Proposed Move to AIM

    RNS Number : 9901F
  The Real Hotel Company PLC
  16 October 2008
   

    The Real Hotel Company plc

    (the "Company" or "Group")
    Proposed Move to AIM
    The Board of the real hotel company plc (LSE: RHC) ("the Board") is pleased to announce a proposed move to AIM and the introduction of a
new holding company by way of a  scheme of arrangement. 
    1.    Summary of the Proposals
    The proposals involve:
(a)     putting in place The Real Hotel Group Plc (*New RHC*) as the new holding company of the Group;
(b)     undertaking a scheme of arrangement (*Scheme*) whereby each shareholder of the Company will receive, in exchange for each existing
share in the Company held by them, one new share in New RHC (*New RHC Shares*). New shares in the Company be issued to New RHC so that
following the Scheme becoming effective the Company will become a wholly owned subsidiary of New RHC; and
(c)     application to the London Stock Exchange for the New RHC Shares to be admitted to trading on AIM and the cancellation of the listing
of the existing shares of the Company on the Official List and to trading on the London Stock Exchange.
    The Scheme will not of itself alter the assets and liabilities of the Group and New RHC will effectively have the same business,
operations and board of directors as the Company after the Scheme takes effect. Upon the Scheme becoming effective, a shareholder of the
Company will have the same proportionate interest in the profits, net assets and dividends of New RHC as he had in the Company before the
Scheme became effective. In addition, the rights attached to the New RHC Shares will be identical to the rights attached to the existing
shares in the Company. 
    The proposals are conditional upon the sanction of the High Court and the approval of shareholders. The Scheme requires approval by a
simple majority in number of shareholders at a meeting convened by the direction of the Court ("Court Meeting") representing not less than
75 per cent of the nominal value of the shares of the Company and at a separate general meeting of the shareholders of the Company ("General
Meeting") requiring approval by 75 per cent of shareholders voting. It is expected that the Scheme will be effective and New RHC will be
admitted to AIM on 2 December 2008. 

    2.     Background to and Reasons for the Proposals
    The Board has for some time been considering the future shape of the Group and has been devising a growth strategy for the Group over
the next few years. The Board is of the view that this growth strategy rests on the premium limited service sector where the Board believes
the Group can build strong asset values from its trading activity for future realisations.
    As mentioned in the announcement by the Company on 25 June 2008, the Board believes that the traditional mid market is being squeezed by
both the extension of four star brands at the higher end and the growth of the budget sector at the lower end of the market, to the extent
that the mid market is no longer an attractive sector in which to grow the business of the Group. The Board believes that the Group offers a
limited service operation that has economics similar to the budget sector but delivers a guest experience similar to that of a four star
hotel. This, the Board believes, comes together in the Group's "purple" branded hotels which are the focus of future growth. As a result,
the Board has determined that over time the Group will exit from the traditional mid market sector as and when opportunities arise to focus
on the premium limited service sector.
    Currently, the Group operates a total of ten "purple" branded hotels in the following locations: Braintree, Glasgow, Derby, Doncaster,
Peterborough, Baldock, Birmingham, Cambridge, Tewkesbury and Shrewsbury. As mentioned above, it is part of the Group's declared strategy to
develop and operate further "purple" branded hotels. The Board is of the view that development of further "purple" branded hotels is
constrained within the Group structure and further believes that optimum finance arrangements for the development of further "purple"
branded hotels will be achieved as a result of the introduction of a new holding company.
    The Board believes that as a result of being admitted to trading on AIM, New RHC will have greater flexibility to implement its
strategic goals and to focus on its core business activities without the extra regulatory burdens imposed by the Listing Rules of the UK
Listing Authority ("Listing Rules") which are, in the Board's opinion, not appropriate to a group of the size of the Group. However, the
Board is aware that there are a number of factors which may make the admission of New RHC to AIM less attractive for certain shareholders of
the Company.
    It should be noted that the obligations of New RHC, once admitted to AIM and subject to the AIM Rules for Companies ("AIM Rules"), will
be similar in many respects to those of the Company, which is subject to the regime of the Listing Rules, except in the following key
areas:
    *     under the AIM Rules a nominated adviser (NOMAD), which has ongoing responsibilities to New RHC and the London Stock Exchange, is
required to be retained by New RHC at all times. KBC Peel Hunt, which is the Group's existing financial adviser and broker, has agreed to be
appointed as New RHC's NOMAD and broker;
    *     for future transactions by New RHC, prior shareholder approval under the AIM Rules is only required for reverse takeovers and
disposals that result in a fundamental change of business whereas under the Listing Rules a broader range of transactions require prior
shareholder approval;
    *     there is no requirement under the AIM Rules for the production of a prospectus or admission documents for further issues of shares
or other securities which are to be traded on AIM except to the extent required by law which would include the admission of a new class of
securities to such trading; and
    *     certain securities laws will not apply to New RHC when it is admitted to trading on AIM, for example, the Disclosure and
Transparency Rules and the Prospectus Rules. This is because AIM is not a regulated market for the purposes of the European Union's laws
relating to securities.
    Shareholders should also note that it is not possible to hold shares in New RHC, when admitted to trading on AIM, in PEPs and ISAs and
the Board understands that any shareholders whose shares in the Company are held in a PEP or an ISA will have a period of 30 days from the
date that the Scheme becomes effective and shareholders are deemed to receive New RHC Shares to decide whether to transfer those shares into
their own name or sell those shares and retain the proceeds within the relevant PEP or ISA.

