Caledonia Regulatory News (CLDN)

Caledonia Investments plc

CALEDONIA INVESTMENTS PLC ACQUIRES THE CARE HOMES OPERATOR, CHOICE CARE GROUP

Caledonia Investments plc ("Caledonia") is pleased to announce that it has acquired Choice Holdings Ltd, Truecare Holdings Ltd and Choice Pathways Ltd (together "Choice Care Group" or "Choice" or the "Group") from Sovereign Capital in a transaction which values the business at £86 million. Choice Care Group provides support services for adults with learning disabilities, mental health disorders or complex needs through a portfolio of 47 residential care homes, owned and operated in the South of England.

Caledonia has subscribed £49.5 million in cash at completion for an initial 97.7% stake, the balance of the equity being rolled over by the management team led by Chief Executive, Edwina Johnston. The Royal Bank of Scotland plc, AIB Group (UK) plc and Santander UK plc (together "the Banks") have provided £40 million of senior debt financing. Both Caledonia and the Banks have committed to provide additional capital to fund the future development of Choice supporting management's growth plans for the Group.

Edwina Johnston has led Choice since 2009 as CEO and was previously the Group's CFO from 2002. She has overseen the development of Choice into the leading care business it is today. Choice places the delivery of care at the heart of its business model seeking to deliver positive care outcomes for its service users at all times. Choice enjoys 100% CQC compliance.

For the financial year to 30 September 2012, Choice Care Group generated EBITDA of £8.9 million, made combined profit before tax of £3.2 million and had gross assets of £45.8 million. From the outset, Choice will pay a running yield to Caledonia that is forecast to build over the life of the investment.

Commenting on the acquisition, Duncan Johnson, Caledonia's Head of Unquoted Investments, said:

"We are delighted to back Edwina Johnston and her management team in the buy-out of Choice. The group is recognised as a premium asset in the learning disability sector providing exceptional levels of care for its service users. Choice's estate is well invested and represents a solid platform for growth.

We look forward to a rewarding relationship with Edwina, Choice and its service users in the years ahead."

Edwina Johnston commented:

"It is great to have the backing of Caledonia and their long term support for our continuing investment plans. Under their ownership we can continue our expansion plans, adding new homes across the South, as well as maintain our continuous improvement plans across our portfolio ensuring we maintain our reputation for the very highest standards of care for our service users."

Will Wyatt, CEO of Caledonia commented:

"Our investment in Choice represents another positive step in the development of Caledonia's unquoted investment business, building upon our reputation as a measured, long-term investor in the unquoted arena. Choice fits well with the investment criteria we have set out to shareholders and I am confident it will deliver positive returns from the continuing growth of the business."

7 August 2013

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Notes for editors:

Caledonia Investments plc

Caledonia is a self-managed investment trust company listed on the London Stock Exchange with net assets of approximately £1.3bn. The company maintains a concentrated portfolio of international quoted, unquoted and fund investments and has paid an increasing dividend for 45 years.

In the unquoted arena, Caledonia seeks to invest £20 to £50 million in private companies either on a majority or minority basis in situations where it believes there to be a good opportunity for building value over the longer term.

For additional information on Caledonia, please visit www.caledonia.com. Neither the contents of the company's website nor the contents of any website accessible from hyperlinks on the company's website (or any other website) is incorporated into, or forms part of, this announcement.

Choice Care Group

Choice is headquartered in Reading, Berkshire and operates in the surrounding regions. The business owns and operates 47 residential care homes for people with Learning Disabilities or mental health disorders. In addition, through its subsidiary, Excel Support Services, the Group provides supported living services for additional service users in the same areas.

Choice employs in excess of 1,200 employees throughout the business.

Choice's strategy is to develop additional homes in its current areas of geographical focus as well as entering adjoining counties via new home development. Choice's business model and measured growth plans result in the delivery of care being placed at the heart of the business.

For additional information on Choice, please visit www.choicecaregroup.com. Neither the contents of the company's website nor the contents of any website accessible from hyperlinks on the company's website (or any other website) is incorporated into, or forms part of, this announcement.

Transaction

The transaction was led by Charlie Edwards, Duncan Johnson and Sally Flanagan on behalf of Caledonia. Caledonia was advised by Osborne Clark (Mark Spinner and Ben Truman), DC Advisory (Richard Clark and Phillip Gutzwiller), Connell Consulting (Clare Connell), Deloittes (Tim Haden) and Catalysis (Mike Hicks). Insurance advice was provided by both JLT and Aon. PricewaterhouseCoopers (Jason Wakelam) provided financial due diligence advice.

Banking facilities to support the transaction have been provided by RBS, AIB and Santander. The transaction was led on behalf of the banks by Mark Ward (RBS) with advice from Hogan Lovells (Stuart Brinkworth).

The Management team was advised by Chris Spanoudakis from Equita Corporate Finance as well as by CMS Cameron McKenna.

Sovereign Capital was advised by Jefferies International and CMS Cameron McKenna.