GOVERNMENT OF MONTENEGRO PRIVATISATION COUNCIL TENDER COMMISSION FOR…

GOVERNMENT OF MONTENEGRO
PRIVATISATION COUNCIL
TENDER COMMISSION FOR THE PRIVATISATION OF "LUSTICA DEVELOPMENT" AD
PODGORICA

                                      PUBLIC INVITATION
 for Participation in the Tender for the Sale of 22,500 Shares, Initially Representing 90% of
 the Equity of Lustica Development AD Podgorica, a Special Purpose Entity Related to the
                Development of a Site on the Adriatic Coast Known as Lustica

The Government of Montenegro invites qualified international investors ("Investors") with
substantial and demonstrable financial resources, as well as design, construction and operating
experience in large and complex mixed-use resort projects, to submit their bids for the purchase of
22,500 shares, representing 90% of the equity of "Lustica Development" AD Podgorica, a special
purpose entity owned by the state of Montenegro. This entity, and thus the selected bidder, will
then enter into negotiations in regard to the development of the subject property.

Lustica Development AD Podgorica will be granted the right and obligation to implement a large
scale investment program for the development of property in the area generally known as Lustica.
This entity will be further capitalized with an increase of at least 100.000.000 Euros and such
capital increase will be followed by public offering of a 30.000.000 Euros interest to the citizens of
Montenegro. An interest in this public offering will be available to each Montenegrin citizen, in a
fraction based on the population of eligible adult citizens, assuring that the initial offering to the
public will give each Montenegrin the opportunity for an ownership interest equal to that of every
other adult Montenegrin. Any shares not purchased by the public will be required to be
repurchased by the Investor.

Corporate Details:

Name: Lustica Development AD Podgorica,
Registration number: 4-0008824/001
Address: Jovana Tomasevia br 1, Podgorica, Montenegro

By a decision of the Government of Montenegro on June 5, 2008, Lustica Development AD, based
in Podgorica, was given the long-term lease for the land owned by the state in KO Gosii,
Radovii, Nikovii, Krasii, Milovii and Bogisii with a total area of 6,487,331 m2, as well as an
additional 325.906 m2 owned by Muinicipality of Tivat, all within the territory of the Municipality of
Tivat, equalling a total of 6,813,237 m2, for the purpose of tourism related development. Aditional
4.000.000 m2 of land is potentionally expected to be available for development after the anticipated
resolution of certain pending legal matters.

Detailed data related to the special purpose entity formed for the purpose of this transaction,
`Lustica Development' AD Podgorica, is given in the tender documents, and will be made available
to tender participants upon signing of a Confidentiality Statement and payment of the applicable
documentation fee.

Participation in the tender will be available to interested persons and entities (including consortia)
which have purchased the tender documents, signed the Confidentiality Statement as specified
herein, and paid the applicable fee. Such persons and entities are hereafter referred to as a
"Tender Participant".

ELIGIBILITY CRITERIA
Bids will be accepted from a Tender Participant whose Bid meets each of the following criteria:

 ·   The Bidder must be, or include as part of the bidding consortium, a commitment from an
     international hotel management brand to join the bidding consortium. The hotel company
     should be internationally recognised and known as a successful operator of at least ten
         hotels in five or more nations of an international four or five star standard. In addition, the
         Bidder must own (directly or through an entity in which the Bidder holds at least 51% interest
         and has managing control) at least five hotels of international four or five star standard in at
         least 2 nations.

 ·       A Bidder must have at least 10 years of continuous and substantial experience in planning,
         developing and managing complex, extremely high quality "mixed-use" developments,
         including hotel, residential, retail and recreational facilities, of a size not smaller than two
         million m2 of developed area, appealing to and serving an upscale, demanding international
         clientele.

 ·       A Bidder must demonstrate ownership or effective control of a business or businesses that
         collectively have a.) a positive net operating profit, excluding special items, in each of the
         three most recent annual reporting periods and (b.) a total cumulative turnover of at least 1
         billion over the total of the three most recent annual reporting periods, or (for publicly listed
         firms) a market capitalization of at least 1.5 billion Euros.

