Posting of Circular (1411G)

TIDMJPLH

RNS Number : 1411G

Japan Leisure Hotels Ltd

06 May 2011

6 May 2011

Japan Leisure Hotels Limited

("JPLH" or the "Company")

Posting of Circular

On 28 April 2011, the Company announced the proposed disposal of the JLH Subsidiaries for an aggregate cash consideration of 1.42 billion Yen (approximately GBP10.64 million) and the proposed return of capital to shareholders of the Company. The JLH Subsidiaries have invested into the TK Operators, which own and operate Bonita Hotels in Japan. Under the AIM Rules, completion of the Disposal will result in a fundamental change of business for the Company, as it will have disposed of its entire portfolio of investments in Japanese leisure hotels. The Disposal is therefore conditional on inter alia the passing of the Disposal Resolution.

The Directors will use the net proceeds raised from the Disposal to return cash to Shareholders. The sum returned is expected to be approximately 23 pence per Existing Ordinary Share, being approximately GBP10.14 million in aggregate. This payment will take the form of either an income dividend or a capital repayment, depending on the wishes of each Eligible Shareholder. The balance of the proceeds from the Disposal, after the relevant payments are made to Shareholders will be used to meet the costs of liquidating the Company. Any surplus after meeting the costs of liquidation will be returned to Shareholders as a final capital payment, as described below. In order to implement the above, the Company now seeks the approval of its Shareholders for: (a) the cancellation of admission of the Existing Ordinary Shares to trading on AIM; (b) a capital reorganisation; and (c) a members' voluntary liquidation of the Company.

( ) Assuming an exchange rate of 133.424 Yen per GBP1.00 sterling

The Company has today posted a Circular to Shareholders explaining the background to the Proposals and what they mean for Shareholders. The Circular also contains two notices in respect of Extraordinary General Meetings which have been convened for 10.00 a.m. on 1 June 2011 and 10.00 a.m. 10 June 2011 at which resolutions will be put to approve inter alia the Disposal, the proposed cancellation of admission of the Existing Ordinary Shares to trading on AIM, the amendment to the Articles, the Reclassification of the Existing Ordinary Shares and the Return Of Cash.

Enquiries:

 
 Japan Leisure Hotels Limited 
  Alan Clifton, Chairman                01481 737600 
 
 Shore Capital and Corporate Limited 
  (NOMAD to the Company) 
  Dru Danford 
  Stephane Auton                        020 7408 4090 
 
 Pelham Bell Pottinger                  020 7861 3112 or 07802 442 
  Archie Berens                          486 
 

Set out below are extracts from the Circular which provide the details of the proposed return of cash and share reclassification.

PROPOSED CANCELLATION OF ADMISSION TO TRADING ON AIM

Upon completion of the Disposal, the entire business of owning and operating the Bonita Hotels will be transferred from the Company to the Buyer and the Beneficiary. The JLH Subsidiaries which invested in the Bonita Hotels, are currently the only assets of the Company, and accordingly the Disposal will effectively result in a fundamental change of business for the Company as it will no longer have any investments in leisure hotels in Japan, ancillary businesses directly related to the operation of leisure hotels or securities secured on leisure hotels in Japan.

The Directors are therefore seeking shareholder approval at the First Extraordinary General Meeting to be held at 10 a.m. on 1 June 2011 for the cancellation of admission of the Existing Ordinary Shares to trading on AIM. In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the proposed cancellation which is conditional upon the consent of not less than 75 per cent. of the votes cast by Shareholders in general meeting.

Subject to the second resolution in the First Notice being passed at the First Extraordinary General Meeting, it is anticipated that trading in the Existing Ordinary Shares on AIM will cease at close of business on 8 June 2011 with cancellation taking effect at 7.00 a.m. on 9 June 2011.

Upon the cancellation becoming effective, Shore Capital and Corporate Limited will cease to be nominated adviser to the Company and Shore Capital Stockbrokers Limited will cease to be broker to the Company and the Company will no longer be required to comply with the AIM Rules. Following cancellation and given the proposed reclassification and liquidation, it is not proposed that there will be any market facility for dealing in the Existing Ordinary Shares and no price will be publicly quoted. As a result, it will be more difficult for Shareholders to buy and sell the Company's Existing Ordinary Shares should they wish to do so.

The Company's report and accounts for the year ended 31 December 2010 will not be published or announced prior to the cancellation of admission of the Existing Ordinary Shares to trading on AIM. It is however anticipated that Shareholders will receive the report and accounts for the year ended 31 December 2010 by 30 June 2011.

