KARDAN : Standard & Poor's adjusts rating of Kardan

PRESS RELEASE

STANDARD & POOR'S ADJUSTS RATING OF KARDAN

Amsterdam, January 7, 2015 - Kardan N.V. ("Kardan" or "the Company"), active in Real Estate, Water Infrastructure and Financial Services in emerging markets, announces that Maalot, the Israeli subsidiary of Standard & Poor's ("S&P"), reported that it has changed the rating of the Company and of its Debentures (series A and series B, hereinafter the 'Debentures') to D (from ilCC) on the announcement of January 6 last that the upcoming February 2015 interest and principal payments for the Debentures have been postponed by six months.

However, following the approval of the holders of the Debentures for the Company and the trustees of the Debentures to begin to draft the amendments to the deeds of trust according to the proposed agreement in principle regarding a debt settlement, as also announced on January 6 last, and other developments, S&P will soon review Kardan's financial position again and will publish new ratings accordingly.

The Release of S&P is attached as an annex to this Press Release.

DISCLAIMER

This press release contains forward-looking statements and information, for example concerning the financial condition, results of operations, businesses and potential exposure to market risks of Kardan N.V. and its group companies (jointly "Kardan Group"). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements (including "forward looking statements" as defined in the Israeli Securities Law). Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. These forward-looking statements are identified by the use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'',

''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. A variety of factors, many of which are beyond Kardan Group's control, affect our operations, performance, business strategy and results and could cause the actual results, performance or achievements of Kardan Group to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For Kardan Group, particular uncertainties arise, amongst others but not limited to and not in any order of importance, (i) from dependence on external financing with the risk that insufficient access to capital threatens its capacity to grow, execute its business model, and generate future financial returns (ii) from concentration of its business in Central Eastern Europe and China as a result of which Kardan Group is strongly exposed to these particular markets (iii) from risks related to the financial markets as a result of Kardan N.V.'s listings on NYSE Euronext Amsterdam and the Tel Aviv Stock Exchange and (iv) from it being a decentralized organization with a large number of separate entities spread over different geographic areas in emerging markets, so that Kardan Group is exposed to the

risk of fraudulent activities or illegal acts perpetrated by managers, employees, customers, suppliers or third parties which expose the organization to fines, sanctions and loss of customers, profits and reputation etc. and may adversely impact Kardan Group's ability to achieve its objectives and (v) from any of the risk factors specified in Kardan N.V.'s Annual

Report and in the related "Periodic Report" (published by Kardan N.V. in Israel) published in April, and which is also

available at the Kardan website. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Kardan N.V. does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

About Kardan

Kardan identifies and develops assets in promising emerging markets, mainly in Asia

(predominantly China), Africa and selected CEE and CIS countries.

Its activities are mainly focused on three sectors that benefit from the rising middle class: Real Estate, Water Infrastructure and Banking & Retail Lending. Company headquarters are in the Netherlands. Kardan aims at holding controlling interests in its investments and is actively involved in the definition and implementation of their strategy through its local business

platforms. Total assets as of September 30, 2014 amounted to EUR 1,013 mn; revenues totalled

EUR 161 mn in the first nine months of 2014. Kardan is listed on NYSE Euronext Amsterdam and the Tel Aviv Stock Exchange.

For further information please contact:

Caroline Vogelzang Director Investor Relations [e-mail]

[phone]

"This press release contains regulated information (gereglementeerde informatie) as defined in the Dutch Act on Financial Supervision (Wet op het financieel toezicht)"

Kardan N.V.

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January 7, 2015

Rating Update

Ratings Downgraded to 'D' Following Approval of Debt Restructuring Agreement

Primary Credit Analyst:

Yuval Torbati, Tel Aviv, [e-mail]

Secondary Credit Analyst:

Zvi Boimer, Tel Aviv, [e-mail]

Table of Contents

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Overview Rating Action Rationale

Ratings List

Please note that this translation was made for the company's use only and under no circumstances obligates Standard & Poor's Maalot. In the case of any discrepancy with the official Hebrew version published on January 7, 2015, the Hebrew version shall apply.

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Kardan N.V.

Ratings Update

Ratings Downgraded to 'D' Following Approval of Debt Restructuring Agreement Overview

· Kardan NV and its bondholders have reached an agreement to restructure the original amortization schedule for bonds series A and B, so that debt repayments of about Euro 100 million (principal and interest) have been delayed from the original date of February 2015 to August 2015.

