EGM 2014

Execution of the transaction of sale and transfer of the Baltic and Russian ice cream and frozen goods operations and notice on convening extraordinary General Meeting

On 06.10.2014, AS Premia Foods, Nordic Foods Holding OÜ and Shiner Macost Ltd executed share purchase agreements under which AS Premia Foods will sell and transfer 100% of all the shares in AB Premia KPC, 100% of all the shares in OOO Khladokombinat No 1 and the Russian trademarks owned by AS Premia Foods to Nordic Foods Holding OÜ and Shiner Macost Ltd. AB Premia KPC is the parent company of Premia Tallinna Külmhoone AS and Premia Tallinna Külmhoone AS is in turn the parent company of AS Premia FFL. The share purchase agreements are conditional and subject to the approval of the General Meeting of shareholders of AS Premia Foods, obtaining concentration permission of the Russian competition authority and submitting the application for the concentration permission to the Latvian competition authority. As a result of the contemplated transactions, AS Premia Foods will sell and transfer all its Baltic and Russian ice cream and frozen goods operations. The Management Board of AS Premia Foods hereby convenes the extraordinary General Meeting of shareholders of AS Premis Foods.
Transaction of Sale and Transfer of Baltic and Russian Ice Cream and Frozen Goods Operations

Object

On 06.10.2014, AS Premia Foods, Nordic Foods Holding OÜ and Shiner Macost Ltd executed share purchase agreements under which AS Premia Foods will sell and transfer and OÜ Nordic Foods Holding and Shiner Macost Ltd will purchase and accept:

100% of all the shares, i.e. 7,176,229 shares with the nominal value of 5 Lithuanian litas of AB Premia KPC, a fully-owned Lithuanian subsidiary of AS Premia Foods engaged in the sales of ice cream and frozen goods products mainly in the territory of Lithuania. AB Premia KPC is the parent company of the Estonian subsidiary Premia Tallinna Külmhoone AS, holding 100% of all the shares of Premia Tallinna Külmhoone AS. Premia Tallinna Külmhoone AS is engaged in the production and sales of ice cream and frozen goods products mainly in the territory of Estonia. Premia Tallinna Külmhoone AS is the parent company of the Latvian subsidiary AS Premia FFL. AS Premia FFL is engaged in the production and sales of ice cream and frozen goods products mainly in the territory of Latvia;
100% of all the shares, i.e. 1 share with the nominal value of 520,000 Russian roubles of OOO Khladokombinat No 1, a fully-owned Russian subsidiary of AS Premia Foods engaged in the production and sales of ice cream and frozen goods products mainly in the territory of Russia;
Russian trademarks owned by AS Premia Foods and used by OOO Khladokombinat No 1.

Purpose of Transaction and Effect on Operations of AS Premia Foods

The purpose of the transaction is to sell and transfer the Baltic and Russian ice cream and frozen goods operations of AS Premia Foods. As a result of the contemplated transaction, AS Premia Foods will terminate its operations in the ice cream and frozen goods business segment.

As a result of the contemplated transaction, AS Premia Foods will receive purchase price of altogether 27,109,000 euro payable in three instalments as described below. In addition to the cash consideration, the outstanding interest bearing debt as at 30.06.2014 of AS Premia Foods will decrease by altogether 1,868,000 euro. The proceeds from the transaction will be for the partial repayment of the investment loan and overdraft facilities financed by AS SEB Pank.

AS Premia Foods will continue its operations in the fish and fish products business segment. The unaudited consolidated turnover from the remaining operations of AS Premia Foods during last twelve month period, i.e. from July 2013 until June 2014, was 47 million euro, i.e. approximately 46% of the total turnover of AS Premia Foods.