DETAILS OF THE RETURN OF CASH AND SHARE RECLASSIFICATION

The Directors will use the net proceeds raised from the Disposal to return cash to Shareholders. This payment will either take the form of the Dividend or the Distribution of Assets, depending on the wishes of each Eligible Shareholder. The Company therefore proposes the following:

(a) the proceeds will be returned to Shareholders such that, together with the remainder of the Company's assets, there will be a return of approximately GBP10.14 million to Shareholders, which represents approximately 23 pence per Existing Ordinary Share; and

(b) Eligible Shareholders will have a choice of receiving, subject to certain limitations, their entitlement by way of income or capital, namely:

(i) prior to liquidation of the Company, they may elect to realise all or part of their investment in the Company for cash by way of a dividend (the "Dividend Option"); and/or

(ii) in connection with the liquidation of the Company Shareholders will receive all or part of their investment in the Company by way of a capital return (the "Capital Distribution Option"). The Directors will seek to agree with the Liquidators for them to make an initial liquidation distribution of the B Fund so that Shareholders electing for the Capital Distribution Option are expected to receive the liquidation distribution in respect of the B Fund shortly after the Second Extraordinary General Meeting at which the Shareholders will vote on inter alia the proposed winding up of the Company.

( ) Assuming an exchange rate of 133.424 Yen per GBP1.00 sterling

Subject to the appropriate resolutions being approved by Shareholders:

(a) the Existing Ordinary Shares in respect of which valid elections are made or are deemed to be made, for the Dividend Option shall be reclassified as A Shares (on a one for one basis); and

(b) the Existing Ordinary Shares in respect of which valid elections are made, or are deemed to have been made, for the Capital Distribution Option, shall be reclassified as B Shares (on a one for one basis).

In order to effect the above, conditional on Shareholder approval being obtained, the cash and other assets of the Company will be divided into three funds. Following an allocation to the Liquidation Fund (as described below), the remaining cash and other assets (including the proceeds from the Disposal) will be divided and allocated to the A Fund (in respect of the Dividend Option and A Shares) and the B Fund (in respect of the Capital Distribution Option and B Shares) pro rata to the number of Existing Ordinary Shares elected, or deemed to have been elected, for each Option.

Rights attaching to the A Shares and Deferred Shares

As soon as practicable after the First Extraordinary General Meeting, the Company will pay the Dividend to Shareholders who have elected or who are deemed to have elected for the Dividend Option.

Following such Dividend being declared, all of the A Shares will automatically be converted into Deferred Shares. The Deferred Shares will not be admitted to the trading on AIM and will have very limited economic rights and no voting rights and will therefore have negligible value. All of the Deferred Shares in issue will be capable of being compulsorily acquired by the Company for an aggregate consideration of one penny after the Liquidation Fund has been distributed.

The Deferred Shares will have a right only to participate in the proceeds of a winding up once the B Shares have received an amount equal to the Distribution of Assets. Once the B Shares receive such amount and all other liabilities of the Company have been deducted, any balance remaining in the Liquidation Fund shall be apportioned between the holders of the B Shares and the Deferred Shares on a pro rata basis.

Rights attaching to the B Shares

Conditional on Shareholder approval, it is expected that the Company will be voluntarily wound up following the Second Extraordinary General Meeting. As soon as practicable thereafter, the Distribution of Assets will be paid by the Liquidators as part of the winding up of the Company, such payment expected to be made by the Liquidators from the B Fund as soon as practicable following their appointment.

Liquidation Fund

The Liquidators will retain an amount to provide for all outstanding current and future liabilities of the Company, including contingent, unknown and unascertained liabilities and the costs incurred by, or in respect of, the Company and the Liquidators in relation to the Proposals. It is currently estimated by the Directors that this retention will be approximately GBP985,000 and will include one per cent. of the total proceeds of the Disposal (being approximately GBP106,000) which will be held for seven months in the Liquidation Fund to cover certain warranties given by the Company pursuant to the Sale Agreement. The Liquidation Fund will be comprised of cash.

To the extent that the total amount of the Liquidation Fund is not required, the Liquidators will in due course pay the remaining balance in cash to the holders of B Shares and Deferred Shares pro rata to their respective holdings of such shares, such payment to be made as a further capital liquidation distribution provided that no such amount of less than GBP5.00 shall be paid to any Shareholder but the same shall instead be paid to a charity nominated by the Company.

General

None of the Existing Ordinary Shares or the Deferred Shares have been or will be registered under the US Securities Act 1933 (the "Securities Act") or the state securities laws of the United States and none of them may be offered or sold in the United States unless registered under the Securities Act and the relevant state securities laws, or pursuant to an exemption form, or in a transaction that is not subject to, the registration requirement of the Securities Act or such laws.

