MLD.L Regulatory News (MLD)

8 July 2016

MirLand Development Corporation PLC

(the "Company")

Debt Settlement with Sberbank

Further to the announcement on 22 June 2016 in relation to the Company's continuing discussions with Sberbank of Russia, the bank financing the Company's operations in Russia, (the "Bank"), the Company announces that today the Company received signed copies of five supplementary agreements dated 29 June 2016 (the "Execution Date"), entered into by the Bank and four subsidiaries of the Company - Mashinostroenie & Hydravlika OJSC ("MAG"), Investisionno Ipotechnaya Kompania LLC. ("IIK"), Hydromashservice LLC. ("Hydro"), Inomotor LLC. ("Ino", together, "Subsidiaries") (the "Agreements"). The Agreements relate to the loans granted by the Bank, totaling approximately US$160 million (the "Loans") and amend the original loan agreements between the Bank and the Subsidiaries. The term of the Agreements is until 2026 and they do not entail an increase in the interest rate.

The Agreements take effect in two stages, as detailed below (the "Debt Settlement):

Stage 1

The principal repayment schedules of three out of five of the Loans (in which principal payments are in arrears) were amended such that the principal payments (totaling approximately US$3.6 million) are now deferred as follows:

· In relation to the MAG Loan, totalling approximately US$1.1 million, and in relation to the Hydro Loan, totalling approximately US$0.6 million - until 20 September 2016;

· In relation to the Saratov project loan (the IIK Loan) totalling approximately US$1.6 million - until 20 August 2016.

The delays in repayment of the principal amounts, as stated, will not constitute a breach of the loan agreements with the Bank.

Additionally, the repayment schedule of the Century project loan (the Ino Loan), which is not in arrears, was amended and the principal repayment of US$0.3 million is now deferred until 28 September 2016.

As of the Execution Date, the annual interest rates of the part of the Loans were slightly reduced. In addition, any early repayment of the Loans will not involve any fine, commission, compensation and/or additional payment with respect to such early repayment.

Stage 2

If the Company fulfils the below conditions:

1. the Company will hold each of the Subsidiaries through wholly owned Cypriot special purpose vehicles (the "Cypriot SPVs"). In guarantee of the repayment of the Loans (jointly and severally), the Company's holdings of the Cypriot SPVs will be pledged under Cypriot law to the Bank. The pledge will be registered within 100 business days from the Execution Date through a deposit to a trustee of documents that would allow for the shares of the Cypriot SPVs to be transferred to the Bank. The Subsidiaries will be granted a 30 day grace period for the repayment of any amount in arrears;

2. the Company undertakes to not sell and/or pledge its holdings in the Cypriot SPVs;

3. the rights of the Subsidiaries to loans provided to the Company will be pledged to the Bank;

4. the Subsidiaries will (jointly and severally) guarantee the entire amount of the Loans;

5. each Subsidiary undertakes that in the event that within any particular project, the Debt Service Coverage Ratio ("DSCR") is greater than 1.05 (the "Supplemental Amount"), the Supplemental Amount will be transferred to the Subsidiaries with an inadequate DSCR. In the event that the DSCR of all of the Loans is above 1.05, such Supplemental Amounts will be utilized for early repayment of the principal of the Loans. The first calculation of the DSCR, will commence on the 10th day of the 3rd quarter in 2016;

"DSCR" for this section is defined as Net Operating Income (as defined below) divided by debt service amounts (of both interest and principal amounts of the Loans); "Net Operating Income" - income less operating expenses including tax;

6. with regards to the Saint Petersburg project (the "Project"), owned by Petra - 8 LLC. ("Petra") which is a fully owned subsidiary of the Company, Petra undertakes to grant a pledge over 60% of the cash flow from the sale of residential apartments and commercial properties being built, which have received occupancy permits (but which are currently unsold), and to use them for early repayment of the principal of Subsidiary's loans after repayment of loans provided by the Bank for the Project,

the repayment schedule for the Loans will be amended, such that approximately 81% of the principal balance (including any deferred principal according to Stage 1 that has yet to be paid until that date) will be repaid during the first quarter of 2026, and the outstanding balance (19%) will be paid on a quarterly basis until then. In addition, there will be a further slight reduction in the interest rate.

The security for the Loans given to the Bank by the Company previously remains in place for the Debt Settlement arrangements under the Agreements.

The Company intends to fulfil all of the above conditions in order to give effect to the Debt Settlement. However, at this stage there is no certainty that the above conditions will be satisfied and that the Debt Settlement will become effective. The Company will make further announcements in due course.

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