ARCO VARA AS - NASDAQ OMX Baltic

GENERAL
UNDERWRITING
The Company and the Selling Shareholders are expected to sign an underwriting agreement
(the “Underwriting Agreement”) with the Skandinaviska Enskilda Banken AB (publ), London Branch
(the “Global Coordinator”) and AS SEB Enskilda (jointly with the Global Coordinator, the
“Managers”) on or about 14 June 2007.
According to the Underwriting Agreement, the Company will agree to issue and the Selling
Shareholders will agree to sell the Offer Shares and, subject to the terms and conditions of the
Underwriting Agreement, the Global Coordinator will agree to purchase or procure purchasers for and
in case of new Shares issued by the Company, subscribe or obtain subscribers for Offer Shares, except
for the Offer Shares in the Management Incentive Offering, at a price equal to the Offer Price.
According to the Underwriting Agreement, the Company and the Selling Shareholders will pay to the
Managers an underwriting commission equal to 3.5 per cent of the Offer Price per Offer Share.
Therefore, in connection with the Combined Offering, the Managers will receive total commissions of
approximately EEK 65.63 million. The calculation is based on the Offer Price of EEK 40.50 assuming
that the Upsizing Option and the Over-Allotment Option are exercised in full. The Company and the
Selling Shareholders have agreed in the Underwriting Agreement to indemnify the Managers against
certain liabilities, including among others liabilities under the Estonian Securities Market Act. In
addition, the Company has agreed to reimburse the Managers for certain expenses.
The obligations of the Managers under the Underwriting Agreement are subject to certain conditions
precedent, including compliance by the Selling Shareholders and the Company with the
representations and warranties set forth in the Underwriting Agreement and the non-occurrence of
certain adverse changes as described in the Underwriting Agreement. The Global Coordinator may
terminate the Underwriting Agreement at any time before the Offer Shares have been issued and paid,
if in its opinion, there shall have been a change in national or international financial, political,
economic or market conditions or currency exchange rates or exchange controls, as would in its
reasonable view, be likely to prejudice materially the success of the Combined Offering and
distribution of, or dealings in, the Offer Shares in the secondary market.
The Offer Price will be determined by negotiation between the Company, the Selling Shareholders
and the Managers. Prior to the Combined Offering, there has been no public market for the Shares.
Factors relevant to the determination of the Offer Price include results of operations, the current
financial condition of the Group, future prospects, markets, the economic conditions in and future
prospects for the industry in which the Group competes, its management, and currently prevailing
general conditions in the equity securities markets, including current market valuations of publiclytraded
companies considered comparable to the Company, and the total demand in the International
Offering, the price sensitivity of such demand and the quality of the demand.
AS SEB Eesti Ühispank and AS SEB Latvijas Unibanka will act as retail managers in the Retail
Offering in Estonia and Latvia, respectively. Both AS SEB Eesti Ühispank and AS SEB Latvijas
Unibanka are affiliates of the Global Coordinator and in relation to the Combined Offering act as
agents of the Global Coordinator.
OVER-ALLOTMENT, OVER-ALLOTMENT OPTION AND STABILIZATION
In connection with the Combined Offering, the Global Coordinator may purchase and sell Shares in
the open market. These transactions may include, among others, over-allotments which involve sales
of Shares in excess of the principal amount of Offer Shares being offered in the Combined Offering.
Subject to the terms and conditions of the Underwriting Agreement, the Selling Shareholders have
granted the Global Coordinator an Over-Allotment Option, exercisable within 30 days from the
195