To secure 30% owners' equity share required by the bond issue terms, OÜ SLProductions, shareholder of Q Vara, issued an assurance letter on March 24, 2008 according to which it confirmed its readiness to invest additional capital into Q Vara if needed. According to announcement issued on June 26, 2008 Q Vara signed a loan agreement with OÜ SLProductions' subsidiary OÜ Q Capital according to which OÜ Q Capital gave to Q Vara 86 000 000 EEK of subordinated loan (the loan is subordinated to all other Q Vara liabilities). Process to convert the subordinated loan into owners' capital was initiated just after the signing of the loan contract. July 21, 2008 Management Board of Q Vara AS made application to Harju County Court registration department to increase share capital of Q Vara AS by non-monetary payment by 8 600 000 EEK. According to decision of shareholders of Q Vara AS 860 000 new shares were issued with nominal value of 10 EEK and excess of issue price of 90 EEK. After registration of above mentioned transactions in Harju County Court registration department Q Vara AS owner's equity will increase by 86 000 000 EEK. This will complete the conversion process of subordinated loan to owners' equity. Alo Lillepea member of the Management Board Q Vara AS Phone: 668 1600