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SAF TEHNIKA A/S (Incorporated with Limited Liability in the Republic of Latvia) ______

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SAF TEHNIKA A/S (Incorporated with Limited Liability in the Republic of Latvia) ______ OFFERING CIRCULAR SUBJECT TO COMPLETION AND AMENDMENT PRELIMINARY OFFERING CIRCULAR DATED MAY 10, 2004 Offering of up to 479,049 Offer Shares (of which 60,000 are subject to an over-allotment option described below) memorandum is not an offer to sell to memorandum is not an offer SAF TEHNIKA A/S (Incorporated with limited liability in the Republic of Latvia) _________________________ ermitted. ermitted. Offer Price Range LVL 32.00 to LVL 37.00 per Offer Share ______________________________ Up to 479,049 shares with a par value of LVL 1.00 each (the “Offer Shares”) of SAF Tehnika A/S (together with its subsidiaries, the “Company” or “SAF”), are being offered in a combined offering (the “Combined Offering”), which comprises (i) an offering of up to 444,049 existing Offer Shares (including 60,000 Shares covered by the Over-Allotment Option described below) by AS MicroLink (“MicroLink”) and certain other existing shareholders of the Company (the “Selling Shareholders”) and 35,000 new Offer Shares by the Company. The Combined Offering is made to (i) institutional and professional investors in Latvia and to institutional investors outside Latvia and the United States in reliance on Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “Securities Act”) and a private placement in the United States to qualified institutional buyers (“QIBs”), as defined in and in reliance on Rule 144A (“Rule 144A”) under the Securities Act (the “Institutional Offering”); (ii) the public in Latvia (the “Retail Offering”). Up to 10,000 new or existing Offer Shares in the Retail Offering have been reserved for a preferential right of subscription by the employees of SAF (the “Employee Offering”). A number of new Offer Shares in the Institutional Offering has been reserved for later delivery to Viking Microwave AB (“Viking Microwave”) in Sweden in payment of certain assets proposed to be purchased by the Company no later than June 1, 2004. The existing Offer Shares are offered by the Selling Shareholders (see “Shares, Share Capital and Ownership Structure – Shareholders of the Company and the Selling Shareholders”). The offer price per Offer Share will be determined through a book building process and is expected to be the same for all investors in the Combined Offering. The initial offer price range for the Offer Shares is LVL 32.00 – 37.00 (approximately EUR 49.00 – 56.00) (the “Offer Price Range”). MicroLink has granted the Global Coordinator an option (the “Over-Allotment is not complete and may be changed. The preliminary offering Option”), exercisable within 30 days of the date of the commencement of the trading on the Official List of the Riga Stock Exchange (the “Riga Stock Exchange”), to purchase up to an additional 60,000 existing Shares of the Company (the “Additional Shares”) for purposes of covering possible over-allotments. See “Underwriting – General.” ecurities in any jurisdiction where the offer or sale is not p sale where the offer or ecurities in any jurisdiction Prior to the Combined Offering, there has been no public market for the Offer Shares or the existing shares of the Company (together the “Shares”). See “Underwriting” for a discussion of certain factors affecting the Offer Price. The Company has made an application to list the Shares on the Riga Stock Exchange. Trading in the Shares is expected to commence on the Official List of the Riga Stock Exchange on or about May 26, 2004. A Latvian-language offering circular relating to the Combined Offering has been registered with the Latvian Finance and Capital Markets Commission (the “Finance Commission”). This English-language offering circular (the “Offering Circular”) has not been registered with the Finance Commission and the Finance Commission is not responsible for the information provided in this Offering Circular. The Offer Shares will rank pari passu with the existing shares of the Company and will be eligible for any dividends declared and paid on the Shares for the financial period starting on July 1, 2003 and for any dividends declared and paid thereafter. Possible dividends paid by the Company to shareholders who are not generally subject to taxation in Latvia may be subject to deduction of Latvian taxes as described in “Taxation – Latvian Taxation.” See “Risk Factors” for a discussion of certain factors that should be considered by prospective investors. THE OFFER SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. ACCORDINGLY, THE OFFER SHARES ARE BEING OFFERED AND SOLD IN THE UNITED STATES ONLY TO QIBs IN RELIANCE ON THE EXEMPTION PROVIDED BY RULE 144A AND ARE BEING OFFERED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. YOU ARE HEREBY NOTIFIED THAT THE SELLERS OF THE OFFERED SHARES MAY BE RELYING ON THE EXCEPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. THE SHARES ARE SUBJECT TO CERTAIN SELLING RESTRICTIONS. SEE “UNDERWRITING - SELLING RESTRICTIONS.” Advisor to the Company and Global Coordinator: The information contained in this preliminary offering memorandum buy these s soliciting an offer to and it is not these securities The date of this Offering Circular is May , 2004 TABLE OF CONTENTS Summary............................................................................................................................................................ 7 The Combined Offering.................................................................................................................................... 9 Background to the Combined Offering .......................................................................................................... 12 Risk factors...................................................................................................................................................... 13 Dividends and dividend policy ....................................................................................................................... 21 Use of proceeds ............................................................................................................................................... 22 Capitalization................................................................................................................................................... 23 Exchange rates................................................................................................................................................. 24 Business........................................................................................................................................................... 25 Selected financial data..................................................................................................................................... 42 Management’s discussion and analysis of the Company’s financial condition and results of operations ... 46 Management .................................................................................................................................................... 55 Shares, Share capital and ownership structure ............................................................................................... 59 Latvian securities market ................................................................................................................................ 64 Taxation........................................................................................................................................................... 67 Latvian taxation............................................................................................................................................... 67 U.S. federal income taxation........................................................................................................................... 69 Underwriting.................................................................................................................................................... 73 Legal matters ................................................................................................................................................... 79 Independent auditors ....................................................................................................................................... 79 Index to financial statements......................................................................................................................... F-1 Annex A. Summary of significant differences between Latvian GAAP and IFRS .......................... A-1 Annex B: Articles of association .......................................................................................................B-1 Annex C: The Republic of Latvia......................................................................................................C-1 Annex D: Glossary............................................................................................................................ D-1 This Offering Circular has been prepared by the Company and the Selling Shareholders in connection with the Combined Offering to be used solely for the purpose of enabling a prospective investor to consider the subscription
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