Notice of EGM & Proposed Restructuring

 

TIDMWHY 
 
RNS Number : 8211D 
White Young Green PLC 
09 December 2009 
 

White Young Green plc ("White Young Green" or the "Company") 
 
 
Notice of Extraordinary General Meeting 
 
 
Proposed Restructuring 
 
 
Introduction 
 
 
Further to the announcement on 30 October 2009 regarding the Company's proposed 
capital restructuring, the Board of White Young Green announces that a circular 
convening an extraordinary general meeting relating to the Restructuring is 
expected to be posted to Shareholders today. 
 
 
The Circular contains Proposals (further details of which are set out below) for 
which Shareholder approval is required in order to implement the Restructuring. 
 
 
The purpose of the Restructuring, which is described below, is to reduce the 
level of the Group's debt and to create a strengthened and more appropriate 
capital structure as a platform upon which to build a sustainable, strong and 
resilient long term business that is better positioned to compete more 
effectively. 
 
 
The Board believes that the Proposals, including the Restructuring, are in the 
best interests of Shareholders and that it is very important that Shareholders 
vote in favour of the Restructuring Resolutions at the EGM, to be held on 6 
January 2010, so that the Restructuring can proceed. It is likely that failure 
to pass the Restructuring Resolutions would lead to the Company entering into 
administration or some other form of insolvency procedure. 
 
 
The EGM is to be held at 2.00 p.m. on 6 January 2010 at the Village Hotel, 186 
Otley Road, Headingley, Leeds LS16 5PR. 
 
 
John Richardson, one of the Independent Directors, who was due to retire from 
the Board on 31 December 2009, will remain as a director until 31 January 2010. 
 
 
Copies of the Circular have been submitted to the UK Listing Authority and will 
shortly be available for inspection by the public during normal business hours 
on any week day (public holidays excepted) 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 and the Circular 
will also be available on the Company's website and at the Company's registered 
office (Arndale Court, Headingley, Leeds LS6 2UJ). 
 
 
Unless otherwise defined, capitalised terms in this announcement have the same 
meaning as in the Circular dated 9 December 2009. 
 
 
For further information, please contact: 
 
 
+------------+---------------+ 
| White      | Tel:          | 
| Young      | 0113 278 7111 | 
| Green      |               | 
| plc        |               | 
+------------+---------------+ 
| Paul       |               | 
| Hamer,     |               | 
| Chief      |               | 
| Executive  |               | 
| Officer    |               | 
+------------+---------------+ 
| David      |               | 
| Wilton,    |               | 
| Group      |               | 
| Finance    |               | 
| Director   |               | 
+------------+---------------+ 
|            |               | 
+------------+---------------+ 
| Rothschild | Tel:          | 
|            | 0113 200 1900 | 
+------------+---------------+ 
| David      |               | 
| Forbes /   |               | 
| Stephen    |               | 
| Moore      |               | 
+------------+---------------+ 
|            |               | 
+------------+---------------+ 
| Financial  | Tel: 020      | 
| Dynamics   | 7269 7291     | 
+------------+---------------+ 
| Jon        |               | 
| Simmons    |               | 
+------------+---------------+ 
 
 
The Proposals 
 
 
The Board announced on 30 October 2009 that it had signed heads of terms with 
the Lenders for the refinancing of the Company's bank facilities, combined with 
a broader restructuring of the Company's capital structure, which includes the 
conversion of approximately GBP52.9 million of the Group's indebtedness into New 
Ordinary Shares and Preference Shares. The Restructuring is conditional on, 
amongst other things, Shareholder approval of the Proposals. 
 
 
The principal terms of the Proposals, including the Restructuring, are as 
follows: 
 
 
  *  The conversion of approximately GBP22.9 million of debt held by the Lenders in 
  exchange for 29,993,441 Post-Consolidation New Ordinary Shares; 
 
 
 
  *  The conversion of GBP30.0 million of additional debt held by the Lenders in 
  return for 27.6 million "A" Preference Shares with a nominal value of GBP27.6 
  million and 2.4 million "B" Preference Shares with a nominal value of GBP2.4 
  million; 
 
 
 
  *  The adoption of two new share incentive schemes by the Company, being the White 
  Young Green Joint Share Ownership Plan 2009 and the White Young Green 
  Performance Share Plan 2009. The Lenders have required, as a condition to the 
  Restructuring proceeding, that arrangements are put in place to appropriately 
  incentivise certain employees, and the Company has determined that the New Share 
  Incentive Plans will best achieve that end; 
 
 
 
  *  As a condition of the Restructuring, the Lenders have directed that the 2.4 
  million "B" Preference Shares and 8,631,111 Post-Consolidation New Ordinary 
  Shares that would otherwise be issued directly to the Lenders on the conversion 
  of the debt, be instead issued directly to the New Employee Benefit Trust, with 
  the intention that: 
 
 
 
  *  such "B" Preference Shares will be used to incentivise the Related Party 
  Managers and Related Party Directors (excluding Mike McTighe) by way of 
  satisfying awards over "B" Preference Shares proposed to be made to such 
  individuals under the White Young Green Performance Share Plan 2009; 
 
 
 
  *  705,797 Post-Consolidation New Ordinary Shares, representing 2 per cent. of the 
  Enlarged Issued Share Capital of the Company (or, if less, such number of 
  Post-Consolidation New Ordinary Shares as have a market value of GBP250,000 at 
  the time that the One-Off Award is offered to Mike McTighe), will be used for 
  the purpose of the One-Off Award proposed to be granted to incentivise Mike 
  McTighe (who will be an Investor Director nominated by the Lenders with effect 
  from Completion); and 
 
 
 
  *  the remainder of such Post-Consolidation New Ordinary Shares will be used in 
  part for the purpose of making proposed awards over Ordinary Shares to the 
  Related Party Managers and Related Party Directors (excluding Mike McTighe) and 
  awards to other Employees, determined at the discretion of the Remuneration 
  Committee under the White Young Green Joint Share Ownership Plan 2009, and in 
  part for the purpose of making awards over Ordinary Shares pursuant to the White 
  Young Green Performance Share Plan 2009 to certain Employees, to be determined 
  at the discretion of the Remuneration Committee. 
 
 
 
  *  Refinanced Lending Facilities totalling GBP58.25 million, comprising GBP50.0 
  million of term debt and GBP8.25 million of working capital facilities will be 
  provided by the Lenders. In addition, EUR38.0 million of committed bonding 
  facilities are to be provided by the Lenders; and 
 
 
 
  *  Cancellation of admission of the Ordinary Shares to the Official List and to 
  trading on the London Stock Exchange's main market for listed securities and 
  admission of the Enlarged Issued Share Capital to trading on AIM, as the Company 
  will no longer have sufficient shares in public hands to be able to maintain its 
  listing on the Official List. Cancellation of the listing on the Official List 
  requires Shareholder approval. 
 
