Government of Montenegro Ministry of Transport and Maritime Affairs Privatization of Container Terminal and General Cargo - Bar

1. PLAN OF THE PRIVATIZATION PROCESS Tender indicative planning Rebel group – privatization consultant Tender indicative planning Rebel group – privatization consultant 2012 year 2012 year May - publication of tender May - publication of tender June - expression of interest June - expression of interest July - selection of candidates & send out tender documents July - selection of candidates & send out tender documents August / September - submission of proposal August / September - submission of proposal October - selection of preferred candidate October - selection of preferred candidate November - signing of contract November - signing of contract

1.1. Container Terminal and General Cargo JSC - Bar The company „Container terminal and General Cargo„ JSC is designed for handling and storage of containers and of general cargo. Terminal operational area covers approximately around 52 acres, and it has completely integrated infrastructure – electricity and water networks, lighting and telecommunication systems. The company „Container terminal and General Cargo„ JSC is designed for handling and storage of containers and of general cargo. Terminal operational area covers approximately around 52 acres, and it has completely integrated infrastructure – electricity and water networks, lighting and telecommunication systems. The possibility to accept different type of ships according to international common practice, with declared draft between 9 and 12 m, represents a real market potential. All warehouses are built of quality construction materials of universal character. The railroad reaches every berth and warehouse, so that direct handling activity road-railroad-ship is possible. Depending in the length of ships 5-9 berths with different type of cargo and different handling activities can be simultaneously organized. The possibility to accept different type of ships according to international common practice, with declared draft between 9 and 12 m, represents a real market potential. All warehouses are built of quality construction materials of universal character. The railroad reaches every berth and warehouse, so that direct handling activity road-railroad-ship is possible. Depending in the length of ships 5-9 berths with different type of cargo and different handling activities can be simultaneously organized.

The entire Company's business is performed through fully- equipped technological units: Container terminal – this terminal is equipped for unloading, loading, handling of containers, stuffing and stripping of containers which takes place in open areas or closed warehouses depending on type of goods and on handling methods, and we offer a complete container service (washing, cleaning, etc). Container terminal – this terminal is equipped for unloading, loading, handling of containers, stuffing and stripping of containers which takes place in open areas or closed warehouses depending on type of goods and on handling methods, and we offer a complete container service (washing, cleaning, etc). Terminal for light and heavy general cargo – Terminal for general cargo is equipped for acceptance and dispatch of all types of general cargo (palletized goods, food products, various metal products, coils, slabs, pipes, steel strips, and other standard types of cargo, as well as the application of specialized technologies). General cargo terminal includes around m2 of closed storage areas – warehouses – and other facilities in the port area. Terminal for light and heavy general cargo – Terminal for general cargo is equipped for acceptance and dispatch of all types of general cargo (palletized goods, food products, various metal products, coils, slabs, pipes, steel strips, and other standard types of cargo, as well as the application of specialized technologies). General cargo terminal includes around m2 of closed storage areas – warehouses – and other facilities in the port area. Timer terminal - Timer terminal has a covered storage area of m2, which is designed for storage and drying of timber. It has ideal technological solution for handling, storage and for the functionality of facilities, all designed according to prevailing microclimate influences. Timer terminal - Timer terminal has a covered storage area of m2, which is designed for storage and drying of timber. It has ideal technological solution for handling, storage and for the functionality of facilities, all designed according to prevailing microclimate influences.

1.2. Privatization share – property of Montenegro Government of Montenegro has a strategic plan to sell 62,09 % of its equity stake at Container Terminal and General Cargo JSC-Bar, which represents the majority of shares, and conclude a concession agreement with future terminal operator. Government of Montenegro has a strategic plan to sell 62,09 % of its equity stake at Container Terminal and General Cargo JSC-Bar, which represents the majority of shares, and conclude a concession agreement with future terminal operator. Container Terminal and general Cargo JSC – Bar is a joint stock company listed on the Montenegro Stock Exchange. Container Terminal and general Cargo JSC – Bar is a joint stock company listed on the Montenegro Stock Exchange. December employees December employees December employees December employees December employees December employees

1.3. Preliminary assessment of the Company value Total equity capital is ,38 EUR, Total equity capital is ,38 EUR, divided into divided into - shareholder's equity amounting to euros or shares, trading symbol KOGE and - shareholder's equity amounting to euros or shares, trading symbol KOGE and - shareholder's equity amounting to euros or shares, trading symbol KOTE. - shareholder's equity amounting to euros or shares, trading symbol KOTE. Nominal value for 1 share, trading symbol KOGE is 1,1485 EUR. Nominal value for 1 share, trading symbol KOTE is 0,5026 EUR.

