EANS-News: Statetment of the Supervisory Board of Balda AG

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responsible for the content of this announcement.

Bad Oeynhausen (euro adhoc) – Supervisory Board of Balda AG responds to
Octavian´s request to substitute the Supervisory Board members

Press Release

Bad Oeynhausen, 29 December 2011 – Octavian Advisors LP (‘Octavian’) via
Octavian Special Master Fund L.P. requested the Management Board of Balda AG
(‘Company’) to convene an extraordinary general meeting with the aim to
substitute the Supervisory Board members of the Company. Having reviewed said
request, the Management Board of the Company decided to convene an extraordinary
general meeting to be held on 8 February 2012.

The Supervisory Board of the Company hereby takes the opportunity to comment on
the allegations put forward in Octavian´s press release dated 12 December 2011.
However, the Supervisory Board is still astonished about how Octavian could get
hold of these Company´s secrets that now have been published in a way that may
be disadvantageous to the Company and, consequently, to all of its

In fact,

In fact,

– This current Supervisory Board has always acted and will always act solely in
the interest of the Company;

– This current Supervisory Board members fulfil their duties independently;

– the election of the Supervisory board members proposed by Octavian would lead
to severe conflicts of interests and would strongly deteriorate the Company´s
corporate governance.

In detail:

The Supervisory Board´s function in a German stock corporation is limited to
vote in favour of or against a proposal of the management board (and not to
conduct the business). Hence, the duty of the Supervisory Board is to evaluate
the Management Board´s proposals in light of the best interests of the Company
and to decide accordingly. The Supervisory Board of the Company understands that
shareholders may doubt the Company´s decision not to sell its shareholding in
the touch screen producer TPK Holding Co., Ltd. (‘TPK’) at a time when the stock
exchange price was favourable for such transaction. However, the better reasons
argued for a refusal of the requested approvals in each of the respective

The Company has announced its intention to sell TPK shares in numerous occasions
including its annual general meeting in May 2011. Nevertheless, the Company as a
major shareholder of TPK (owning 16.1% of TPK or around 37.8 million TPK shares)
cannot dump TPK shares into the stock market recklessly to destroy the stability
of TPK stock price and, hence, the value of its remaining TPK shares held. The
common practice is to conduct this activity via a block trade or a secondary
offering. In addition, the securities laws of Taiwan require the Company, before
selling or buying, to file with Taiwan authorities for change of its
shareholding in TPK for more than 10,000 TPK shares, as by operation of law, the
Company is deemed to be an insider.

The aforementioned market circumstances and regulatory constraints required the
Supervisory Board to intensively review each of the Management Board´s proposals
of how and when to proceed with selling the TPK shares. The Supervisory Board is
still convinced that none of the Management Board´s proposals has had the
capacity to comply with these complex requirements in the respective situation.

Firstly, it should be mentioned that the further lock-up after April 2011 was
not the result of a blindfold decision of the Company. TPK issued a USD 400m
convertible bond in April 2011 to fund its capital expenditure and M&A
activities. This was not an uneventful capital-raising. It was the result of a
demand from TPK´s customers which required expansion of production capacity by
TPK and had been scheduled by TPK since the beginning of 2011. As a result, the
bond´s underwriters had imposed a lock-up to all major shareholders of TPK
including the Company for three months as a standard market practice. Not to
agree to this lock-up was no alternative for the Company since it would have
otherwise endangered the whole TPK investment. Consequently, 50% of the
Company´s TPK shares were further locked-up to 13 July 2011; the other 50% of
the Company´s TPK shares were anyway locked-up.

Further, all proposals from the Management Board that followed the end of the
further lock-up were either not sufficient with regard to the regulatory aspects
of the said filing to the Taiwan authorities or endangered the stock exchange
price of the Company´s TPK shares that would have remained with the Company
after the envisaged transactions. Even the attempt to launch a joint GDR
(Depository Receipt) offering together with TPK which would have complied with
the respective requirements failed at the end of the day due to the decreasing
stock exchange price of the TPK shares. It would have not been in the best
interest of the Company to accomplish this GDR offering in a market where TPK
shares lost value to such a tremendous extent. There was and there is no reason
for the Company to sell its shareholding in TPK to a price that does not reflect
the value of TPK. The Company is not forced to act on short notice like a hedge
fund may be and, hence, able to wait for better market conditions.

As far as Octavian mentioned that the Supervisory Board was obstructing the
implementation of the management board´s strategy to concentrate on growth in
its core business areas, this allegation is of no substance. The Supervisory
Board has never been un-supportive of exploring strategic growth areas for the
Company including the medical field. However, strategic exploration is not
equivalent to conducting an M&A activity that does not make economic sense. The
Supervisory Board believes that it was in best interest of the Company and its
shareholders to consider any M&A activity carefully without any unneeded
pressure and will act accordingly in future.

