Opinion of the Supervisory Council of Aktsiaselts Tallinna Vesi on takeover offer

This opinion of the supervisory council (“Supervisory Council”) of AKTSIASELTS TALLINNA VESI (“ASTV”) has been issued on 22 April 2021, in accordance with subsection 171 (2) of the Estonian Securities Market Act (“SMA”) and Chapter 9 of Regulation No. 71 of the Estonian Minister of Finance, dated 28 May 2002, “The Rules of Takeover Offers” in connection with the mandatory takeover offer made the City of Tallinn and Osaühing Utilitas (jointly as “Offerors”, separately as “City of Tallinn” or “Utilitas” respectively) on 13 April 2021 for the acquisition of all ASTV A-shares not held by the Offerors (“Offer”).

On the date of this opinion, the members of the Supervisory Council are Priit Lello, Katrin Kendra, Mart Mägi, Robert Kitt, Priit Koit (Chairman of the Supervisory Council), Niall Mills, Allar Jõks and Priit Rohumaa. The term of office of Toivo Tootsen as a member of the Supervisory Council has expired.

The Supervisory Council, having reviewed the prospectus and notice of the Offer, is of the following opinion:

1. Contracts and other relationships between the Offerors and members of the Supervisory Council and Management Board

Of the members of the Supervisory Council, Priit Lello and Katrin Kendra have relationships with the City of Tallinn. Priit Lello is the Head of Tallinn City Office, who has been appointed on the basis of an order of Tallinn City Government and a directive of the mayor of City of Tallinn. Katrin Kendra is the Financial Director of the City of Tallinn, who has been appointed on the basis of an order of Tallinn City Government and a directive of the Head of Tallinn City Office.

Of the members of the Supervisory Council, Priit Koit, Robert Kitt and Niall Mills have relationships with Utilitas. Priit Koit is a member of the management board of Utilitas (manager). Robert Kitt is, since March 2021, a member of the management boards of AS Utilitas Tallinn and AS Utilitas Eesti, both members of the Utilitas group. Niall Mills is the managing partner of First Sentier Investors, which is a related party of Utilitas. Priit Koit has a contract of a member of the management board with Utilitas. Robert Kitt has contracts of a member of the management board with AS Utilitas Tallinn and AS Utilitas Eesti.

There are no contracts or relationships between the Offerors and members of the management board of ASTV (“Management Board”) or the other members of the Supervisory Council (member of the Supervisory Council Mart Mägi and independent members Priit Rohumaa and Allar Jõks).

2. The election or appointment of members of the Supervisory Council and Management Council

Member of the Supervisory Council Priit Lello has been appointed to the Supervisory Council by the City of Tallinn. Members of the Supervisory Council Katrin Kendra and Mart Mägi were nominated as candidates to the Supervisory Council by the City of Tallinn.

Members of the Supervisory Council Priit Koit and Niall Mills have been appointed to the Supervisory Council by Utilitas. Member of the Supervisory Council Robert Kitt was nominated as a candidate to the the Supervisory Council by Utilitas.

Independent members of the Supervisory Council Priit Rohumaa and Allar Jõks were elected to the Supervisory Council by the general meeting of shareholders of ASTV.

Members of the Management Board Kristi Ojakäär and Aleksandr Timofejev were elected to the Management Board by the Supervisory Council.

3. Conflicts of interests and measures of risk management

None of the members of the Supervisory Council or of the Management Board are entitled to receive any benefits, the provision of which would depend on the Offer or the results thereof, and which could cause a conflict of interests for the members of the Supervisory Council or of the Management Board in connection with the Offer.

Despite the absence of benefits described above, due to the relationships between the Offerors and Supervisory Council members Priit Lello, Katrin Kendra, Robert Kitt, Priit Koit and Niall Mills (which have been described in Section ‎1 above), the occurrence of a conflict of interests is possible for Priit Lello, Katrin Kendra, Robert Kitt, Priit Koit and Niall Mills in a situation in which the Supervisory Council would adopt resolutions in connection with the Offer. Still, aside from issuing this opinion of the Supervisory Council (by unanimous approval of the Supervisory Council), the Supervisory Council has not adopted any resolutions in connection with the Offer and does not foresee a need for adopting resolutions in connection with the Offer in the future.