Non-Related-Party Nature of Transaction; Management’s Interests

Nordic Foods Holding OÜ is the special purpose vehicle owned by Shiner Macost Ltd. The ultimate beneficial owner of Shiner Macost Ltd is Andrey Beskhmelnitskiy who is a food industry entrepreneur with global scope originally from Ukraine. Shiner Macost Ltd owns Food Union, a company that unites the biggest dairy companies in the Baltic states, continuing the traditions of Rigas Piena Kombinats (founded in 1927) and Valmieras Piens (founded on 1971). Beskhmelnitskiy operates in Europe, Russia and Asia, and has developed the Russia’s largest dairy producer UNIMILK Company, that was sold in 2010 to global food industry giant Danone.

The contemplated transaction is not a related party transaction in the essence of the Rules of the NASDAQ Tallinn Stock Exchange.

The current members of the Management Board of AS Premia Foods Katre Kõvask, Erik Haavamäe and Silver Kaur will continue as the members of the management bodies of AB Premia KPC, Premia Tallinna Külmhoone AS, AS Premia FFL and OOO Khladokombinat No 1 also after the contemplated transaction, whereas the terms and conditions of their services as the members of the management bodies of the above-referred companies are subject to on-going negotiations with Shiner Macost Ltd. For a limited period of time (up to 6 months), current members of the Management Board of AS Premia Foods Katre Kõvask, Erik Haavamäe and Silver Kaur will also continue as the members of the Management Board of AS Premia Foods in order to ensure sustainability of the management of the operations of AS Premia Foods after the transaction.

In addition to the members of the Management Board, the Chairman on the Supervisory Board of AS Premia Foods Indrek Kasela will continue as the member of the Supervisory Board of Premia Tallinna Külmhoone AS. Indrek Kasela will serve as the member of the Supervisory Board of Premia Tallinna Külmhoone AS until the payment of the purchase price of the contemplated transaction has been made in full, i.e. for the period of approximately 12 months as from the completion of the contemplated transaction.
The current members of the Supervisory Board of AS Premia Foods have no personal interests related to the contemplated transaction.

Conditions Precedent

In the essence of the Rules and Requirements of NASDAQ Tallinn Stock Exchange, AB Premia KPC is a significant subsidiary of AS Premia Foods and therefore the sale and transfer of the shares of AB Premia KPC is subject the approval of the General Meeting of shareholders of AS Premia Foods. Due to the above, the Management Board of AS Premia Foods hereby convenes an extraordinary General Meeting of shareholders (please see the respective notice below) and in relation to the same, additional information on the contemplated transaction is provided below.

In addition to the approval of the General Meeting of shareholders, the contemplated transaction is subject to obtaining the concentration permission of the Russian competition authority and submitting the application for the concentration permission to the Latvian competition authority. The respective concentration notices will be submitted to the competent competition authorities as soon as practically possible.

Obtaining the approval of the General Meeting of shareholders of AS Premia Foods, the concentration permission of the Russian competition authority and submitting the application for the concentration permission to the Latvian competition authority have been set as conditions precedent to the completion of the contemplated transaction be the parties thereof.

Purchase Price and Payment Terms

The total purchase price payable for the object of the contemplated transaction as described above is 27,109,000 euro. As agreed between the parties, the purchase price will be payable in cash in three instalments as follows:

the amount of 19,109,000 euro will be paid upon the completion of the contemplated transaction, i.e. upon the transfer of ownership to the shares and trademarks forming the object of the transaction, provided that the above-described conditions precedent are duly complied with;
the amount of 4 million euro will be paid after the lapse of 6 months from the completion date; and
the amount of 4 million euro will be paid after the lapse of 12 months from the completion date.

The claims of AS Premia Foods of the second and third instalments will be secured by surety of Shiner Macost Ltd, pledge of shares of Nordic Foods Holding OÜ and mortgage on the real estate owned by Premia Tallinna Külmhoone AS (located at Peterburi tee 42, 42a, 42b and 42c, Tallinn), which may be amended from time to time.

The amount of purchase price has been agreed upon based on the financial results and net debt of AB Premia KPC, Premia Tallinna Külmhoone AS, AS Premia FFL and OOO Khladokombinat No 1 as at 30.06.2014.