 
 
Immediately following Completion (and before any awards over Ordinary 
Shares have been made by the New Employee Benefit Trust): 
 
 
  *  The Lenders will own 60.5 per cent.; 
 
 
 
  *  The New Employee Benefit Trust will own 24.5 per cent.; and 
 
 
 
  *  Existing Shareholders (including the existing stakes of Related Party Managers 
  and Related Party Directors and certain Employees) will own 15.0 per cent. 
 
 
 
of the Enlarged Issued Share Capital. 
 
 
The proposed new capital structure immediately following the Restructuring 
represents the final outcome of the Board's negotiations with the Lenders. The 
Group's liabilities will be reduced and net assets increased as a consequence of 
the conversion of approximately GBP52.9 million of indebtedness into equity. 
The Restructuring seeks to address the adverse impact of White Young Green's 
existing unsustainable indebtedness and associated interest cost on its 
business, whilst retaining the opportunity to deliver value to Shareholders in 
the future. As a result of the Restructuring, the credit profile of the Group is 
expected to be substantially enhanced with regard to suppliers and customers. 
This solution has been negotiated with a view to providing the Group with a 
strengthened and sustainable long-term capital structure. This proposed 
structure is considered by the Board to be crucial in ensuring that the Group 
can address its financial obligations in the future, which the Board believes is 
critical to the Company's ability to create value for Shareholders. 
 
 
As a result of the Restructuring, the Group's earnings will be affected by: 
 
 
  *  the increased margin payable under the terms of the Restructured Facilities 
  Agreement compared to the terms of the Existing Facilities Agreement; 
 
 
 
  *  the reduction in the total amount of the Group's debt; 
 
 
 
  *  any changes in LIBOR (to the extent not hedged), which will affect the interest 
  payable by the Company on the Refinanced Lending Facilities under the terms of 
  the Restructured Facilities Agreement; 
 
 
 
  *  the fees and commissions payable under the terms of the Restructured Facilities 
  Agreement compared to the terms of the Existing Facilities Agreement; 
 
 
 
  *  any Preference Dividend paid; and 
 
 
 
  *  the Redemption Premium payable, dependent on when the redemption of the 
  Preference Shares occurs. 
 
 
 
The Proposals, including the Restructuring, are conditional upon, inter alia, 
Shareholders' approval being obtained at the EGM. The arrangements in connection 
with the Issue to the New Employee Benefit Trust, the implementation of the 
Investment Agreement and the Framework Agreement, the proposed grant of awards 
under the White Young Green Performance Share Plan 2009 to the Related 
Party Directors (other than Mike McTighe) and the Related Party Managers, the 
proposed grant of the One-Off Award to Mike McTighe and the proposed grant of 
awards under the White Young Green Joint Share Ownership Plan 2009 to the 
Related Party Directors (other than Mike McTighe) and the Related Party Managers 
will be classified as related party transactions under the Listing Rules and 
require approval by the Independent Shareholders at the EGM. 
 
 
The Board is of the view that the Restructuring represents the best prospect for 
securing a significantly strengthened capital structure for the Group and the 
continuing support of its Lenders, upon which the Group is dependent for its 
ability to trade. 
 
 
The Directors will not be able to proceed with the Restructuring unless 
and until all the proposed Restructuring Resolutions are approved at the EGM, 
since the Restructuring Resolutions are inter-conditional. 
 
 
Furthermore, the Board believes that, without the Restructuring proceeding, the 
Group would be unable to continue to operate within the Existing Lending 
Facilities and would be in default under the Existing Facilities Agreement. 
There already exist certain defaults under the Existing Facilities Agreement, in 
relation to which the Lenders have agreed to suspend any enforcement action (but 
not to waive the relevant breaches) until the earlier of (i) 5.00 p.m. on 8 
January 2010; and (ii) the date (if any) on which the Lenders terminate their 
obligations to enter into the Restructuring, which they are entitled to do, 
inter alia, if Shareholders fail to pass all of the Restructuring Resolutions at 
the EGM. In addition, the Lenders have agreed to defer testing of the financial 
covenants until the same time. If, however, the Restructuring Resolutions are 
all passed and Completion takes place, then the Existing Facilities Agreement 
(and any breaches under it) will fall away and be replaced by the Restructured 
Facilities Agreement. The Board is of the view that alternative funding sources 
are very unlikely to be available and, in this event, the Group would be unable 
to sustain its position as a going concern. Therefore, it is likely that failure 
to pass the Restructuring Resolutions would lead to the Group entering into 
administration or some other form of insolvency procedure, which would, in the 
Board's opinion, result in Shareholders receiving no value for their current 
shareholdings. 
 
 
Shareholders are therefore strongly recommended to vote in favour of all of the 
Resolutions to be proposed at the EGM by completing the Form of Proxy 
accompanying the Circular and returning it to the address marked on it as soon 
as possible and, in any event, so as to be received by no later than 2.00 p.m. 
on 4 January 2010. 
 
 
Background to and reasons for the Restructuring 
 
 
White Young Green underwent a sustained period of continuous revenue and 
earnings growth until 2008. Revenue and profit before tax grew by 195 per cent. 
and 207 per cent. to GBP232.1 million and GBP21.0 million respectively over the 
four years ended 30 June 2008. During this time the Company acquired a total of 
15 businesses for a total consideration (including potential deferred 
consideration) of approximately GBP103.4 million, funded through a mixture of 
debt and equity. Approximately GBP66 million of the total consideration paid has 
been funded using debt which resulted in the Company's ratio of net debt to 
EBITDA increasing from 1.3 times to 2.1 times over the same period. 
 
 
As at 30 June 2008, the Group had net debt of GBP68.2 million (including accrued 
interest and fees) and contingent exposures to certain of the Lenders of 
approximately GBP26.7 million under bonding arrangements. Audited EBITDA for the 
year then ended was GBP32.1 million, which resulted in the Company's ratio of 
net debt to EBITDA of 2.1 times (or 3.0 times including contingent 
bonding exposures). (These figures have been calculated without material 
adjustment from the annual report and accounts of White Young Green as at and 
for the year ended 30 June 2008.) 
 
 
As set out in the unaudited interim results for the six months ended 31 December 
2008 and further described in the audited results for the year ended 30 June 
2009, trading conditions in White Young Green's key markets have been extremely 
challenging, and are expected by the Directors to continue to be so for some 
time due to the prolonged recession, the expectation of a slow recovery, 
particularly in the UK and the Republic of Ireland, and the predicted cuts in 
public sector spending. The impact of the global economic downturn in mid to 
late 2008 and early 2009 has had a materially detrimental impact on the 
Company's performance. For the year ended 30 June 2009 gross revenue fell by 7.3 
per cent. to GBP261.6 million and profit before tax (before exceptional items) 
fell by 42.4 per cent. to GBP12.1 million. The Company reported a loss before 
tax (after exceptional items) of GBP128.9 million for the year ended 30 
June 2009 (2008: profit before tax (after exceptional items) of GBP16.8 
million). (These figures have been extracted without material adjustment from 
the annual report and accounts of White Young Green for the year ended 30 June 
2009.) 
 
