Posting of Circular

RNS Number:8985M
Carter & Carter Group PLC
30 January 2008


For Immediate Release                                            30 January 2007



                           Carter & Carter Group plc

                      ("Carter & Carter" or the "Company")



    Posting of circular to waive the borrowing restrictions contained in the
              Company's articles of association and notice of EGM


30 January 2008


The Company is today posting a circular to its shareholders convening an
extraordinary general meeting ("EGM") of the Company on 15 February 2008, at
which a resolution (the "Resolution") will be proposed to waive the borrowing
restriction contained in regulation 90.1 of the Company's articles of
association (the "Articles").


Waiver of the Articles borrowing restriction


As announced on 30 November 2007, the Company has been working with its
auditors, PricewaterhouseCoopers LLP, in order to enable the completion of the
audit of the results for the year ended 31 July 2007. The work in respect of the
audit remains ongoing and conclusion of the audit remains outstanding. However,
the directors of the Company ("Directors" or "Board") believe that, due to the
financial performance for the year ended 31 July 2007, it is likely that the
finalisation of the audit will result in a substantial write-down of goodwill.


In the same announcement, it was explained that the Company's and its
subsidiaries' (the "Group") indebtedness going forward was likely to be higher
than the performance of the business was able to support. The Group's net
indebtedness has increased as follows:

                       31 January 2007       31 July 2007   17 January 2008
 Net indebtedness                 £86m              £111m             £129m

                                      

The Group is forecasting a further increase in net indebtedness over the next
few months as additional working capital is required. In the year to 31 July
2008 net indebtedness is currently forecast by the Board to peak at £175
million.


Regulation 90.1 of the Articles provides that the Board shall restrict the
borrowings of the Company so as to procure that such borrowings shall not exceed
a sum equal to "three times the adjusted total of capital and reserves", as
defined by the Articles. Due to the reasons set out above it is expected that,
when the Company finalises its results for the year ended 31 July 2007, the
anticipated substantial reduction in goodwill, which will result in a
corresponding reduction in capital and reserves, would result in the Company's
borrowings being in excess of the limit stipulated by the Articles.


The Articles provide that the limit set may be exceeded if an ordinary
resolution is passed by the shareholders of the Company. Therefore, to allow the
Company to exceed its borrowing limits, as stipulated by the Articles, and to
ensure the Company is able to seek the required further borrowing from its
lenders, the Board believes it is necessary to pass the Resolution to authorise
the waiver of the borrowing limit in the Articles.


Serious loss of capital


It has come to the Directors' attention that, as a result of the increase in the
Company's overall indebtedness and the trading performance since 31 January
2007, the net assets of the Company have fallen to below half the current called
up share capital of the Company. In these circumstances, the Directors are
required, pursuant to section 142 of the Companies Act 1985, to convene an
extraordinary general meeting of the Company to consider whether any, and if so
what, steps should be taken to deal with the situation. Accordingly, this matter
will also be considered at the EGM.


The Board remains in active discussions with the Company's lenders. If these
negotiations are successful, the Board anticipates that the Company will
announce full details of a restructuring in February 2008. At this time, a
further circular containing full details of the proposed restructuring will be
sent to the Company's shareholders in order to seek shareholder approval of such
restructuring.


Notice of EGM


For the purposes of considering and, if thought fit, passing the Resolution and
further for the purposes of considering, in accordance with s.142 of the
Companies Act 1985, whether any, and if so what, steps should be taken to deal
with the situation that the net assets of the Company are less than half of its
called up share capital, the circular to be posted today gives notice of an EGM
of the Company which will be held at Jurys Inn, Waterfront Plaza, Station
Street, Nottingham NG2 3BJ at 9.00 a.m. on 15 February 2008.


The Directors believe that failure to pass the Resolution is likely to result in
the Company breaching its borrowing restrictions under the Articles. This would
cause the Company to be unable to fund its expected working capital requirements
and/or would require the Company to repay a substantial amount of the Company's
existing borrowings so that total borrowings do not exceed a sum equal to "three
times the adjusted total of capital and reserves", as defined in the Articles,
which it would be unable to do. In these circumstances, the Board is of the
opinion that alternative sources of finance would not be available and that the
Board would be forced to seek the appointment of an administrator or pursue
other insolvency proceedings shortly thereafter.


The Board is of the opinion that the Resolution is in the best interests of the
Company's shareholders as a whole. Accordingly, in the circular to be posted
today, the Board will be unanimously recommending that the shareholders of the
Company vote in favour of the Resolution at the EGM, as the Directors intend to
do in respect of their own beneficial holdings.


Copies of the circular have been submitted to the UK Listing Authority and will
shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at The Financial Services Authority, 25 The
North Colonnade, Canary Wharf, London E14 5HS.



ENQUIRIES:

Buchanan Communications             020 7466 5000
Mark Edwards
Suzanne Brocks






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            The company news service from the London Stock Exchange

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