Hotel Overview

Hoteli Podgora d.d. is the main tourist accommodation company in the town of Podgora, located 12 km south of Makarska. Having sold a number of assets in recent years, Hoteli Podgora d.d. now consists of the following commercially operating facilities:

• Hotel Minerva with 175 rooms;
• Hotel Podgorka with 184 rooms;
• Hotel Mediteran with 178 rooms;
• Hotel Borak with 9 suites;
• Sutikla Auto Camp with Tennis Center;
• Administration Building and
• Dvi Palme Restaurant.

Investment Opportunites and Considerations
Major advantages that this investment opportunity offers include:

• Location along the Makarska Riviera - a strong brand tourist resort on the Adriatic;
• Waterfront location adjacent to the beach along the town's promenade;
• Increasing EBITDA profitability;
• Development opportunities at the Auto-Camp - situated on an uninhabited peninsula a walking distance from the town;
• Possibility of tourist season extension into the spring and autumn months;
• Concession of 42 berths at local marinas;
• Continuing strong expansion of Croatia as a tourist destination.

Investors should be aware that the auto-camp has not been included in the share capital of the Company. The Company management maintains that it is in Company’s ownership. Located on a small peninsula a walking distance from the town, the land occupied by the camp has been designated by the town planning authorities as an area envisaged for development.

The deadline for submission of bids: November 29, 2004 by 14,00 Hours.

For any further information, please contact us at the numbers below:

Hrvojka Skokovic and Koraljka Voloder
Croatian Privatization Project / Croatian Privatization Fund
Tel: + 385 (1) 60 60 770
Or + 385 (1) 45 96 356

E-mail: investcroatia@cas-cpp.com
For any further information on tender procedure please visit: www.hfp.hr

In accordance with the Privatization Law (Official Gazette 21/96, 71/97, 16/98 and 73/00) and the Decision of the Management Board of the Croatian Privatization Fund (hereinafter: Fund) Ref: 024-04/04-03/9; 563-01-01/01-2004-25 dated September 10, 2004 the Fund hereby announces: Public Invitation to Tender for Shares in the joint-stock Company

HOTELI PODGORA d.d., Podgora
(hereinafter: Company)

The shares that are offered for sale in this procedure are from the portfolio of the following shareholders: Croatian Privatization Fund, Agency of the Croatian State for Saving Deposit Insurance and Bank Rehabilitation and the Croatian Pension Insurance Institute.

Brief profile of the Company: The Company is headquartered in Podgora, the town 10 km to the south of Makarska. The core business is hotel operation, hospitality and tourism. The property owned by the company include: Hotel Minerva, Hotel Podgorka, Hotel Mediteran, Hotel Borak, Camping site Sutikla (tennis center). All of the aforementioned facilities are operating. As on December 31, 2003 the total assets of the Company amounted to Kuna 111 milllion, while liabilities on the same date amounted to Kuna 101 million.

• Registered capital of the Company: DM 36.625.000,00
• The total registered capital of the company is divided into: 366.250 shares
• Number of shares offered for sale in this procedure: 269.344
• Face value per share: DM 100,00
• Percentage in the registered capital: 73,54 percent
• Starting bidding price: Kuna 21.008.832,00
• Company registration: Commercial Court in Split under MBS: 060008652
• Number of employees: 135
• Special requirement: Bidders are expected to enclose a Letter of Intent or other document to guarantee that the Company will become a part of one of internationally recognized hotel chains i.e. brands.

Beside the payment of the purchase price for Company shares, the Bidders are expected to meet following additional requirements:

• service all due debts of the Company owed to state creditors;
• undertake to provide substitute guarantees that would replace the existing guarantees for liabilities of the Company issued by the Croatian state;
• assume a commitment not to seek war damages from the Croatian state (neither on behalf of the Bidder nor the Company)

In the process of selection of the best bidder, except the amount offered for share purchase and fulfillment of additional and special requirements, the Fund will especially appreciate the willingness of the bidder to:

• commit to keep the current number of employees in the period of 1 (one) year from the date of execution of the Contract on the sale and transfer of shares and/or undertake to implement the program for possible redundant number of employees in accordance with applicable laws of the Republic of Croatia and/or offer to create new jobs if proposed in the “Business plan”;
• offer an “Investment program” for the Company (technical structure and time frame of investment realization, amount of the required financial means, finance sources and mode of investment, introduction of new services, know-how, etc.);
• offer a “Business plan” for the Company in the next 5 (five) year period;
• commit not to sell nor hypothecate neither the real estate nor shares of the Company without previously obtained consent of the vendor in the period of 1 (one) year from the date of execution of the Contract on the sale and transfer of shares;
• offer acceptable instruments to guarantee the fulfillment of the assumed obligations.

The deadline for submission of bids: November 29, 2004 by 14,00 Hours.