Notice regarding the acquisition of 16,000 own shares (ordinary shares with the ticker symbol KDHR)

Pursuant to the provisions of the Rules of the Ljubljana Stock Exchange d.d. and the Securities Market Act (ZTVP-1) (Official Gazette of the Republic of Slovenia, No. 56/99), KD Group, d.d., Ljubljana, hereby issues the following announcement:

Pursuant to Article 66 of the Securities Market Act (Official Gazette of the Republic of Slovenia, No. 56/99, as amended) and Article 39 of the Stock Exchange Rules (Official Gazette of the Republic of Slovenia, No. 113/02, as amended), the issuer KD Holding, d.d., Ljubljana, Celovška cesta 206, hereby announces

the acquisition of 16,000 of its own shares (ordinary shares with the symbol KDHR)

. KD Holding, d. d., Ljubljana (KD Holding) acquired 16,000 of its own shares (ordinary shares with the symbol KDHR) on 7 October 2004, representing 1.18 per cent of the issuer’s total shares. The shares were acquired on the basis of a loan agreement concluded with KD Group, d. d., Ljubljana (KD Group), for the purpose of implementing the merger of KD Naložbe, d. d., Ljubljana (KD Naložbe) into KD Holding.

On 20 August 2004, the general meetings of KD Holding and KD Naložbe passed all the resolutions necessary to carry out the merger, with an exchange ratio of one share in the acquired company for 0.05 shares in the acquiring company. Any shareholder of the acquired company who does not hold a sufficient number of shares in the acquired company to exchange the entire number of their shares for shares in the acquiring company at the specified exchange ratio the acquiring company will provide a cash payment for the remaining shares of the acquired company (up to a maximum of 19 shares) at a value of 536.31 SIT per share of the acquired company.

KDD Centralna klirinško depotna družba, d. d., Ljubljana (KDD) has been appointed as the agent for the acquisition of the acquiring company’s shares and cash payments. In accordance with KDD’s operating rules, KD Holding must provide KDD with the total number of shares that would be required to complete the merger, if each shareholder of the acquired company were to hold exactly the number of shares required to exchange all their shares for shares in the acquiring company, whilst also depositing, on a specified date, the estimated amount of cash top-ups required for shareholders who do not hold a sufficient number of shares in the acquired company to receive a whole number of shares in the acquiring company. The General Meeting of KD Holding adopted a resolution to increase the share capital for the purpose of carrying out the merger by an amount which, at the specified exchange ratio, is expected to be sufficient to exchange shares for the shareholders of the acquired company. However, as KD Holding must provide KDD with a greater number of shares than will actually be required to carry out the merger, it will provide the additional shares by utilising 8,789 of its own shares, which it already held, and 16,,000 shares acquired under a loan agreement concluded with KD Group; at the same time, it will also deposit SIT 260,000,000 in cash with KDD to cover any potential cash top-ups.

On the record date, KDD will exchange the shares of the acquired company for shares in the acquiring company and pay cash compensation to shareholders who are entitled to it. The remaining shares and deposited cash will be returned to KD Holding, which will return 16,000 shares to KD Group. In the event that KD Holding does not receive a sufficient number of shares from KDD to fulfil its obligation under the loan agreement with KD Group, it will acquire the missing shares on the secondary market within six months at the latest and thereby fulfil its obligation.

Ljubljana, 7 October 2004



The Management Board of KD Holding d.d.