PRESS RELEASE

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 Strok, 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 Strok, 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.

ENVIRONMENTAL AND SOCIAL REVIEW SUMMARY

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    Environment and Social Review Summary
    Environmental and Social Action Plan

ALH Property and Management

1. Project Description

This project involves an EBRD equity investment to help develop high quality, environmentally friendly tourism facilities in five hotels in Croatia, by assisting the development of the ALH Group, the leading local hospitality group in tourism. The development of quality tourism accommodation is of particular importance for the local economy, which is aiming to differentiate itself from other mass market tourism destinations in Europe, so as to capitalise on the unique natural environment of the Adriatic coast whilst best preserving that environment. In accordance with EBRD's Environmental Policy, environmental investigations have been undertaken to assess the current environmental status of the plant and environmental impacts associated with the project.

2. Screening Category and Justification

The project may result in some future environmental impacts, which are not expected to be significant and which can be readily identified and assessed. Therefore, the EBRD has classified the project B/1 and an Environmental Analysis of the planned expansion programme and an Environmental Audit of the existing facilities has been undertaken by independent environmental consultants. The environmental due diligence identified a range of issues in particular the need to develop an environmental, health and safety management systems at the group level along with specific actions to minimise environmental impacts at individual hotels. A comprehensive Environmental Action Plan (EAP) has been developed at the Group level as well as individual hotel levels to address these issues.

3. Key environmental issues

• Environmental audits have been carried out for the five hotels under the Project by an independent consultant in October 2006. The environmental due diligence based on the audit report identified the following main issues.
• In general, environmental performance at the hotel is appropriate for its current operations. All of the hotels have a good understanding of the environmental regulations that affect their operations and have assigned duties to staff and prepared procedures that achieve compliance with relevant regulations. The Company however needs to develop environmental, health and safety systems at the group level.
• A range of specific actions are required to minimize environmental impacts at individual hotels. These are all set out in a comprehensive environmental action plan (EAP).

4. Implementation Requirements

An environmental action plan (EAP) has been developed to address the necessary corrective and mitigation measures so as to bring the Company in compliance with European Union environmental standards and best international practice. The Company will develop its environmental management system in accordance with international standards. The Company is monitoring and reporting it's environmental, health and safety performance in accordance with Croatian regulatory requirements and will prepare annual environmental reports for the EBRD. The EBRD will evaluate the project's compliance with the applicable environmental and social standards, including European Union environmental standards, during the lifetime of the project by reviewing these reports and by periodic monitoring visits.