GORENJE, d.d., Velenje

Gorenje and Istrabenz Team Up in the Energy Business

Koper, Velenje, 18 July 2006 - The agreement signed today between Gorenje, d.d., and Istrabenz, d.d., has given Gorenje, d.d., a 49.95 percent share in Istrabenz energetski sistemi, d.o.o., making it an equal partner with Istrabenz, d.d., which has retained an equal 49.95 percent share in the company. The two giants have undertaken to join forces in the development of projects in the energy sector and investment in power generation resources in the domestic and foreign target energy markets.

The price for the acquired share in equity is set at SIT 1,232,863,612 (EUR 5,144,648.69). The payment falls due within five days following the contract being signed. Dr Robert Golob, General Manager of Istrabenz energetski sistemi, remains a shareholder with a 0.1 percent share in the business.

The agreement also provides for Gorenje to sell and transfer to Istrabenz energetski sistemi, d.o.o. (IBES) its 50 percent shares in Istrabenz Gorenje, d.o.o. and IG Prodaja, d.o.o., respectively. Both companies are part of the IBES Group. That in conjunction with the amalgamation of IG Prodaja, d.o.o., with Istrabenz Gorenje, d.o.o., will complete the consolidation of ownership within the IBES Group and enable the company to focus its efforts on the target markets.

"We welcome Gorenje as an equal partner in the part of the company's energy division involving power generation and renewable sources of energy, and are looking forward to a new, crucial period in the development of the business whose market- and financial performance since its inception in 2003 supports and justifies future investment in this area," said Igor Bavčar, President of the Management Board of the Istrabenz holding company, on the agreement being signed.

Franjo Bobinac, President of the Management Board of Gorenje, commented the agreement as follows: "The business association between the two Groups over the past few years has proven successful, so we decided to continue and deepen our partnership. From Gorenje's perspective the signing of this agreement affirms our strategic decision that in addition to its core business - manufacture of home appliances - the company should also start developing an energy and environment protection division as it provides a good business opportunity with huge growth potential."

The public announcement will be also available on the www.gorenje.com web-site.

Date: 19. 7. 2006