Notice of EGM

RNS Number:0711V
Pavilion Housing Association Ltd.
05 February 2004



                      PAVILION HOUSING ASSOCIATION LIMITED
            (formerly known as Rushmoor Housing Association Limited
              until a change of name was effected on 14 May, 1997)
                                  (the Issuer)

(Incorporated in England  under the Industrial and Provident Societies Act 1965
and registered as a social landlord under the Housing Act 1996 with the Housing
                   Corporation with registered number L4082)

                              NOTICE OF A MEETING

                         of the holders of those of the
                                  #53,000,000
            GUARANTEED SECURED STEPPED COUPON BONDS DUE 2012 TO 2027
                              (ISIN XS0075416783)
           unconditionally and irrevocably guaranteed as to scheduled
                  payments of principal and interest pursuant
              to a financial guarantee insurance policy issued by
                           AMBAC ASSURANCE UK LIMITED
                 (formerly known as AMBAC Insurance UK Limited
            until a change of name was effected on 8 February, 1999)
                                (the Guarantor)
 (Incorporated in England and Wales with limited liability under company number
                                    3248674)
                      of the Issuer presently outstanding
                 (the Bondholders and the Bonds respectively).

NOTICE IS HEREBY GIVEN that a Meeting of the Bondholders convened by the Issuer
will be held at the offices of Royal Bank of Canada Europe Limited, 71 Queen
Victoria Street, London EC4V 4DE on 25 February, 2004 at 10.00 a.m. (London
time) for the purpose of considering and, if thought fit, passing the following
resolutions which will be proposed as Extraordinary Resolutions in accordance
with the provisions of the Bond Trust Deed dated 24 April, 1997 (the Trust Deed)
made between the Issuer, the Guarantor and Law Debenture Trustees Limited (the
Trustee) as trustee for the Bondholders and constituting the Bonds.

                           EXTRAORDINARY RESOLUTION 1

"THAT this Meeting of the holders of those of the #53,000,000 Guaranteed Secured
Stepped Coupon Bonds due 2012 to 2027 of Pavilion Housing Association Limited
(formerly known as Rushmoor Housing Association Limited until a change of name
was effected on 14 May, 1997) (the Issuer) presently outstanding (the Bonds)
constituted by the Bond Trust Deed dated 24 April, 1997 (the Trust Deed) made
between the Issuer, Ambac Assurance UK Limited (formerly known as AMBAC
Insurance UK Limited until a change of name was effected on 8 February, 1999) as 
guarantor (the Guarantor) and Law Debenture Trustees Limited (formerly known as 
L.D.C. Trustees Limited until a change of name was effected on 29 June, 1999) 
(the Trustee) as trustee for the holders of the Bonds (the Bondholders) hereby:

1.         assents, if the conditions set out in paragraph (2) of this
Extraordinary Resolution are met, to the modification of the Terms and
Conditions of the Bonds as set out in the Third Schedule to the Trust Deed by
the deletion of the existing Condition 10.3 and its replacement with the
following as the new Condition 10.3:

"On or before 25 March, 2004, and on giving not less than three Business Days'
notice to Bondholders, the Issuer will use its best endeavours to redeem all of
the Bonds for the time being outstanding at any time at a price (the Redemption
Price) which shall be the higher of the following, together with interest
accrued up to and including the date of redemption (the Redemption Date): (a)
Adjusted Principal Amount as at the Calculation Date (as defined below); and (b)
that price (as reported in writing by Royal Bank of Canada Europe Limited to the
Issuer, AMBAC and the Trustee) at which the Gross Redemption Yield on the Bonds
on the Calculation Date is equal to the Gross Redemption Yield at 11.00 a.m.
(London time) on that date of 8 per cent. Treasury Stock 2021 (being the average
of quotes provided by three gilt-edged market-makers) plus 0.25 per cent.  The
notice to redeem despatched by the Issuer shall be irrevocable and shall specify
the Redemption Date.  Upon the expiry of such notice, the Issuer shall be bound
to redeem the Bonds at the applicable Redemption Price together with accrued
interest as aforesaid, unless previously redeemed or purchased and cancelled.
All Bonds so redeemed will be cancelled forthwith and may not be reissued or
resold.

For such purposes and the provisions of this Condition 10.3, Calculation Date
means the date which is not more than five Business Days prior to the intended
date of redemption and not prior to the date upon which the notice to redeem is
despatched by the Issuer and Gross Redemption Yield means a yield calculated on
the basis below:

The Gross Redemption Yield is calculated taking accrued interest as part of the
Price and using a true compound interest formula by finding the value of v to
give f(v) = 0 where:

(the Discounted Cash Flow Formula)

where   v     is the discounting factor per semi-annual interest period;

        Ci    is the aggregate amount of interest and principal on the ith
              Scheduled Payment Date of the Bonds after the Calculation Date 
              (C1 may be zero if the Bonds are already quoted 'ex-dividend', or 
              may be a first fractional payment);

        n     is the integral number of semi-annual interest periods remaining 
              from the Calculation Date to the date of final redemption of the 
              Bonds;

        t     is the fractional period until the next Scheduled Payment Date; 
              and

        P     is the price (including accrued interest) as at the Calculation 
              Date,

Then the Gross Redemption Yield, G, is determined by

G = 200 (1 - v) per cent. per annum.
        _______
             v

AMBAC will not be obliged under any circumstances to accelerate payment under
the Bond Policy; however, if it does so, the amount payable will be the Adjusted
Principal Amount as at the date of acceleration. Any amounts of principal in
excess of the Adjusted Principal Amount of the Bonds from time to time will not
be guaranteed by AMBAC under the Bond Policy.";