However, if it appears that any resolution in connection with the Offer need to be adopted by the Supervisory Council, the Supervisory Council will analyse the possible risk of a conflict of interests for Priit Lello, Katrin Kendra, Robert Kitt, Priit Koit and Niall Mills. In case of risk of a conflict of interests, Priit Lello, Katrin Kendra, Robert Kitt, Priit Koit and Niall Mills would abstain from voting on the relevant resolutions.

4. Assessment of the impact of the Offer on ASTV’s interests and employment relationships

All the members of the Supervisory Council, including both independent members of the Supervisory Council (according to clause 21 (2) 4) of The Rules of Takeover Offers), Priit Rohumaa and Allar Jõks, are of the opinion that the Offer has no negative impact on ASTV or ASTV’s interests.

The Supervisory Council notes that the Offer is made by the Offerors due to the fact that under the share purchase agreement, which entered into force on 31.03.2021, the City of Tallinn acquired 3,530,435 ASTV A-shares from the Dutch company United Utilities (Tallinn) B.V. (which together with the ASTV A-shares owned by the City of Tallinn before that date represent approximately 52.35% of all ASTV A-shares) and Utilitas acquired 3,530,435 ASTV A-shares (representing approximately 17.65% of all ASTV A-shares) from the same seller under the same agreement. Considering the referenced share purchase agreement of ASTV shares and the agreements stipulated in the shareholders’ agreement concluded between the Offerors (which entered into force upon closing of the transaction on 31.03.2021), incl. the agreements regarding corporate governance of ASTV, election and appointment of members of the Supervisory Council and the Management Board, the Offerors have on 31.03.2021 gained a joint dominant influence over ASTV, and according to subsection 166 (1) of the SMA, the Offerors became obliged to make a takeover offer and provide ASTV shareholders an opportunity to sell their shares in a situation where the Offerors, acting in concert, have gained a joint dominant influence over ASTV.

Pursuant to the Offer prospectus, the Offerors do not intend to make any significant and direct changes in the commercial activities and structure of ASTV or in the performance of ASTV’s obligations. According to the Offer prospectus, it is envisaged to develop ASTV in the coming years in accordance with the 12-year public water supply and sewerage development plan of the City of Tallinn and applicable legal acts and to make necessary investments into ASTV’s infrastructure.

The members of the Supervisory Council, including both independent members of the Supervisory Council, are of the opinion that the Offer is not expected to have an impact on the employment relationships of ASTV. Pursuant to the Offer prospectus, the Offerors do not intend to make any significant changes in the employment relationships of ASTV employees in connection with the Offer.

5. Intention of the members of the Supervisory Council and Management Board to accept the Offer

Neither the members of the Supervisory Council nor the members of the Management Board own (either directly or indirectly) ASTV shares, therefore it is not possible for the members of the Supervisory Council and the Management Board to participate in the Offer.

6. Agreements of the members of the Supervisory Council and Management Board

There are no agreements between ASTV and the members of the Supervisory Council or of the Management Board which would provide for the termination of the agreement or payment of compensation to the members of the Supervisory Council or of the Management Board by ASTV or a third person in relation to the Offers or the results thereof.

ORGANISATIONAL ISSUES

This opinion of the Supervisory Council will be made available in writing and free of charge at the office of ASTV on business days between 9:00 AM and 5:00 PM at Ädala st 10, 10614 Põhja-Tallinn district, Tallinn, Harju county, Estonia, and will also be made available on the Nasdaq Tallinn Stock Exchange website (www.nasdaqbaltic.com) and on the website of ASTV (https://tallinnavesi.ee).

In order to access the opinion of the Supervisory Council at ASTV’s office, please make an appointment in advance by phone (+372 62 62 200) at least one business day before the desirable time.

Priit Lello

Katrin Kendra

Mart Mägi

Robert Kitt

Priit Koit

Niall Mills

Allar Jõks

Priit Rohumaa

Laura Korjus

Head of Communications

AS Tallinna Vesi

(+372) 626 2271

laura.korjus@tvesi.ee