Arricano’s Open Letter to the President of Ukraine Petro Poroshenko

Mr. President,

On behalf of the international development company, we are yet again bound to appeal to you as the guarantor of respect for rights and law in Ukraine because of the illegal takeover of the shopping mall Sky Mall, the property over which the international-level dispute between Arricano Real Estate Plc and Stockman Interhold S.A. continues for seven years now. The illegal takeover and absolutely unlawful withdrawal of Sky Mall in the name of third parties as well as stripping of funds disregarding the lengthy review of the dispute before the international courts and notwithstanding the effective injunctions and law, by one of the shareholders, Stockman Interhold S.A., yet for another year remains outside the attention of law enforcement officers and is among the actual cases of violation of foreign investor’s rights and use of criminal bribery schemes involving the Ukrainian law enforcement bodies, agencies of Justice, and judicial authorities.

Stolen from the foreign investor five years ago, the shopping mall Sky Mall must be returned to its legal owner. The High Court of Justice (London, England) has put an end to the dispute between the European shareholders and the Ukrainian partner. On November 30, 2017, the Commercial Court of the Queen’s Bench Division of the High Court of Justice rendered its decision in the arbitration between Arricano Real Estate Plc and Stockman Interhold S.A. over the title to the shares in Assofit Holdings Limited, a holding company that previously owned the shopping mall Sky Mall located in Kyiv, Ukraine. By that decision, the Commercial Court of the Queen’s Bench Division of the High Court of Justice dismissed all appeals of Stockman Interhold S.A. against three of eight previous awards of the London Court of International Arbitration and confirmed the jurisdiction and correct decisions of the London Court of International Arbitration, in particular, with respect to the Arricano’s performance under the option agreements and the Arricano’s right to require that Stockman Interhold S.A. perform their obligation to transfer the shares in Assofit Holdings Limited, a holding company that previously owned Sky Mall at a price equal to USD 0.00. As at the date of the decision made by the High Court of Justice, the shares in Assofit Holdings Limited were not transferred, as it was prescribed in the aforesaid LCIA award of May 5, 2016, and the ownership of Sky Mall was not returned to Arricano.

May we remind that, in accordance with the LCIA award of May 5, 2016, Stockman Interhold S.A. was ordered to transfer the ownership of 50.03 percent of shares in the holding company Assofit Holdings Limited, which previously owned (until illegally withdrawn) the shopping mall Sky Mall, to Arricano by July 5, 2016 for USD 0.00 towards the damages caused to the company. As of the date of this Arricano’s letter, the award remains unexecuted, and Arricano is still deprived of the right to access information about the shopping center’s activity and management.

No implementation of those decisions is possible without holding liable the corrupt representatives of the Ukrainian power who assisted in the theft of Sky Mall and its transfer to “third parties”, thus depriving the European investor of all income from the property operation. Having exhausted all legal possibilities to return the asset and protect its rights in Ukraine, Arricano had to assert its legal rights and interests before independent international authorities. All the aforesaid decisions are in Arricano’s favor.

The company requests you, Mr. President, that the following be initiated:

• a comprehensive investigation of the acts of the law enforcement bodies and officers, including, but not limited to, the Prosecutor’s Office of Dniprovskyi District in Kyiv, and the Kyiv City Prosecutor’s Office, with respect to illegal takeover and unlawful alienation of Sky Mall;

• an impartial investigation of the illegal withdrawal of the Sky Mall rental income by the Pryzma Beta LLC directors through sham businesses to avoid taxation;

• an impartial investigation of the acts of Pryzma Beta LLC’s officers in connection with the illegal prevention of Arricano from generating income from the shopping center management and Pryzma Beta LLC’s business operations; and

• an impartial investigation of the activities of the State Registrars and the circumstances of Sky Mall withdrawal in the name of Bank Pivdennyi.

Considering the anti-corruption focus and protection of foreign investor rights that you have declared, Arricano real Estate Plc also undertook responsibility to support the state’s anti-corruption program with the specific actions:

• In October 2017, Arricano joined the Ukrainian Network of Integrity and Compliance, UNIC, and signed the Transparent Business Memorandum, initiated by the Business Ombudsman Council with the support of the European Bank for Reconstruction and Development and the Organization for Economic Cooperation and Development, regarding the readiness to improve and support its integrity and compliance culture and promote the principle of ethical business operation in Ukraine in accordance with the best international practices and standards.

• In March 2017, Arricano’s delegation took part in the Ukrainian investment road show “Approaches to Corporate Finance and Strategies of the Most Dynamic Ukrainian Companies” that was held in London and arranged by Strategy Council;

• In September 2016, Arricano signed the Memorandum on Countering the Corruption in Immovable Property and Construction Sector that was initiated by the international anti-corruption NGO Transparency International Ukraine and the Business Ombudsman Office;

However, the Sky Mall case remains a marker of allowed raider culture in Ukraine. At the same time, Arricano continues to operate on the commercial immovable property market demonstrating a double-digit increase in its financial indicators for the second year in series and transparently posts the results of its operations on the information hubs of the London Stock Exchange, the corporate website, and within the news for Ukrainian and foreign media. The latest indicators in the Consolidated Interim Financial Statements for the first six month of 2017 are available at

We trust in the supremacy of law in Ukraine and full implementation of the LCIA awards, which would become an important and vivid example of improved investment environment in Ukraine, and that the State as represented by its President guarantees equal and fair business operation conditions as well as protection of the ownership right which is the fundamental right of “culture and civilization” in Ukraine.

Arricano fully supports the position, which you stated at the meeting of the National Council of Reforms on September 12, 2017, that “Increased foreign investments are vital to us». Currently, investors and international financial institutions treat the possibility to invest funds or finance international business operations within Ukraine with caution, since the bald corruption pressure, impunity, impudent breach of Ukrainian legislation, and participation of government authorities in raider attacks and schemes neutralize all efforts of business to establish transparent rules of play on the market and favorable and attractive conditions of investing in business in Ukraine.

We wish to believe that, owing to your personal assistance, the situation will start to change, and we, as a group of companies that actively continues to invest in Ukraine, pays taxes, and creates new jobs, will be able to defend and return our ownership of the illegally alienated property and investments.

Hillar Teder

Majority Shareholder

Arricano Real Estate PLC

Thomas Fiala

General Director,

Dragon-Ukrainian Properties & Development PLC

Mykhailo Merkulov

General Director,

Arricano Real Estate PLC