CAPC.L Regulatory News (CAPC)

15 November 2019

LEI: 549300TTXXZ1SHUI0D54

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

FOR IMMEDIATE RELEASE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

CAPITAL & COUNTIES PROPERTIES PLC ("Capco" or "the Company")

Sale of Earls Court interests for £425 million

Capco is pleased to announce that it has exchanged contracts for the sale of its interests in Earls Court, excluding Lillie Square, to APG and Delancey (on behalf of its client fund) for £425 million (the "Disposal").

This transaction is consistent with Capco's strategy of monetising investments at Earls Court over time with a focus on growing its central London property investment business, centred around Covent Garden. Completion of the transaction is expected to take place before the end of November 2019.

Highlights:

·; Disposal to APG and Delancey's client fund (the "Purchaser") is for total consideration of £425 million, on a cash-free and debt-free basis which compares to a balance sheet value at 30 June 2019 of £508 million;

·; Payments will be made to Capco on a phased basis, with 45 per cent payable on completion and the balance over two years. Net proceeds from the initial payment are expected to be approximately £156 million (adjusting for net debt, transaction-related costs and other completion items). The balance of £211 million will be payable in two equal instalments,12 months and 24 months after completion;

·; The Board unanimously considers the Disposal to be in the best interests of the Company and shareholders as a whole;

·; On a pro forma basis as at 30 June 2019 following the Disposal, Capco's loan to value is reduced from 19 per cent to 15 per cent with cash and undrawn facilities of over £900 million. This position will be enhanced further as deferred consideration is received. Net proceeds will be used to repay debt where appropriate or held as cash balances pending redeployment; and

·; The Disposal positions Capco as a prime central London property investment business, centred around Covent Garden, with a continued focus on driving rental growth and securing income. The business has significant financial flexibility to capitalise on investment opportunities and is well-positioned to deliver attractive long-term returns for shareholders.

Ian Hawksworth, Chief Executive of Capco, commented:

"Having prepared Earls Court for future development, we are now pleased to have agreed terms for the sale of our interests to APG and Delancey (on behalf of its client fund), an experienced real estate investment partnership which, with the support of TfL will take forward this important scheme for London.

Following the disposal, Capco will be a strongly-capitalised property investment business centred around our landmark Covent Garden estate. The business is well-positioned to generate attractive long-term returns for shareholders. Backed by a strong balance sheet and with a significant investment pipeline, our access to substantial liquidity will enable us to capitalise on opportunities."

Further information on the Disposal

The balance sheet value of the Earls Court interests at 30 June 2019 subject to the transaction (the "Disposal Group") comprises:

- 63 per cent interest in Earls Court Partnership Limited ("ECPL"): the investment vehicle with Transport for London ("TfL") in respect of the site formerly the location of the Earls Court exhibition centres and certain assets on and around Lillie Road valued at £389 million (Capco's share of ECPL net debt as at 30 June 2019 was approximately £38 million);

- Other related assets around Earls Court valued at £36 million; and

- Capco's interests in respect of the Conditional Land Sale Agreement ("CLSA") in relation to the West Kensington and Gibbs Green Estates, comprising prepayments and capitalised costs, with a carrying value of £83 million.

The Disposal Group generated net rental income of £2 million (Capco share) for the year ended 31 December 2018. The Disposal Group had gross assets, including working capital, of £517 million as at 30 June 2019 (Capco share). The accounting loss on disposal, against 30 June 2019 valuation, taking account of transaction-related costs and working capital adjustments is expected to be approximately £103 million. This amount does not include any fair value adjustment which may be made in relation to the deferred consideration. This exercise will be completed by the Company as part of preparing its annual report and accounts for the financial year ending 31 December 2019.

TfL has provided confirmation that it does not intend to take up its right to acquire a portion of shares in ECPL, which is triggered by the Disposal.

The Purchaser has paid a cash deposit of £42.5 million. Failure by the Purchaser to complete would result in this deposit being retained by Capco.

The Disposal will be effected by way of a sale of the entire issued share capital of a wholly-owned subsidiary of Capco. The Disposal to the Purchaser is on a cash-free and debt-free basis. Capco will receive total consideration of £425 million on a phased basis as set out above, subject to the following adjustments:

·; £15 million in relation to the final CLSA instalment due in December 2019, if paid prior to completion; and

·; a net asset adjustment in respect of certain ongoing costs ensuring the business remains compliant with its continuing obligations between exchange and completion.