 ·       A Bidder must prove clearly and specifically that they possess the financial capability and
         resources required to implement the anticipated project on a complete and timely basis under
         the terms specified in the Instructions to Bidders. This includes, but is not limited to, a
         demonstrated ability to provide a 100 million Euro deposit, as may be required to effect the
         subject entity's increase in capital and as evidence of the Bidder's liquidity and timely access
         to capital. Verification of the bidder's financial capability must be provided by a major
         international bank of AA rating or higher.

Compliance with eligibility criteria will be assessed after, and based on, receipt and opening of a
Bid submission.

A Tender Participant may establish a consortium, for purposes of bidding, and submit a Bid as
such a consortium, providing that the respective responsibility and obligations of each and every
consortium member is defined and made explicit as part of the Bid and that the Bid demonstrates
that consortium members are able, jointly and collectively, to meet all Eligibility Criteria. Evidence
of each consortium member's awareness of, and capability to fully and satisfactorily fulfill, their
stated obligations and responsibilities must be provided as part of the Bid.

     BIDDERS SHALL, INTER ALIA, BE EXPECTED:

     ·    To propose a structure and level of annual rent, which is going to be paid by Lustica
          Development AD, the guaranteed level of which shall in any case be no lower than 0.10
          per square meter. The level and structure of rent proposed will be one of the criteria in the
          assessment of that Bid.

     ·    To propose an Investment Plan which specifies the nature and timing of investment, and
          the anticipated source of required investment capital. In any case, it is expected that a
          minimum of $150 million Euros will be required during the first three years of the investment
          cycle to effect the quality of development anticipated and desired. The proposed
          Investment Plan will be one of the Bid Evaluation Criteria

     ·    To submit a comprehensive and coherent development and design concept for the subject
          property that is consistent with both existing and anticipated land use planning, as well as
          with the highest international standards of excellence and innovation in architecture,
          design, planning, engineering, land use and sustainability. It is expected that the project will
          complement, not conflict with, the natural setting and environment, and be seen as a model
          of progressive and innovative design and development. It is further expected that the
          concept, design, aesthetic sensibility and finish of the proposed project will be consistent
          with, appeal to, and exceed the expectations of the most selective international guests. ;
The Government of Montenegro thus invites interested parties to submit a written request to the
Commission at the below address for the purchase of tender documents, with such request to be
labelled as follows: "Request for the Purchase of the Tender Documents", with such request
received by the Commission by post, e-mail or fax at the below address. Upon completion and
submission of the Confidentiality Statement (available from the commission), and payment of the
50,000 Tender Documents Fee, full tender documentation will be sent by post, e-mail or fax, as
specified, to Tender Participants. The Confidentiality Statement must be delivered to the
Commission, and the fee received in the account of the Privatisation Council not later than
October 13, 2008 at 10:00 am local time.

Tender Participants will be provided access to the subject property, and to a data room containing
documents relevant to the Bid Process and available for inspection and review, between August
15, 2008 and October 13, 2008.

To be considered, Bids must comply in form and content with the requirements specified in the
tender documentation, and must be delivered to the Commission by October 14, 2008 at 15:00
local time.

Together with the Bid, a Bidder is to provide either a cash deposit, or an unconditional guarantee
for the benefit of the Privatisation Council, in the amount of 1,000.000 to be issued by a bank
holding a Standard and Poors AA rating or above, or otherwise approved by the Commission at its
sole discretion, in response to a Bidder request for such approval.

The Bidder signing the Purchase and Sale Agreement shall be obliged to pay the amount of the
purchase and sale price in money to the account of the Seller within the timeframe stipulated in the
Purchase and Sale Agreement.

The Commission reserves the right to extend the deadlines specified herein.

For all enquiries concerning matters related to this Public Invitation specifically, or this Tender
generally, please contact the Commission at the below address:


Tender Commission for Privatisation of Lustica Development AD Podgorica
Attn: Dr. Igor Luksi, Commission Chair
Stanka Dragojevia bb
81000 Podgorica, Montenegro
Tel:/Fax: + 382 20 225 913
E-mail ddarmanovic@cg.yu, marko.vujovic@gov.me