Linas AB - Notification on material event

Regarding the initiation of bankruptcy case of AB “Linas” subsidiary company “Lino audiniai”

During 01-04 months of the year 2008 the sales income of AB “Linas” subsidiary
company “Lino audiniai” was 17.850 thousand Lt. During the same period of year
2007 the sales income was 21.292 thousand Lt. During 01-04 months of the year
2008 the loss was 4.542 thousand Lt. The result of the last year's same period
was 32 thousand Lt before taxation. Bad results of 01-04 months of year 2008
were influenced by negative atmosphere of the business - increased inflation,
increased costs, the slow down of the economy. The production cost of AB
“Linas” subsidiary company UAB “Lino audiniai” increased because of price
increase of raw materials, increased prices of labor cost and technological
energy. At the same time the prices for ready made products did not increase,
because the usage of textile products has got slower during the economic crisis
and sharp competition with Asian textile producers. 
At the moment AB “Linas” subsidiary company UAB “Lino audiniai” is using only
55% of production capacity. The company is unable to pay for received goods, to
return credits and to fulfill other pecuniary obligations. After elimination of
import quotas for the textile goods which are delivered to European Countries
the competition of Asia countries, especially China, is very sharp, the lack of
materials and assets are decreasing production and sales volumes of UAB “Lino
audiniai”. 
The members of Board and managers, feeling the responsibility against the
company's employees, put a lot of efforts in order to secure business activity
of UAB “Lino audiniai”. It was tried to specialize the business by dividing the
business into the group of companies and to make effective management. In order
to keep working places and to decrease production costs, a lot of economical,
strategic and marketing measures were taken. But the worsening economical
situation is forcing to take radical measures in order to avoid much more harm
for employees, shareholders and business partners. 
That is why members of AB “Linas” Board evaluated inside and outside business
possibilities and above mention reasons, has taken the decision on June 13,
2008 to oblige the administration of subsidiary company UAB “Lino audiniai” to
initiate the case of bankruptcy of UAB “Lino audiniai” and to execute all
actions in connection with this decision, which are indicated by the law of
Lithuanian Republic. 
Further activity of the company will depend on the volition of the creditors. 

Director of AB “Linas”
Ramunas Lenciauskas
Tel.: +370 45 506100