RB nr 31/2006

Legal basis: Art. 56, subpar. 1, pt. 1 of the Act on Public Offering

The Management Board of MCI Management SA informs that on September 5, 2006 it receives the loan agreement signed on September 4, 2006 concluded between MCI Management S.A. and S4E S.A. According to the concluded loan agreement S4E S.A. shall grant MCI Management S.A. a loan in the amount of PLN 900 thousand in two tranches: PLN 600 thousand by September 6, 2006 and PLN 300 thousand by December 1, 2006. The interest of the loan was 5.5% annually and it was granted for the period until the end of April 2007.

The concluded loan agreement constitutes an element of the implementation of the strategy of decapitalization of the investment of MCI in S4E S.A. Good results achieved by S4E S.A. over the last three years as well as carrying out current plans and assumptions enabled the Company to generate a substantial financial surplus. Additionally, obtaining by S4E of greater and better conditions of the financing with debt capital and trade credit created the basis for making a decision about the return of part of invested capital to the investors. The strategy assumes a partial return of capital by decreasing the share capital and amortization of capital or redemption of own shares in order to cancel them.

Consequently on June 19, 2006 the shareholders of S4E S.A. by the resolution of the General Assembly of the Shareholders of the Company decided to decrease the share capital of S4E S.A. by PLN 2,413,474 by redemption of 2,413,474 registered shares of the Company with their nominal value of PLN 1.00 per each share. The decrease of the share capital by PLN 1.288.474 shall cover the balance losses of the Company from previous years, whereas the decrease of the share capital by the remaining amount of PLN 1.125.000 shall be made at the nominal value of the shares that is with the set remuneration for the redeemed shares for the shareholders in the amount of PLN 1.00 per each redeemed share. The redemption shall affect the shares held by all shareholders of the Company proportionately to the shareholding in the share capital of each shareholder. This means that 2,146,587 registered shares of the Company held by MCI Management S.A. shall be redeemed, including the remuneration in the amount of PLN 1,000,595 to be received by MCI Management as a result of the redemption of 1,000,595 registered shares of the Company. The remuneration for the redeemed shares shall be paid to the shareholders not earlier than within the term provided in Art. 456 § 2 of the Polish Commercial Companies Code that is after the registration of the reduction of the share capital.
In connection with the adopted resolution on the decrease of the share capital after the registration of the reduction the share capital of S4E S.A. shall be PLN 1,686,726 and it will be divided into 1,686,726 ordinary registered shares with the nominal value of PLN 1.00 each. The shareholding of MCI Management S.A. in the company shall remain unaffected at the level of 88.94% of the share capital.

The original investment level of MCI in S4E SA was PLN 4 million. After taking into account of the sale of a portion of shares to the persons managing S4E in 2005 and after return of capital from redemption the cash exposure of MCI Management SA in this project will be about PLN 2.6 million. The fund does not exclude next stage of decapitalization already in 2007 if S4E maintains high dynamics of growth. The decapitalization is carried out together with the process of preparation of the complete exit of MCI from the investment by trade sale to strategic investor. Currently talks are held in this scope with potential Polish and foreign investors.

The Management Board of MCI Management S.A. shall be informing about the registration of the redemption of shares and decrease of the share capital of S4E S.A. in next current report.