Financial Results and Table of Audited Annual Reports

According to the Rules and Requirements of NASDAQ Tallinn Stock Exchange (Requirements for Issuers), an issuer must publish the financial results of the significant subsidiary for the three preceding financial years together with the audited annual reports of the same presented in a table format. The relevant information is presented below; nevertheless, since AB Premia KPC is the parent company of Premia Tallinna Külmhoone AS and the ultimate parent company of AS Premia FFL, the consolidated financial information of AB Premia KPC group of companies provides a better overview of the financial effect of the contemplated transaction. The consolidated financial statements of AB Premia KPC group of companies are; however, not audited. Therefore the unaudited consolidated financial information is presented below in the same volume and format.
The financial statements of AB Premia KPC have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The audited unconsolidated financial information of AB Premia KPC for the three preceding financial years:

Thousands euros	2013	2012	2011
Turnover	11,653	10,547	9,937
Net loss	-560	-681	-407
Dividends by share	-	-	-
Net earnings per the share of AB Premia KPC (diluted and undiluted)	-0.08	-0.09	-0.06
Net earnings per the share of AS Premia Foods (diluted and undiluted)	-0.01	-0.02	-0.01

The unaudited consolidated financial information of AB Premia KPC for the three preceding financial years:

Thousands euros	2013	2012	2011
Turnover	48,149	43,873	41,680
Net loss	3,046	1,532	771
Dividends by share	-	-	-
Net earnings per the share of AB Premia KPC (diluted and undiluted)	0.42	0.21	0.11
Net earnings per the share of AS Premia Foods (diluted and undiluted)	0.08	0.04	0.02

The audited unconsolidated and unaudited consolidated financial reports of AB Premia KPC for the two preceding financial years in the table format have been attached to this announcement in a separate document here.

Overview of Loans

According to the Rules and Requirements of NASDAQ Tallinn Stock Exchange (Requirements for Issuers), an issuer must publish information of the loans taken by the significant subsidiary. The relevant information is presented below; however, in order to provide an adequate understanding of the loan burden of the AB Premia KPC group of companies, the below overview includes information about the loans of Premia Tallinna Külmhoone AS and AS Premia FFL as well as the loans given by AB Premia KPC group of companies.

As at 31.08.2014, AB Premia KPC is the borrower under the following loan agreements:

loan from AS Premia Foods in the outstanding principal amount of 1,514,000 euro, which will be repaid upon the completion of the contemplated transaction;
loan from Premia Tallinna Külmhoone AS in the outstanding principal amount of 1,274,000 euro;
finance lease obligations to Danske Bank A/S Lietuvos filialas, UAB Nordea Finance Lithuania and AB SEB bankas in the total outstanding principal amount of 115,281 euro, assumed under 11 separate agreements.

As at 31.08.2014, AB Premia KPC is the lender under the following loan agreement:

positive cash pool account balance within the group overdraft facility financed by AS SEB Pank in the outstanding amount of 49 euro, which will be repaid upon the completion of the contemplated transaction.

As at 31.08.2014, Premia Tallinna Külmhoone AS is the borrower under the following loan agreements:

loan from Danske Bank A/S Eesti filiaal in the outstanding principal amount of 1,729,380 euro;
finance lease obligations to AS SEB Liising and Pohjola Finance Estonia AS in the total outstanding principal amount of 1,060,223 euro, assumed under 35 separate agreements.

As at 31.08.2014, Premia Tallinna Külmhoone AS is the lender under the following loan agreements:

positive cash pool account balance within the group overdraft facility financed by AS SEB Pank in the outstanding amount of 6,389,135 euro, which will be repaid upon the completion of the contemplated transaction;
finance sub-lease granted to AS Premia FFL in the total outstanding principal amount of 135,331 euro, given under three separate agreements;
loan to AB Premia KPC in the outstanding principal amount of 1,274,000 euro.

