Alpcot Agro announces rights issue of SEK 322 million and early publication of year-end report

This press release is not intended for, and may not be distributed to or be published in, directly or indirectly, Australia, Canada, Hong Kong, Japan, New Zeeland, South Africa or the USA, or any other jurisdiction where it would require any form of registration or would constitute a breach of law.

Stockholm, February 16, 2011

Summary

• The Board of Directors of Alpcot Agro has resolved to conduct a rights issue of approximately SEK 322 million through an issue of shares with preferential right for existing shareholders in Alpcot Agro (“the Rights Issue”).
• The proceeds will be used to repay the convertible debt, increase the cropped land in Russia, further expand operations in Ukraine and to expand the dairy farming operations.
• The Rights Issue is subject to approval by the Extraordinary General Meeting, which is scheduled to be held on March 18, 2011.
• The Company’s shareholders are entitled to subscribe for one (1) new share for each existing share held at a subscription price of SEK 6.50 per new share.
• Subscription period from March 30 to April 15, 2011.
• Shareholders representing approximately 20 per cent of outstanding shares in Alpcot Agro have undertaken to subscribe for their respective pro-rata shares in the Rights Issue and intend to vote in favour of all proposals required for the implementation of the Rights Issue.

Background and reasons

Alpcot Agro AB (publ) (“Alpcot Agro” or the “Company”) started its operations in Russia in 2007 and in Ukraine in 2008. The Company has expanded rapidly and operates today an efficient and modern agricultural business of international standard.

Alpcot Agro’s operations are located in seven regions in Russia and four regions in Ukraine and the Company has about 188,700 hectares in Russia and about 17,900 hectares in Ukraine of land under control. The Company is in the process of restructuring the Russian land assets into four mega clusters, each consisting of or with a view to consist of at least 30,000 hectares of farmland and complementary infrastructure for maintenance, logistics and storage. The Company also has four large dairy farms, three of which are centrally located in one of the mega clusters. The dairy farming operations have synergies with crop production. Land, which does not belong to a mega cluster, will be evaluated and either divested, leased out or used for other purposes than crop production. In the improvement of the land bank, the Company is focusing on the land with the highest yield potential and proximity to export facilities.

During the previous agricultural year the Company faced particularly difficult weather conditions with a harsh winter followed by an extraordinary summer drought in the Russian inland, which resulted in lower yields than expected and consequently lower revenues. The Company’s crop operations located outside the Russian inland, i.e. in Kaliningrad and Ukraine, where the weather conditions have been better, have demonstrated expected yields and are consequently partly counterbalancing the exposure to weather conditions in the Russian inland. The Westernmost cluster in the Russian inland, Kursk, withstood the Russian drought relatively well. Kursk has a lower climate risk than the Company’s other clusters in the Russian inland and has in general good preconditions for agriculture. Alpcot Agro has reconsidered its decision to divest the land in Kursk and has decided to develop the land holdings in Kursk into a mega cluster. The extreme weather conditions in Russia have resulted in the Company having a weaker financial position and more strained liquidity than what was expected a year ago.

In the current situation with high grain prices and financially strained agricultural companies, Alpcot Agro sees good opportunities to develop its business in Russia and Ukraine, both within crop production and dairy farming.

The Board of Directors of Alpcot Agro has against this background in combination with not receiving the proceeds from the previously planned sale of the land area in Kursk, resolved to conduct a Rights Issue of approximately SEK 322 million, before issue costs, subject to approval by an Extraordinary General Meeting. The proceeds of the Rights Issue are expected to enable Alpcot Agro to:

• Repay the convertible debt instrument

In March 2009, the Company raised SEK 65 million through an issue of a convertible debt instrument. The conversion rate is, after recalculation from the last rights issue, SEK 14.61 and the convertible debt instrument matures on March 27, 2011, to the extent that holders of the convertible debt instrument have not called for conversion. Alpcot Agro has entered into agreements with holders of the convertible debt instrument corresponding to approximately 88 per cent of the outstanding amount. The agreement entails that the convertible debt instrument falls due on April 28, 2011, and thus enables the Company to receive the proceeds from the Rights Issue prior to repaying the convertible debt instrument. The Company’s intent is to enter into agreements with remaining holders of the convertible debt instrument.

