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Press Room:

Barlinek capital increases by half

Tuesday, 15 July 2008

At the Ordinary General Meeting of Shareholders of Barlinek, which took place on the 27^th of June 2008, shareholders passed resolutions, concerning the new share issue with option rights. The firm wishes to increase its share capital by half. The producer of wooden floors plans the issue of the L series shares from 32.9 mln to 48.4 mln with retention of options rights for existing shareholders. For each two shares of the company possessed at the end of the day of option rights, shareholders shall be entitled to an option on one share. The price of the issue shall be determined by the management board of the company. In effect the issue shall increase the share capital of the company from the sum of 96.78 mln PLN to a maximum of 145.17 mln PLN. The day of the 27th of September this year has been determined as the day of option rights. It is already known that the principal shareholder of Barlinek – Michał Sołowow – has declared that he will take up the shares to which the option rights entitle him, which means that 68 % of the securities (32.9 mln shares) shall be sold for certain.

Barlinek will designate the money from the issue for investment in Central-Eastern Europe. The company invests boldly in this part of Europe, where, according to analyses conducted, these markets create great growth possibilities for the wood production sector. Currently, equally in Russia as in Romania the markets are ever more frequently referred to as developing consumer goods markets. The years of neglect have caused especially Russia to be a country of enormous potential for building products. To 2011 the company intends to spend approximately 700 mln PLN on production capacity development.

In Russia itself, Barlinek intends to invest about 600 mln PLN over the next three years. In Czerepowiec, 500 km to the north of Moscow, the construction of the plywood factory is already underway for 300 mln PLN. The start-up of the establishment is envisaged in the second half of 2009. Next year the following building stage shall be commenced for another 100 mln PLN. In mid 2009 the next investment shall begin in Russia - a wooden floor factory with a production capacity of approximately 2 mln m² annually for a further 200 mln PLN. The time foreseen for the completion of this investment is the second half of 2010.

In January this year Barlinek took over Diana Forest with registered office in Bacau, in Romania - producer of floor planks, veneers, windows and doors. Currently the production potential of the Romanian enterprise amounts to around 500 thousand m² of layered planks annually. Barlinek intends to increase, and significantly so, the production potential of Diana Forest – to 2-3 mln m². Already work is now in progress on the modernisation of the Romanian factory. Barlinek envisages completion of the investment as early as in 2009. Apart from layered floors Diana Forest shall produce surface layer plank formats, in quantities up to 4 mln linear metres. The value of the investment programme amounts to over 80 mln PLN. Barlinek invests less, because part of the investment is financed by the sale of unnecessary assets of the Romanian company. The restructuring of Diana Forest shall be completed in the first quarter of 2009.

Barlinek SA is the largest Polish producer of triple layered wooden floors and a leading producer of veneers. The company conducts operations within Capital Group Barlinek. The basic product is the floor plank – the Barlinek plank – from fine indigenous and exotic woods. Flooring is exported to over 35 countries on 3 continents. The group also produces: certified floors for sports facilities (Barkiet Sport), natural veneers (production is at the level of approximately 13 mln m² annually), wooden accessories (2.2 linear metres annually) and ecological fuel granules – pellets (110 thousand tonnes annually).

The factory building in Russia signifies for Barlinek Group the intentional increase of production capacity volume to close to 14 mln m² floor planks annually in 2010. The production base of the Group consists of the four Polish plank lines located at Barlinek, in the Western Pomerania province. Their combined annual production capacity amounts to approximately 6.5 mln m². The first foreign Barlinek establishment (with a planned production capacity of 2.5 mln m²) was opened in 2007 in Ukraine. The next factory apart from Russia is built in Romania.

Employment in Capital Group Barlinek amounts to 3,100 persons. Since 2005 the company has been quoted on the Warsaw Stock Exchange.