The State Assets Management Agency of the republic of Uzbekistan

As previously announced, in accordance with the relevant privatization programs, the process of open sales of 100% state share in the authorized capitals of LLC "Tashkent New Palace" (hereinafter - Hotel "Lotte City Hotel Tashkent Palace" or "Lotte") and LLC "InterHotel" (hereinafter - Hotel "International") has started.

I. About Hotel “Lotte City Hotel Tashkent Palace”:

The State Assets Management Agency has started the open sales process of Hotel "Lotte City Hotel Tashkent Palace" with the involvement of international consulting company "KPMG" as a Privatization Consultant, as well as international consulting company "Deloitte" to conduct an independent valuation.

The Management of this hotel is carried out by the company "Hotel Lotte CO., Ltd." (Republic of Korea) on the basis of the agreement on hotel management concluded in 2013.

As part of the privatization process, the international consultant and the State Assets Management Agency conducted a large-scale marketing campaign both locally and internationally. In particular, investment teasers were sent to various foreign investors through the network of regional offices of the international consulting company “KPMG” around the world (investor sounding).

As a result, the Consultant received 15 Expression of Interest applications from local and international investors from the CIS, South Asia and Europe.

Accordingly, 13 applicants meeting the criteria established at this stage were invited by the Consultant to participate in the next stage of the privatization process - submission of Non-Binding Offers (NBO). As part of this stage, a Non-Disclosure Agreement (NDA) was signed and access to the Virtual Data Room (VDR) containing analytical information prepared by the Consultant was granted.

9 applicants who submitted their Non-Binding Offers (NBO) in the established term were invited to participate in the final stage of the privatization process - submission of Binding Offers (BO). Also, at this stage, they were given the opportunity to familiarize themselves with comprehensive analytical reports (due diligence) on the financial, tax, legal and environmental activities of Hotel "Lotte", prepared by an international consultant and placed in the virtual data room (VDR), as well as given the opportunity to meet with the management body of Hotel "Lotte".

As a result, 3 applicants submitted their Binding Offers (BO) within the deadline.

JSC "ALFA INVEST Insurance Company", which offered the highest price offer with strict compliance with all the requirements established for the acquisition of the Hotel "Lotte", was recognized as the winner of the sales with the condition of payment of the redemption value in the amount of 20 million USD.

It should be noted that taking into account the architectural appearance of the exterior of the Hotel "Lotte", the Investor has accepted the obligation to carry out in the future any construction, repair and reconstruction works strictly in coordination with the Ministry of Construction and Communal Services of the Republic of Uzbekistan and the Agency of Cultural Heritage.

It is necessary to emphasize that this price offer was higher than the appraised value determined by the international independent appraisal company "Deloitte" and is within the upper limit of the indicative price range of the Hotel calculated by the international consulting company "KPMG".

The results of privatization of the Hotel "Lotte" were approved by the relevant decision of the State Commission for Privatization and Coordination of State Assets Privatization Processes.

For information: JSC “ALFA INVEST Insurance Company” is one of the major insurance companies in Uzbekistan. The company provides services on all types of optional and compulsory insurance. International rating agency “Moody's Investors Service” (USA) has assigned JSC “ALFA INVEST Insurance Company” rating at the level of “B2” with the forecast “stable”.

II. About Hotel “International”:

The State Assets Management Agency has started the open sales process of Hotel "International" with the involvement of international consulting company "Deloitte" as a Privatization Consultant, as well as international consulting company "Ernst & Young" to conduct an independent valuation.

As part of the privatization process, the international consultant and the State Assets Management Agency conducted a large-scale marketing campaign both locally and internationally. In particular, investment teasers were sent to various foreign investors through the network of regional offices of the international consulting company "Deloitte" around the world (investor sounding).

As a result, the Consultant received 6 Expression of Interest applications from local and international investors from the Arab countries, East Asia and Europe.

Accordingly, all 6 applicants meeting the criteria established at this stage were invited by the Consultant to participate in the next stage of the privatization process - submission of Non-Binding Offers (NBO). As part of this stage, a Non-Disclosure Agreement (NDA) was signed and access to the Virtual Data Room (VDR) containing analytical information prepared by the Consultant was granted.

4 applicants who submitted their Non-Binding Offers (NBO) in the established term were invited to participate in the final stage of the privatization process - submission of Binding Offers (BO). Also, at this stage, they were given the opportunity to familiarize themselves with comprehensive analytical reports (due diligence) on the financial, tax, legal and environmental activities of Hotel "International", prepared by an international consultant and placed in the virtual data room (VDR), as well as given the opportunity to meet with the management body of Hotel "International".

As a result, 3 applicants submitted their Binding Offers (BO) within the deadline.

LLC "Smart Fast Stroy", which offered the highest price offer for the acquisition of the Hotel "International", was recognized as the winner of the sales with the condition of payment of the redemption value in the amount of 26 million USD.

At the same time, it should be noted considering that along with the purchase of 100% state shares in LLC “InterHotel” for 26 million USD, the Investor accepts the Company's debt on loans to the relevant bank in the amount of 14.7 million Euros, thus within the framework of the transaction the Investor allocates funds in the amount of more than 41 million USD.

It is necessary to emphasize that this price offer was significantly higher than the appraised value determined by the international independent appraisal company "Ernst & Young" and is within the upper limit of the indicative price range of the Hotel calculated by the international consulting company "Deloitte".

The results of privatization of the Hotel "International" were approved by the relevant decision of the State Commission for Privatization and Coordination of State Assets Privatization Processes.