    3.    Recommendation
    The Board believes that the proposals are in the best interests of the Company and its shareholders and recommends shareholders vote in
favour of the proposals at the Court Meeting and General Meeting.

    4.    Posting of Documents
    The Company has today posted the following documents to shareholders to give effect to the proposals:
(a)     a Scheme circular setting out the detailed background and reasons for the proposals, the introduction of a new holding company by
means of the Scheme, details, terms and conditions and timetable to give effect to the Scheme, action to be taken by shareholders and
convening the Court Meeting and General Meeting required to implement the Scheme for 10 November 2008; and
(b)      necessary forms of proxy to enable shareholders to vote at the Court Meeting and General Meeting.
    An announcement has also today been released giving details of the proposals for the purposes of Rule 2 and Schedule 1 to the AIM
Rules.

    For further information please contact:

    
 RHC plc:                                                   020 8233 2001
 Michael Prager, Chief ExecutivePaul Mitchell, Chief Financial Officer

    
 Adhoc PR       020 7483 0030
 Deborah Parritt
                

    Notes to Editors:

    The Real Hotel Company plc 

    The Real Hotel Company is more than just a name. It is a statement of the Company's core values. To deliver the rich traditions of hotel
keeping to a 21st century market in a low cost environment. In short to be real hoteliers.

    The Company is an owner, operator and developer of branded hotels in the UK and Europe and operates 55 owned, leased or managed hotels
in the UK, France, Germany and Belgium. It also operates the New Connaught Rooms conference and banqueting suite situated in London's Covent
Garden.

    The Company owns the Purple Hotels* limited service brand - 'a real hotel for the price of an inn' which differentiates itself by adding
a touch of style and cool to a sector that has, so far, defined itself only by price.

    It also operates hotels under the franchise Choice brands of Quality, Comfort and Clarion as well as six Stop Inn hotels.

    The management team has considerable experience in the hotel sector. Michael Prager was Managing Director of Utell International and
held senior positions in Intercontinental and Radisson Hotel groups. Paul Mitchell was formerly Vice President of Financial Planning and
Control for Europe, Middle East and Africa at Intercontinental Hotel Group in addition to holding senior finance positions in Granada, Forte
and Allied Lyons.


This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
MSCDGMMGLVFGRZG