Secure Prop Regulatory News (SPDI)

4 July 2011

Aisi Realty Public Limited

Aisi Realty Public Limited ("Aisi" or the "Company"), the closed-ended investment company incorporated in Cyprus admitted to trading on AIM, today announces that a circular was sent to shareholders after the market closed on 1 July 2011 detailing a subscription, capital reorganisation, the convening of two extraordinary general meetings, a related party transaction and the appointment of a new director (the "Circular").

Introduction

On 15 March 2011, the Company announced that the Board was in discussions with (i) certain existing Shareholders; and (ii) an independent third party investor group to provide a working capital facility, or other cash injection, to meet the short term funding requirements of the Group. Due to these discussions taking longer than anticipated, on 1 June 2011 the Company made a further announcement that it had requested that trading in the Existing Ordinary Shares on AIM be suspended until such time that it had secured all necessary funding to enable to it to carry on as a going concern.

The above mentioned discussions with an independent third party investor group, namely South East Continent Unique Real Estate (SECURE) Management ("Secure Management"), have now been concluded and the Board is pleased to announce that the Company has entered into a Subscription Agreement with the Investor, a member of the Secure Management group, conditional on, inter alia, the Proposed Investment Resolutions being passed by Shareholders at the First EGM and completion of due diligence to the satisfaction of the Investor, following which the Investor proposes to make a substantial investment in the Company (the "Proposed Investment").

The Board is also convening the Second EGM to put forward the Capital Reorganisation Resolutions for Shareholder approval. The Capital Reorganisation Resolutions will enable the Company to restructure its share capital from Existing Ordinary Shares to New Ordinary Shares for the reasons set out below. The requisite notice period under the Act for the Capital Reorganisation Resolutions is longer than the Proposed Investment Resolutions. Accordingly, the Company is proposing the Capital Reorganisation Resolutions at the Second EGM rather than the First EGM so that the Proposed Investment Resolutions are put to Shareholders without delay.

The Company is also pleased to announce the appointment of Roland Philippe de Hauke Peeters, aged 44, as a non-executive director with immediate effect. Roland is or has been a director or partner of the following companies or partnerships during the previous five years:

The Company confirms that there are no other matters which are required to be announced with regard to this appointment under paragraph (g) of Schedule 2 of the AIM Rules.

timetable for the PROPOSED INVESTMENT AND CAPITAL REORGANISATION

The Circular that will be sent to Shareholders today will contain further details of the Proposed Investment and the Capital Reorganisation together with the Notice of First EGM and Notice of Second EGM. A copy will also shortly be available on the Company's website www.aisicap.com.

For further information please contact:

The Proposed Investment

Pursuant to the Subscription Agreement, the Investor (i) has conditionally agreed to subscribe for Bonds from the Company with an aggregate capital value of US$8 million which shall be convertible, in certain circumstances, into 513,500,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 5,135,000 New Ordinary Shares; and (ii) will be issued with Class B Warrants to subscribe for up to 109,100,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 1,091,000 New Ordinary Shares.

The Bonds and the Class B Warrants will be subscribed for and issued to the Investor in two tranches.

The subscription for the first tranche of (i) Bonds with an aggregate capital value of US$4 million; and (ii) Class B Warrants to subscribe for up to 109,100,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 1,091,000 New Ordinary Shares is conditional upon a number of conditions including, inter alia, the passing of the Proposed Investment Resolutions, receipt by the Investor of the Interim Accounts, the Investor being satisfied that any Ukrainian anti-monopoly provisions have been complied with or are capable of being complied with with respect to the first tranche of the Bonds and the Class B Warrants and the satisfactory outcome of the Investor's due diligence review of the Group. The outstanding balance under the Bridge Loan Facility will be offset against the subscription price for the first tranche of Bonds.

The subscription for the second tranche of Bonds with an aggregate capital value of US$4 million is conditional upon the first tranche of Bonds and Class B Warrants having been issued, there having been no occurrence of any of the material adverse change events described in the Subscription Agreement, no breach of the warranties contained in the Subscription Agreement and the security described in the Bond Instrument having been entered into in a form satisfactory to the Investor.

