Agrokultura Board: "Shareholders with a prudent view of risk should accept the mandatory offer"

This statement is rendered by the Board of Directors (the “Board”) of
Agrokultura AB (the “Company”) with regard to the mandatory bid (the”Bid” or the
“mandatory bid”) launched by Steenord Corp (“Steenord”) in accordance with
chapter III in the Takeover Rules for Certain Multi-Trading Facilities
(“Takeover Rules for MTFs”). The mandatory bid was made public on 28 August
2014, corresponding to an offer of SEK 4.50 in cash per share in the Company,
and was initially subject to a condition relating to potentially necessary anti
-competition clearances.

On 28 August 2014 after the announcement of the mandatory bid, a brief
introductory statement was made by the Board regarding the Bid. The Board then
inter alia expressed the following.

“As the Board previously announced, it looks positively on the new major
shareholders’ intentions for Agrokultura and on the fact that the mandatory bid
rules of First North are followed. The Board welcomes the new specific cash
offer which is clearly in excess of the share price during a considerable time
before Steenord started buying shares of Agrokultura. According to existing
rules, it falls upon the Board to make a statement to the shareholders, at the
latest two weeks before the expiry of the acceptance period, regarding whether
the shareholders should accept the offer or not. The Board will therefore return
with a more detailed announcement regarding the offer within the aforementioned
timeframe, whereby the Board also will be able to take Steenord’s formal offer
document into account.”

Steenord has thereafter amended the Bid so that it will from now on apply
without any anti-competition condition, with the 29 September 2014 as a last
acceptance date for participation in a first closing pursuant to the Bid, and
such that the Bid will in effect extend to the expiry of the initial time-frame,
i.e. 24 October 2014.

The statement made by the Board as set out below thus constitutes the more
detailed recommendation from the Board in accordance with the Takeover Rules for
MTFs as guidance for the shareholders’ decision prior to the last acceptance
date on 29 September 2014 for the first closing – or alternatively prior to the
24 October 2014 – in the matter whether or not the mandatory bid is to be
accepted.

For shareholders with a relatively prudent view on risk, and where no specific
considerations are relevant as further discussed below, the Board recommends the
shareholders to accept the Bid. The board members who own or control shares in
Agrokultura currently intend to accept the Bid wholly or partially. The reasons
are summarised below.

The Board is of the view that the Company as well as share investments in the
Company have a significant potential, but are also subject to significant risk.

Since several years, the Company and its shares have been valued far below the
book value per share of the Company’s net assets. In addition, the Company has
regularly shown operational deficits, which from time to time have been
substantial. It is only in the latest half-year report that the Company has been
able to show profits from the operations. This is positive and is confirming
that the Board’s strategy the last few years has been adequate, and this turn
-around should moreover create some strategic freedom of action which was
perhaps not at hand before. The level of this profit, and any additional profit
potential, should however need to become sustainably higher in order to become
satisfactory in relation to the book value per share of the Company’s net assets
when taking into account the operational and political risks that the Company’s
business is subject to.

It is only in the somewhat longer term, and assuming that the current pricing
picture would roughly remain in place, that is possible to envisage – and as
noted then subject to significant risk – that the Company’s current business and
assets would generate such surpluses so that the surpluses would justify a share
price corresponding to or even exceeding the book value of the assets. The
Company’s strategy since a few years – i.e. seeking disposals of assets at
levels reflecting book values in parallel to the increased profitability focus –
is based on the same underlying assessment. The disposals and the preparations
for disposals during the last year should also indicate that it is indeed
possible to obtain prices at levels reflecting book values, on the one hand, but
that this may take longer than expected and could entail complex and inherently
uncertain disposal processes, on the other hand. Sales right now of shares in
Agrokultura into the Bid could be seen as an accelerated and simplified
alternative to the current strategy of the Board, something which would also
reflect a significant discount when compared to the aforementioned book value,
however. The Board can conclude that the book value per share, being SEK 6.39 in
the latest half-year report would result in a lower net to the Company and to
the shareholders in case of an assumed dismantlement of all the Company’s assets
at levels reflecting book values, although presumably considerably closer to
SEK 6.39 per share than SEK 4.50 per share. This is due to costs for handling
and disposals, tax implications, and the lapse of time where in particular the
risk for renewed current deficits must be taken into account. Although one can
presumably assess that it is quite possible under the current strategy to run
the Company’s business continuously with a positive result, and even to improve
cost-efficiency further, there will thus remain a certain risk for renewed
current deficits. The political risk which is quite difficult to evaluate should
also be taken into account since the Company’s business is conducted in Russia
and Ukraine. A risk factor that is even harder to assess could be the
preparedness of individual shareholders to live with an investment risk when the
risk is seen in light of the influence of that the individual shareholder might
be able to exercise.