UNITED KINGDOM TAXATION IN RELATION TO THE RETURN OF CASH

The comments below are intended as a general guide only and are based on current UK tax law and HM Revenue and Customs' practice as of the date hereof. Except where otherwise indicated, the comments below apply only to Shareholders who are resident and, in the case of individuals, ordinarily resident in the UK for tax purposes and who hold their Existing Ordinary Shares beneficially as investments and not on trading account. The position may be different for any future disposal and may alter between the date of this document and the implementation of the Return of Cash.

The Return of Cash to certain other Shareholders who hold their Existing Ordinary Shares in special circumstances such as insurance companies, collective investment schemes, persons who have (or are deemed to have) acquired their shares by reason of an office or employment and dealers in securities may result in different tax consequences from those set out below for Shareholders.

Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult an appropriate professional adviser.

1. Share Reorganisation

For the purposes of UK taxation of capital gains and corporation tax on chargeable gains ("CGT") the steps by which holdings of Existing Ordinary Shares are converted into and reclassified as either A Shares or B Shares should be treated as a reorganisation of the share capital of the Company. Accordingly, the A Shares or the B Shares will replace a Shareholder's holding of Existing Ordinary Shares and should be treated as the same asset as the Shareholder's holding of Existing Ordinary Shares, and as having been acquired at the same time as the Shareholder's holding of Existing Ordinary Shares was acquired. In order to effect the Return of Cash it will be necessary for the Share Reorganisation to take place. Shareholders are asked to elect one of the following Options in relation to their Existing Ordinary Shares.

2. Dividend Option

Income tax

The Company will not be required to withhold tax at source when paying the Dividend pursuant to the Dividend Option.

A UK resident individual shareholder who receives the Dividend from the Company should be entitled to a tax credit in respect of the Dividend Option equal to one-ninth of the cash dividend received or ten per cent. of the aggregate of the cash dividend received and the related tax credit (the "gross dividend"), provided the Shareholder holds less than 10 per cent. of a shareholding in the Company. The related tax credit may be set against the individual Shareholder's total liability to income tax on the Dividend.

UK resident taxpayers who are not liable to UK tax on dividends, including pension funds and charities, will not be liable to pay tax on the Dividend and will not be entitled to reclaim the tax credit on the Dividend.

An individual shareholder who is liable to income tax at no more than the basic rate will be subject to income tax at the rate of ten per cent. on the gross dividend and so the tax credit should satisfy in full that individual Shareholder's liability to income tax on the Dividend.

UK resident individual Shareholders who are liable to income tax at the higher rate will be subject to income tax on the gross dividend received at 32.5 per cent., but will be able to set the tax credit off against this liability giving an effective 25 per cent. rate after the tax credit. Such individuals who are subject to income tax at the additional rate will be subject to tax on gross dividend received at 42.5 per cent., with an effective 36.1 per cent. rate after the tax credit.

UK resident corporate Shareholders should generally not be subject to corporation tax on the Dividend Option.

Taxation of chargeable gains

For CGT purposes, the Dividend (and the consequent conversion of the A Shares into Deferred Shares) should not be treated as giving rise to a disposal or part disposal of the A Shares.

Shareholders who receive the Dividend should note that, consequent on the Share Reorganisation, the base cost, for CGT purposes, of their Existing Ordinary Shares will be attributed to their A Shares and this amount will continue to be attributed to those A Shares following their conversion into Deferred Shares (notwithstanding that the Deferred Shares have limited rights or value).

A disposal of Deferred Shares (including a repurchase of Deferred Shares or on the winding up of the Company) may result in a Shareholder realising a capital loss. However, Shareholders liable to corporation tax should note that it is possible that section 30 of the Taxation of Chargeable Gains Act 1992 could be regarded as being applicable to such a Shareholder who elects for the Dividend. If that position applies, consideration for the disposal of such a Shareholder's Deferred Shares is liable to be increased for tax purposes by such an amount as is just and reasonable having regard to the payment of the Dividend Option.

Those Shareholders who elect for the Dividend Option will receive a cash dividend in respect of their A Shares. Such Shareholders will receive cash distributions pro rata to their respective holdings in the A Fund. It is expected that a cash distribution to Shareholders who elect (or who are deemed to elect) for the Dividend Option will be made on 14 June 2011 and that any further cash distributions will be made by the Liquidators out of the Liquidation Fund as and when they consider it appropriate during a period of up to several months after their appointment. Aggregate amounts due pursuant to the Dividend Option will be rounded down to the nearest penny, provided that, in cases where the amount so payable to any such Shareholder is less than GBP5.00, such amounts shall be donated to a charity nominated by the Company.

