Arco Vara Sells 75% Stake in Botanica Lozen EOOD

Arco Vara AS has entered into a preliminary agreement to sell its 75% stake in the Bulgarian real estate development company Botanica Lozen EOOD to Kamaleo Invest OOD, which already owns 25% of the company. The transaction, which is a management buyout, will see Kamaleo Invest OOD take full control of Botanica Lozen EOOD, with Christian Petrov, who has served as the General Manager since 27 October 2025, leading the company.

The purchase price for the 75% stake is EUR 6.3 million, with the payment structured as follows: EUR 1.27 million as a non-refundable deposit within seven business days of signing the preliminary agreement, EUR 1.00 million by 31 October 2026, and EUR 4.03 million upon completion of the transaction. The first two payments will be financed through a loan granted by Botanica Lozen EOOD to Kamaleo Invest OOD. The transaction is expected to be completed by 26 February 2027.

As part of the deal, Arco Vara AS will also dispose of the non-operating companies remaining from previous Bulgarian development projects: Arco Riverside EOOD, Arco Manastirski EOOD, Arco Vara Bulgaria EOOD, Arco Invest EOOD, and Iztok Parkside EOOD. These companies do not have a material impact on the assets, financial results, or cash flows of the Arco Vara group.

Upon completion of the transaction, Kamaleo Invest OOD will own 100% of Botanica Lozen EOOD, and Arco Vara AS will exit the Bulgarian real estate development business. The group’s direct business and financial risks related to development activities in Bulgaria will cease. The capital released through the transaction will be directed towards Arco Vara’s development projects in Estonia, including the Luther Quarter and Arcojärve developments.

The equity of Botanica Lozen EOOD is approximately EUR 8.7 million, making the EUR 6.3 million purchase price for the 75% stake close to the equity value attributable to Arco Vara’s stake. Arco Vara does not expect the transaction to have a material impact on the group’s profit. Following the transaction, Arco Vara will cease consolidating Botanica Lozen EOOD, resulting in a decrease in the group’s consolidated assets and liabilities by the respective assets and liabilities of Botanica Lozen EOOD, taking into account the consideration received from the transaction.

The transaction constitutes a related-party transaction, as Kamaleo Invest OOD owns 25% of Arco Vara AS’s subsidiary Botanica Lozen EOOD. However, it does not qualify as a material related-party transaction within the meaning of clause 7.9.4 of the Rules of Nasdaq Tallinn. The disposal of the stake in Botanica Lozen EOOD qualifies as a material disposal of a holding within the meaning of clause 7.12 of the Rules.

In 2018, Arco Vara acquired 100% of Arco Lozen EOOD, the predecessor of Botanica Lozen EOOD, for EUR 2.939 million. At the time of acquisition, the transaction was not accounted for as a business combination, as the company had no active business operations and the acquisition essentially represented the purchase of land with development potential. Following the acquisition, Arco Vara has made additional investments in the development of the project, and the company’s capital structure has changed significantly. Therefore, the 2018 acquisition price for the 100% stake is not directly comparable with the EUR 6.3 million disposal price for the current 75% stake.

Since the end of the 2025 financial year, the financial position of Botanica Lozen EOOD has been materially affected by the conversion of approximately EUR 5.7 million of loan liabilities into equity and the sale of a 25% stake to Kamaleo Invest OOD in May 2026. Loan liabilities to Arco Vara group companies will be zero at the time of the transaction. Prior to the transaction, the ownership structure of Botanica Lozen EOOD is Arco Vara AS 75% and Kamaleo Invest OOOD 25%. Upon completion of the transaction, Kamaleo Invest OOOD will become the sole shareholder of the company.

Botanica Lozen EOOD is not involved in any pending court or arbitration proceedings that could materially affect the company’s business activities. The General Manager of Botanica Lozen EOOD is Christian Petrov, and the company does not have a supervisory board. Arco Vara AS will inform the market separately upon completion of the transaction. The use of the Arco Vara trademark in Bulgaria will continue under a licence agreement by a local real estate agency that is not part of the Arco Vara consolidation group.