 
The Board, recognising the likelihood of a prolonged period of uncertain and 
challenging market conditions, acknowledged that the combination of the 
Company's capital structure and weakening financial performance created material 
risks for its ability to continue to operate within the terms of the Existing 
Facilities Agreement. The Company considered raising finance through an equity 
issue in order to ensure that, despite any further downturn in trading 
performance, the Group would continue to be able to satisfy its existing banking 
covenants. For a variety of reasons, the Company was unable to complete any such 
fundraising. On 25 February 2009, the Board announced that it believed that 
the Company was at risk of breaching the covenants under the Existing Facilities 
Agreement and entered into negotiations with the Lenders. 
 
 
Since that time, the Company has been in intensive discussions with its Lenders 
and has undertaken extensive work to agree a solution to rebalance its capital 
structure on a strengthened basis, to reduce the Company's level of borrowings 
and to refinance the Group's existing indebtedness. It has also considered other 
alternatives, such as obtaining funding from other sources and a possible sale 
of parts or all of the business. 
 
 
Following the appointment of David Wilton as Group Finance Director on 10 
February 2009, the Group undertook an extensive review of its forecasts and 
systems and has also carried out a detailed exercise to re-examine the carrying 
value of goodwill, properties, debtors, work-in-progress and other assets on 
its balance sheet, the results of which were disclosed in the audited results 
for the year ended 30 June 2009.As described in these results, the Company 
incurred an exceptional charge of GBP138.8 million for the year ended 30 June 
2009, mainly arising from the write down in the carrying value of these assets. 
 
 
In addition, adverse working capital flows arising from deterioration in debtor 
days and work-in-progress days, as well as resulting indirectly from the 
write-downs in debtor and work-in-progress balances that were previously 
believed to be realisable, and adverse exchange rate movements which were 
not adequately protected through the Group's foreign currency hedging 
strategies, caused net debt to increase above previous expectations during the 
year ended 30 June 2009. As at 30 June 2009, the Group had gross borrowings of 
approximately GBP96.2 million (including accrued interest and fees). The 
Group also had a contingent exposure to certain of the Lenders of approximately 
GBP31.0 million under bonding arrangements. At 30 June 2009, the Group had net 
debt of GBP88.7 million (including accrued interest and fees but excluding 
restricted cash balances). EBITDA for the year then ended was GBP22.6 million, 
which resulted in the ratio of net debt to EBITDA increasing from 2.1 times to 
3.9 times over the same period (or from 3.0 times to 5.3 times including 
contingent bonding exposures). 
 
 
The Board has also concluded that the level of debt within the Group is 
materially in excess of that supportable by the current and expected level of 
trading performance due to the prolonged recession which continues to result in 
significant reductions in activity, particularly in the UK and the Republic 
of Ireland. The Board also believes, based on the trading value of its quoted 
peers and its own forecasts of trading performance, that the enterprise value of 
the business is materially lower than its borrowings and that the Group cannot 
continue to compete effectively in its markets unless there is a 
substantial reduction in the level of debt carried by the Group. As announced on 
25 August 2009, the discussions with the Lenders developed to the stage where 
the only available options being considered by the Company and its Lenders would 
involve a material dilution to Existing Shareholders' holdings in the 
Company and could lead to the Company not meeting the requirements, in respect 
of the percentage of the issued share capital in public hands, to remain on the 
Official List. 
 
 
The Restructuring represents the conclusion of these negotiations. The Board 
believes that the 
Restructuring will provide the Group with a strengthened and sustainable long 
term capital structure enabling the Company to compete more effectively in the 
current challenging environment. The Restructuring will reduce the indebtedness 
of the Company by approximately GBP52.9 million through the conversion of 
borrowings into New Ordinary Shares and Preference Shares. 
 
 
During the past 18 months, the Board has been strengthened with new 
appointments. Mike McTighe joined as Non-Executive Chairman and will be an 
Investor Director nominated by the Lenders with effect from Completion, Paul 
Hamer was appointed as Chief Executive Officer, Graham Olver joined as 
Group Services Director and Company Secretary and, as mentioned above, David 
Wilton joined as Group Finance Director. The Directors now believe that they 
have a strong and focused board. 
 
 
Cost saving initiatives 
 
 
In response to the downturn in activity in mid to late 2008 and early 2009, the 
Board took swift and decisive action to restructure the Group's operations. At 
the same time as the interim results to 31 December 2008 were published, the 
Board announced cost saving measures to reduce the headcount by 235, resulting 
in annualised cost savings of approximately GBP5.7 million, after restructuring 
costs of GBP1.6 million, with additional non-payroll savings of GBP2.4 million 
also being made. This was augmented by a further headcount reduction of 324 and 
the closure of seven regional offices announced on 18 May 2009. 
 
 
Since then, the Board has continued to focus on cost control and making the 
business more efficient. As a result the Group has now closed a total of 17 
offices and has reduced headcount by 800 full-time equivalent employees. 
 
 
The decisive actions taken by the Board to introduce swift cost saving 
initiatives and restructure the Group's operations has created a more focused 
and efficient business. 
 
 
Placing to the Lenders 
 
 
In exchange for the conversion of approximately GBP22.9 million of debt, 
29,993,441 Post-Consolidation New Ordinary Shares have been conditionally placed 
to the Lenders. 
 
 
Of the 29,993,441 Post-Consolidation New Ordinary Shares conditionally placed to 
the Lenders, 21,362,330 Post-Consolidation New Ordinary Shares shall be issued 
to the Lenders representing, in aggregate, 60.5 per cent. of the Enlarged Issued 
Share Capital of the Company, and in relation to the remaining 
Post-Consolidation New Ordinary Shares, representing in aggregate 24.5 per cent. 
of the Enlarged Issued Share Capital of the Company, to which the Lenders would 
otherwise be entitled on conversion of such debt, the Lenders have directed that 
the same be issued to the New Employee Benefit Trust. 
 
 
In order to convert approximately GBP22.9 million of outstanding borrowings 
under the Existing Lending Facilities into Post-Consolidation New Ordinary 
Shares under the Placing to the Lenders (excluding the GBP30.0 million 
of outstanding borrowings to be converted to equity via the issue of the 
Preference Shares), and to thereby grant the Lenders an interest in 60.5 per 
cent. of the Enlarged Issued Share Capital of the Company (with 24.5 per cent of 
the Enlarged Issued Share Capital to be issued to the New Employee Benefit Trust 
at the direction of the Lenders), the Placing Price will be approximately 7.6 
pence, which represents an approximate 35.0 per cent. discount to the Closing 
Price of 11.75 pence per Ordinary Share on 29 October 2009 (being the last 
Business Day before the Announcement). 
 
