Investor relations

Report concerns:
Position of the Company’s Management Board on the planned merger

Report’s text:
Acting pursuant to section 19.3 of the Ordinance of the Minister of Finance on current and periodical reporting by issuers of securities of 19 October 2005 (Journal of Laws of 2005, No. 209, item 1744) (henceforth the Ordinance), the Management Board of J.W. Construction Holding S.A. with its seat in Ząbki, Poland (henceforth the Company or the Acquirer) hereby recommends to the Company’s shareholders merger of the Company and Przedsiębiorstwo Turystyczne “CZARNY POTOK” S.A. (henceforth Czarny Potok or the Acquiree) with its seat in Krynica as well as voting in the Extraordinary General Meeting of the Company summoned to be held on 26 November 2008.

Basic information on the terms and conditions of the planned merger:

1.Type, name and seats of the merging Companies:

1.1 The Acquirer
J.W. Construction Holding Spółka Akcyjna with its seat in Ząbki, at ul. Radzymińska 326, entered in the Register of Entrepreneurs of the National Court Register kept by the District Court for the Capital City of Warsaw, 14th Business Division of the National Court Register under number KRS 0000028142. The share capital amounts to PLN 10,939,656 and is divided into 54,698,280 ordinary bearer shares with a face value of PLN 0.20 each. A public company within the meaning of the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies, dated 29 July 2005 (Journal of Laws No. 184 item 1539, as amended).

1.2 The Acquiree
Przedsiębiorstwo Turystyczne “Czarny Potok” Spółka Akcyjna with its seat in Krynica, at ul. Czarny Potok 65, entered in the Register of Entrepreneurs of the National Court Register kept by the District Court for Krakow - Śródmieście in Krakow, 12th Business Division of the National Court Register under number KRS 0000091153. The share capital amounts to PLN 1,994,000 and is divided into 19,940 registered shares with a face value of PLN 100 each.

2. Merger method
The merger shall be executed in line with the procedure set forth in Article 492 § 1 point 1) in conjunction with Article 516 § 6 of the Code of Commercial Companies by transferring the total assets of the Acquiree to the Acquirer as the sole shareholder of the Acquiree. As a result of the merger, the Acquiree shall be wound up without executing a liquidation procedure. The merger shall be executed based on resolutions of the general shareholders’ meetings of the merging companies, in line with the provisions of the Code of Commercial Companies.

3. Legal basis for the merger

3.1 The merger shall be executed based on the provisions of the Code of Commercial Companies as well as the provisions of the Articles of Association of the merging Companies, pursuant to which general shareholders’ meetings of each Company have the right to decide on the merger. The general shareholders’ meetings passing resolutions on the merger constitutes the major condition for the merger of joint-stock companies.
A resolution of the general shareholders’ meeting of the Acquirer on the merger with the Acquiree shall be passed in line with Article 492 § 1 point 1 of the Code of Commercial Companies as well as § 10 clause 4 point 7 of the Company’s Articles of Association and shall stipulate that the merger shall be conducted based the Acquirer’s acquisition of the Acquiree by transferring the total assets of the Acquiree to the Acquirer. Due to the fact that as of the merger date the Acquirer holds all the shares in the Acquiree and in line with Article 515 § 1 of the Code of Commercial Companies, the merger will not involve an increase in the Company’s share capital.
3.2 Based on Article 516 § 5 and § 6 of the Code of Commercial Companies the Acquirer – Acquiree share exchange ratio shall not be determined.
3.3 Pursuant to Article 516 § 5 and § 6 of the Code of Commercial Companies, the principles governing the granting of shares in the Acquirer shall not be set forth.
3.4 Pursuant to Article 516 § 5 and § 6 of the Code of Commercial Companies, the date from which the shares shall give the right to participate in the profits of the Acquirer shall not be determined.
3.5 The Acquirer’s granting of the rights referred to in Article 499 § 1 point 5) of the Code of Commercial Companies to shareholders and persons with particular privileges in the Acquiree shall not be provided for.
3.6 No particular benefits for the members of the governing bodies of the merging companies or other participants in the merger shall be provided for.

4. Economic reasons

The Company’s organizational structure includes a branch operating under the name of J.W. Construction Holding S.A. “Hotel 500” Branch, through which it conducts business activity involving provision of hotel services in five hotel facilities. The Company has been rendering hotel services since 2002 and has extensive experience in this regard. Inclusion of a facility located in Krynica, owned so far by the Acquiree, will increase the potential represented by the Hotel 500 network and enable the Company to use it in a more efficient manner. It will also lead to reducing fixed costs related to management as well as a more efficient use of funds as part of one structure.