3. Capital Distribution Option

The Distribution of Assets by the Liquidators in respect of the B Shares on a winding up pursuant to the Capital Distribution Option to Shareholders should not be treated as an income distribution for the purposes of the Income Tax Acts, but as a distribution of a capital nature and therefore should not be subject to tax as income in the hands of individual Shareholders. The Distribution of Assets will not carry a tax credit.

A distribution in the case of a winding up will not be treated as a distribution for the purposes of the Corporation Tax Acts and therefore a corporate Shareholder should not be subject to corporation tax on income on receipt of the Distribution of Assets.

For CGT purposes, Shareholders who receive the Distribution of Assets should be regarded as making a part disposal of their B Shares. This may give rise to a chargeable gain or an allowable loss, depending on the Shareholder's circumstances, taking into account the Shareholder's base cost of the B Shares (which is the same as the base cost of the Existing Ordinary Shares). Individual and trustee CGT payers who make a chargeable gain will be subject to CGT rates of up to 28 per cent. (subject to any applicable exemption or relief).

A corporate Shareholder is taxable on all of its chargeable gains, subject to other reliefs and exemptions. Corporate Shareholders are entitled to indexation allowance up to the date the chargeable gain is realised.

DEEMED ELECTIONS

If you are an Eligible Shareholder and you do not make a valid election in respect of either Option (whether by submitting a validly completed Form of Election as described in this document or submitting a valid TTE instruction as described in this document), unless the Directors otherwise determine, you will be deemed to have chosen the Capital Distribution Option in respect of the entirety of your Existing Ordinary Shares. If you elect for the Capital Distribution Option and/or the Dividend Option in respect of some but not all of your Existing Ordinary Shares you will be deemed to have chosen the Capital Distribution Option in respect of the balance of your Existing Ordinary Shares. If the total number of Existing Ordinary Shares in respect of which you make an election is more than the total number of Existing Ordinary Shares you hold at the Record Date, then each Election you have made will be decreased pro rata so that the aggregate equals your entire holding of Existing Ordinary Shares as at the Record Date.

In addition, if you are an Overseas Shareholder and, notwithstanding the terms of this document, you attempt to elect for the Capital Distribution Option, you will be deemed to have elected for the Dividend Option in respect of your entire holding of Existing Ordinary Shares.

OVERSEAS SHAREHOLDERS

Shareholders who are not resident in the United Kingdom, the Channel Islands or the Isle of Man or who are citizens, residents or nationals of, or have their registered address in, countries other than the United Kingdom, the Channel Islands or the Isle of Man should consult their professional advisers to ascertain whether their participation in, or any election under, the Return of Cash will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Shareholder who is not resident in the United Kingdom, the Channel Islands or the Isle of Man or a citizen, resident or national of or who has his registered address in another country to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the Return of Cash, including the obtaining of any government, exchange control or other consents; which may be required, or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties in such jurisdiction.

The distribution of this document in certain jurisdictions may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Neither this document nor any other document issued or to be issued by or on behalf of the Company in connection with the Proposals constitutes an invitation, offer or other action on the part of the Company in any jurisdiction in which such invitation, offer or other action is unlawful.

A resident, citizen or national of, or a person with a registered address in any jurisdiction other than the United Kingdom, the Channel Islands or the Isle of Man is not entitled to participate in the Capital Distribution Option and must therefore not execute a Form of Election or give a TTE instruction to participate in the Capital Distribution Option. A trustee, custodian or nominee holding Existing Ordinary Shares on behalf of a resident, citizen or national of, or a person with a registered address in any jurisdiction other than the United Kingdom, the Channel Islands or the Isle of Man is not entitled to participate in the Capital Distribution Option and must therefore not execute a Form of Election to participate in the Capital Distribution Option. Without prejudice to the generality of the foregoing, a Shareholder located in, or whose registered address is in, any jurisdiction other than the United Kingdom, the Channel Islands or the Isle of Man shall receive the Dividend, subject to such dividend being declared.

The above provisions of this paragraph relating to Overseas Shareholders and other Shareholders who are citizens, residents or nationals of, or whose registered address is in, countries other than the United Kingdom, the Channel Islands or the Isle of Man may (subject to applicable law) be waived, varied or modified by the Company in its absolute discretion as regards specific Overseas Shareholders.

ADOPTION OF AMENDED ARTICLES

In order to implement the Proposals, amended Articles, which include the rights and restrictions attaching to the A and B Shares and the Deferred Shares, are being proposed to be adopted at the First Extraordinary General Meeting.

INFORMATION FOR WARRANTHOLDERS

Holders of Warrants are entitled to exercise their Warrants, but if they do so as they would be required to pay 45 pence per Warrant to receive an Existing Ordinary Share (and/or B Share if exercised following the reclassification of the Existing Ordinary Shares) and will subsequently only receive the equivalent of 23 pence plus any surplus following the distribution of the Liquidation Fund (which is not expected to be material).