 
The Directors believe that the level of the discount is in the best interests of 
the Company, in view of the agreement reached with the Lenders concerning the 
Restructuring. The Board therefore proposes to seek specific approval of the 
Placing Price and the discount from Shareholders at the Extraordinary General 
Meeting, in accordance with the Listing Rules. 
 
 
The Restructuring is subject to Shareholder approval. The Placing to the Lenders 
is conditional upon, inter alia, the fulfilment of the following conditions: 
 
 
  *  the passing, without amendment, of the Restructuring Resolutions at the 
  Extraordinary General Meeting; and 
 
 
 
  *  the Restructuring Agreements not having been terminated prior to Completion and 
  the conditions precedent to the Restructuring Agreements having been satisfied. 
 
 
 
Issue of Post-Consolidation New Ordinary Shares to the New Employee Benefit 
Trust 
 
 
Both the Board and the Lenders acknowledge that White Young Green is very much a 
"people business" and that the Group has a large number of important employees 
who are critical to its future success and future value creation. The Lenders 
have required, as a condition to the Restructuring proceeding, that 
arrangements are put in place to appropriately incentivise certain Directors and 
Employees, and the Company has determined that the New Share Incentive Plans 
will best achieve that end.  It is the intention that there will be widespread 
Employee share ownership going forward, subject to eligibility criteria to be 
established and approved by the Remuneration Committee. 
 
 
The Lenders have directed the Company to issue 8,631,111 Post-Consolidation New 
Ordinary Shares of the 29,993,441 Post-Consolidation New Ordinary Shares to 
which they are entitled on the conversion of the debt, directly to the New 
Employee Benefit Trust, rather than receiving such Post-Consolidation New 
Ordinary Shares themselves. 
 
 
The 8,631,111 Post-Consolidation New Ordinary Shares to be issued to the New 
Employee Benefit Trust at the direction of the Lenders will represent, in 
aggregate, 24.5 per cent. of the Enlarged Issued Share Capital of the Company, 
assuming the Restructuring takes effect. 
 
 
It is proposed that as soon as reasonably practicable after the 
Post-Consolidation New Ordinary Shares have been issued to the New Employee 
Benefit Trust and have been admitted to trading on AIM, the New Employee Benefit 
Trust will grant awards under the proposed White Young Green Joint 
Share Ownership Plan 2009 to Related Party Directors (other than Mike McTighe) 
and Related Party Managers as follows: 
 
 
+--------------------------------------------------+---------------------+ 
|                                                  |           Number of | 
|                                                  |  Post-Consolidation | 
+--------------------------------------------------+---------------------+ 
| Name of Related Party Director / Related Party   | New Ordinary Shares | 
| Manager                                          |                     | 
+--------------------------------------------------+---------------------+ 
|                                                  |                     | 
+--------------------------------------------------+---------------------+ 
| Paul Hamer                                       |           1,058,696 | 
+--------------------------------------------------+---------------------+ 
| David Wilton                                     |             264,674 | 
+--------------------------------------------------+---------------------+ 
| Graham Olver                                     |             264,674 | 
+--------------------------------------------------+---------------------+ 
| Ray Moore                                        |             264,674 | 
+--------------------------------------------------+---------------------+ 
| David Crichton-Miller                            |             264,674 | 
+--------------------------------------------------+---------------------+ 
 
 
provided always that in the case of each of the individuals mentioned above the 
number of Post-Consolidation New Ordinary Shares made subject to an award to 
that individual shall be capped so that the market value of the 
Post-Consolidation New Ordinary Shares so awarded shall not exceed 
the individual's base salary. 
 
 
For these purposes, the market value of the Post-Consolidation New Ordinary 
Shares under award and an individual's base salary will be measured at the time 
the invitations are issued to the above named individuals under the White Young 
Green Joint Share Ownership Plan 2009. 
 
 
It is further proposed that shortly after the Post-Consolidation New Ordinary 
Shares have been issued to the New Employee Benefit Trust and have been admitted 
to AIM, the New Employee Benefit Trust will grant the One-Off Award to Mike 
McTighe over 705,797 Post-Consolidation New Ordinary Shares held by the New 
Employee Benefit Trust, which represents 2 per cent. of the Enlarged Issued 
Share Capital of the Company (or, if less, such number of Post-Consolidation New 
Ordinary Shares as have a market value of GBP250,000 at the time that the 
One-Off Award is offered to Mike McTighe). 
 
 
In relation to the remainder of the Post-Consolidation New Ordinary Shares held 
by the New Employee Benefit Trust, it is intended that these are either used to 
grant awards under the White Young Green Joint Share Ownership Plan 2009 or the 
White Young Green Performance Share Plan 2009 to Employees, determined at 
the discretion of the Remuneration Committee. 
 
 
No specific proposals in relation to further awards over the Post-Consolidation 
New Ordinary Shares have been made save in respect of the Related Party 
Directors and the Related Party Managers. 
 
 
The issue of the 8,631,111 Post-Consolidation New Ordinary Shares to the New 
Employee Benefit Trust, in accordance with the direction of the Lenders, 
pursuant to which the Related Party Directors and the Related Party Managers may 
ultimately benefit by virtue of the proposed awards to be made to them, and the 
grant of the awards to the Related Party Managers and Related Party Directors 
(including the One-Off Award to Mike McTighe), are each deemed to be a related 
party transaction under the Listing Rules. Consequently each of 
these transactions will require Independent Shareholder approval at the 
Extraordinary General Meeting, where the Related Party Directors and Related 
Party Managers will be prohibited from voting in relation to the relevant 
resolutions. 
 
 
Preference Shares 
 
 
The Company has agreed with the Lenders to issue GBP30.0 million of Preference 
Shares in White Young Green, subject to, inter alia, Shareholder approval of the 
Restructuring Resolutions, in exchange for the conversion of GBP30.0 million of 
outstanding borrowings. 
 
 
The Company proposes to issue the Preference Shares as follows: 
 
 
  *  27.6 million "A" Preference Shares with a total nominal value of GBP27.6 
  million; and 
 
 
 
  *  2.4 million "B" Preference Shares with a total nominal value of GBP2.4 
  million. 
 
 
 
The "A" Preference Shares, with a nominal value of GBP27.6 million, will be 
issued to the Lenders. 
 
 
The Lenders have agreed to direct the Company to issue the GBP2.4 million 
nominal value of "B" Preference Shares to which they are entitled on the 
conversion of the debt, directly to the New Employee Benefit Trust, rather than 
receiving such "B" Preference Shares themselves. 
 
