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«Registration Document Registration Document AS Tallink Grupp 14.10 2013 Prepared according to Commission Regulation (EC) No 809/2004 - Annex IX AS ...»

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AS Tallink Grupp– 14.10 2013

Registration Document

Registration Document

AS Tallink Grupp

14.10 2013

Prepared according to Commission Regulation (EC) No 809/2004 - Annex IX

AS Tallink Grupp– 14.10 2013

Registration Document

Important notice

The Arrangers and/or affiliated companies and/or officers, directors and employees may be a

market maker or hold a position in any instrument or related instrument discussed in this

Registration Document, and may perform or seek to perform financial advisory or banking services related to such instruments. The Arranger's corporate finance department may act as manager or co-manager for this Issuer in private and/or public placement and/or resale not publicly available or commonly known.

Copies of this Registration Document are not being mailed or otherwise distributed or sent in or into or made available in the United States other than on the Issuer’s web page. Persons receiving this document (including custodians, nominees and trustees) must not distribute or send such documents or any related documents in or into the United States.

Other than in compliance with applicable United States securities laws, no solicitations are being made or will be made, directly or indirectly, in the United States. Securities will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

The distribution of the Registration Document may be limited by law also in other jurisdictions, for example in Canada, Japan and in the United Kingdom. The Prospectus has been reviewed and approved by the Norwegian FSA in accordance with sections 7-7 and 7-8, cf. section 7-3 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information given in this Prospectus. The approval given by the Norwegian FSA only relates to the Issuer's descriptions pursuant to a pre-defined check list of requirements.

The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or otherwise covered by this Prospectus.

Page 2 of 26 AS Tallink Grupp– 14.10 2013 Registration Document

Table of Contents:

1. Risk factors

2. Persons responsible

3. Definitions

4. Third party information and forward looking statements

5. Statutory auditors

6. Information about the Issuer and the Group

7. Business overview

8. Administrative, management and supervisory bodies

9. Major shareholders

10. Financial information concerning the issuer's assets and liabilities, financial position and profits and losses

11. Documents on display

12. Cross reference list:

–  –  –

Registration Document

1. Risk factors The Group’s business, financial position and operating results could be materially affected by various risks. The order of presentation of the risk factors below is not intended to be an indication of the probability of their occurrence or of their potential effect on the Issuer’s business.

Risk Relating to Business

AS Tallink Grupp operates in a competitive market The Group faces competition in the operations, both from other ferry operators and from providers of other means of transport and substitute products from other sectors. The Group cannot guarantee that it will be successful in retaining or improving its current market position or in expanding its business. Failure to adapt to the changes in the market, whether caused by political decision-making or otherwise, or to increased competition could have a material adverse effect on the Group’s business, results of operations and financial condition.

Any introduction of new vessels and routes and related capacity increases involves risks and uncertainties From time to time the Group evaluates possibilities to introduce new vessels, to expand into alternative routes and to expand its business generally. Although the Group believes that the restructuring of the vessels on the different routes and expanding the business to new routes will improve its revenue and profitability per passenger and facilitate growth in passenger numbers, new investments in the fleet and new businesses acquired may represent substantial investments for the Group and, thus, involve risks. The materialization of any of these risks could have a material adverse effect on the Group’s business, results of operations and financial condition.

The Group faces uncertainties regarding onboard trade and price development Consumer price level in Estonia and Latvia are currently lower than in Finland and Sweden, the prices in the Group’s onboard shops must be comparable to the prices in onshore shops in Estonia or Latvia on vessels visiting Estonia or Latvia in order to be competitive. Any reduction in the Estonian or Latvian consumer price levels may reduce the demand for goods sold onboard and force the Group to reduce the onboard prices, which could have a material adverse effect on its business, results of operations and financial condition.

Changes in consumer behavior Consumers, including clients may change their behavior either due to the changes in economic environment, demographics, preferences, etc. These and other changes may reduce sales and earnings, which could have material adverse effect on the Group’s business, results of operations and financial condition.

Dependency on third party services and internal services The Group is dependent on therelations with partners, tour operators and travel agencies who sell tickets to the Group’s ferries. Changes in their operations or ceasing partnership with the Group may reduce the number of passengers, which could have material adverse effect on its business, results of operations and financial condition. Significant parts of the Group’s tickets are sold via inhouse booking system. Disruptions, errors, connectivity problems, etc. relating to the sales systems or cybercrime against the IT network may disturb sales and reduce earnings, which could have material adverse effect on the Group’s business, results of operations and financial condition.