EXTRAORDINARY GENERAL MEETINGS

Set out at the end of this document, Shareholders will find the First and Second Notices convening the First and Second Extraordinary General Meetings of the Company. A Form of Proxy for use at each Extraordinary General Meeting is enclosed with this document.

At the First Extraordinary General Meeting an ordinary resolution will be proposed to approve and authorise the Directors to complete the Disposal, in accordance with the terms of the Sale Agreement. In addition, special resolutions will be proposed: (a) to authorise the Board to proceed with the proposed cancellation of the admission of the Existing Ordinary Shares to trading on AIM; and (b) to approve the reclassification of Existing Ordinary Shares into A and B Shares, to amend the Articles to reflect the rights attaching to the Reclassified Shares and to approve the Dividend as recommended by Directors. The payment of the Dividend will be conditional on the passing of the special resolution at the Second Extraordinary General Meeting as described below.

At the Second Extraordinary General Meeting there will be one special resolution to approve the entry of the Company into voluntary liquidation, appoint the Liquidators and authorise their remuneration, authorise the Liquidators to carry into effect the provisions of the Articles (as amended by the First Extraordinary General Meeting), and to approve any distribution pursuant to the Capital Distribution Option.

ACTION TO BE TAKEN

Forms of Proxy

Shareholders will find enclosed with this document a Form of Proxy for use at each Extraordinary General Meeting.

It is important that you complete and sign the enclosed Forms of Proxy in accordance with the instructions printed thereon and return it to the Company's registrars,Capita Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in any event so as to arrive not later than 9.00 a.m. on 31 May 2011 in respect of the First Extraordinary General Meeting and not later than 9.00 a.m. on 8 June 2011 in respect of the Second Extraordinary General Meeting. Completion and return of a Form of Proxy will not preclude you from attending and voting at the relevant Extraordinary General Meeting, should you wish to do so.

Forms of Election

Eligible Shareholders who hold Existing Ordinary Shares in certificated form will find enclosed with this document a Form of Election that will allow them to elect for either of the Options.

Such Shareholders should complete and return the Form of Election to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in any event so as to arrive no later than 1.00 p.m. on 8 June 2011. Elections, once submitted, will be irrevocable.

You should note that if you hold Existing Ordinary Shares in both certificated and uncertificated form, you should complete a Form of Election for the certificated holding and send a TTE instruction for the uncertificated holding. If you hold Existing Ordinary Shares in certificated form, but under different designations, you should complete a separate Form of Election in respect of each designation.

Shares held in uncertificated form

Eligible Shareholders who hold their Existing Ordinary Shares in uncertificated form (that is, in CREST) do not have to complete or return a Form of Election. You should, however, take (or procure to be taken) the action set out below to transfer (by means of a TTE instruction) the number of Existing Ordinary Shares in respect of which you are making an election to an escrow balance, specifying Capita Registrars in its capacity as the escrow agent (under its participant ID referred to below), as soon as possible and in any event so that the transfer to escrow settles not later than 1.00 p.m. on 8 June 2011.

You should send (or, if you are a CREST personal member, procure that your CREST sponsor sends) a TTE instruction to Euroclear, which must be properly authenticated in accordance with Euroclear's specifications and which must contain the following details:

-- the number of Existing Ordinary Shares to be transferred to an escrow balance;

-- your member account ID;

-- your participant ID;

-- the ISIN code for the Existing Ordinary Shares, which is GG00B28QMS50;

-- the participant ID of Capita Registrars (in its capacity as a CREST receiving agent) which is RA10;

-- the member account ID of Capita Registrars, which for the Dividend Option is 27389DIV and for the Capital Distribution Option is 27389CAP;

-- the corporate action number for the Proposals, which is allocated by Euroclear and can be found by viewing the relevant corporate action details in CREST;

-- contact name and number to be inserted in the shared note field;

-- the intended settlement date for the transfer to escrow, which should be as soon as possible and in any event no later than 1.00 p.m. on 8 June 2011; and

-- the standard delivery instruction priority of 80.

You should note that, if you hold Existing Ordinary Shares in both certificated and uncertificated form, you should complete a Form of Election for the certificated holding and send a TTE instruction for the uncertificated holding. If you hold Existing Ordinary Shares in uncertificated form, but under different member account IDs, you should send a separate TTE instruction in respect of each member account ID.

