Related party transaction

RNS Number:6136G
Dobbies Garden Centres PLC
30 October 2007

                                        
                           Dobbies Garden Centres plc
                                (the "Company")
                            
                            Related party transaction


The Company announces that it has entered into a committed revolving loan
facility agreement with Tesco PLC ("Tesco") on 30th October 2007 under which
Tesco has agreed to provide a committed revolving facility (the "Facility") of
up to a maximum amount of #110 million. Amounts advanced under the Facility will
bear interest (payable quarterly) at a rate of (a) 3-month LIBOR plus 0.60% in
respect of the first #20 million of the Facility drawn down from time to time
and (b) 3-month LIBOR plus 0.85% in respect of amounts drawn down under the
Facility in excess of #20 million from time to time. The Facility is repayable
in full on 30th October 2017, save that, (a) if a change of control of the
Company occurs, Tesco shall have the right to cancel the Facility on 30 days'
notice and upon cancellation the Facility (together with interest accrued
thereon) shall become immediately repayable, and (b) if the Company defaults on
any payment due under the Facility, Tesco may by notice to the Company forthwith
cancel the Facility and the Facility (together with interest accrued thereon)
shall become immediately repayable.

The Company will draw down under this Facility to repay in full the amounts
currently drawn under the Company's existing term loan and working capital
facility with Bank of Scotland plc which totals #84.9m. The Company have enjoyed
a long standing relationship with Bank of Scotland plc, and Bank of Scotland plc
will remain the Company's relationship banker for transactional banking and
working capital funding.

The Company intends to use the balance of the Facility provided by Tesco to
finance the Company's ongoing new store development programme.

As Tesco is a substantial Shareholder of the Company (having a beneficial
interest in approximately 65 % of the Company's share capital), the provision of
the Facility by Tesco to the Company is a related party transaction according to
the AIM Rules. The Directors of the Company, having consulted with its nominated
adviser, Brewin Dolphin, consider the terms of the Facility to be fair and
reasonable insofar as the Company's shareholders are concerned.

Given the Company's expansion plans, it is the intention of the Board that cash
generated from operations will be used to fund future growth rather than be
distributed as a dividend to shareholders.  A review of additional funding
requirements and possible sources of those funds is underway.

James Barnes, Chief Executive, said:

"As previously stated, the Company's strategy for the future remains unchanged -
to position Dobbies as the leading gardens and homes retailer in the UK and to
develop the horticultural and environmental aspects of our brand that reinforce
our position as first choice for plants and gardening. I believe we have a
unique opportunity to deliver this.

Our ambition is to raise the growth rate of the business in the coming years,
through new site developments, by acquisitions as and when appropriate, and via
our new internet business."

For further information, please contact:
Sharon Brown, Dobbies Garden Centres plc                     0131-663-6778
(Finance Director)

Sandy Fraser, Brewin Dolphin                                 0131-225-2566
(nominated advisor and joint broker to Dobbies)

Antonia Coad, Bell Pottinger Corporate & Financial           0207-861-3232
(financial PR advisor to Dobbies)



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