In this context, the Board would like to point out that the book value discount
when valuing the Company’s shares, whether historically in the stock-market or
when evaluating the Bid, must be made subject to an overall assessment combining
all relevant factors. When operational risk, financial risk, and political risk
are expressed in terms of a reasonable yield requirement, and a reasonable
investment time horizon for a presumed realisation of all assets of the Company
to at least book values –and where the investment time horizon for such presumed
disposals would be counted in years rather than in months according to the
Board’s experience – the level of the Bid would appear as attractive when
assuming reasonable yield requirements. Here, the Board would also like to point
out that the current valuation expressing the level of the Bid would appear as
quite attractive when comparing with other listed comparable agricultural
companies with similar operations. Moreover, the level of the Bid is expressing
a value appreciation when comparing with the preceding earlier stock-market
pricing, for instance 53% when comparing with the average stock price over the
first six months of 2014. This is also reflecting a significantly better yield
than for the Swedish stock market in general, as well as when comparing with
listed comparable companies.

Against the above background, the Board has thus concluded that the book value
discount which the mandatory bid is expressing is appearing to be adequate, and
that the level of the Bid is attractive when the discount based on reasonable
assumptions regarding yield requirements and investment time horizons is
compared to today’s stock market price of the shares in the Company. This
conclusion remains the same if this discount is compared to an assumed outcome
of the Board’s current strategy based on increased efficiency as well as
disposals if and when book values can realised.

The above assessment shall of course be contrasted with the fact the Company may
change its current strategy, not the least by virtue of the Company having a new
controlling shareholder. It could for instance be envisaged that disposals at
book values would no longer be seen as interesting enough, and/or that the new
main owner would see a further development potential in the current assets, as
well as that possibilities for interesting additional acquisitions that could be
envisaged. The Board has on its part abstained from assessments as to whether
conceivable changes would speak for a continued shareholding (or in itself would
speak against a continued shareholding). This is rather an assessment that
current and also future shareholders would have to make over time, while the
Company will remain listed and will continue its business under the new main
shareholder’s control. For such shareholders who see a specific potential for
the Company’s range of assets (such as for a general value appreciation, or for
a materially increased yields, or for combination possibilities), and who have
confidence in the intentions and possibilities of the new Russian key
shareholder to operate more effectively in Russia and Ukraine, the Board will
confine its guidance to point out that such other specific considerations may
very well justify a continued shareholding. The Board also believes that the
main shareholder’s expressed intention to keep the Company as listed on First
North is positive and is without doubt realistic, and could be relied on when
the individual shareholders consider these matters. The more long-term that the
individual shareholder is, as well as the more risk-tolerant that the individual
shareholder may be, the more interesting could a continued shareholding in the
Company be. For certain shareholders, specific considerations could thus lead to
that the weighing between risk and potential would lead to a different outcome
than the Board’s above-stated conclusion. All shareholders must of course make a
diligent assessment on their own based on their own portfolio situation as well
as their risk tolerance, investment time horizon and the liquidity on their own
part for the shares from time to time.

In addition, the Board has no other view as regards the assessment stated by
Steenord regarding the implications in the near term of the completion of the
Bid when it comes to the management and employees of Agrokultura in terms of the
employment conditions and the employment situation on the locations where
Agrokultura is conducting business.
About Agrokultura AB (publ)
Agrokultura invests in farmland and produces agricultural commodities in Russia
and Ukraine. The Group aims to generate an attractive return on invested capital
by optimally utilizing its agricultural land bank through crop production,
livestock and related operations. Shares in Agrokultura are listed in Sweden on
the Nasdaq OMX First North exchange under the ticker AGRA and the Group’s
Certified Adviser is Remium Nordic AB.