RECOMMENDATION

The Directors do not recommend Shareholders to vote in favour of the Disposal. However, the Directors consider that it is very unlikely that the Disposal will not be approved at the First Extraordinary General Meeting, as the Majority Shareholders who own 87.57 per cent. of the Existing Ordinary Shares of the Company have under the terms of the Sale Agreement entered into an irrevocable undertaking to vote in favour of the Disposal Resolution.

Assuming that the Disposal Resolution is passed, the Directors consider the proposed cancellation of the admission of the Existing Ordinary Shares to trading on AIM, the Return of Cash and the winding up of the Company to be in the best interests of the Company and the Shareholders as a whole. Accordingly and on the basis of the above assumption, the Directors unanimously recommend Shareholders to vote in favour of all other resolutions to be proposed at the Extraordinary General Meetings, as they intend to do in respect of their own beneficial holdings of Existing Ordinary Shares amounting, in aggregate, to 100,000 Existing Ordinary Shares, representing approximately 0.23 per cent. of the existing issued share capital of the Company.

 
                    EXPECTED TIMETABLE OF PRINCIPAL EVENTS* 
 Latest time and date for receipt of Forms                 9.00 a.m. on 31 May 
  of Proxy for the First Extraordinary                                    2011 
  General Meeting 
 First Extraordinary General Meeting                       9.00 a.m. on 1 June 
                                                                          2011 
 Completion of the Disposal                                        1 June 2011 
 Date from which it is advised that dealings                       3 June 2011 
  in Existing Ordinary Shares should only 
  be for cash settlement and immediate 
  delivery of documents of title 
 Latest time for receipt of Forms of Proxy                 9.00 a.m. on 8 June 
  for the Second Extraordinary General                                    2011 
  Meeting 
 Latest time and date for receipt of Forms                 1.00 p.m. on 8 June 
  of Election                                                             2011 
 Latest time and date for receipt of TTE                   1.00 p.m. on 8 June 
  Instructions from Shareholders owning                                   2011 
  Existing Ordinary Shares in uncertificated 
  form 
 Record date for the purposes of Elections                 6.00 p.m. on 8 June 
                                                                          2011 
 Register closes and Existing Ordinary                     6.00 p.m. on 8 June 
  Shares disabled in CREST                                                2011 
 Expected cancellation of admission to                     7.00 a.m. on 9 June 
  trading on AIM                                                          2011 
 Existing Ordinary Shares reclassified                   9 June 2011 following 
  as Reclassified Shares**, Register reopened        cancellation of admission 
                                                             to trading on AIM 
 Dividend in respect of the Dividend Option              9 June 2011 following 
  declared                                                the reclassification 
                                                                        of the 
                                                      Existing Ordinary Shares 
 Second Extraordinary General Meeting                     9.00 a.m. on 10 June 
                                                                          2011 
 Cheques despatched and CREST payments                  14 June 2011 following 
  made in respect of the Dividend to Shareholders          close of Second EGM 
  electing for the Dividend Option and 
  conversion of A Shares into Deferred 
  Shares 
 Expected date for Company to be placed                 14 June 2011 following 
  into liquidation                                     payment of the Dividend 
 Expected distribution of the B Fund to                 As soon as practicable 
  B Shareholders                                         after the appointment 
                                                            of the Liquidators 
 
 

* The dates and times given in this document are based on the Company's current expectation and may be subject to change. If any of the above dates or times should change, the revised times and/or dates will be notified to Shareholders by an announcement on the Regulatory News Service of the London Stock Exchange.

** The Reclassified Shares are a technical requirement of the Return of Cash process. Existing Ordinary Shares will be reclassified according to Elections made (or deemed to have been made) by Shareholders.

All references in this document to times are to London times.

DEFINITIONS

The following definitions apply throughout this document unless the context requires otherwise:

