EBRD AND IFC SUPPORT EXPANSION OF ADRIATIC LUXURY HOTELS, LEADING CROATIAN HOTEL GROUP

The European Bank for Reconstruction and Development and the International Finance Corporation, the private sector arm of the World Bank Group, are providing financing to GSHR Holdings Limited, the owner of Adriatic Luxury Hotels Group, one of the largest hotel groups in Croatia.

The investment agreement worth €130 million was signed at the EBRD headquarters in London on 14 June 2007 by Varel Freeman, EBRD’s First Vice President, Dimitris Tsitsiragos, Director of IFC’s Global Manufacturing and Services Department and Goran Štrok, Chairman of GSHR.

The €130 million investment will be provided via loans and equity stakes and will support the further expansion of hotels owned and managed by GSHR. Senior loans total €93 million, of which €38 million will be syndicated to Hypo Alpe Adria Bank. There will also be equity investments from both EBRD and IFC for a 25.1 percent and 12 percent shareholding, respectively, in GSHR Holdings Limited. The financing will extend the group’s loan tenors.

Goran Štrok, Chairman of GS Holdings Limited, said the investments of EBRD and IFC in GS Holdings Ltd are very important for the further development of the group as well as the development of tourism in Croatia. The financing will help us to apply our experience in the hotel business in neighbouring countries and expand further in the region, he said.

GSHR Holdings Ltd owns a number of landmark hotels in Croatia which operate under the Adriatic Luxury Hotels Group, including the Hotel Excelsior, Dubrovnik Palace, Kompas, and Bellevue in Dubrovnik, as well as Grand Hotel Bonavia in Rijeka. It also owns the SC Wren Hotel in the United Kingdom. The group’s hotels total 1,806 beds and employ 890 people.

Varel Freeman, the EBRD’s First Vice President, said that the tourism sector in Southeast Europe, and in Croatia in particular, is of strategic importance and that investing in GSHR Group, which has a proven track record and a commitment of expanding its business, will give excellent support to the wider tourism industry regionally.

Dimitris Tsitsiragos, IFC Director for Global Manufacturing and Services, said that the GSHR Group has been a pioneer in helping Croatia recover from conflict and transform into a premier tourist destination. Through this investment, IFC will support the group as it expands its operations in Croatia and subsequently further into Southern Europe, Mr. Tsitsiragos said.

About EBRD
The European Bank for Reconstruction and Development, owned by 61 countries and two intergovernmental institutions, aims to foster the transition from centrally planned to market economies from central Europe to central Asia. The EBRD is the largest single investor in the region and mobilises significant foreign direct investment beyond its own financing. As of May 2007, it had committed €33.5 billion to 1,487 projects throughout its countries of operations. EBRD’s commitments in Croatia exceed €1.7 billion.  In the property and tourism sector alone, it has committed €1.53 billion in 70 projects across Central and Eastern Europe and the Commonwealth of Independent States. For more information, please visit www.ebrd.com.

About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products have committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.

About GSHR
GS Hotels and Resorts Holdings Ltd owns a number of landmark hotels in Croatia which operate under the Adriatic Luxury Hotels Group, including the Hotel Excelsior, Dubrovnik Palace, Kompas and Bellevue in Dubrovnik, and the Grand Hotel Bonavia in Rijeka. ALH also manages the Atrium Hotel in Split. The group also owns the Sir Christopher Wren’s House Hotel in the UK. In total, the group has 1,806 beds and 890 employees. For more information, please visit www.gshotelsresorts.com.