 
It is proposed that as soon as reasonably practicable after the "B" Preference 
Shares have been issued to the New Employee Benefit Trust, the New Employee 
Benefit Trust will grant awards structured as nil cost options over such "B" 
Preference Shares (or the proceeds of the same on redemption) under the proposed 
White Young Green Performance Share Plan 2009 to Related Party Directors (other 
than Mike McTighe) and Related Party Managers as follows: 
 
 
+-----------------+------------+ 
|                 |     Number | 
|                 |     of "B" | 
+-----------------+------------+ 
| Name of         | Preference | 
| Related         |     Shares | 
| Party           |            | 
| Director        |            | 
| /               |            | 
| Related         |            | 
| Party           |            | 
| Manager         |            | 
+-----------------+------------+ 
|                 |            | 
+-----------------+------------+ 
| Paul            |    780,000 | 
| Hamer           |            | 
+-----------------+------------+ 
| David           |    480,000 | 
| Wilton          |            | 
+-----------------+------------+ 
| Graham          |    480,000 | 
| Olver           |            | 
+-----------------+------------+ 
| Ray             |    330,000 | 
| Moore           |            | 
+-----------------+------------+ 
| David           |    330,000 | 
| Crichton-Miller |            | 
+-----------------+------------+ 
 
 
The issue of the GBP2.4 million nominal value of "B" Preference Shares to the 
New Employee Benefit Trust, in accordance with the direction of the Lenders, 
pursuant to which the Related Party Directors (excluding Mike McTighe) and the 
Related Party Managers are intended ultimately to benefit by virtue of 
the proposed awards to be made to them over such "B" Preference Shares, and 
the grant of the awards to the Related Party Managers and Related Party 
Directors (excluding Mike McTighe), are each deemed to be a related party 
transaction under the Listing Rules. Consequently each of these transactions 
will require Independent Shareholder approval at the Extraordinary General 
Meeting, where Related Party Directors and Related Party Managers will 
be prohibited from voting in relation to the relevant resolutions. 
 
 
The Preference Shares will be unlisted and issued at par value.In normal 
circumstances, the Preference Shares have no running yield, but, in the case of 
the "A" Preference Shares only, are subject to a Redemption Premium. 
 
 
The New Ordinary Shares 
 
 
The New Ordinary Shares issued in connection with the Restructuring will be 
created under the 2006 Act and the legislation made thereunder and are expected 
to be issued in registered form on or about 8 January 2010 and will be capable 
of being held in both certificated and uncertificated form. 
 
 
The New Ordinary Shares will, when issued and fully paid, rank pari passu in all 
respects with the Existing Issued Ordinary Shares, including the right to 
receive all dividends and other distributions (if any) declared, made or paid by 
White Young Green after the date of issue of the New Ordinary Shares. 
 
 
Should the Resolutions be approved by Shareholders at the EGM, the Directors 
will have authority to allot a maximum of 299,934,417 New Ordinary Shares, which 
represents 566 per cent. of the Existing Issued Share Capital as at 8 December 
2009 (being the latest practicable date before the publication of the Circular). 
These figures exclude treasury shares, none of which are held by the Company as 
at 8 December 2009. Such authority to allot New Ordinary Shares will expire six 
months following the passing of the Resolutions. 
 
 
The Refinanced Lending Facilities 
 
 
The Company has agreed with the Lenders to enter into the Refinanced Lending 
Facilities, which will become effective subject to, amongst other things, 
Shareholder approval of the Restructuring Resolutions. Once the Refinanced 
Lending Facilities become effective, they will replace the Existing Lending 
Facilities. 
 
 
The Refinanced Lending Facilities comprise: 
 
 
  *  a term loan of GBP50.0 million split into tranche A of GBP35.0 million 
  and tranche B of GBP15.0 million; and 
 
 
 
  *  working capital facilities of GBP8.25 million in total. In addition, the Lenders 
  are to provide bonding facilities of EUR38.0 million. 
 
 
 
The purpose of the Refinanced Lending Facilities is to repay and refinance the 
Existing Lending Facilities, to pay fees and transaction costs relating to the 
Restructuring and for the general corporate and working capital purposes of the 
Group. 
 
 
The Refinanced Lending Facilities will be secured by cross-guarantees and fixed 
and floating security (or, in the case of the Company's Polish subsidiaries, 
pledges and security assignments) granted by the Company and certain of 
its trading subsidiaries in the United Kingdom, the Republic of Ireland and 
Poland and, following satisfaction of the relevant condition subsequent referred 
to in more detail in Part III of the Circular, by a pledge in relation to the 
shares in its trading subsidiary in Turkey and a guarantee and subordination 
agreement from that subsidiary. 
 
 
Share Reorganisation 
 
 
The Resolutions include a Share Reorganisation such that each Existing Ordinary 
Share of five pence each in the capital of the Company, whether issued or 
unissued, will be sub-divided into one ordinary share of one penny in the 
capital of the Company and one deferred ordinary share of four pence in 
the capital of the Company. The purpose of the Share Reorganisation is to reduce 
the nominal value of the Existing Ordinary Shares as a precautionary measure as 
the New Ordinary Shares cannot be issued at a price less than their nominal 
value. The Placing Price will be calculated on the day following the EGM and 
is subject to fluctuation due to the Currency Fluctuation and the Share 
Capital Fluctuation. The Share Reorganisation is subject to, inter alia, 
Shareholder approval of the Restructuring Resolutions. 
 
 
The Deferred Shares, to be created upon the Restructuring becoming effective, 
will have no voting or dividend rights and, on a return of capital, will have 
the right to receive the amount paid up thereon only after the holders of the 
"A" Preference Shares and the "B" Preference Shares have received an 
amount equal to the amount paid up thereon together with any Preference 
Dividends that have become due and payable and, in the case of the "A" 
Preference Shares only, the Redemption Premium, and after the holders of the 
Post-Consolidation Ordinary Shares have received, in aggregate, the amount paid 
up thereon. No share certificates will be issued in respect of the Deferred 
Shares, nor will CREST accounts of Shareholders be credited in respect of any 
entitlement to Deferred Shares, nor will they be listed on the Official List or 
admitted to trading on the London Stock Exchange, AIM or any other 
investment exchange. 
 
 
Share Consolidation 
 
 
The Resolutions include a share consolidation such that the New Ordinary Shares 
in the capital of the Company and the Existing Ordinary Shares, whether issued 
or unissued, are consolidated into ordinary shares of ten pence each in the 
capital of the Company on the basis of one Post-Consolidation Ordinary Share for 
every ten Ordinary Shares. Following the Share Consolidation, the Company's 
issued ordinary share capital will comprise 35,289,886 ordinary shares of ten 
pence each in the capital of Company. 
 