 
 "A Fund"                   the cash to be held for Shareholders 
                               who elect for the Dividend Option 
 "A Shares"                   Existing Ordinary Shares which have 
                               been reclassified into Existing Ordinary 
                               Shares with "A" rights pursuant to the 
                               special resolution set out in the First 
                               Notice taking effect in accordance with 
                               its terms 
 "AIM"                        the AIM market operated by the London 
                               Stock Exchange 
 "AIM Rules"                  the rules for AIM companies and their 
                               nominated advisers issued by the London 
                               Stock Exchange 
 "Articles"                   the articles of association/incorporation 
                               of the Company 
 "Asset Manager"              New Perspective YK, a Japanese company 
                               which provides asset management services 
                               to the TK Operators 
 "B Fund"                   the cash to be held for Shareholders 
                               who elect for the Capital Distribution 
                               Option and which is expected to be paid 
                               to B Shareholders following the Second 
                               Extraordinary General Meeting 
 "B Shares"                   Existing Ordinary Shares which have 
                               been reclassified into Existing Ordinary 
                               Shares with "B" rights pursuant to the 
                               special resolution set out in the First 
                               Notice taking effect in accordance with 
                               its terms 
 "Beneficiary"                AM1 Co., Ltd 
 "Bonita Hotels"              the hotels owned by the TK Operators 
                               in Isawa, Komaki, Matsusaka, Sendai, 
                               Yamagata and Yokkaichi, Japan 
 "Buyer"                      Sanglier Pte. Ltd. 
 "Capita Registrars" or       Capita Registrars, The Registry, 34 
  "the Registrar"              Beckenham Road, Beckenham, Kent BR3 
                               4TU 
 "Capital Distribution        the option for Shareholders to realise 
  Option"                      their Existing Ordinary Shares for cash 
                               by way of the Distribution of Assets 
 "certificated" or "in        not in uncertificated form 
  certificated form" 
 Companies Law                the Companies (Guernsey) Law 2008, as 
                               amended or replaced from time to time 
 "Completion"                 completion of the Disposal pursuant 
                               to the Sale Agreement 
 "CREST"                      the relevant system (as defined in the 
                               CREST Regulations) in respect of which 
                               Euroclear is the Operator (as defined 
                               in the CREST Regulations) 
 "CREST Manual"               the compendium of documents entitled 
                               CREST Manual issued by Euroclear from 
                               to time and comprising the CREST Reference 
                               Manual, the CREST Central Counterparty 
                               Service Manual, the CREST International 
                               Manual, CREST Rules, CCSS Operations 
                               Manual and the CREST Glossary of Terms 
 CREST Regulations            the Uncertificated Securities Regulations 
                               2001 (SI 2001/3755), as amended 
 "Deferred Shares"          deferred shares in the capital of the 
                               Company with the rights set out in the 
                               special resolution set out in the first 
                               Notice, into which the A shares will 
                               automatically convert once the Dividend 
                               is paid prior to the liquidation of 
                               the Company 
 "Directors" or "Board"       the directors of JLH whose names are 
                               set out on page 8 of this document 
 "Disposal"                   the proposed disposal of all of the 
                               issued and outstanding shares of the 
                               JLH Subsidiaries to the Buyer as described 
                               in this document 
 "Disposal Resolution"        the ordinary resolution of Shareholders 
                               set out in the First Notice, which (if 
                               passed and amongst other things) will 
                               approve the Disposal 
 "Distribution of Assets"     the distribution of assets to be made 
                               by the Liquidators on the winding up 
                               of the Company to holders of B Shares, 
                               such amount being expected to be equal 
                               on a per share basis to the Dividend 
 "Dividend"                   A final dividend expected to be approximately 
                               23 pence per share payable prior to 
                               the winding up of the Company to all 
                               Overseas Shareholders and to Eligible 
                               Shareholders electing for the Dividend 
                               Option 
 "Dividend Option"          the option for Shareholders to realise 
                               their Existing Ordinary Shares for cash 
                               by way of a Dividend to be paid prior 
                               to the winding up of the Company 
 "Effective Date"             10 June 2011 
 "Elections"                  elections made by Eligible Shareholders 
                               pursuant to the Form of Election 
 "Eligible Shareholders"    all Shareholders other than Overseas 
                               Shareholders 
 "Euroclear"                  Euroclear UK & Ireland Limited 
 "Existing Ordinary Shares"   the existing ordinary shares of 1 pence 
                               each in the capital of the Company 
 "Extraordinary General       the First Extraordinary General Meeting 
  Meetings" or "EGMs"          and/or the Second Extraordinary General 
                               Meeting, as the context may require 
 "First Extraordinary         the first Extraordinary General Meeting, 
  General Meeting"             details of which are set out in the 
                               First Notice 
 "First Notice"               the notice of the First Extraordinary 
                               General Meeting to be held at 9.00 a.m. 
                               on 1 June 2011 
 "Form of Election"           the form of election enclosed with this 
                               document 
 "Form of Proxy"              any form of proxy sent to Shareholders 
                               with this document for use at the Extraordinary 