· Given the company's extreme liquidity stress just prior to the debt restructuring, as reflected in the previous rating of ilCC, we view this agreement as a "distressed restructuring" transaction which in our opinion averted a high likelihood conventional non-payment default in February 2015.

· Despite the fact that the restructuring agreement is consensual, we believe that changes to the original payment schedule constitute an event of default (D rating) for both the issuer and its rated bonds, according to our criteria and in concert with our last outlook statement published September 4, 2014.

· We are downgrading our ratings for the Netherlands-based holding company, Kardan N.V., and its series A and series

B bonds, to 'D' from 'ilCC'.

· In the coming days we will reassess the company's financial and business risk profiles, taking into consideration the recent developments in Kardan's capital structure and possible progress in its divestment plans. Following our review, we will publish new ratings for both the company and its bonds (Series A and B).

Rating Action

On January 7, 2014, Standard & Poor's Maalot lowered the rating on Kardan N.V., a Netherlands-based operating holding company, and on its Series A and Series B bonds, to 'D' from 'ilCC'.

Rationale

Kardan's ratings downgrade (issuer and issues) to 'D' (default) is a direct result of its agreement with bondholders to delay its next scheduled debt amortization payment. More specifically, according to the recently approved restructuring agreement, debt repayments of about Euro 100 million (principal and interest) have been delayed from the original date of February 2015 to August 2015. Given a backdrop of extreme liquidity stress just prior to the debt restructuring deal, as reflected in the previous rating of ilCC, and in light of the company's virtually empty coffers in the face of a scheduled Euro
100 million amortization in February 2015, we view this agreement as a "distressed restructuring" transaction. In our opinion, the delay in payment essentially averted a high likelihood conventional non-payment default according the bonds' original repayment schedule. We also note that Kardan has been operating under a "going concern" disclosure statement since publication of its Q2-2014 financial statements, which could have potentially served as a catalyst for negative
developments on the original February 2015 redemption date.

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Kardan N.V.

As indicated in our previous outlook statement published September 4, 2014, Kardan's' complete dependence on inherently difficult-to-conduct divestments of privately held assets, within a very narrow time window, have led the company to a distressed restructuring default. The company will not deliver on its promise to conduct bond repayments according to the original amortization schedule. We believe that the company's failure to stand by its original obligations is not of its own free will, but rather a product of its inability to do so. The fact that changes in the repayment schedule are mutually acceptable, as reflected in the agreement between the company and its bondholders, does not have any mitigating value with reference to the event of default, as bondholders have a separate set of interests and views with regards to the company's ability to ultimately repay debt and the practical options at the creditors' disposal.
In the coming days we will reassess the company's financial and business risk profiles, taking into consideration the recent developments in Kardan's capital structure and possible progress in its divestment plans. Following our review, we will publish new ratings for both the company and its bonds (Series A and B).

Ratings List

Kardan N.V.
To From
Issuer credit rating D ilCC/Negative
Series A D ilCC Series B D ilCC

Standard & Poor's Maalot ratings are based on information received from the Company and from other sources that Standard & Poor's Maalot believes to be reliable. Standard & Poor's Maalot does not audit the information it receives nor does it verify the correctness or completeness of such information.

It is hereby clarified that Standard & Poor's Maalot rating does not reflect risks relating to and/or arising from breaches, through intent or oversight, of any of the obligations included in the bond documents and/or the incorrectness or inaccuracy of any of the representations contained in the documents relating to the bond offering that is the subject of this rating, Standard & Poor's Maalot report or the facts that form the basis for the opinions expressed to Standard & Poor's Maalot as a condition for the giving of the rating, fraudulent or dishonest acts of commission or omission, or any other act that contravenes the law.

The ratings could be revised as a result of changes to the information received or for other reasons. The rating should not be perceived as expressing any opinion concerning the price of the securities on the primary or secondary market. The rating should not be perceived as expressing any opinion concerning the advisability of buying, selling or holding any security.

© Standard & Poor's Maalot reserves all rights. This summary is not to be copied, photographed, distributed or used for any commercial purpose without Standard & Poor's Maalot consent, except to provide a copy of the whole report (with an acknowledgement of its source) to potential investors in the bonds that are the subject of this rating report for the purpose of their reaching a decision concerning the acquisition of the aforesaid bonds.

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