1.4. Basic tender conditions Transaction consists of two elements: Transaction consists of two elements: 1. The sale of majority stake (62%) of the Government of Montenegro in CTGC 1. The sale of majority stake (62%) of the Government of Montenegro in CTGC 2. Signing the Concession Agreement between CTGC and Government of Montenegro 2. Signing the Concession Agreement between CTGC and Government of Montenegro The Government of Montenegro has the intention to publish a Tender for the selection of appropriate investor / terminal operator who will buy a majority stake and have an exclusive right to conclude the Concession Agreement. The Government of Montenegro has the intention to publish a Tender for the selection of appropriate investor / terminal operator who will buy a majority stake and have an exclusive right to conclude the Concession Agreement. Main clauses in the Concession Agreement are: Main clauses in the Concession Agreement are: Agreement signed between Port Authorities (PA) and the operator Agreement signed between Port Authorities (PA) and the operator It gives the right to use the terminal for a period of 25 years. It gives the right to use the terminal for a period of 25 years. Port Authorities responsibilities Port Authorities responsibilities » Safety and security in the port area » Safety and security in the port area » Access to the terminal via road and sea » Access to the terminal via road and sea » Maintaining the draft in the access channel and along quays » Maintaining the draft in the access channel and along quays Responsibilities of the Operator: Responsibilities of the Operator: » Upgrading and the investment in the terminal according to CAPEX » Upgrading and the investment in the terminal according to CAPEX » Operating the facility according to international standards. » Operating the facility according to international standards. » Maintains all terminal assets including buildings, asphalt / paved surfaces, quay wall and equipment. » Maintains all terminal assets including buildings, asphalt / paved surfaces, quay wall and equipment. » Pays concession fees to Port Authorities. Concession fees include a fixed fee for the lease per m2 and a variable fee per TEU or per handled ton. » Pays concession fees to Port Authorities. Concession fees include a fixed fee for the lease per m2 and a variable fee per TEU or per handled ton.

2. Key information on assets that are a subject of privatization Container quays are constructed in 1975 and a deck on reinforced steel pipes filled with concrete. General cargo quays are constructed in 1960 and are block walls. Quays have a Capacity of 4 t/m2. The draft along the (container) quay is 12 meter and can be dredged up to 14 meter. The quality of the quay constructions is good, apart form the south Pier 1 (container quay) which is in need of extensive repair work on reinforced concrete beams and columns.

2.1. Business, partners, technologies Strategic partners of CTGC JSC are the leading container terminal operators in the World, and their regional agents: MSC, Maersk line, CMA CGM Group, Happag Lloyd. The most important partners with the highest amount of handled general cargo in 2011 are: Strategic partners of CTGC JSC are the leading container terminal operators in the World, and their regional agents: MSC, Maersk line, CMA CGM Group, Happag Lloyd. The most important partners with the highest amount of handled general cargo in 2011 are: US Steel Serbia /hot and cold rolled steel strips and sheet metal; US Steel Serbia /hot and cold rolled steel strips and sheet metal; KAP Podgorica /aluminium, alumina; KAP Podgorica /aluminium, alumina; Pacorini / aluminium, sugar, coffee; Pacorini / aluminium, sugar, coffee; Jadroagent /B materials, aluminium rods, water pipes; Jadroagent /B materials, aluminium rods, water pipes; Nimont /cement; Nimont /cement; Fab Live /cement; Fab Live /cement; San Francisko, Rastoder, Pop Fruit, MDD Group, Mont Valeri / bananas; San Francisko, Rastoder, Pop Fruit, MDD Group, Mont Valeri / bananas; Zenšped /sugar, timber; Zenšped /sugar, timber; Jugodrvo, Kubo, Mi Rai, Trgo Duka / timber; Jugodrvo, Kubo, Mi Rai, Trgo Duka / timber; Gorenje /white goods; Gorenje /white goods; Jugoimport /B materials; Jugoimport /B materials; Montavar Metalac /steel structures. Montavar Metalac /steel structures.

