REPUBLIKA HRVATSKA

HRVATSKI FOND ZA PRIVATIZACIJU

Ivana Lučića 6, 10000 Zagreb

On the basis of the Privatization Law (Official Gazette 21/96, 71/97, 16/98 and 73/00) and the Decision of the Management Board of the Croatian Privatization Fund (hereinafter: Fund); Ref: 024-04/04-03/3; 563-01/00-2004-13 dated May 11, 2004 the Fund announces:

Public Invitation to Tender by Submission of Bids for Purchase of Shares in the Company

HOTEL SPLIT d.d., Split

(hereinafter: Company)

The shares are from the portfolio of the Fund and State Agency for Deposit Insurance and Bank Rehabilitation.

Short description of the Company: The company is located in the town of Split. Considering its position and offer variety it is presented as town, beach and congress hotel. The main operation of the Company is rendering tourism related services. Company consists of Hotel Split (current re-categorization into five star hotel) with 143 rooms and 8 apartments, hotel annexes (not operating and currently under reconstruction) and camping sites Trstenik and Stobreč. As on December 31, 2003 the total assets of the Company amounted to Kuna 121,5 million, while total liabilities amounted to Kuna 2,4 million. Estimated investment in the amount of minimally Kuna 40-50 million would significantly improve the quality of operation.

Registered capital of the Company: Kuna 112.601.300,00

Number of issued shares: 36.323

Face value per share: 3.100,00

Number of shares for sale: 24.730

Percentage in the registered capital: 68,08 percent

Initial tender price: Kuna 61.330.400,00

Company registration: Commercial Court in Split, MBS: 060050702

Number of employees: 130

In the selection process, except the price offered for share purchase, the Fund will especially appreciate if the bidder:

· undertakes to keep the current number of employees in the period of 1 (one) year from the date of execution of the Contract on the sale and transfer of shares and/or undertakes to implement the program for possible redundant number of employees in accordance with applicable laws of the Republic of Croatia and/or offers to create new positions if contained in the “Business plan”;

· offers an “Investment program” for the Company (technical structure and time frame of investment realization, amount of the required financial means, finance sources and mode of investment, introduction of new services, know-how, etc.);

· offers a “Business plan” for the Company in the next 5 (five) years;

· makes a re-categorization of hotels to 5 (five) stars;

· commits himself not to sell nor hypothecate neither the real estate nor shares of the Company without previously obtained consent of the vendor in the period of 1 (one) year from the date of execution of the Contract on the sale and transfer of shares;

· commits himself not to sell the camping site “Trstenik” nor the development land in front of the “Hotel Split” in the period of 5 (five) years from the execution date of the Contract on the sale and transfer of shares;

· offers acceptable instruments to guarantee the fulfillment of the assumed obligations.

The deadline for submission of bids: August 30, 2004 by 14,00 Hours.

The procedure of bid submission and selection of the best bidder is implemented in accordance with regulations prescribed in the Tender documentation. The bidder is expected to buy the Tender documentation minimally 48 Hours before the final deadline for bid submission . Bids that are not delivered and prepared in accordance with Tender documentation will be rejected. If the payment receipt for Tender documentation does not contain the correct name of the bidder, such bid will be considered invalid and will not be taken into consideration.

The price of Tender documentation in the amount of Kuna 15.000,00 is payable to the benefit of the Croatian Privatization Fund’s account No.: 2340009-1105010031 at Privredna banka Zagreb d.d. – referencing the number 2198 and stating the name of the Company for which Tender documentation is being purchased. Foreign bidders can pay for Tender documentation in foreign currency, EUR 2.000,00 to the benefit of the Croatian Privatization Fund’s foreign currency account No. 71210-VAL-315811 at Privredna banka d.d. stating the name of the Company for which Tender documentation is being purchased.

Upon presentation of the payment receipt for Tender documentation and delivery of contact information, the bidder will receive Confidentiality Agreement form that can also be found at the web site of the Fund (www.hfp.hr). Upon return of the signed Confidentiality Agreement and presentation of the payment receipt the bidder can either collect the Tender documentation in the premises of the Fund in person or it can be sent by mail or delivery service if the seat of the bidder is abroad.

After having purchased the Tender documentation the bidder can request an authorization issued by the Fund to perform the “due diligence” in the Company.

The tender guarantee made to the amount of 2% of the initial price stated in the bid must be enclosed with the bid. Bids with no tender guarantee enclosed will not be taken into consideration.

Contact information: