According to an agreement signed on 29.06.07 Arco Vara AS's subsidiary Arco Investeeringute AS and Arco Vara's head of Latvian operations Mr. Viktors Savins continue the Bišumuižas II development project with a third counterpart, Linstow Baltic SIA, who acquired a 50% stake in the Bišumuižas nami SIA. Arco Investeeringute AS and Mr. Viktors Savins sold respectively a 40% and 10% share in the company to Linstow for the nominal value (respectively 800 LVL and 200 LVL) and after the transaction Bišumuižas nami SIA will within four months pay Arco Vara AS and Mr. Viktors Savins EUR 19.22 mln for the Bišumuižas II development project - EUR 15.376 mln to Arco Vara AS and EUR 3.844 mln to Mr. Viktors Savins. As the result of the transaction Arco Vara group will receive consolidated revenue of approximately EUR 7.5 mln in the second quarter. Arco Vara's consolidated and unaudited net profit in the first quarter of 2007 was EUR 4.4 mln. Arco Vara will publish the full financial results for first half of 2007 in Week 35. The sold project's value in the group's consolidated accounts reflected the acquisition price of EUR 0.89 mln. Information about the conditional sales agreement reached between the parties on May 18th 2007 has been previously published in the listing documents of Arco Vara AS. After the closed deal Arco Investeeringute AS retains a 40% stake in Bišumuižas nami SIA and Mr. Viktors Savins retains a 10% stake. The transaction will require approval from the Latvia's competition council to be enforced. According to available information Bišumuižas nami SIA is not involved in any judicial disputes or court proceedings. As the head of Latvian operations of Arco Vara was party to the transaction as the seller of a separate 10% stake, the transaction qualifies as a transaction with a connected person according to Tallinn stock exchange regulation. Bišumuižas nami SIA acquired the Bišumuižas II development project on 24.04.07 by purchasing Sportings Riga SIA from Arco Vara AS and Viktors Savins. The material property of Sportings Riga SIA is a property in Riga located on Zalu Street 8, size 111 596 m2. It is proposed to possibly develop 1085 apartments on the property. Linstow Baltic SIA's parent company Linstow AS is part of the Anders Wilhelmsen Group and a leading real estate developer in Norway, whose one major focus is developing hotels and retail premises in the Baltic States and in Scandinavia. 1 EUR=15,6466 EEK 1 EUR=0,7028 LVL 1 LVL=22,4779 EEK Further information: Heigo Metsoja + 372 614 4654 heigo.metsoja@arcovara.ee