• Increase cropped land in Russia

The proceeds from the Rights Issue will also enable the Company to increase its harvested area from 65,500 hectares to close to 85,000 hectares in Russia, thus substantially increasing its crop production in 2011. Alpcot Agro has winter planted 46,100 hectares and is planning to spring plant up to 40,000 hectares with focus on traditionally profitable crops as sunflower and maize. The increased spring planting will position Alpcot Agro to benefit from the relatively low inventory levels that currently exist in the domestic Russian market for a number of agricultural crops.

• Further expand the operations in Ukraine

At present, Alpcot Agro controls about 17,900 hectares of land in Ukraine through lease agreements as compared to about 7,400 hectares as of December 31, 2009. The Company’s short term objective is to increase the landholding up to 20,000–30,000 hectares. By increasing the landholding the Company will benefit from economies of scale and consequently run its operations more efficiently. The Company is also planning to finalise the construction of a grain silo and to purchase more machinery and equipment to cultivate additional land. Furthermore, the Company is discussing closer co-operation or merger with other agricultural producers in Ukraine, and the contemplated expansion is strengthening the Company’s position in these talks and creates new opportunities.

• Expand dairy farming operations

Milk prices in Russia are among the highest in the world and Russia is a major importer of dairy products. The Company therefore sees very attractive opportunities for a profitable expansion in this business area. As of December 31, 2010 Alpcot Agro had about 6,000 animals, of which 2,800 were milk cows. Current production is 30,000 kilo of milk per day and the target is to produce 100,000 kilo per day within four years. The expansion will primarily take place through increasing production from the Company’s existing farms. The expansion plan also consists of purchase of high yielding European cows and the construction of new cow houses. The dairy farms constitute an integrated part of the Company’s business concept and generate stable cash flows all year around and consequently balance the cash flows from the crop production.

The Rights Issue

The Board of Directors resolved on February 15, 2011, subject to approval by the Extraordinary General Meeting, to raise approximately SEK 322 million, before issue costs, through an issue of new shares, with preferential right for the Company’s existing shareholders. The Extraordinary General Meeting is scheduled to be held on March 18, 2011. As part of the Rights Issue, the Board of Directors has decided to submit additional proposals to the Extraordinary General Meeting regarding amendments to the Articles of Association. Notice of the Extraordinary General Meeting is published through a separate press release.

The proposed Rights Issue implies a right for Alpcot Agro’s existing shareholders to, for every Alpcot Agro share held, subscribe for one (1) newly issued share at the subscription price of SEK 6.50 per share with preferential rights. If not all shares are subscribed for with preferential rights, shareholders and other parties are entitled to subscribe for shares without preferential rights. Allotment of shares subscribed for without preferential rights will, in first instance, be allocated to those who have subscribed for shares with preferential rights. Payment of subscribed shares shall be made in cash. The Board shall be entitled to allow payment by way of set-off of claims against the Company.

Assuming that the Rights Issue is fully subscribed, the share capital will increase by not more than SEK 247,959,460 from SEK 247,959,460 to not more than SEK 495,918,920. The number of shares will increase from 49,591,892 shares to not more than 99,183,784 shares. The Company is estimated to receive approximately SEK 322 million before deduction of issue costs, assuming the Rights Issue is fully subscribed. Shares that may be issued through conversion of outstanding convertible debt instrument 2009/2011 shall be eligible for participation in the Rights Issue, whereby the Rights Issue could comprise of not more than 54,044,322 shares and SEK 270,221,610.

Shareholders representing approximately 20 per cent of outstanding shares in Alpcot Agro have undertaken to subscribe for their respective pro-rata shares in the Rights Issue and intend to vote in favour of all proposals required for the implementation of the Rights Issue.

Convertible debt instrument

The convertible debt instrument of SEK 65 million issued in March 2009 carries an annual interest of ten per cent. The holders of the convertible debt instruments are entitled to call for conversion of debt into new shares in the Company up to and including March 4, 2011 at a conversion price of SEK 14.61 per share. To the extent that the loan has not been converted into shares the convertible loan matures on March 27, 2011.

The Company has entered into agreements with holders of the convertible debt instrument corresponding to approximately 88 per cent of the outstanding amount entailing that the convertible debt instrument fall due on April 28, 2011, thus enabling the Company to receive the proceeds from the Rights Issue prior to repaying these convertible debt instrument.

