1. What impact does the agreement with Penta have upon my Stream Communications shares now?

2. What role is Penta expected to play in Stream Poland as the majority owner?

3. How will Penta influence management and governance of the company?

4. How much has Penta invested in Stream Poland and when will the funds be available? How will the funds from the equity investment be used?

5. What is Stream Poland's strategy?

6. How is Penta assisting Stream Poland in determining and securing the appropriate capital structure to facilitate growth?

7. What protections exist in the agreement for the minority shareholder, Stream Communications?

What impact does the agreement with Penta have upon my Stream Communications shares now?
The agreement gives Penta Investments a controlling stake in Stream Poland. Stream Poland is now owned by two entities, Stream Communications with 49% and Penta Investments with 51%.  The investment offers Stream Poland, the main asset of Stream Communications, the opportunity to grow more rapidly through a combination of factors: 1) Penta's direct equity investment; 2) access to lower cost debt possible with Penta as a majority shareholder; and 3) access to management and governance resources. Back to top 

What role is Penta expected to play in Stream Poland as the majority owner?
As a private equity investor, Penta took a majority equity position in Stream Poland in order to increase the value of the company and eventually to monetize that increase via the sale of Penta's equity stake exclusively, or in connection with the sale of both shareholders' stakes in Stream Poland. Generally, private equity investors invest for a limited period of time using a mixture of equity and debt financing to enable the investment company to grow more rapidly through access to funding, in exchange for varied levels of involvement in the company. Penta Investments intends to hasten the growth of Stream Poland's business by assisting Stream Poland in determining and securing the appropriate capital structure to facilitate growth, and by providing management and governance resources to the company. Back to top

How will Penta influence management and governance of the company?
Penta and Stream Communications both make appointments to the two boards which determine the strategy and capital structure of Stream Poland. The Management Board consists of 3 members: 2 members nominated by Penta, and 1 member nominated by Stream Communications. The Management Board runs the day to day operations of the company.  The Supervisory Board consists of three members: two designated by Penta, and one by Stream Communications. The Supervisory Board provides strategic guidance and monitors the financial results of the company. Back to top

What is Stream Poland's strategy?
Stream Communications' overall plan to consolidate the Polish cable market has not changed fundamentally. Operational goals for Stream Poland include the following: Increasing the number of subscribers through acquisitions and organic growth, full system bidirectionality by the end of 2009, as well as the capability for delivery of digital television, internet access, and VOIP services. Back to top

How much has Penta invested in Stream Poland and when will the funds be available? How will the funds from the equity investment be used?
Penta's equity investment in the company is expected to take place via two phases:

The First Phase of Financing
As previously announced and completed on February 22, 2008, the first phase of this financing includes:

1. Penta purchased 15,640 existing shares in Stream Poland from Stream Canada for PLN 21,637,052 [US $8.3 million at closing of the agreement].
2. Penta purchased 16,900 of newly issued shares in Stream Poland for PLN 23,380,190 [US $ 9.6 million], bringing Penta's ownership in Stream Poland to 51% at closing.

15,640 existing shares in Stream Poland purchased from Stream Canada for PLN 21,637,052

From these proceeds Stream Canada repaid an outstanding debt to Barrington Wedgewood in the amount of US $3.2 million (after a discount of approximately USD $480,000 for early repayment). The remaining funds will be used for development of new projects in telecommunication sector, working capital, including the cost of moving the Company to a recognized exchange.

16,900 of newly issued shares in Stream Poland purchased for PLN 23,380,190 [US $ 9.6 million at closing]

Approximately US$2.7 million of the proceeds from the newly issued shares were used to repay a subsidiary of Penta that lent Stream Poland proceeds sufficient to redeem bonds early per the Company's announcement dated December 27, 2007. The remaining US$6.9 million of the proceeds from the newly issued shares will be used to finance further growth of the company.

The Second Phase of Financing

Penta has made a commitment to provide further capital to finance a second phase of investment to be utilized exclusively on additional cable TV network acquisitions, the modernisation of networks and the introduction of new services. The terms of the second phase of investment are the same as the first phase, with new shares in Stream Poland issued for proceeds of over PLN 100,000,000 [approximately USD $44.35 million at current exchange rates]. Back to top

How is Penta assisting Stream Poland in determining and securing the appropriate capital structure to facilitate growth?
During phases 1 and 2, Penta has committed to assist Stream Poland in arranging debt financing that will enable it to maintain a debt to equity structure that is both conservative and sufficient to realize the growth objectives of the company. The Company is targeting a 2:1 debt to equity structure during the Penta investment period. The Management and Supervisory Boards negotiate and approve the ultimate amounts and terms of the debt financing in order to ensure that the capital structure is one that is sustainable for Stream Poland, while maximizing growth in a capital-intensive industry. Back to top

What protections exist in the agreement for the minority shareholder, Stream Communications?

• The Management Board of Stream Poland, jointly put into place by Penta Investments and Stream Communications, will draft and agree upon the Stream Poland Business Plan, the blueprint for Stream Poland's growth over the life of the Penta investment.
• Matters core to Stream Poland's business require 90% approval via a shareholders vote, allowing Stream Canada to veto and or compel negotiation on these matters, if necessary.
• Neither Penta nor Stream Communications are permitted to transfer any shares of Stream Poland, directly or indirectly, for a period of one year from the closing (i.e, until late February 2009) without the consent of the other shareholder.
• Right of co-sale or Tag Along Option: After the end of the first year, if either Penta or Stream Communications decides to sell its shares of Stream Poland to a prospective third party purchaser, then the shareholder proposing to sell its share (for example, Penta) should give reasonable notice in reasonable detail to the other shareholder (for example, Stream Communications) in sufficient time to allow the Stream Communications to participate in the sale on the same terms. To the extent the prospective third party purchaser refuses to purchase shares from Stream Communications, Penta shall not sell to such prospective purchaser unless and until Penta purchases the Stream Poland shares owned by Stream Communications.
• Exiting the Investment via a Put Option: At any time following the third anniversary of the closing (ie., late February 2011), Stream Communications has the right to request that Penta try to obtain a buyer for the Stream Poland shares owned by Stream Communications. In the event Penta has not found a buyer within six months of Stream Communications' request, Stream Communications can require Penta to acquire all of its Stream Poland shares. The price to be paid to Stream Communications for the Stream Poland shares would be the fair market value at that time, to be established through negotiation or if necessary by an independent valuator. The fair market value will be based on standard methodologies used for valuing cable television companies such as discounted cash flow, comparable values used on acquisitions of companies with a similar business, and using a trading multiple reflecting that of other comparable companies. If Stream Communications and Penta cannot agree on a valuation, or either party rejects the independent valuator's opinion, then both parties are obligated to cooperate in obtaining third party offers for all of the shares of Stream Poland - in that case, Penta is obligated to either buy out Stream Communications' shares of Stream Poland at the same price as the best 3rd party offer received, or Penta must agree to allow the 3rd party purchaser to buy 100% of the shares of Stream Poland, including all shares owned by Penta and all shares owned by Stream Communications.