Equity Issue

    RNS Number : 2266D
  Madara Bulgarian Property Fund
  11 September 2008
   

    11 September 2008
    Madara Bulgarian Property Fund Limited 
    Equity Issue

    Madara Bulgarian Property Fund Limited announces that it has today sent a letter to its shareholders, the substantive text of which is
set out below.  

    "Dear Shareholder

    Madara Bulgarian Property Fund Limited (the "Company") continues to make steady progress with its existing and committed property
portfolio despite the difficult trading environment for overseas property funds.  As of 30 June 2008 and, as set out in the Company's AIM
admission document dated 14 June 2007, the Company has acquired 408,341 sq.m. in the coastal area of Byala and has committed to buying
124,000 sq.m. of land in Borovets.  The unaudited net asset value of the Company, as at 30 June 2008, was EUR1.28 per share following
receipt of an independent property valuation as set out in the enclosed unaudited interim results of the Company for the 6 months ended 30
June 2008.  

    The land in Byala has been designed and developed into the Black Sea Gardens project (www.blackseagardens.com) by the eminent
architectural practice of Foster + Partners.  This project in particular, has attracted an encouraging level of interest from prospective
co-investors despite the testing economic climate. The Company is in negotiations with several partners regarding co-investment in the Black
Sea Gardens project. 

    The Company has also recently initiated a "Shareholder Benefit Scheme" (the "Scheme") for shareholders of the Company. The Scheme allows
existing shareholders an exclusive period in which to view and, if they are so interested, reserve villas and/or apartments in the Black Sea
Gardens project ahead of the full public launch.

    Although the progress of these projects has been steady, it has been slower than anticipated, leading to a position whereby the Company
requires further working capital to fund the Company's ongoing operations until completion of a satisfactory deal on the Black Sea Gardens
project.  

    The Company has actively sought and reviewed several sources of alternative financing, including equity, debt and convertible loan
notes.  Following a thorough review of the available funding options, the Board believes that a pre-emptive rights issue of new ordinary
shares to existing shareholders is the most commercial and equitable funding option available and is in the best interests of the Company
and its shareholders. Details regarding the Company's alternative financing arrangements are set out below.  

    Accordingly, your Board has resolved to issue up to 3,676,471 new ordinary shares of no par value in the Company (representing
approximately 9.8 per cent. of the issued ordinary shares in the Company) at a price of EUR0.68 per ordinary share to raise a maximum of
EUR2,500,000. The issue price is the same as the price of the Company's ordinary shares as at 10 September 2008, being the most recent
dealing day prior to the date of this letter, and represents a discount of approximately 47% to the unaudited net asset value per ordinary
share of the Company as at 30 June 2008,. 

    The new ordinary shares will, upon issue, rank pari passu, in all respects, with the existing issued ordinary share capital of the
Company. Application will be made to the London Stock Exchange for the new ordinary shares to be admitted to trading on AIM.   

    The new ordinary shares have been provisionally allotted in proportion to each shareholder's current holding of ordinary shares.  

    The Board anticipates that there may be some shareholders who are unable or unwilling to subscribe for their entitlement of new ordinary
shares in the rights issue. Your Board is therefore giving existing shareholders the opportunity to subscribe for additional new ordinary
shares, over and above their pro rata entitlement.  

    Alternatively, shareholders may subscribe for a lesser amount than the pro rata entitlement provisionally allocated to them.

    Arrangements concerning new ordinary shares not taken up
    As set out above, any new ordinary shares not taken up will be offered in the first instance to existing shareholders of the Company.
Following such offer to existing shareholders, if any new ordinary shares remain not taken up by existing shareholders they may then be
allocated to new shareholders of the Company in accordance with the articles of association of the Company. Accordingly, your Board is
authorised to issue new ordinary shares to existing shareholders and/or to new shareholders.  

    Alternative Financing Arrangements
    The Directors of the Company are confident of successfully issuing the total number of shares in this issue following recent discussions
with several major shareholders who have expressed their intention to subscribe to this issue. There are certain related parties who have
expressed a wish to subscribe for further new ordinary shares by agreeing to cancel short-term liabilities owed to them that the Company
currently carries on its balance sheet, which the Directors intend to pursue. Should the Company not raise the aggregate amount being
sought, the Directors would seek alternative financing, namely debt and/or a convertible loan note, for which they have already received
indicative terms. However, these alternatives are not the Directors' preferred option at this stage.

    Action to be taken
    To subscribe for new ordinary shares, please complete and sign the accompanying Form of Acceptance and return it to the Company as soon
as possible at the Company's registered office in accordance with the instructions printed thereon.  You will also find enclosed with this
letter a copy of the Company's unaudited interim results for the 6 months ended 30 June 2008 which were announced on 11 September 2008. 

    To be valid, Forms of Acceptance must be received by the Company at its registered office address by no later than the close of business
(5.00 pm Jersey time) on 2 October 2008.

    Yours sincerely
    Timothy J M Chadwick
    Chairman
    Madara Bulgarian Property Fund Limited"

      Enquiries:

 Timothy Chadwick, Chairman                 [phone]
 Milena Harrison, Corporate Communications  [phone]
 Madara Bulgarian Property Fund Limited

 Scott Perkins, Chief Executive             [phone]
 Madara Capital LLP

 Tom Griffiths / Paul Vanstone              [phone]
 Arbuthnot Securities Limited

    A copy of the letter to shareholders is available at the Company's registered office, Elizabeth House, 9 Castle Street, St Helier,
Jersey, JE2 3RT, Channel Islands and on its website, www.madarafund.com.

    END

This information is provided by RNS
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