                               General Meetings 
 "Group"                      the Company and its subsidiaries 
 "Hotel Operator"             Bonita Services LLP, a Japanese company 
                               which provides hotel operation services 
                               to the TK Operators 
 "Japan Leisure Hotels",      Japan Leisure Hotels Limited, a Guernsey 
  "JLH" or the "Company"       incorporated company with registered 
                               number 47899 
 "JLH Subsidiaries"           JLH1 and JLH2 
 "JLH1"                       JLH1 Limited, a Guernsey incorporated 
                               company with registered number 47918 
 "JLH2"                       JLH2 Limited, a Guernsey incorporated 
                               company with registered number 47919 
 "Liquidation Fund"         the liquidation fund to be established 
                               by the Liquidators 
 "Liquidators"              Ashley Charles Paxton and Robert James 
                               Kirkby, both of KPMG Channel Islands 
                               Limited, 20 New Street, St Peter Port, 
                               Guernsey GY1 4AN, acting jointly and 
                               severally for the purposes of the winding 
                               up of the Company, expected to be appointed 
                               as liquidators of the Company pursuant 
                               to the first resolution tabled at the 
                               Second Extraordinary General Meeting 
 "London Stock Exchange"      London Stock Exchange plc 
 "Majority Shareholders"      Chestnut Fund Ltd and Japan Resorts 
                               and Leisure Limited 
 "member account ID"          the identification code or number attached 
                               to any member account in CREST 
 "NOMAD"                      Shore Capital and Corporate Limited 
 "Notices"                    the First Notice and/or the Second Notice, 
                               as the context may require 
 "Option"                     the Dividend Option and/or the Capital 
                               Distribution Option, as the context 
                               may require 
 "Overseas Shareholders"      Shareholders whose addresses, as entered 
                               in the Company's Register, are outside 
                               the UK, the Channel Islands and the 
                               Isle of Man or who are not resident 
                               in, or a citizen, resident or national 
                               of the UK, the Channel Islands or the 
                               Isle of Man 
 "Pounds" or "GBP"            the lawful currency of the United Kingdom 
 "Proposals"                  the Disposal, the Return of Cash, the 
                               proposed cancellation of admission of 
                               the Existing Ordinary Shares to trading 
                               on AIM, the proposed winding up of the 
                               Company and the other matters described 
                               in this document to be approved at the 
                               Extraordinary General Meetings, including 
                               the reclassification of the Existing 
                               Ordinary Shares into A and B Shares 
                               and the changes to the Articles and 
                               all ancillary matters 
 "Reclassified Shares"      Existing Ordinary Shares as reclassified 
                               into Existing Ordinary Shares with "A" 
                               rights and Existing Ordinary Shares 
                               with "B" rights pursuant to the special 
                               resolution set out in the First Notice 
                               taking effect in accordance with its 
                               terms 
 "Record Date"                6.00 p.m. on 8 June 2011 
 "Register"                   the register of members of the Company 
 "Return of Cash"           the repayment of funds to Shareholders 
                               either by way of the Dividend Option, 
                               the Capital Distribution Option or additional 
                               return of capital from the proceeds 
                               of the liquidation 
 "Sale Agreement"             the agreement dated 27 April 2011 made 
                               between the Company, the Majority Shareholders, 
                               the Buyer and the Beneficiary relating 
                               to the disposal of the JLH Subsidiaries 
                               and the TK Operators 
 "Second Extraordinary        the Second Extraordinary General Meeting, 
  General Meeting"             details of which are set out in the 
                               Second Notice 
 "Second Notice"              the notice of the Second Extraordinary 
                               General Meeting to be held at 9.00 a.m. 
                               on 10 June 2011 
 "Shareholders"               holders of Existing Ordinary Shares 
 "TK Operators"               First Dormitory Yugen Kaisha, Yugen 
                               Kaisha KN Planning, Yugen Kaisha Chubu 
                               Kasseika and BLT Godo Kaisha, Japanese 
                               companies which have received capital 
                               contributions from the JLH Subsidiaries 
                               in order to acquire the Bonita Hotels 
 "TK Owners"                  Bonita Holdings LLC and Bonita Holdings 
                               Ltd, the shareholders of the TK Operators 
 "TTE Instruction"            a transfer to escrow instruction (as 
                               described in the CREST Manual) 
 "UK"                         the United Kingdom of Great Britain 
                               and Northern Ireland 
 "uncertificated" or "in      recorded in the Register as being in 
  uncertificated form"         uncertificated form in CREST and title 
                               to which, by virtue of the CREST Regulations, 
                               may be transferred by means of CREST 
 "Warrant"                    a warrant entitling the holder to subscribe 
                               for one new Existing Ordinary Share 
                               at GBP0.45 (exercisable from 31 January 
                               2010 until 31 January 2013) 
 "Warranty Deed"              the warranty deed dated 27 April 2011 
                               made between the Company, the Majority 
                               Shareholders, the Buyer and the Beneficiary 
                               relating to the disposal of the JLH 
                               Subsidiaries and the TK Operators 
 "Yen" or "Yen"               the lawful currency of Japan 
 

( ) Assuming an exchange rate of 133.424 Yen per GBP1.00 sterling

This information is provided by RNS

The company news service from the London Stock Exchange

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