Opinion of the supervisory board of Arco Vara AS regarding the mandatory takeover bid
This opinion of the supervisory board of Arco Vara AS (“Arco Vara”) has been formulated on 15 March 2021 conforming to clause 171 of the Securities Market Act and clause 21 of the Minister of Finance’s 28.05.2002 regulation no. 71 “Rules of a takeover bid” regarding the mandatory takeover bid publicised on 2 March 2021 for acquiring the shares of Arco Vara (“Bid”) by OÜ ALARMO KAPITAL (“Offeror”). Members of Arco Vara supervisory board are Tarmo Sild (chairman of the supervisory board), Allar Niinepuu, Hillar-Peeter Luitsalu, Kert Keskpaik and Steven Yaroslav Gorelik. The supervisory board, having examined the prospectus and notice of the Bid, is of the following opinion: - Agreements and other connections between the Offeror and the supervisory board and management board members
From members of the supervisory board, Tarmo Sild and Allar Niinepuu are connected to the Offeror. Tarmo Sild and Allar Niinepuu are management board members of the Offeror. Tarmo Sild is a management board member, shareholder and actual beneficiary of Aia Tänav OÜ, 50% shareholder of the Offeror. Allar Niinepuu is a management board member, shareholder and actual beneficiary of Kavass OÜ, 50% shareholder of the Offeror. Arco Vara management board member (Miko-Ove Niinemäe) and rest of the members of the supervisory board (Hillar-Peeter Luitsalu, Kert Keskpaik and Steven Yaroslav Gorelik) have no agreement or other connections with the Offeror. - Election or appointment of supervisory board and management board members
No supervisory board or management board member of Arco Vara has been elected or appointed on a proposal of or by the Offeror. Members of the supervisory board Tarmo Sild, Allar Niinepuu, Hillar-Peeter Luitsalu, Kert Keskpaik and Steven Yaroslav Gorelik were elected to the supervisory board by the general meeting held on 30 April 2020 on the proposal of Arco Vara shareholders. Member of the management board Miko-Ove Niinemäe was elected to the management board by the supervisory board on the 30 April 2020 supervisory board meeting. - Conflicts of interests and risk-management measures
No Arco Vara supervisory board member or management board member has the right to any reimbursements that would depend on the Bid or its results and that would bring about conflict of interest for the supervisory board or management board members regarding the Bid. Due to the connections specified in clause 1 between the Offeror and Arco Vara supervisory board members Tarmo Sild and Allar Niinepuu, despite lack of reimbursements, it is possible for conflict of interests for Tarmo Sild and Allar Niinepuu to arise in the case the supervisory board should adopt resolutions regarding the Bid. However, expect for submitting this opinion of the supervisory board (which Arco Vara supervisory board has submitted unanimously), Arco Vara supervisory board has not adopted any resolutions regarding the Bid and, going forward, does not see the need to adopt resolutions regarding the Bid. If it should become apparent, that Arco Vara supervisory board should adopt resolutions regarding the Bid, Arco Vara supervisory board would analyse the potential risk of conflict of interests of Tarmo Sild and Allar Niinepuu. If there was to be a risk of conflict of interests, Tarmo Sild and Allar Niinepuu would not vote on adopting the corresponding resolutions. Pursuant to the above-mentioned and as is known to the supervisory board members, other supervisory board or management board members do not have a conflict of interests regarding the Bid and Arco Vara has not had the need to implement measures for risk-management of the risks possibly arising from a conflict of interests. - Impact of the Bid to interests and employment relationships of Arco Vara