Holders of the convertible debt instrument, who have not yet entered into agreements with Alpcot Agro, will receive information regarding the agreement through their bank or nominee (information will also be available on the Company’s website). Holders of the convertible debt instrument, who have not converted their holding into shares and wish to receive payment upon maturity, do not have to take any action.

Early publication of year-end report

In view of the Rights Issue the year-end report for 2010 will be published in advance on March 18, 2011.

Indicative timetable for the Rights Issue

March 18, 2011                             Extraordinary General Meeting of shareholders to approve the Rights Issue resolved by the Board of Directors

March 21, 2011                             Last day of trading in the Alpcot Agro share including right to participate in the Rights Issue

March 24, 2011                             Record date for participation in the Rights Issue, i.e. shareholders registered in the share register of Alpcot Agro as of this date will receive subscription rights for participation in the Rights Issue

March 24, 2011                             Estimated date for publication of the prospectus

March 30 – April 12, 2011             Trading in subscription rights

March 30 – April 15, 2011             Subscription period

April 21, 2011                                Announcement of preliminary outcome

Financial advisor

Carnegie Investment Bank is acting as financial advisor to Alpcot Agro.

For additional information, please contact:

Björn Lindström, Chief Executive Officer, tel. +44 (0) 20 7518 0530

Joakim Ollén, Chairman of the Board, tel. +46 (0) 70 354 24 07

About Alpcot Agro AB (publ)

Alpcot Agro is a Swedish limited liability company incorporated in 2006. The Company's objective is to generate an attractive total return on invested capital by acquiring and farming agricultural land in Russia and in other CIS member states. The shares in Alpcot Agro are listed on First North under the ticker ALPA and the Company's Certified Adviser is Remium. Additional information is available on www.alpcotagro.com.

IMPORTANT INFORMATION

The information above is not intended for, and may not be distributed to or be published in, directly or indirectly, Australia, Canada, Hong Kong, Japan, New Zeeland, South Africa or the USA, or any other jurisdiction where this would require registrations measures or would constitute a breach of law. Further, this press release is not intended for any person, whose participation in the Rights Issue referred to in the press release would require a prospectus, registration measures or any other measures not required under Swedish law.

The information above does not contain or constitute an invitation or an offer to acquire, subscribe for or otherwise trade in shares, subscription rights, paid subscribed shares (BTA’s) or other securities in Alpcot Agro AB (“the securities”). Nor does it contain or constitute a prospectus under the terms in Directive 2003/71/EC (“the Prospectus Directive”). Once such a prospectus has been drafted and has been approved and registered by the Swedish Financial Supervisory Authority, it will be published inter alia on the Company’s web site.

No securities are or will be registered in accordance with the U.S. Securities Act of 1933 (“Securities Act”) or any provincial act in Canada. Nor are or will any securities be registered under any legislation in Australia, Hong Kong, Japan, New Zeeland or South Africa. The securities may therefore not, directly or indirectly, be sold, resold, offered for sale, delivered or spread within or to any of these jurisdictions, or to any person located there at that point of time or resident there, or on account of such person, and further not to or within any other jurisdiction where such measure would violate the laws of the jurisdiction or require registrations measures, other than in accordance with an applicable exemption. A failure to comply with this instruction may result in a violation of the Securities Act or laws applicable in other jurisdictions. Further, Alpcot Agro AB has not taken any action to offer the securities to the public in any other member state within the European Economic Area but for Sweden. Within such member states, which have implemented the Prospectus Directive, the securities may therefore not be offered in such way that would require registration of a prospectus or a summary thereof.

This press release may contain forward-looking statements that reflect Alpcot Agro AB’s current views with respect to future events and financial and operational performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts or by the use of terminology, including, but not limited to, terms such as “may”, “will”, “expects”, “believes”, “anticipates”, “plans”, “intends”, “wants”, “estimates”, “projects”, “targets”, “forecasts”,” seeks”, “aims”, “could”, “should” or, in each case, the negative of such terms, and other variations on such terms or comparable terminology. These statements are solely based on the circumstances as of the date on which they are made and Alpcot Agro AB undertakes no obligation to publicly update or revise any such information, whether due to new information, new conditions or other circumstances. Though Alpcot Agro AB considers the statements fair, no undertakings or warranties are provided that they will be realized or shown to be correct. Thus, such statements must not be unduly relied on.