 
The purpose of the share consolidation is to reduce the total number of shares 
in issue following the Restructuring (including the Placing). The Directors 
believe that this may reduce the volatility in the price of the Company's 
Ordinary Shares, lead to more meaningful earnings per share figures, may 
avoid large dealing spreads in the Ordinary Shares and may ensure that the price 
of the Ordinary Shares is more appropriate for a company of White Young Green's 
size than would otherwise have been the case following the Restructuring 
becoming effective and Admission. 
 
 
Fractional entitlements to Ordinary Shares will be rounded down to the nearest 
whole number. All such fractional entitlements to issued Ordinary Shares will be 
aggregated and, in accordance with the Articles, all Ordinary Shares arising 
from such aggregation will be sold. It is expected that the net proceeds of 
such sale will be retained for the benefit of the Company. In accordance with 
the Articles, whenever as the result of any consolidation of shares fractions 
arise, the Directors may deal with such fractions as they see fit and, in 
particular, may sell the shares to any person and distribute to and amongst the 
Shareholders in due proportions the net proceeds of such sale. 
 
 
The Share Consolidation is conditional upon the approval of the Shareholders at 
the EGM as required by the 2006 Act and the Articles. 
 
 
Dividends and dividend policy 
 
 
As announced on 30 October 2009 in the Company's audited results for the year 
ended 30 June 2009 and as described in the Company's annual report and accounts 
for the same period published on 30 October 2009, the Directors have decided 
that it is in the best interests of the Company not to propose a final dividend 
for the year ended 30 June 2009. 
 
 
In addition, the Restructured Facilities Agreement contains a restriction 
prohibiting the payment of a dividend on the Ordinary Shares until repayment in 
full of the Refinanced Lending Facilities, which is scheduled for January 2013 
and, further, under the terms of the Investment Agreement, no dividends can be 
declared on any class of shares in the Company without the consent of the 
holders of at least 60 per cent. of the "A" Preference Shares. The New Articles 
also require that if a dividend is declared on the Ordinary Shares, a preferred 
dividend equal to one per cent. of any dividend declared on the Ordinary Shares 
will first be paid to holders of the "A" Preference Shares and "B" 
Preference Shares. 
 
 
If the Refinanced Lending Facilities are amended or refinanced and either the 
Preference Shares are redeemed in full or the consent of the holders of at least 
60 per cent. of the "A" Preference Shares is obtained, there is a possibility 
that the Company may be able to commence payment of dividends on Ordinary 
Shares, but there can be no certainty that holders of Ordinary Shares will be 
entitled to receive a dividend on Ordinary Shares for at least the duration of 
the Refinanced Lending Facilities and the period prior to redemption in full of 
the Preference Shares. Therefore, there can be no assurance whether or when 
dividends on Ordinary Shares will be paid in the future. 
 
 
Proposed cancellation of listing on the Official List and admission to trading 
on AIM 
 
 
One of the conditions of maintaining a listing on the Official List is that a 
minimum of 25 per cent. of a company's issued ordinary share capital has to be 
held in public hands at all times, as defined by the Listing Rules. Subject to 
Shareholder approval of the Restructuring, the Lenders will, in aggregate, 
hold 60.5 per cent. of the Enlarged Issued Share Capital and the New Employee 
Benefit Trust, and subsequently the Related Party Directors and the Related 
Party Managers and certain Employees, will hold, in aggregate, 24.5 per cent. of 
the Enlarged Issued Share Capital. The Company would consequently no longer meet 
this condition of listing and therefore, subject to Shareholder approval, the 
Company's listing on the Official List will be cancelled, with effect from 8.00 
a.m. on 4 February 2010, and it is intended that the Ordinary Shares will be 
subsequently admitted to trading on AIM. 
 
 
In addition, the Board believes that AIM is a more appropriate market for a 
company of White Young Green's size and that a transfer of the Ordinary Shares 
to trading on AIM should lead to lower ongoing costs associated with being a 
publicly quoted company and a simplification of the Company's administrative and 
regulatory requirements. It also believes that AIM will offer greater 
flexibility, particularly with regard to corporate transactions, and should 
therefore enable the Company to agree and execute certain transactions more 
quickly, if such opportunities arise in the future. 
 
 
Conditional upon the Restructuring Resolutions being approved at the 
Extraordinary General Meeting, the Company will give notice of its intention to 
cancel the listing of its Ordinary Shares on the Official List and the Company 
intends to apply to the London Stock Exchange for the admission of the 
Ordinary Shares to AIM as soon as practicable. 
 
 
The Board envisages no material alteration in the standards of reporting and 
governance which the Company currently maintains. Once admitted to AIM, 
Shareholders should continue to be able to trade the Ordinary Shares in the 
usual manner through their stockbroker or other suitable intermediary, subject 
to liquidity. 
 
 
It is anticipated that trading in the Ordinary Shares on the London Stock 
Exchange's main market for listed securities will cease at the close of business 
on 3 February 2010, with cancellation of listing on the Official List taking 
effect at 8.00 a.m. on 4 February 2010, being not less than 20 Business Days 
following the passing of the Resolution relating to the Cancellation as required 
by the Listing Rules. It is anticipated that the Ordinary Shares will be 
admitted to, and commence trading on, AIM at 8.00 a.m. on 4 February 2010. 
 
 
The Company has appointed Arbuthnot Securities Limited as its Nomad, conditional 
on Shareholder approval of the Restructuring, for the purposes of Admission and 
its listing on AIM thereafter.Arbuthnot Securities Limited is authorised and 
regulated by the FSA. 
 
 
Rule 9 of the Takeover Code 
 
 
Rule 9 of the Takeover Code stipulates, inter alia, that if a person acquires, 
whether by a series of transactions over a period of time or not, an interest in 
shares which (taken together with shares in which persons acting in concert with 
him are interested) carry 30 per cent. or more of the voting rights of 
a company, then such person will normally be required by the Panel to make a 
general offer to shareholders of that company to acquire the balance of the 
equity share capital of that company not held by such person or group of persons 
acting in concert with him. An offer under Rule 9 must be in cash and be at the 
highest price paid by the person required to make the offer or any person acting 
in concert with him for any interest in shares in the company during the 12 
months prior to the announcement of the offer. 
 
 
Under the Takeover Code, a concert party arises where persons acting together, 
pursuant to an agreement or understanding (whether formal or informal), 
co-operate to obtain or consolidate control of that company. A person has 
control of a company if he is interested in shares carrying 30 per cent. or more 
of the company. 
 
 
Waiver of Rule 9 in relation to the Restructuring 
 
 
Lloyds Banking Group, RBS and Fortis are deemed to be acting in concert for the 
purpose of the Code. 
 
 
The issue of the Post-Consolidation New Ordinary Shares to Lloyds Banking Group, 
RBS and Fortis, with each of these parties deemed to be acting in concert under 
the Takeover Code, under the Placing to the Lenders would normally give rise to 
an obligation for the Lenders to make a general offer to all Shareholders 
pursuant to Rule 9 of the Code since it will result in the combined interests in 
shares of Lloyds Banking Group, RBS and Fortis increasing above 30 per cent. of 
the issued voting share capital of the Company. 
 
