AS Silvano Fashion Group (“SFG”) has entered into a share purchase agreement for the acquisition of 100% of all shares in France Style Lingerie S.A.R.L. (“FSL”), a limited liability company registered in France. The total price of the acquisition is EUR 2 million (EEK 31.3 million). 50% of the purchase price is due within five business days as of the closing of the transaction. The closing is expected to occur within the coming weeks, subject to the fulfillment of certain conditions precedent. Another 50% of the purchase price is payable by 31 December 2008 at the latest. FSL is a holding and retail management company with significant retail and brand management expertise in the lingerie business. FSL holds 49% of all shares in SOOO «Torgovaja Kompanija Milavitsa» (“TKM”), a Belarussian company operating the Belorussian retail chain for the products of SP ZAO Milavitsa (“Milavitsa”), a subsidiary of SFG and the leading lingerie producer in Belarus and Russia. As at 1 July 2008, TKM operated 26 Milavitsa retail stores in Belarus. Already prior to the acquisition of FSL, 51% of all shares in TKM are owned by Milavitsa. As a result of the acquisition of FSL, the SFG group will own the majority of all shares in TKM. Further, FSL holds 25% of all shares in ZAO «Stolichnij Torgovij Dom Milavitsa» (“STD”), an independent Russian lingerie wholesaler and retail operator managing 30 lingerie stores in Russia, 27 of them under the trademark of Milavitsa. Another 25% of all shares in STD is already held by Milavitsa. The remaining 50% of all shares in STD will continue to be held by its management. Through the acquisition of FSL, SFG will gain broader access to the retail business of STD, the biggest retailer of Milavitsa's products in Russia, and will be able to coordinate its operations with those of ZAO Linret, the SFG group company operating the “Oblicie” and “PTA” retail chains in Russia. The acquisition of FSL is expected to contribute to the distribution and retail sales of the products of the SFG group, in particular the products of Milavitsa. The effect of the acquisition with respect to the profit and revenue of the SFG group is not expected to be significant. The acquisition of FSL will also secure the ownership of the trademark “Alisee” (a high-level lingerie brand used by Milavitsa), which is being licensed from FSL. The sellers of FSL are Fashion Management & Retail Associates Ltd, a limited liability company registered in the United Kingdom, and Mr. Remi Pilat. Mr. Remi Pilat, a member of the management board of SFG, owns 10% of the share capital of FSL and participates in the transaction as a seller. Mr. Remi Pilat is also a director of FSL and will remain in that position following the completion of the acquisition. According to the share purchase agreement, Mr. Remi Pilat is entitled to receive EUR 200,000 for his shares in FSL, out of the total purchase price of EUR 2 million. Therefore, the member of the management board of SFG Mr. Remi Pilat has personal interest in the transaction as described above, and the acquisition of shares in FSL from Mr. Remi Pilat qualifies as a transaction with a related person. Other than the above, the members of the Management Board and the Supervisory Council of SFG do not have personal interest in the transaction. The acquisition of FSL is not a material transaction within the meaning of the Tallinn Stock Exchange Rules. Dmitry Ditchkovsky Chairman of the Management Board AS Silvano Fashion Group Tel +372 6 710 700