With effect from completion of subscription for the first tranche of the Bonds and for so long as it holds or is entitled to hold on a fully diluted basis more than 40 per cent. of the issued share capital of the Company, the Investor shall be entitled to nominate such number of Directors as will constitute a majority in number of the Directors.

As part of their future employment, the Company has agreed to issue to the principals of the Investment Manager Class B Warrants entitling the holder to subscribe for up to 27,300,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 273,000 New Ordinary Shares (of which Besik Sikharulidze will receive 75 per cent. and Nugzar Kachukhashvili will receive 25 per cent.).

The Bonds

The principal term of the Bonds will be eight months and the annual interest accruing during this eight month period will be 1 per cent.. On the date eight calendar months following the issue of the first tranche of Bonds (the "Maturity Date"), if the Adjusted Monetisable Liabilities are equal to or less than US$6.4 million, the Bonds will automatically convert into 513,500,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 5,135,000 New Ordinary Shares. The conversion price of the Bonds will be £0.0095.

If, on the Maturity Date, the Adjusted Monetisable Liabilities are greater than US$6.4 million, the Bonds will convert into 513,500,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 5,135,000 New Ordinary Shares only at the sole discretion of the Investor. In such circumstances, from the Maturity Date until such conversion, the Bonds will bear annual interest of 10 per cent.. Where the Bonds have not been converted into Existing Ordinary Shares or New Ordinary Shares by 31 December 2013 (as appropriate), the right of the Investor to convert the Bonds will lapse. Notwithstanding the above, the Bonds will be able to be converted into Existing Ordinary Shares or New Ordinary Shares (as appropriate) at the Investor's discretion at any time between the date of the Bond Instrument and 31 December 2013.

Under the terms of the Bond Instrument, there are anti-dilution provisions in favour of the Investor, such that the number of Existing Ordinary Shares or New Ordinary Shares (as appropriate) to be issued on conversion will be adjusted in certain events including further equity issuances by the Company, so that the Investor is entitled to receive the same percentage of Existing Ordinary Shares or New Ordinary Shares (as appropriate) carrying the same percentage of voting rights as it would have done if the event had not occurred.

The Bonds will be secured against the Company's interests in its various Ukrainian assets. The Bonds will be issued free of any pre-emption rights and the proceeds raised from their issue will be used to settle the Monetisable Liabilities and the Bridge Loan Facility and to fund the Group's on-going working capital requirements for a period of at least twelve months from the date of the First EGM.

The Class B Warrants

Each Class B Warrant will entitle the holder thereof to receive one Existing Ordinary Share. The Class B Warrants may be exercised at any time from the earlier of the Maturity Date and exercise of not less than 75 per cent. of the Bonds to the third anniversary of the date of the Class B Warrant Instrument. The exercise price of the Class B Warrants will be the nominal value per Existing Ordinary Shares or New Ordinary Shares as at the date of exercise.

The Class B Warrant Instrument will have anti-dilution protections so that, in the event of further share issuances by the Company, the number of Existing Ordinary Shares or New Ordinary Shares (as appropriate) to which the holder is entitled will be adjusted so that the holder receives the same percentage of the issued share capital of the Company (as nearly as practicable), as would have been the case had the issuances not occurred. This anti-dilution protection will lapse on the earlier of (i) the expiration of the Class B Warrants; and (ii) capital increase(s) undertaken by the Company generating cumulative gross proceeds in excess of US$100,000,000.

The Capital Reorganisation

The Board feels there are currently too many Existing Ordinary Shares in circulation given the size of the Company and that, because of this, the Existing Ordinary Shares are trading at a value lower than it is hoped would otherwise be the case.

The first step of the Capital Reorganisation will be to consolidate the Existing Ordinary Shares on a 100 for 1 basis. Where such consolidation results in any Shareholder being entitled to a fraction of a consolidated ordinary share, such fraction shall be aggregated with the fractions of a consolidated ordinary share to which other Shareholders of the Company may be entitled on the same basis as above (provided that any consolidated fraction remaining after such aggregation shall itself be designated as a consolidated ordinary share) and sold on behalf of the relevant shareholders in the market on behalf of the Shareholders so entitled.