AS Tallink Grupp is leveraged, and if it or any of the Group’s ship-owning subsidiaries defaults under any of the respective loan agreements, they could forfeit the rights to the vessels AS Tallink Grupp owns vessels through individual ship-owning subsidiaries. Their obligations under the loan agreements have been secured by different security arrangements, including mortgages, guarantees, assignments of earnings or insurances, charters, charter guarantees, pledges or options to pledge the shares of the ship-owning subsidiaries, pledges of bank accounts and other arrangements. The loan agreements include several negative undertakings, relating to, among other things, entering into other financial commitments, changes in the corporate structure or in the nature of business, and consolidating or merging with another corporation. The loan agreements also contain extensive requirements relating to the use of the vessels, compliance with environmental laws and insurance policies. Several of the loan agreements prevent subsidiaries from paying dividends without the prior approval of the lenders. Furthermore, as a result of the

Page 4 of 26AS Tallink Grupp– 14.10 2013

Registration Document legal and operational structure and the terms of the loan agreements entered into by AS Tallink Grupp and its ship-owning subsidiaries, the ability to transmit certain funds among companies inside the Group and to pay dividends may be restricted. Since the interest rates under the loan agreements are mainly tied to EURIBOR with specific margins, interest rate fluctuations may affect the amounts payable under the loan agreements. All of the term loan agreements contain customary events of default, including cross-default provisions. Frequently, the cross-default provisions extend to the Issuer, to certain group companies as guarantors. These cross-default clauses expose the companies of the group to default risks based on contract performance by other group companies. In addition, under certain agreements, it is an event of default if, without the prior consent of the relevant lender, a third party acquires in whole or in part the issued share capital of (or an equivalent to the controlling interest in) the borrower or the guarantor/shareholder or if there is a change in the ultimate beneficial ownership of the shares in the relevant borrower or guarantor or in the ultimate voting rights attaching to the shares. The Group loan agreements also include various financial covenants, which include minimum level of liquidity, minimum equity ratio, maximum net debt to EBITDA multiple and loan to assets values. Any failure to comply with the loan agreements or any demand for repayment made by the banks could have a material adverse effect on the Group’s business, results of operations and financial condition.

Fluctuations in the market value of the fleet may impair the Group’s ability to obtain additional funding and have a material adverse effect on business, results of operations and financial condition The market value of vessels in the Group’s fleet on the regional and global markets is subject to fluctuations. These depend in part on the general economic and market conditions affecting the ferry industry, competition from other ferry companies, the supply of similar vessels, the price of new vessels, government regulations, the development of other means of transportation, and technological advancements. It should be expected that the fair market value of the vessels will fluctuate. In addition, as vessels grow older, they generally decline in value. If the Group determines at any time that there is a need to impair vessel values on the financial statements, it could result in a charge against the earnings and a reduction in the shareholders’ equity. If the Group sells any of the vessels at a time when prices are low, the sale price may be less than the vessel’s carrying amount on the financial statements, with the result that it would also incur a loss and a reduction in earnings, which could have a material adverse effect on the Group’s business, results of operations and financial condition.

The Group may be unable to retain key management personnel or other employees or to attract qualified new personnel, which may negatively impact its business Management and the planning of operations are conducted by a small number of executives, and the loss of any of them or of certain other members of the operating personnel could adversely affect the Group’sbusiness. If the Group is unsuccessful in retaining key management personnel or in attracting qualified new management personnel, it may have a material adverse effect on the Group’s business, results of operations and financial condition.

The Group may be negatively affected by the actions of trade unions Constructive relations with trade unions are important for the continuity of the the Group operations. Disruptions may have a material adverse effect onits results of operations and financial condition.

Rising labor costs may have a material adverse effect on the Group’s business, results of operations and financial condition Labor laws of the country of a ship’s flag govern the employment of the ship’s crew and other onboard staff. If labor costs increase due to general economic developments, increased regulation or other reasons, it may have a material adverse effect on the Group’s business, results of operations and financial condition. Some of the Group’s ferries operate under the Estonian and Latvian flag where increase in labor costs may be faster than ferries under Swedish or Finnish flag.

Changes in Finnish, Swedish or Latvian state aid regulations may cause a rise in labor costs The Group currently operates several vessels under Finnish, Swedish or Latvian flag and therefore enjoy certain tax related benefits from the governments of Finland, Sweden and Latvia, which in effect lower costs of on-board personnel. AS Tallink Grupp cannot be certain that this policy will be continued by those governments and changes in these regulations could cause a rise in labour costs. Changing the flag is an option, when the conditions become more unfavorable, but as there are certain costs related to reflagging and potential savings could be delayed. In addition, a strong resistance from trade unions could be expected when changing the flag.

Page 5 of 26AS Tallink Grupp– 14.10 2013

Registration Document AS Tallink Grupp principal shareholder Infortar and its controlling shareholders hold a significant interest in AS Tallink Grupp, and, consequently, will be able to significantly influence the outcome of any shareholder vote The Group has in the past and will in the future engage in transactions with Infortar or its affiliates.

In particular, Infortar through its affiliates owns the Group’s office building in Tallinn and several of the hotel properties which the Group operates under operating lease agreements. Therefore, it can be expected that the role of Infortar will remain significant in the Group’s future development and operations.

The Group’s operations could be affected by any actions taken by competition authorities Any alleged violations of competition laws and regulations or the outcome of any legal or administrative proceedings brought against the Group could have a material adverse effect on its business, results of operations and financial condition.

Risk Relating to the Group’s Industry Fuel costs and increases in port and regulatory fees are beyond the Group’s control and may have a material adverse effect on its business, results of operations and financial condition Marine transportation is inherently risky and an incident involving passenger vessels could harm the Group’s reputation and have a material adverse effect on its business, results of operations and financial condition The operation of ships involves the risk of accidents and incidents at sea which could bring into question passenger safety and adversely affect future industry performance.

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