2.2. Operational area for the acceptance of ships Operating berth/pier, with draft from 9 to 12 m, has the ability to accept simultaneously different types of ships according to international common practices. Operating berth/pier, with draft from 9 to 12 m, has the ability to accept simultaneously different types of ships according to international common practices. Storage space/warehouses of around m2 were built out of high quality construction materials of universal character. Every berth and warehouse is connected with railroads which enables direct road – railroad – ship handling activity. Storage space/warehouses of around m2 were built out of high quality construction materials of universal character. Every berth and warehouse is connected with railroads which enables direct road – railroad – ship handling activity. Depending on the length of ships, 5-9 berths could be operational simultaneously. Depending on the length of ships, 5-9 berths could be operational simultaneously. Length of operational quay m, with draft m; Length of operational quay m, with draft m; Length of rail network in the port area 14,6 km; Length of rail network in the port area 14,6 km; Length of primary roads in the port areaa 1,2 km. Length of primary roads in the port areaa 1,2 km. Port aquatorium cca m2 Port aquatorium cca m2

2.3. Handling activities – natural business indicators for container traffic Container throughput as per owners and per months, and in total for 2011 (TEU) Container Owners JanFebMarAprilMayJunJulAugAugSepOctOctNovDecTotal MSC MAERSK CMA CGM HAPAG LLOYD EVERGREEN LINE Other Total in TEU

Handling activities – natural business indicators for general cargo Cargo throughput as per type of goods for Cargo throughput as per type of goods for No. Type of goods Quantity in tons 1 Containers 20’ and 40’ full and empty ,54 2 Steel strip hot rolled ,83 3 T aluminium ingots ,19 4Cement47.293,51 5Bananas33.054,65 6Sugar26.054,53 7 Aluminium slabs ,92 8 Hot rolled sheet metal 7.822,16 9 Steel strip cold rolled 7.794,69 10 Rolled steel sections 4.660,93 11 Aluminium rods 4.404,91 12 Standard aluminium ingots 3.826,96 13 B materials 2.645,79 14 Electrolyte resin 3.118,97 15Cigarettes1.347,68 16 Hard sawn timber 1.337,92 17 Various good not mentioned 1.234,76 18 Water pipes 1.277,66 19 Steel constructions 1.269,22 TOTAL WITH OTHER ,50

2.4. Market position CTGC has a favourable strategic maritime and geographic position in relation to main maritime routes in the Mediterranean and in relation to transshipment hub centers. Infrastructural base includes port territory that can be extended, rail and road network in the gravitational area and connection with main transport corridors. The lack of highway towards Serbia, of modernized rail road and of connection with Pan-European network puts CTGC in a secondary position. CTGC has old mechanization of low capacity and partially neglected and undeveloped infrastructure facilities (shores, reinforced concrete beams, iinternal roads). There are no international logistic companies, which integrate all participants in the supply chain and find the best transport combination between producer and customer, present at our market. The main change that characterizes a modern market is the development and domination of logistics industry. CTGC has a favourable strategic maritime and geographic position in relation to main maritime routes in the Mediterranean and in relation to transshipment hub centers. Infrastructural base includes port territory that can be extended, rail and road network in the gravitational area and connection with main transport corridors. The lack of highway towards Serbia, of modernized rail road and of connection with Pan-European network puts CTGC in a secondary position. CTGC has old mechanization of low capacity and partially neglected and undeveloped infrastructure facilities (shores, reinforced concrete beams, iinternal roads). There are no international logistic companies, which integrate all participants in the supply chain and find the best transport combination between producer and customer, present at our market. The main change that characterizes a modern market is the development and domination of logistics industry.