Following the consolidation, the Company shall sub-divide each of the consolidated ordinary shares into one New Ordinary Shares of €0.01 and one Deferred Share of €0.99 each. The New Ordinary Shares will have the same rights and benefits as the Existing Ordinary Shares. The Deferred Shares, which will not be listed, will be valueless, non-transferable and have no effect on the economic interest of the Shareholders. No share certificates will be issued for the Deferred Shares. Instead it is intended that, in due course, all the Deferred Shares will be repurchased by the Company for an aggregate of €0.01 and cancelled.

Application will be made for the New Ordinary Shares to be admitted to trading on AIM. Dealings in the Existing Ordinary Shares will cease at 5pm on 25 July 2011 and dealings in the New Ordinary Shares are expected to commence on at 8 a.m. on 26 July 2011. New share certificates will be issued for the New Ordinary Shares.

The Company also proposes to increase its authorised share capital from €8,750,000 to €14,000,000 at the First EGM. This will provide the Company with the required authorised capital to satisfy its obligations under the Class A Warrants, Class B Warrants and the Bonds and provide head room when issuing shares and as such grant the Board the required flexibility needed to raise funds as and when required. Rights of pre-emption will be waived with respect to these future capital increases.

Settlement Agreement

The Company and the Investment Manager together with Mr. Achilleoudis and Grafton Properties Limited in their capacity as lenders to the Investment Manager (as described below), have also entered into the Settlement Agreement pursuant to which the existing Management Agreement will upon completion of the Proposed Investment be terminated. Following the termination of the Management Agreement, the principals of the Investment Manager will be engaged directly by the Company on an ongoing basis.

Pursuant to the Settlement Agreement, the Investment Manager agrees to release the Company from all claims and liabilities that have arisen under the Management Agreement which are owing by the Company to the Investment Manager conditional on, and with effect from, completion of the Proposed Investment. In consideration for this release, the Investment Manager will receive (i) cash payment of US$300,000; and (ii) Class A Warrants to subscribe for up to 27,300,000 Existing Ordinary Shares or, following completion of the Capital Reorganisation, 273,000 New Ordinary Shares.

The Class A Warrants will have substantially the same terms as the Class B Warrants but will not benefit from the anti-dilution protection granted to the Class B Warrants.

In addition, certain loans of US$700,000 in aggregate from Mr. Achilleoudis and Grafton Properties Limited to the Investment Manager have been forgiven in exchange for payment by the Company to the lenders of staged payments of up to US$450,000, with US$150,000 of such payments conditional on the Company successfully undertaking future fundraisings to raise US$50,000,000.

The Settlement Agreement constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The Independent Director, having consulted with the Company's nominated adviser, considers that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.

Shareholders should also note that, following completion of the Settlement Agreement, the Company will no longer be considered an 'investing company' for the purposes of the AIM Rules for Companies. Accordingly, from such time, the provisions of the AIM Rules for Companies (including the AIM Note for Investing Companies) will no longer be applicable to the Company although the provisions of the AIM Rules relating to trading companies will continue to apply.

Future Additional Capital Increase

The Board is also seeking authority from Shareholders at the First EGM to allot up to 261,978,989 Existing Ordinary Shares (or 2,619,790 New Ordinary Shares following completion of the Capital Reorganisation) at a price of £0.0095 per Existing Ordinary Share (or £0.95 per New Ordinary Share following completion of the Capital Reorganisation) and a waiver of pre-emption rights in respect of these issues. This authority will expire on the date of the first anniversary of conversion of the Bonds.

The additional authority will enable the Company to raise up to US$4 million by means of an issue of Existing Ordinary Shares or New Ordinary Shares (as appropriate) at the conversion price of the Bonds (being £0.0095 per Existing Ordinary Share or £0.95 per New Ordinary Share (as appropriate)). It is anticipated that the Board will only need to utilise this authority in the event that, following completion of the Proposed Investment, the Company has a need for more working capital before the first anniversary of conversion of the Bonds.

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