Update on QXL Legal Battle to Regain Control of QXL Poland (Allegro.pl)

[amy]

Update on QXL Legal Battle to Regain Control of QXL Poland (Allegro.pl)

from company press release:

28 September 2005

Poland Update

The Company has recently received further information regarding the financial position of QXL Poland Sp z o.o. (“QXL Poland”), the ownership of which is currently the subject of a number of legal claims in Poland. This information was provided by the court-appointed administrator of QXL Poland and has not been reviewed or audited by or on behalf of the Company’s directors. However it states that for the year ended 31 March 2005, QXL Poland’s revenues were approximately £8.8 million (2004: £3.8 million) and its pre-tax profits approximately £3.7 million (2004: £0.9 million). From the limited information available to the Company, the Company believes that QXL Poland has continued to grow rapidly since 31 March 2005 – it currently has over 1 million items listed on its site and has recently launched a major brand-building campaign.

The development of QXL Poland is consistent with the Company’s plans and forecasts for the business in the autumn of 2002 when the Company (without receiving any consideration) allegedly consented to the transfer of 92% of QXL Poland to a company connected with former country manager, Arjan Bakker, and his common-law wife, Magdalena Jezierska. It therefore provides further substantiation for the Company’s case and reinforces the Company’s belief that the Polish courts will ultimately decide that the transaction was fraudulent and should be declared void.

No dates have yet been fixed either for the resumption of hearings in the main civil case or the commencement of hearings in the criminal case against Arjan Bakker and Przemyslaw Rogowski, although the Company still anticipates that these will take place this autumn.

In a separate development, the Higher Disciplinary Tribunal at the Polish National Bar Association yesterday considered the appeals of the Company and Mr. Rogowski against last year’s decision of the Disciplinary Tribunal of the Poznan Bar Association. The Poznan Tribunal had decided that Mr Rogowski should be barred from practising as a lawyer for 5 years for a number of breaches of his professional obligations relating to QXL Poland. The Higher Tribunal accepted the Company’s arguments that the breaches in question warranted a more severe penalty than the Poznan Tribunal had determined. It also decided that the Poznan Tribunal should have heard evidence from a number of additional parties on behalf of Mr Rogowski (in particular Arjan Bakker and Magdalena Jezierska) before coming to its decision. It has therefore sent the case back to the Poznan Tribunal so that this evidence can be heard and a new decision taken in the light of the Higher Tribunal’s directions and any new information provided. The Company believes that no material new evidence will result from the hearing of the additional witnesses. It therefore considers that the process will ultimately lead to a similar decision, but with a more severe penalty against Mr Rogowski.

Further information regarding these issues will be announced in due course.

[mandy]

The Company confirms that it has recently been approached with a proposal for the recovery by the Company of full control of QXL Poland Sp z o.o. (“QXL Poland”) as well as the acquisition of certain additional assets in Poland and other parts of Eastern Europe. This proposal would involve the Company issuing shares and/or options representing up to approximately 22% of the Company’s fully-diluted share capital. The proposal, which would represent a settlement of the Company’s ongoing legal claims in Poland, also envisages that the pre-tax profits of QXL Poland for the six months to 30 September 2005 would not be materially less than £4.7 million.

The financial terms referred to above have not been negotiated by the Company and do not reflect a change in the Company’s assessment that it will ultimately succeed in its legal actions in Poland.

full press release: http://www.qxl.co.uk/contents/uk/qxlmedi...nd1005.pdf

[mandy]

Latest Update on QXL's legal battle to regain control of Poland's largest auction site Allegro.pl (QXL Poland)

Update regarding QXL Poland Sp z o.o. (“QXL Poland”)

There have been a number of recent developments in connection with the Company’s ongoing negotiations to settle the disputes relating to the ownership of QXL Poland.

Progress in the discussions regarding the settlement proposal first announced by the Company on 17 October 2005, has been slow but generally positive. In order to consolidate this progress, the court hearings in the main civil case that were scheduled for 22 March and 29 March 2006 have been postponed by mutual agreement of all the parties. The Company has also withdrawn its appeal against the decision made on 19 January 2006 in the criminal case against Messrs Bakker and Rogowski, as a result of which the Public Prosecutor has to address certain additional matters and collect further evidence before the case will be permitted to go to trial.

While the Company is encouraged by the progress in the settlement discussions, it is still seeking to finalise its due diligence and complete negotiation of the detailed terms of the proposal. This work is not expected to be completed for at least a month and any agreement that ensues from this process will then be conditional on its approval at a meeting of the Company’s shareholders.
There can still be no assurance that any agreement regarding the proposal will be reached.

Consequently the Company will continue to take all steps that it considers appropriate to protect its legal position in the ongoing litigation, having regard to the status of the ongoing discussions. This will include filing an appeal at the appropriate time against last week’s decision of the Poznan District Court in one of the peripheral civil cases that the Company has no rights to the software currently used to operate QXL Poland’s auction platform.

Further developments will be announced, as appropriate, in due course.

http://www.qxl.co.uk/contents/uk/qxlmedi...e_2006.pdf