2.         agrees that the foregoing modification to the Terms and Conditions of
the Bonds will only become effective if the Issuer and all other relevant
parties have executed and delivered all the necessary documentation relating to
certain new financing arrangements for the Issuer following approval from the
Issuer's Board of Management and the necessary written consents of the Trustee,
the Guarantor and Nationwide Building Society to such modification are
forthcoming.  For the avoidance of doubt, if the Board of Management of the
Issuer does not approve such new financing arrangements, the necessary
documentation is not executed or the necessary written consents described above
are not forthcoming, the Terms and Conditions of the Bonds shall remain
unamended;

3.         sanctions every abrogation, modification, compromise or arrangement
in respect of the rights of the Bondholders appertaining to the Bonds against
the Issuer, whether or not such rights arise under the Trust Deed, involved in
or resulting from or to be effected by, the modifications referred to in
paragraph (1) of this Extraordinary Resolution and their implementation;

4.             authorises, directs, requests and empowers the Trustee to concur
in the modifications referred to in paragraph (1) of this Extraordinary
Resolution and, in order to give effect thereto and to implement the same,
forthwith to execute and deliver a supplemental trust deed in the form of the
draft produced to this Meeting and for the purpose of identification signed by
the Chairman thereof with such amendments (if any) thereto as the Trustee shall
require and to concur in, and to execute and do, all such other deeds,
instruments, acts and things as may be necessary or appropriate to carry out and
give effect to this Extraordinary Resolution and the implementation of the
modifications referred to in paragraph (1) of this Extraordinary Resolution; and

5.         subject to Clause 18.3 of the Trust Deed, discharges and exonerates
the Trustee from any liability in respect of any act or omission for which the
Trustee may have become responsible by reason of its acting in accordance with
this Extraordinary Resolution or making any determination or exercising (or, as
the case may be, not exercising) any other power or right conferred pursuant to,
or arising out of, this Extraordinary Resolution."

                           EXTRAORDINARY RESOLUTION 2

"THAT this Meeting of the holders of those of the #53,000,000 Guaranteed Secured
Stepped Coupon Bonds due 2012 to 2027 of Pavilion Housing Association Limited
(formerly known as Rushmoor Housing Association Limited until a change of name
was effected on 14 May, 1997) (the Issuer) presently outstanding (the Bonds)
constituted by the Bond Trust Deed dated 24 April, 1997 (the Trust Deed) made
between the Issuer, Ambac Assurance UK Limited (formerly known as AMBAC
Insurance UK Limited until a change of name was effected on 8 February, 1999) as
guarantor (the Guarantor) and Law Debenture Trustees Limited (formerly know as
L.D.C. Trustees Limited until a change of name was effected on 29 June 1999)
(the Trustee) as trustee for the holders of the Bonds (the Bondholders) hereby:

1.                   assents to the modification of the Trust Deed by the
deletion of the existing Clause 16.6 and its replacement with the following as
the new Clause 16.6:

"16.6 Return of Bond Policy:  The Bond Trustee will return the Bond Policy to
AMBAC for cancellation upon:

(a)                the redemption in full of the Bonds by the Issuer, the
payment in full of accrued interest thereon and the delivery to the Bond Trustee
of a certificate signed by an Authorised Signatory of the Issuer to the effect
that, as at the date of such redemption, payment and delivery the Issuer is and
will be solvent and is not unable to pay its debts within the meaning of Section
123 of the Insolvency Act 1986 and that no petition has been presented for the
winding-up of the Issuer; or

(b)                the payment in full of all amounts which are or may become
due under the Bond Policy."

2.                   sanctions every abrogation, modification, compromise or
arrangement in respect of the rights of the Bondholders appertaining to the
Bonds against the Issuer, whether or not such rights arise under the Trust Deed,
involved in or resulting from or to be effected by, the modifications referred
to in paragraph (1) of this Extraordinary Resolution and their implementation;

3.                   authorises, directs, requests and empowers the Trustee to
concur in the modifications referred to in paragraph (1) of this Extraordinary
Resolution and, in order to give effect thereto and to implement the same,
forthwith to: (i) execute and deliver a supplemental trust deed in the form of
the draft produced to this Meeting and for the purpose of identification signed
by the Chairman thereof with such amendments (if any) thereto as the Trustee
shall require; (ii) upon the Redemption Date (as defined in the Terms and
Conditions of the Bonds) concur in the cancellation of the financial guarantee
insurance policy and the endorsement thereto (the "Bond Policy") by the
Guarantor thereby releasing the Guarantor from all of its obligations under the
Bond Policy, and to concur in, and to execute and do, all such other deeds,
instruments, acts and things as may be necessary or appropriate to carry out and
give effect to this Extraordinary Resolution and the implementation of the
modifications referred to in paragraph (1) of this Extraordinary Resolution; and

4.                   subject to Clause 18.3 of the Trust Deed, discharges and
exonerates the Trustee from any liability in respect of any act or omission for
which the Trustee may have become responsible by reason of its acting in
accordance with this Extraordinary Resolution or making any determination or
exercising (or, as the case may be, not exercising) any other power or right
conferred pursuant to, or arising out of, this Extraordinary Resolution."

A full copy of this circular has been sent to the Documents Viewing Facility and
will be available for viewing shortly.


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