As at 31.08.2014, AS Premia FFL is the borrower under the following loan agreements:

loan from AS Premia Foods in the outstanding principal amount of 356,318 euro, which will be repaid upon the completion of the contemplated transaction;
negative cash pool account balance within the group overdraft facility financed by AS SEB Pank in the amount of 56,993 euro, which will be repaid upon the completion of the contemplated transaction;
finance lease obligations to SIA SEB Līzings in the total outstanding principal amount of 574,019 euro, assumed under 63 separate agreements.
finance sub-lease obligations from Premia Tallinna Külmhoone AS in the total outstanding principal amount of 135,331 euro, assumed under three separate agreements.

Shareholder Structure

AS Premia Foods is the sole shareholder of AB Premia KPC, holding altogether 7,176,229 shares with the nominal value of 5 Lithuanian litas of AB Premia KPC.

Significant Court and Arbitration Proceedings

AB Premia KPC, Premia Tallinna Külmhoone and AS Premia FFL are not involved in any ongoing court or arbitration proceedings, which could have material effect on their operations or the operations of AS Premia Foods.

Agreements with AS Premia Foods

After the completion of the contemplated transaction there will be no effective agreements between AS Premia Foods, AB Premia KPC, Premia Tallinna Külmhoone and AS Premia FFL. Considering the synergies between the current business operations of AS Premia Foods, there will be some trading activities between the AB Premia KPC group of companies and AS Premia Foods group of companies also after the contemplated transaction. All such trading activities will be carried out on arms’ length terms.

Management and Supervisory Board Members

The members of the Management Board of AB Premia KPC are Katre Kõvask, Erik Haavamäe and Alvydas Malakauskas and the Managing Director of AB Premia KPC is Alvydas Malakauskas.

The members of the Supervisory Board of Tallinna Premia Külmhoone AS are Indrek Kasela, Lauri Kustaa Äimä and Erik Haavamäe and the members of the Management Board of Tallinna Premia Külmhoone AS are Katre Kõvask and Silver Kaur.

The members of the Supervisory Board of AS Premia FFL are Katre Kõvask, Erik Haavamäe and Silver Kaur and the member of the Management Board of AS Premia FFL is Andis Kļaviņš.

From the above-referred persons Katre Kõvask, Erik Haavamäe, Silver Kaur, Alvydas Malakauskas, and Andis Kļaviņš will continue in their respective positions also after the closing of the contemplated transaction, whereas Lauri Kustaa Äimä will resign and Indrek Kasela will continue as the member of the Supervisory Board of Premia Tallinna Külmhoone AS until the payment of the purchase price of the contemplated transaction has been made in full, i.e. for the period of approximately 12 months as from the completion of the contemplated transaction.

Notice on Convening Extraordinary General Meeting

AS Premia Foods (register code 11560713, address Betooni 4, 11415 Tallinn, Estonia), hereby convenes the extraordinary General Meeting of shareholders, which will be held on 30.10.2014 starting at 10.00 in in the hall “Beta” of the hotel „Radisson Blu Olümpia“ (address Liivalaia 33, 10118 Tallinn, Estonia). The list of shareholders being entitled to vote at the General Meeting will be determined seven days before the meeting, i.e. on 23.10.2014 at 23.59.

The registration of the participants of the General Meeting begins on 30.10.2014 at 9.30 and ends at 10.00 at the venue of the meeting.

For registration, please submit:

in the case of a natural person shareholder, a passport or ID-card. Representative of the shareholder must also submit a written power of attorney;
in the case of a legal entity shareholder, an extract from the respective register where the legal entity is registered evidencing the authorities of the legal entity’s representative to represent the legal entity (representation by virtue of law); and a passport or ID-card of the representative. If the legal entity is represented by a person who is not the legal representative of the legal entity, a written power of attorney is also required. The documents of a shareholder located abroad shall be legalized or certified with an apostille, unless a relevant international agreement stipulates otherwise.