 
Following an application by the Directors, the Panel has agreed, subject to the 
approval of the Waiver Resolution on a poll by the Independent Shareholders at 
the Extraordinary General Meeting, to waive the obligation for any of the 
Lenders to make a general offer that would otherwise arise as a result of 
the Restructuring.  The Lenders have undertaken not to vote on the Waiver 
Resolution, save in respect of those Ordinary Shares that they hold as nominee. 
The effect of the Waiver, if the Waiver Resolution is approved by 
Independent Shareholders, would be that none of Lloyds Banking Group, RBS and 
Fortis would be subject to a requirement to make a general offer under Rule 9 of 
the Code that might otherwise arise as a result of the Restructuring. 
 
 
The Waiver Resolution is subject to the approval of the Independent Shareholders 
on a poll and each Independent Shareholder will be entitled to one vote for each 
Existing Ordinary Share held. For the avoidance of doubt, the Independent 
Shareholders in respect of the Waiver are all Shareholders other than Lloyds 
Banking Group, the Related Party Directors and the Related Party Managers, who 
have undertaken not to vote. 
 
 
Following completion of the Proposals, the Lenders will between them hold 
Ordinary Shares carrying more than 50 per cent. of the Company's Enlarged Issued 
Share Capital and (for so long as they continue to be treated as acting in 
concert) may accordingly increase their aggregate interests in Ordinary 
Shares without incurring any obligation under Rule 9 to make a general offer, 
although the individual Lenders will not be able to increase their percentage 
interest in Ordinary Shares through or between a Rule 9 threshold without prior 
Panel consent. 
 
 
The Lenders do not have any specific intentions regarding the future business 
of, or strategic plans for, the Group, the locations of the Group's places of 
business, the redeployment of its fixed assets, the continued employment of its 
employees or, other than in relation to the appointment of Investor Directors 
pursuant to the Investment Agreement, the management of the Group following 
completion of the Restructuring. 
 
 
Related Party Transactions 
 
 
It is proposed that each of the Related Party Directors (excluding Mike McTighe) 
and the Related Party Managers will be granted an option to acquire the number 
of "B" Preference Shares set out against their respective names below, or the 
proceeds of the same on redemption, from the New Employee Benefit Trust for zero 
consideration under the terms of the White Young Green Performance Share Plan 
2009, proposed to be introduced as part of the new share incentive arrangements. 
 
 
+-----------------+------------+ 
|                 |     Number | 
|                 |     of "B" | 
+-----------------+------------+ 
| Name of         | Preference | 
| Related         |     Shares | 
| Party           |            | 
| Director        |            | 
| /               |            | 
| Related         |            | 
| Party           |            | 
| Manager         |            | 
+-----------------+------------+ 
|                 |            | 
+-----------------+------------+ 
| Paul            |    780,000 | 
| Hamer           |            | 
+-----------------+------------+ 
| David           |    480,000 | 
| Wilton          |            | 
+-----------------+------------+ 
| Graham          |    480,000 | 
| Olver           |            | 
+-----------------+------------+ 
| Ray             |    330,000 | 
| Moore           |            | 
+-----------------+------------+ 
| David           |    330,000 | 
| Crichton-Miller |            | 
+-----------------+------------+ 
 
 
The purpose of granting options over the "B" Preference Shares under the terms 
of the White Young Green Performance Share Plan 2009 is to incentivise the 
recipients of such options to enhance the equity value in the future, both in 
the Preference Shares and the Ordinary Shares. 
 
 
Also, as part of the Restructuring agreed with the Lenders, it is intended that 
each of the Related Party Directors (excluding Mike McTighe) and the Related 
Party Managers will be granted an award in respect of a number of 
Post-Consolidation New Ordinary Shares as set out below, for zero consideration, 
under the terms of the White Young Green Joint Share Ownership Plan 2009 
proposed to be introduced as part of the new share incentive arrangements. 
 
 
+--------------------------------------------------+---------------------+ 
|                                                  |           Number of | 
|                                                  |  Post-Consolidation | 
+--------------------------------------------------+---------------------+ 
| Name of Related Party Director / Related Party   | New Ordinary Shares | 
| Manager                                          |                     | 
+--------------------------------------------------+---------------------+ 
|                                                  |                     | 
+--------------------------------------------------+---------------------+ 
| Paul Hamer                                       |           1,058,696 | 
+--------------------------------------------------+---------------------+ 
| David Wilton                                     |             264,674 | 
+--------------------------------------------------+---------------------+ 
| Graham Olver                                     |             264,674 | 
+--------------------------------------------------+---------------------+ 
| Ray Moore                                        |             264,674 | 
+--------------------------------------------------+---------------------+ 
| David Crichton-Miller                            |             264,674 | 
+--------------------------------------------------+---------------------+ 
 
 
provided always that in the case of each of the individuals mentioned above the 
number of Post-Consolidation New Ordinary Shares made subject to an award to 
that individual shall be capped so that the market value of the 
Post-Consolidation New Ordinary Shares so awarded shall not exceed 
the individual's base salary. 
 
 
For these purposes, the market value of the Post-Consolidation New Ordinary 
Shares under award and an individual's base salary will be measured at the time 
the invitations are issued to the above named individuals under the White Young 
Green Joint Share Ownership Plan 2009. 
 
 
It is further proposed that shortly after the Post-Consolidation New Ordinary 
Shares have been issued to the New Employee Benefit Trust and have been admitted 
to trading on AIM, the New Employee Benefit Trust will grant the One-Off Award 
to Mike McTighe over such number of Post-Consolidation New Ordinary Shares held 
by the New Employee Benefit Trust as represents 2 per cent. of the Enlarged 
Issued Share Capital of the Company (or, if less, such number of 
Post-Consolidation New Ordinary Shares as have a market value of GBP250,000 at 
the time that the One-Off Award is offered to Mike McTighe). 
 
 
The purpose of the awards as described above is to provide the Related Party 
Directors and the Related Party Managers with an interest in the potential 
growth in value of the Ordinary Shares and therefore to align their interests 
with Existing Shareholders and the Lenders to enhance the equity value of 
the Ordinary Shares. 
 