Octavian´s further allegations that two of the three members of the Company´s
Supervisory Board were not independent or were subject to conflict of interests
are misleading and incorrect. They are based on the wrong assumption that Mr
Michael Chiang was the major shareholder of the Company. However, as is well
known by the public notifications of voting rights held in the Company that the
Company´s major shareholder, Yield Return Investments Limited, is solely owned
by Mrs Yun-Ling Chiang. To the extent known to and knowable by the Company, Mr
Chiang is neither a shareholder in the Company nor in Yield Return Investments
Limited. In particular, the Supervisory Board members deem it inappropriate, to
say the least, to attempt to evidence their purported lack of independence with
an allegedly unfair sale of TPK shares that occurred in 2008 when neither the
current Management Board nor the current Supervisory Board members were in
charge. However, it should be mentioned that Mr. Chiang helped out the Company
in 2008 by paying a price for the TPK shares (that had not been listed at that
time): A well-respected investment firm had conducted an evaluation analysis
reaching a conclusion of TPK´s equity value at USD 205 million in 2008. This was
exactly the same acquisition price Mr. Chiang paid for to buy additional TPK
shares from the Company in October 2008 as mentioned by Octavian. It is needless
to say that the acquisition was pivotal to the Company at the time of its
liquidity crunch to service bank debt. Furthermore, the timely help was solely
undertaken by Mr. Chiang for the purpose of helping out the Company while
certain major shareholders were also offered but declined the same opportunity
to buy secondary TPK shares from the Company.

Based on these facts, Octavian´s allegations that the Supervisory Board would
not be independent but act in the interest and for the benefit of individual
shareholders are barely comprehensible.

In fact, the Supervisory Board is proud of the current composition of
membership. Dr. Michael Naschke is an experienced corporate lawyer in Germany
and has been involved with the Company for a long period of time. Mr. Chun-Chen
Chen is a veteran in the touch industry who is capable of providing strategic
guidance to the Supervisory Board concerning the industry dynamics of TPK whose
shares represent all, if not more than 100%, of the Company´s market
capitalization. Mr. Yu-Sheng Kai is a seasoned private equity investor with
relevant finance experience of more than 20 years. Neither Mr. Chun-Chen Chen
nor Mr. Yu-Sheng Kai is an employee of TPK as wrongfully insinuated by Octavian.
Needless to say that both are not influenced in a way (as alleged by Octavian)
that could hinder them to comply with their duties in an independent and lawful
manner. The recently announced changes to the Management Board include Dominik
Mueser and Mr. James Lim. Mr. Mueser, the new CEO, is a renowned specialist who
is expected to lend his experience to develop proper strategies for the Company
and its current operations, much needed to re-define and re-position the
Company`s future as going concern. Mr. Lim, the new COO, is returnee to the
Company with a proven track record as general manager of Balda Malaysia
generating positive bottom-line results for many years.

In contrast, the Supervisory Board of the Company fears that the election of the
candidates proposed by Octavian would lead to severe conflicts of interests and
would strongly deteriorate the Company´s corporate governance. This is based on
the following reasons:

Mr René Charles Jäggi, who is intended to become the Chairman of the Supervisory
Board, holds numerous management and supervisory mandates in listed and
non-listed other companies in Germany and abroad that demand ample time. As
stated in Octavian´s press release, Mr Jäggi holds various supervisory
positions. Some (but not necessarily all) of them will be listed in the
invitation to the Company´s extraordinary general meeting. It is hardly
imaginable that the remaining fraction of time that Mr Jäggi disposes of could
allow him to serve the Company as an active member of the Supervisory Board – be
it as a simple member or as its Chairman. The full number and the details of
management and supervisory positions exercised by Mr Jäggi are not known to the
Supervisory Board of the Company. However, the Supervisory Board of the Company
believes Mr Jäggi´s election would not be in line with the recommendations set
forth in the German Corporate Governance Code (No. 5.4.5). As a consequence, his
election might be declared void by the courts.

Mr Igor Kuzniar works as a managing director for Octavian. His conflict of
interests is obvious. The substantiation of Octavian´s proposal of Mr Kuzniar´s
election as a member of the Supervisory Board together with Mr Alizadeh, partner
of a hedge fund also based in New York, with the asserted aim to improve the
Company´s corporate governance in the Supervisory Board appears to be rather

The Supervisory Board kindly asks the shareholders of the Company to take the
aforementioned information into account when forming their opinion and casting
their votes in the extraordinary general meeting. In light of this information,
the Supervisory Board of the Company will propose to the extraordinary general
meeting to reject Octavian´s proposals for resolution.

Further inquiry note:
Clas Röhl
Tel.: +49 (0) 5734 922-2728

company: Balda AG
Bergkirchener Str. 228
D-32549 Bad Oeynhausen
phone: +49 (0) 5734 9 22-0
FAX: +49 (0) 5734 922-2747
mail: info@balda.de
WWW: www.balda.de
sector: Semiconductors & active components
ISIN: DE0005215107
indexes: CDAX, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
Hamburg, Stuttgart, Düsseldorf, München
language: English