All supervisory board members, including all independent supervisory board members within the meaning of § 21 (2)(4) of the Rules of a takeover bid Hillar-Peeter Luitsalu, Kert Keskpaik and Steven Yaroslav Gorelik, are of the opinion that the Bid is beneficial for Arco Vara and Arco Vara’s business opportunities. Experienced managers and strong capitalization of the Offeror create favourable conditions for development of Arco Vara and Arco Vara group companies. Supervisory board members, including all independent supervisory board members within the meaning of § 21 (2)(4) of the Rules of a takeover bid Hillar-Peeter Luitsalu, Kert Keskpaik and Steven Yaroslav Gorelik, are of the opinion that it is not foreseeable that the Bid would affect employment relationships of Arco Vara. Pursuant to the Bid documents, the Offeror plans to continue with the usual commercial activities and structure of Arco Vara and does not plan to make changes in the business model, employment relationships or structure of Arco Vara. It is also referred in the prospectus of the Bid, that the Offeror does not plan to change the registered address of Arco Vara or change the location of the main office from Tallinn to elsewhere. - Supervisory and management board member’s plan to accept the Bid
- Tarmo Sild (chairman of the supervisory board), as of submitting the opinion, holds 19 880 Arco Vara shares through Aia Tänav OÜ, which total approximately 0,2209% of all Arco Vara shares. Tarmo Sild holds 4 664 242 Arco Vara shares through the Offeror, which total approximately 51,8343% of all Arco Vara shares. Additionally, the Offeror has subscribed for, but not been issued, 390 000 Arco Vara shares. Tarmo Sild (indirectly, through Aia Tänav OÜ) does not plan to accept the Bid;
- Allar Niinepuu, as of submitting the opinion, holds 4 664 242 Arco Vara shares through the Offeror, which total approximately 51,8343% of all Arco Vara shares. Additionally, the Offeror has subscribed for, but not been issued, 390 000 Arco Vara shares;
- Hillar-Peeter Luitsalu, as of submitting the opinion, holds 330 505 Arco Vara shares through OÜ HM Investeeringud, which total approximately 3,673% of all Arco Vara shares. Hillar-Peeter Luitsalu (indirectly, through OÜ HM Investeeringud) does not plan to accept the Bid;
- Kert Keskpaik, as of submitting the opinion, holds 59 100 Arco Vara shares as a natural person, which total approximately 0,6568% of all Arco Vara shares. He holds 147 271 Arco Vara shares through K Vara OÜ, which total approximately 1,6366% of all Arco Vara shares. Kert Keskpalu holds a share in One Eleven OÜ, who holds 4 385 Arco Vara shares which total approximately 0,0487% of all Arco Vara shares. Kert Keskpaik (directly and indirectly, through K Vara OÜ or One Eleven OÜ) does not plan to accept the Bid.
- Steven Yaroslav Gorelik as a fund manager is connected with three investment funds with holding in Arco Vara (Firebird Republics Fund Ltd holds 356 428 shares, which total approximately 3,961% of the share capital, Firebird Avrora Fund Ltd holds 185 800 shares, which total approximately 2,0648% of the share capital and Firebird Fund L.P holds 150 522 shares, which total approximately 1,6728% of the share capital), in total holding 692 750 Arco Vara shares (in total 7,698% shareholding). According to Steven Yaroslav Gorelik, the previously mentioned investment funds do not plan to accept the Bid.
Management board member Miko-Ove Niinemäe holds 722 Arco Vara shares, which total approximately 0,008% of all Arco Vara shares. Miko-Ove Niinemäe has informed the supervisory board, that he does not plan to accept the Bid. - Supervisory board and management board member agreements
There are no agreements between Arco Vara and a supervisory board or management board member, that would set out termination of the agreement or payment of a reimbursement to supervisory board or management board members by Arco Vara or a third person in relation to the Bid or its results. This opinion of the supervisory board is made freely available in written form in the office of Arco Vara on business days from 9:00 to 17:00, at the address Maakri str. 19/1 Tallinn 10145, Republic of Estonia, and also published on the web page of Nasdaq Tallinn stock exchange market www.nasdaqbaltic.com and the web page of Arco Vara www.arcovara.com.
Tiina Malm
CFO
Arco Vara AS
Tel: +372 614 4630
tiina.malm@arcovara.com 
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