Negative factors that directly influence the process of attracting goods from the gravitational area and the volume of cargo throughput in CTGC are the fact that we haven't got a regular container train between Bar and industrial centers in CTGC gravitational area, there are no larger intermodal operators in Montenegro and the region, who would be able to significantly improve intermodal routes, limited capacities of road network, which result in longer transit times and force intermodal operators to look for systems with better transport flow. Negative factors that directly influence the process of attracting goods from the gravitational area and the volume of cargo throughput in CTGC are the fact that we haven't got a regular container train between Bar and industrial centers in CTGC gravitational area, there are no larger intermodal operators in Montenegro and the region, who would be able to significantly improve intermodal routes, limited capacities of road network, which result in longer transit times and force intermodal operators to look for systems with better transport flow. In relation to Serbia, our very important market segment when we talk about hinterland, we recognize port of Koper, Rijeka, Thessalonica and Constantza as our main competition. Apart from Constantza which is important because of its connection with the Danube river, other competition ports are well connected with Serbia via inland roads. However, north ports are a lot further away from Serbia, more specifically Belgrade, than Bar. Sailing time to north Adriatic ports, compared to Bar, is considerably longer. In relation to Serbia, our very important market segment when we talk about hinterland, we recognize port of Koper, Rijeka, Thessalonica and Constantza as our main competition. Apart from Constantza which is important because of its connection with the Danube river, other competition ports are well connected with Serbia via inland roads. However, north ports are a lot further away from Serbia, more specifically Belgrade, than Bar. Sailing time to north Adriatic ports, compared to Bar, is considerably longer.

2.5. Potential and development chance Container Terminal and General Cargo –Bar with its capacities and its maritime position offers a great chance for opening regional distribution centers that would be specialized in certain types of goods and brands. Extensive experience in handling, very favourable maritime – geographical position and Company's capacities that primarily reflect in large storage areas for storing containers and general cargo are all together positive factors that attract business and lead to successful implementation of business arrangements with leading export import companies from Serbia. The vicinity of hub ports, direct container lines, knowledge of international procedure that in accordance with international rules and requirements, free zone activities are some of numerous advantages and possibilities that the port offers to future projects and development plans. Container Terminal and General Cargo –Bar with its capacities and its maritime position offers a great chance for opening regional distribution centers that would be specialized in certain types of goods and brands. Extensive experience in handling, very favourable maritime – geographical position and Company's capacities that primarily reflect in large storage areas for storing containers and general cargo are all together positive factors that attract business and lead to successful implementation of business arrangements with leading export import companies from Serbia. The vicinity of hub ports, direct container lines, knowledge of international procedure that in accordance with international rules and requirements, free zone activities are some of numerous advantages and possibilities that the port offers to future projects and development plans. As the largest terminal operator in Bar port area, we represent the system whose operation requires a complete integration in the logistic chain in order to fulfill its function. Efficiency and quality of service provided by the terminal requires adequate infrastructure, superstructure and equipment, adequate connections with other transport sectors, motivated management and qualified employees. As the largest terminal operator in Bar port area, we represent the system whose operation requires a complete integration in the logistic chain in order to fulfill its function. Efficiency and quality of service provided by the terminal requires adequate infrastructure, superstructure and equipment, adequate connections with other transport sectors, motivated management and qualified employees.

Establishing CTGC as a transshipment hub center in the Mediterranean and as distribution center in the Adriatic region is our strategic vision of success. The corresponding terminal area, length of shore / quays and draft depth, as well as container handling equipment which is a prerequisite that according to international standards and contemporary container mega ships` capacities must be met in order to accept and service the new generation of ships, and securing cargo volumes form CTGC hinterland countries all together justify direct calls of mother ships at CTGC. This way we would achieve a competitive advantage over the ports in the area as container dispatch time and transit time would be shorter. With the reconstruction and modernization of railways system that connects Bar with hinterland industry centers, building of Bar-Beograd highway, faster customs procedures in the port and border crossings, modern equipment for handling containers and containerized goods CTGC would gain competitive strategic advantage in attracting large volumes of cargo which destination are multinational companies in the middle and south-east Europe, and in the future in Serbia, Bosnia and Herzegovina, Macedonia and Kosovo. Establishing CTGC as a transshipment hub center in the Mediterranean and as distribution center in the Adriatic region is our strategic vision of success. The corresponding terminal area, length of shore / quays and draft depth, as well as container handling equipment which is a prerequisite that according to international standards and contemporary container mega ships` capacities must be met in order to accept and service the new generation of ships, and securing cargo volumes form CTGC hinterland countries all together justify direct calls of mother ships at CTGC. This way we would achieve a competitive advantage over the ports in the area as container dispatch time and transit time would be shorter. With the reconstruction and modernization of railways system that connects Bar with hinterland industry centers, building of Bar-Beograd highway, faster customs procedures in the port and border crossings, modern equipment for handling containers and containerized goods CTGC would gain competitive strategic advantage in attracting large volumes of cargo which destination are multinational companies in the middle and south-east Europe, and in the future in Serbia, Bosnia and Herzegovina, Macedonia and Kosovo.

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