 
Each Related Party Director and Related Party Manager is either a Director or a 
director of a subsidiary of the Company and is therefore classified by the 
Listing Rules as a "related party".  Consequently: 
 
 
  *  the Issue to the New Employee Benefit Trust; 
 
 
 
  *  the implementation of the Investment Agreement and the Framework Agreement; 
 
 
 
  *  the awards over the "B" Preference Shares described above to the Related Party 
  Directors (other than Mike McTighe) and the Related Party Managers by the New 
  Employee Benefit Trust under the proposed White Young Green Performance Share 
  Plan 2009; 
 
 
 
  *  the awards over Post-Consolidation New Ordinary Shares described above to the 
  Related Party Directors (other than Mike McTighe) and the Related Party Managers 
  by the New Employee Benefit Trust pursuant to the terms of the proposed White 
  Young Green Joint Share Ownership Plan 2009; and 
 
 
 
  *  the proposed One-Off Award over such number of Post-Consolidation New Ordinary 
  Shares as represents 2 per cent. of the Enlarged Issued Share Capital of the 
  Company (or, if less, such number of Post-Consolidation New Ordinary Shares as 
  have a market value of GBP250,000 at the time that the One-Off Award is offered 
  to Mike McTighe) to be granted to incentivise Mike McTighe; 
 
 
 
are related party transactions under the Listing Rules and will require 
Independent Shareholder approval at the EGM. The Related Party Directors and the 
Related Party Managers and their associates will be prohibited from voting in 
relation to the Related Party Transactions Resolutions as they relate to (i) 
the establishment of the White Young Green Performance Share Plan 2009 and the 
grant of the awards thereunder over the "B" Preference Shares described above 
to the Related Party Directors (other than Mike McTighe) and the Related Party 
Managers, (ii) the establishment of the White Young Green Joint Share Ownership 
Plan 2009 and the grant of the awards thereunder over Ordinary Shares, as 
described above, to the Related Party Directors (excluding Mike McTighe) and the 
Related Party Managers, (iii) the establishment of the arrangements for, and the 
grant of the One-Off Award to Mike McTighe as described above, (iv) the Issue to 
the New Employee Benefit Trust; and (v) the Investment Agreement and the 
Framework Agreement. 
 
 
In addition to the above Related Party Transactions, the Company has agreed to 
pay one-off discretionary bonuses totalling GBP166,250 to the Related Party 
Directors on completion of the Restructuring. 
 
 
Working capital 
 
 
With the Restructuring 
 
 
Following completion of the Restructuring, the Company is of the opinion that, 
with the Refinanced Lending Facilities, the Group has sufficient working capital 
for its present requirements, that is for at least 12 months from the date of 
the Circular. 
 
 
Without the Restructuring 
 
 
If Shareholders do not approve the Restructuring Resolutions, the Company is of 
the opinion that the Group does not have sufficient working capital for its 
present requirements, that is for at least the next 12 months from the date of 
the Circular. 
 
 
The Board believes that if Shareholders do not approve the Restructuring 
Resolutions, the Group is highly likely to suffer material adverse consequences 
including, but not limited to: 
 
 
  *  substantial deterioration in the support of customers, employees and other 
  stakeholders; 
 
 
 
  *  potential damage to White Young Green's reputation and customer goodwill; and 
 
 
 
  *  deterioration in the support of the Lenders, based on the Directors' belief that 
  the Group is highly unlikely to be able to comply with the terms and conditions 
  of the Existing Facilities Agreement. 
 
 
 
Whilst the Board recognises that it is difficult to predict the severity of 
these adverse consequences and the speed at which they would occur, the Board 
believes that the Group would not be able to continue to operate within its 
Existing Lending Facilities and would require significant immediate 
emergency funding. 
 
 
The Board is of the view that it is highly probable that appropriate emergency 
funding sources would not be available. In this event, the Group would be unable 
to sustain its position as a going concern and would be forced to enter into 
administration or some other form of insolvency procedure. 
 
 
The Board believes that in an administration or other insolvency process it is 
highly unlikely that the Ordinary Shares would retain any value. The Board is of 
the opinion that the Restructuring represents the only available route to 
achieving a long-term sustainable capital structure for the benefit of 
all stakeholders in the current market conditions. 
 
 
Importance of the vote 
 
 
All of the Restructuring Resolutions must be passed by Shareholders at the 
Extraordinary General Meeting in order for the Proposals, including the 
Restructuring, to be implemented and, due to the conditionality described above, 
in order for the Refinanced Lending Facilities to become effective. 
 
 
If all of the Restructuring Resolutions are not passed, the Restructuring will 
not proceed and the Refinanced Lending Facilities will not be made available. In 
this event the Group will remain subject to the Existing Facilities Agreement 
and the financial covenants therein.  The Lenders have agreed to defer testing 
of the financial covenants until the earlier of (i) 5.00 p.m. on 8 January 2010; 
and (ii) the date (if any) on which the Lenders terminate their obligations to 
enter into the Restructuring, which they are entitled to do, inter alia, if 
Shareholders fail to pass all of the Restructuring Resolutions at the EGM. If, 
however, the Restructuring Resolutions are all passed and Completion takes 
place, then the Existing Facilities Agreement (and any breaches under it) will 
fall away and be replaced by the Restructured Facilities Agreement. Should 
the Restructuring Resolutions not be passed by Shareholders at the Extraordinary 
General Meeting, the Group would be in immediate breach of the covenants and be 
in default under the Existing Facilities Agreement at that time. Such a default 
under the Existing Facilities Agreement would entitle the Lenders to demand 
repayment of all outstanding amounts and to cancel the facilities. The Group 
would then face administration or other insolvency proceedings as the Board 
believes that alternative sources of debt or equity finance are very unlikely 
to be available.  This would, in the Board's opinion, result in Shareholders 
receiving no value for their current shareholdings. 
 
 
The Board believes that if the Restructuring takes place, the resulting stronger 
capital base will provide the Group with greater financial and operational 
flexibility and resilience in the event that the adverse conditions currently 
being experienced in the Group's core markets persist for an extended period of 
time or these core markets weaken further. 
 
 
Recommendation 
 
 
The Board, which has been so advised by Rothschild, considers that the 
Resolutions and the Proposals are fair and reasonable as far as the Shareholders 
are concerned and in the best interests of the Company and of Shareholders as 
a whole.  In providing such advice, Rothschild has taken into account the 
commercial assessment of the Board. 
 
 
Accordingly, the Board recommends that Shareholders vote in favour of all of the 
Resolutions to be proposed at the Extraordinary General Meeting as the 
Independent Directors intend to do in respect of the Ordinary Shares in which 
they are beneficially interested (representing, in aggregate, 0.05 per cent. of 
the issued voting share capital of the Company) and as the Related Party 
Directors and Related Party Managers intend to do (in relation to the 
Resolutions other than the Related Party Transactions Resolutions) in respect of 
the Ordinary Shares in which they are beneficially interested (representing, 
in aggregate, 0.28 per cent. of the Existing Issued Share Capital). 
 
 
The Related Party Directors have taken no part in the Board's consideration of 
the Related Party Transactions. Each of the Related Party Directors and Related 
Party Managers have undertaken not to vote on the Related Party Transactions 
Resolutions and have undertaken to take all reasonable steps to ensure their 
respective associates do not vote on the Related Party Transactions Resolutions 
at the Extraordinary General Meeting. 
 
 
End 
 
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