Kalev                         NEWS RELEASE                      05/08/2002



FOUNDATION OF SUBSIDIARY COMPANY



According to the decision of the council of AS Kalev of 6 December 2001

(Minutes No 6, item No 3) AS Kalev has founded together with its strategic

partner Skanska EMV AS a subsidiary company dealing with real estate

development and management services. 60% of the founded company belongs to 

AS Kalev and 40% to Skanska EMV AS. The name of the new company is 

AS Kalev Real Estate Company (Kalev REC).



The chairman of AS Kalev Mr Oliver Kruuda said that

the main activity of the new company would be the arrangement of the

construction of the new factory building of AS Kalev and development 

of the 30-hectar registered immovable (so-called 

"Põrguvälja immovable") situated in the territory of Rae rural 

municipality



Mr Kruuda announced: "AS Kalev has owned a 30-hectar piece of land 

in Rae´rural municipality since the beginning of the year 2000 which 

has been left unused until present, but has an excellent potential to 

be built up due to its good location." The new factory of AS Kalev 

will take only a small part of the immovable, approximately 

five hectares.



The founded subsidiary gives AS Kalev a possibility to concentrate 

on its main activity – the production of sweets. Mr Kruuda said: 

"Another positive aspect about the new subsidiary is that it 

enables to use external financing without taking any additional 

risks." He also mentioned that in financing 

the new factory the 40.5 million share capital of Kalev REC would 

form a sufficient additional guarantee and the amount of share capital 

may be increased in future in the account of the immovable belonging 

to AS Kalev in Pärnu road and Kohila street.



The estimated costs of the new factory will be 100-120 million kroons. 

AS Kalev will rent the new factory premises from its subsidiary and 

plans to cover the rental costs by the income from renting out the 

real estate in Pärnu road and Kohila street.





Ruth Roht

PR manager

6 28 38 58