (the "Annex No. 2 tothe ROFO Agreement") to the agreement for ROFO projects concluded on9 March 2017, concerning the investment of 25% of the capital alreadyinvested, and the future capital required to complete the constructionand to finalise office projects in Warsaw, i.e. Beethovena project(phase I and II) and Browary Warszawskie project (phase J), by theCompany's subsidiaries (the "ROFO Agreement"), whoseconclusion was reported by the Company in the Initial Report. At thesame time, and in connection with the conclusion of Annex No. 2 to theROFO Agreement, GPRE Management was presented proposal to acquire bondsof several series with a total nominal value and an issue price of EUR6,400,000, issued under private placement by theCompany'ssubsidiaries (the "ROFO Bonds"),andthe proposal was subsequently accepted by the GPRE Management.The maturity date of the ROFO Bonds of all series is 12 June 2032,however,the earlier redemption of relevant series of the ROFO Bonds is possibleif,inter alia, the ROFO transaction regarding given phase ofBrowaryWarszawskie project orBeethovena project isclosed earlier than initially expected.ROFO Bonds will beredeemed by means of payment of the amount equal to the nominal value ofeach bondplus accrued interest.The ROFO Bonds bear interest at a fixed interest rate in the amount andunder the terms stipulated in the ROFO Bonds issue terms. The ROFO Bondsare unsecured bonds.