Baltika                        ANNOUNCEMENT                             30.11.2004



Establishment of production joint venture on the basis of OÜ Baltika Tailor



The  documents  on  the  establishment  of  men's  suits,  jackets  and   trousers

production joint venture were signed on November 29 by  AS  Baltika  and  OY  Turo

Tailor. The joint venture was established by separating  OÜ  Baltika  Tailor  from

its Mother Company and by selling 50% from the  formerly  100%  AS  Baltika  owned

limited company to Finnish garment manufacturer OY Turo Tailor Ab.

For partnership Turo pays 250 000 euros to Baltika.



During the execution of the transaction the share will be  increased  from  40 000

EEK to 2 000 000 EEK through the down-payments from the Shareholders.



In the Shareholders' agreement the parties have agreed on the business  plan  2005

- 2009, which specifies the interest against guaranteed production capacities  and

maximal allowed prices.



The parties emphasize that although the main purpose of the joint  venture  is  to

assure the increase of the income  to  its  owners,  there  should  be  guaranteed

conditions for financial independency of Baltika Tailor and  for  the  enhancement

of competitive ability.



According to the agreed business plan, for the next 5 years  investments  will  be

made in the amount of 11 MEEK (including 3 MEEK  from  the  owners  in  2005)  and

relocation from the centre to more suitable areas for production in 2007.



Managing Baltika Tailor follows the 50:50 principle. Two  representatives  in  the

Council are from AS Baltika - Meelis Milder and Miles  Burger,  2  representatives

from OY Turo Tailor Ab - Heikki Vuorinen who is the Executive  Director  of  Turo,

and Kari Mattson who is the Board Member of  Turo.  Anneli  Mühle,  the  Executive

Director of Baltika Tailor, and Taimo Kinnunen who is the  Production  Manager  of

Turo will be the Members of the Board.





Anu-Mall Naarits

Marketing Manager

AS Baltika

+372 6 302 731