New equity investor in Terminal No. 11 project

In the fourth quarter 2007 AS Q Vara (hereinafter”Q Vara”) started negotiations
with a German company HIH Global Invest GmbH (hereinafter”HIH”) for raising
additional equity to finance the development of Terminal No. 11 project
(hereinafter Q Vara and HIH together are referred to as the “Parties”). HIH
Global Invest GmbH belongs to M. M. Warburg & CO KGaA group which is the second
largest privately held bank in Germany. HIH is active in setting up closed-end
investment funds and raising capital from small investors. 

As a result of the negotiations the Parties signed a letter of intent
(hereinafter “LOI”) on March 3, 2008 with an objective to regulate the Parties'
intention to cooperate on the Terminal No. 11 project and to confirm the
Parties' will to finalize the Transaction by April 7, 2008. In the following
text Terminal No. 11 project (hereinafter the “Project”) refers to Q Vara's
land plots that are listed in the following paragraph, utilities and buildings
on the land plots, loans that are backed by the land plots and buildings and
other project related liabilities. 

According to the LOI the Project's land consists of 18 (eighteen) land plots in
Rae parish, Harjumaa, Estonia owned by Q Vara. The list of the land plots is
the following: 

- Koplipere tee 1 (cadastre code: 65301:002:0688)
- Koplipere tee 3 (cadastre code: 65301:002:0691)
- Koplipere tee 5 (cadastre code: 65301:002:0694)
- Koplipere tee 7 (cadastre code: 65301:002:0696)
- Koplipere tee 9 (cadastre code: 65301:002:0701)
- Koplipere tee 11 (cadastre code: 65301:002:0703)
- Koplipere tee 13 (cadastre code: 65301:002:0705)
- Koplipere tee 17 (cadastre code: 65301:002:0708)
- Koplipere tee 19 (cadastre code: 65301:002:0709)
- Koplipere tee 21 (cadastre code: 65301:002:0711)
- Koplipere tee 23 (cadastre code: 65301:002:0713)
- Koplipere tee 25 (cadastre code: 65301:002:0714)
- Koplipere tee 27 (cadastre code: 65301:002:0715)
- Koplipere tee 29 (cadastre code: 65301:002:0716)
- Koplipere tee 6 (cadastre code: 65301:002:0695)
- Koplipere tee 8 (cadastre code: 65301:002:0699)
- Koplipere tee 10 (cadastre code: 65301:002:0702)
- Koplipere tee 14 (cadastre code: 65301:002:0706)

Four other land plots on Koplipere tee that are also owned by Q Vara are sold
already and these properties are not part of the Project. 

The Parties intend to develop a logistics park that consists of warehouse and
office spaces on the previously listed land plots (hereinafter
the”Development”). The development volume will be between 45 000 - 50 000 sqm
of warehouse and office space and the expected project revenue will be 50 - 55
million euros. The development period will be 2008-2010 and during this period
the expected internal rate of return (“hereinafter the “IRR”) is expected to
reach 19% p.a. 

For developing the Project the Parties will establish a joint venture
(hereinafter the “Company”) which will be owned by Q Vara and HIH. Each party's
share of the company depends on the investment amount. Q Vara's investment will
be the Project (non-cash equity payment). In the LOI the Parties have agreed
the Project's net value of 3 500 000 EUR. The final non-cash equity payment's
value will be determined after HIH has finalized the project's due diligence. 

HIH will pay cash equity into the Company that amounts the equity needed to
finish the Development. According to the preliminary estimations the amount
will be 4 690 000 EUR and it will be paid in tranches according to the
development timetable. 

According to the described equity investments Q Vara will receive 43% of the
Company and HIH will receive 57% of the company. HIH will also receive a right
to increase its share up to 70% by purchasing additional Company's shares from
Q Vara. Together with establishing the Company the Parties will sign a
shareholders' agreement that sets out the Parties' rights and obligations and
the Development's goals. 

The Company will sign a development agreement with Q Vara according to which Q
Vara is responsible for finalizing the Development. According to the agreement
the Company will pay to Q Vara monthly development fee for covering periodical
expenses and in the end a success fee. The success fee amount will be related
to the project performance: in case the project's IRR exceeds the hurdle rate
of 17% Q Vara will receive 30%; and in case the project's IRR exceeds the
hurdle rate of 20% Q Vara will receive 50% of the profit that exceeds the
profit needed for paying out the hurdle rate return. 

By signing the LOI the Parties expressed their will to finalize the transaction
by April 7, 2008. By then HIH has finalized the Project's due diligence, the
Parties have signed the shareholders' agreement and have paid the equity into
the Company. 

The prerequisites for finalizing the transaction are Q Vara bond investors' and
the project financier's (AS Sampo Pank) consent for paying the Project into the
Company, the final investment decision by HIH's supervisory board and the
positive Project's due diligence result for HIH. 

Therefore Q Vara applies for a consent of the Investors to raise additional
equity capital at least in the amount of 4 690 000 EUR for developing the
Terminal No. 11 project and to pay the Project into the Company as a non-cash
equity payment on the following conditions: 
1)	The Project's minimum net value upon making the non-cash payment is 3 000
000 EUR; 
2)	Q Vara has a right to sell additional amount of the Company's shares to HIH
so that Q Vara's minimum shareholding will be 30% 

To apply for the note holders' consent Q Vara according to the bond issue terms
sends the draft of the note holders' decision by mail to the investors listed
as Q Vara note holders in Estonian Central Registry of Securities on March 5,
2008. Based on the application the Investors have an opportunity to vote for
the described transaction. The draft of the note holders' decision is also
attached to the current release. 

Meelis Šokman
Chairman of the management board
AS Q Vara
Phone: 668 1600