The deferred payments receivable by Capco would be accelerated in part to the extent that payments made by Capco to the London Borough of Hammersmith and Fulham pursuant to the CLSA are refunded to the Purchaser after completion.

Further consideration may be payable to Capco in limited circumstances.

On 21 October 2019, following the announcement by Candy Ventures stating it was in the early stages of considering a possible cash offer for the Company, Capco entered into an offer period for the purposes of the Takeover Code. The Panel Executive has provided its consent to enter into the Disposal for the purposes of Rule 21.1 of the Takeover Code without requiring shareholder approval on the basis that, under Rule 21.1(c)(v)(A) of the Takeover Code, the decision to undertake the Disposal had been taken and partly implemented prior to the date on which Rule 21.1(a) was engaged. Candy Ventures has confirmed to the Panel Executive that it is not appealing this decision.

Rothschild & Co is acting as lead financial adviser to Capco on the Disposal. BofA Securities and UBS are acting as joint financial advisers and joint corporate brokers to Capco on the Disposal.

Person responsible

The person responsible for arranging the release of this announcement on behalf of Capco is Ruth Pavey, Company Secretary.

Enquiries

Capital & Counties Properties PLC

Media enquiries

Rothschild & Co +44 (0)20 7280 5000

BofA Securities +44 (0)20 7628 1000

UBS +44 (0)20 7567 8000

Notes to Editors

About Capital & Counties Properties PLC (Capco)

Capital & Counties Properties PLC is one of the largest investment and development property companies that specialises in central London real estate and is a constituent of the FTSE-250 Index. Capco's landmark London estates at Covent Garden and Earls Court were valued at £3.2 billion as at 30 June 2019 (Group share). The company is listed on the London Stock Exchange and the Johannesburg Stock Exchange.

www.capitalandcounties.com

Additional information

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to this announcement or otherwise. Any offer, if made, will be made solely by certain offer documentation which will contain the full terms and conditions of any offer, including details of how it may be accepted. The distribution of this announcement in jurisdictions other than the United Kingdom and the availability of any offer to shareholders of Capco who are not resident in the United Kingdom may be affected by the laws of relevant jurisdictions. Therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or shareholders of Capco who are not resident in the United Kingdom will need to inform themselves about, and observe any applicable requirements.

Notice related to financial advisers

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Capco and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Capco for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Merrill Lynch International ("BofA Securities"), a subsidiary of Bank of America Corporation, is acting exclusively for Capco in connection with the matters set out in this announcement and for no one else and will not be responsible to anyone other than Capco for providing the protections afforded to its clients or for providing advice in relation to the matters set out in this announcement.

UBS AG London Branch ("UBS") is authorised and regulated by the Financial Market Supervisory Authority in Switzerland. It is authorised by the Prudential Regulation Authority and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority in the UK. UBS AG London Branch is acting as financial adviser to Capco and no one else in connection with the matters set out in this announcement. In connection with such matters, UBS, its affiliates, and its or their respective directors, officers, employees and agents will not regard any other person as its client, nor will it be responsible to any other person for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement or any other matter referred to herein.

Publication on website

In accordance with Rule 26 of the Takeover Code, a copy of this document will be made available subject to certain restrictions relating to persons resident in restricted jurisdictions on Capco's website at www.capitalandcounties.com by no later than 12 noon (London time) on the Business Day following the date of this announcement. For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this document.

Information regarding forward-looking statements

This announcement contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. All statements other than statements of historical fact are forward-looking statements. They are based on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "goals", "intends", "anticipates", "believes", "targets", "aims" or "projects". Words or terms of similar substance or the negative thereof, are forward-looking statements, as well as variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

Forward-looking statements include statements relating to: (a) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (b) business and management strategies and the expansion and growth of the Company's operations; and (c) the effects of global economic conditions on the Company's business.

Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of the Company to differ materially from the expectations of the Company include, among other things, general business and economic conditions globally, industry trends, competition, changes in government and changes in regulation and policy, including in relation to the environment, health and safety and taxation, labour relations and work stoppages, interest rates and currency fluctuations, changes in its business strategy, political and economic uncertainty. Such forward-looking statements should therefore be construed in light of such factors.

Neither the Company nor any of its Directors, officers or advisers provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as at the date of this announcement.

Other than in accordance with its legal or regulatory obligations (including under the Listing Rules and the Disclosure Guidance and Transparency Rules), the Company is not under any obligation and the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

No profit forecast

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years will necessarily match or exceed the historical published earnings per Ordinary Share.