Reverse split of LUG’s shares

On Friday, 28th September, during the General Meeting, LUG S.A. shareholders made the decision on the reverse split of Company’s shares. The consolidation procedure will begin as soon as the district court registers all the necessary changes in the Company’s Articles of Association, while the first session during which the increased value LUG's bonds will be quoted should take place still in 2012.

In accordance with the schedules presented in resolution drafts, LUG S.A. Extraordinary Shareholder's Meeting on Friday, 28th September made the decision on the consolidation of the Issuer’s shares. The increase of LUG bonds nominal value obtained thanks to their consolidation should help in their proper valuation, what until now was hindered by their current nominal value ( 0,01 PLN), as the average Company’s share price during several last months equalled to less then 0,20 PLN.

– The proposal of reverse stock split presented in the resolution drafts found approval. Also potential investors claim that this operation will increase Company’s investment potential – explains President of the Board, Mr. Ryszard Wtorkowski.

By the decision of the shareholders the consolidation ratio will equal to 25:1. This means that the nominal value of shares of all LUG's series will be increased from the amount of 0,01 PLN (1 grosz) to the amount of 0,25 PLN (25 groszy). The reverse split will occur by a proportional reduction of the total number of shares from the number of 179.964.250 to the number of 7.198.570, i.e. by merging each 25 shares with the previous nominal value of 0,01 PLN into one Company's share with the value of 0,25 PLN. The whole procedure will not affect LUG's S.A. share capital which amounts to 1.799.642,50 PLN.

Table. Simulation of LUG's share structure before and after the consolidation

- The proposed share exchange ratio of 25:1 will allow us to leave the group of "one penny per share" companies. I also count on the fact, that the information we receive from institutional investors about their interest in our shares will be confirmed in the future, and the consolidation will be another LUG's step leading to the regulated market of Warsaw Stock Exchange - Wtorkowski comments.

LUG's Board shown concern for the shortages arising after the reverse split so they do not impede the whole procedure. The shortages, or so called reverse split residues arise when the number of shares hold by a shareholder, according to the share exchange ratio, do not translate into one share with the new nominal value obtained after the consolidation. If during the realization of the procedure these so called reverse split residues arise, a shareholder in exchange of the shares constituting the residues will obtain one share of a new nominal value at the expense of shares rights hold by AmerBrokers S.A. brokerage house.

- We have executed an agreement on the basis of which, the brokerage house will assure the shares needed in order to supplement the consolidation shortages. The number of shares is somewhat limited, this is why we want the shareholders to adjust the number of shares on their accounts before the reference date in such a way that they constitute a number of 25 or its multiplicity. With this kind of approach they will not only assure the success of the whole procedure, but most of all they will act in their interest by minimizing the risk of too many shortages arising - Wtorkowski adds.

The term of the consolidation is dependant on the procedures of institutions taking part in the process, including the National Depository of Securities and the Stock Exchange Market. The amendments in the Company's Articles of Association made by the district court will trigger the whole process. LUG's S.A. Board intends to realise the schedule in such a way that the reference day would take place still in November of the current year, and the first trading session of increased value LUG's shares would happen still in 2012.