Prior to the extraordinary General Meeting, a shareholder may notify AS Premia Foods of appointing a representative or revoking authorisation to represent the shareholder by sending a respective digitally signed notice to the e-mail address premia[A]premia.ee or by personally delivering the written notice during business days from 10.00 a.m. until 4.00 p.m. to the address Betooni 4, 11415 Tallinn, Estonia, by 4.00 p.m. on 29.10.2014 2014 at the latest. The respective forms of power of attorney and revocation of the power of attorney are available at the website of AS Premia Foods www.premiafoods.eu.

In accordance with the resolution of the Supervisory Board of AS Premia Foods, dated 26.09.2014, the agenda of the extraordinary General Meeting along with the proposals of the Supervisory Board to the shareholders is as follows:

1. Sale and Transfer of Significant Subsidiary

The summary of the main terms and conditions of the contemplated transaction of sale and transfer of significant subsidiary of AS Premia Foods is available at the website of AS Premia Foods www.premiafoods.eu.

The Supervisory Board of AS Premia Foods makes the extraordinary General Meeting of shareholders to vote in favour of approving the contemplated transaction of sale and transfer of significant subsidiary of AS Premia Foods in accordance with the terms and conditions of the contemplated transaction of sale and transfer of significant subsidiary of AS Premia Foods as made available to the shareholders at the website of AS Premia Foods www.premiafoods.eu together with convening the extraordinary General Meeting of shareholders and as presented to the shareholders in the course of the extraordinary General Meeting of shareholders.

2. Amendment to Articles of Association

The trademark “Premia” is owned by Premia Tallinna Külmhoone AS. Therefore the business name of AS Premia Foods must be changed as a result of the contemplated transaction. The Supervisory Board of AS Premia Foods has made proposal to use AS PRFoods, i.e. the name derived from the currently used ticker of AS Premia Foods as the new business name of AS Premia Foods.

The Supervisory Board of AS Premia Foods makes the extraordinary General Meeting a proposal to vote for the amendment of the Articles of Association of AS Premia Foods and adopt the Articles of Association of AS Premia Foods in the form made available to the shareholders at the website of AS Premia Foods www.premiafoods.eu together with convening the extraordinary General Meeting of shareholders and as presented to the shareholders in the course of the extraordinary General Meeting of shareholders.
All documents pertaining to the extraordinary General Meeting of shareholders of AS Premia Foods, including the form of the Articles of Association, summary of the terms of the contemplated transaction and the draft resolutions are available for review as of the date of publishing of this notice on the website of AS Premia Foods www.premiafoods.eu.
This notice of convening extraordinary General Meeting as well as the total number of shares and voting rights related to shares as of the day of publishing the notice of convening extraordinary General Meeting will be also published on the website of AS Premia Foods www.premiafoods.eu.

Inquiries on items of the agenda of the extraordinary General Meeting of shareholders can be sent to the e-mail address premia[A]premia.ee .

A shareholder has a right to receive information on the activities of AS Premia Foods from the Management Board at the General Meeting. The Management Board may refuse to disclose the information if there are sufficient grounds to presume that the disclosure may adversely affect the interests of the company. If the Management Board refuses to disclose the information, the shareholder may claim that the General Meeting decides on the lawfulness of the shareholder's request or file within two weeks a petition to a court by way of proceedings on petition to oblige the Management Board to disclose the information.
Shareholders, whose shares represent at least 1/20 of the share capital of AS Premia Foods, may request additional items to be added on the agenda of the extraordinary General Meeting if a respective request has been submitted at least 15 days prior to the General Meeting, i.e. by 15.10.2014 the latest in writing to the following address: AS Premia Foods, Betooni 4, 11415 Tallinn, Estonia.

Shareholders, whose shares represent at least 1/20 of the share capital of AS Premia Foods, may propose draft resolutions with respect to each item on the agenda at least 3 days prior to the extraordinary General Meeting, i.e. by 27.10.2014 the latest by submitting the proposal in writing to the following address: AS Premia Foods, Betooni 4, 11415 Tallinn, Estonia.

Katre Kõvask
AS Premia Foods
Chairman of Management Board