Current Report No 10/2015: Opinion of the management board of Globe Trade Centre S.A. concerning the tender offer announced by LSREF III GTC Investments B.V.

The management board of Globe Trade Centre S.A. (“GTC” or the “Company”) with its registered office in Warsaw on the basis of Article 80 of the Act dated 29 July 2005, as amended, on public offering and terms of introducing financial instruments to organised trading, and on public companies (the “Act on Public Offering”), presents its opinion concerning the tender offer to subscribe for the sale of the Company’s shares announced on 30 March 2015 (the “Tender Offer”) by LSREF III GTC Investments B.V. (“Lone Star” or the “Bidder”) pursuant to Article 73 sec. l of the Act on Public Offering.

1. Strategic plans of the Bidder

Pursuant to the Tender Offer circular, the Bidder aims to increase its stake in GTC to up to 66% of the Company’s shares with the intention to take control over GTC. Lone Star sees GTC’s unique investment prospects based on Company's platform and asset management capabilities in its core Central and South Eastern European (“CSEE”) markets. In addition to improving the Company’s property portfolio in Poland, Lone Star shares the management's view regarding the growth potential from investments in countries such as Romania, Hungary and Serbia. Lone Star is convinced that the Company is well-positioned to benefit from its strong local platform and know-how in these markets, which will allow to take advantage of attractive market conditions for acquiring income-generating properties and selective pipeline developments. Lone Star believes that the successful execution of an equity injection is imperative to strengthening GTC’s balance sheet and supporting its growth strategy in CSEE.

As the cash tender offer is conditional on a minimum acceptance level of 50.1%, Lone Star intends to reach a sufficient level of control to better support the Company's growth strategy going forward and to address associated funding needs. It is Lone Star's specific intention to maintain the Company's listing on the Warsaw Stock Exchange and not to increase its stake beyond the level of 66%.

2. The management board’s opinion regarding the Bidder’s strategic plans

The Bidder has been a major shareholder of the Company since November 2013. The Bidder’s stake in the Company, the corresponding number of votes at the general meeting of the Company and its authority to appoint members to the Company’s supervisory board has allowed the Bidder to be involved in the review of the Company’s strategy.

The strategic plan presented by the Bidder in the Tender Offer is aligned with the current strategic plan of the Company i.e. strengthening the Company’s position on its core CSEE markets, improving the quality and efficiency of its services and further developing selected pipeline projects. The management board believes that an increased involvement of Lone Star in the Company resulting from a larger equity stake would enable a faster development of GTC’s platform by accelerating the execution of its growth strategy.

3. The management board’s opinion regarding the future location of operations

The management board does not expect that a successful Tender Offer would have any adverse impact on the future location of operations of the Company and its headquarter.

4. The management board’s opinion regarding the influence on employment in GTC

The management board does not expect that a successful Tender Offer would have any adverse impact on employment in the Company.

5. The management board’s opinion regarding the influence of the Tender Offer on GTC’s interest

The management board’s view is that a successful Tender Offer would strengthen the Company’s position on its core markets and shall accelerate the implementation of its strategy. The Tender Offer provides existing shareholders, who do not want to participate in GTC's expansion strategy with a viable option to exit their investment in GTC. Additionally, it is anticipated that GTC’s platform would attract new investors interested in gaining a wider CSEE real estate exposure.

6. The management board’s opinion regarding the offered share price

The subscription period will commence on 18 May 2015 and end on 3 June 2015. For the first five days, i.e. from 18 May until 22 May, Lone Star offers PLN 6.10 in cash per GTC share (the “Premium Price”), whereas during the remainder of the offer period, i.e. for shares tendered on or after 23 May 2015, the Tender Offer provides for a price of PLN 5.50 in cash per GTC share (the “Base Price”, together with the Premium Price the “Tender Prices”).

Pursuant to Article 79 of the Act on Public Offering the Tender Prices may not be lower than:

the arithmetic mean of the market price determined on the basis of the daily volume-weighted average prices (“VWAP”) in the six-months period prior to the date of the announcement of the Tender Offer, which amounts to PLN 5.36; or
the highest price that was paid by the Bidder, its subsidiaries or its holding entities for the acquisition of the shares in the period of 12 months prior to the announcement of the Tender Offer, which amounts to PLN 5.50 (five zloty and 50/100).

According to the Company’s management board, the Tender Prices offered are within the range of prices, which reflect the fair value of the Company:

the Tender Prices offer a premium in the range of approximately 12% to 25% over the closing price of PLN 4.89 on the day prior to the announcement of the offer.
the Tender Prices offer a premium in the range of approximately 6% to 18% over the Company’s Net Book Value per share of PLN 5.18 based on the Consolidated Financial Statements of the Company’s capital group prepared in accordance with the International Financial Reporting Standards, as of and for the year ended on 31 December 2014.

7. Reservations

For the purpose of the preparation of this opinion, the management board has reviewed the following available external sources of information and data:

the Tender Offer circular; and
the market prices of the shares in the Company in the period of six months preceding the announcement of the Tender Offer.

This opinion of the management board is not a recommendation to purchase or sell financial instruments referred to in Art. 42 of the Act of 29 July 2005, as amended, on trading in financial instruments.

Each shareholder of the Company making an investment decision in relation to the announced Tender Offer should assess on its own the risk related to selling the Company’s shares and the price of the Company’s shares offered in the Tender Offer, based on all circumstances related to the Tender Offer and information contained in the Tender Offer circular, as well as information made available by other companies active in the real estate sector as a result of the performance of their obligations as companies listed on the regulated market of the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.), including obtaining individual advice or recommendations of authorized advisors within the scope necessary to make an appropriate decision.

In preparing this opinion, the management board did not consult an external expert as regards the prices of the Company’s shares in the Tender Offer. The management board is not responsible for the authenticity, reliability, completeness and accuracy of information based on which this opinion of the Company’s management board was expressed, with the exclusion of information concerning the operation, organisation and development strategy of the Company.

Legal basis: Article 80 of the Polish Act on Public Offering, the Conditions Governing the Introduction of Financial Instruments to Organised Trading, and on Public Companies of 29 July 2005

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