EI Group Regulatory News (EIG)

THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR MAY HAVE QUALIFIED AS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

Ei Group plc

Disposal of 370 properties within Ei Commercial Properties for £348 million

The Board of Ei Group plc ("Ei Group" or the "Company"), the largest owner and operator of pubs in the UK, is pleased to announce that it has entered into sale agreements, subject to Shareholder approval, with Tavern Propco Limited in relation to 370 properties comprising public houses and other commercial properties (the "Portfolio") for expected gross aggregate cash consideration of £348 million.

Tavern Propco Limited (the "Purchaser") is a newly incorporated private company, which is owned, through intermediate holding companies, by investment funds managed and/or advised by Davidson Kempner Capital Management LP.

The Disposal of the Portfolio, which comprises a significant proportion of the current Ei Commercial Properties division (FY 2018: 412 properties), represents a successful outcome of the previously announced sale process designed to optimise value from this part of the Group.

The Group's strategy in recent years to grow the income and quality of the Commercial Properties portfolio has resulted in what the Board believes to be an attractive valuation for the Portfolio.

Highlights of the Disposal:

· The Portfolio is being sold on a debt free basis for expected gross aggregate cash consideration of £348 million, subject to customary rent apportionment mechanics at Completion. The Purchaser has paid Ei Group a deposit of £33.66 million, which is non-refundable unless Shareholders do not approve the Disposal.

· The sale value represents a 13 times multiple of earnings and is in line with the net book value of the assets, reinforcing the Board's confidence in the robustness of the net asset value of the Group.

· A significant proportion of the Disposal proceeds will be used to reduce the level of the Group's outstanding debt, accelerating the delivery of the Group's medium-term target leverage ratio of 6x net debt to EBITDA.

· Along with the accelerated debt reduction, the Disposal provides the Board with the opportunity to consider more immediate returns to Shareholders.

· The Disposal also allows the Group flexibility to invest in driving growth in its core Publican Partnerships, Managed Operations and Managed Investments divisions, whilst at the same time identifying properties to rebuild its Commercial Properties division.

The Disposal constitutes a Class 1 transaction under the Listing Rules and Completion is conditional on Shareholder approval. Accordingly, a circular will soon be sent to Shareholders to convene the General Meeting at which Shareholders will be asked to approve the Disposal. Completion is expected to occur in early March 2019. Ei Group will continue to provide certain management services in respect of the Portfolio for a transitional period of up to 12 months.

Simon Townsend, CEO of Ei Group said: "We are very pleased to have agreed the sale of the Portfolio, which is in line with our strategy of delivering attractive and sustainable returns to Shareholders by unlocking the embedded value and optimising the returns from every asset within the business. The Portfolio is comprised of high quality assets which we believe are best suited to a free-of-tie, rent-only business model. Throughout the sale process, we have been impressed with the commitment and speed of execution demonstrated by Davidson Kempner, a global institutional investment management firm with over US$31 billion in assets under management and a long track record of investing in real estate."

Rothschild & Co acted as sole financial adviser to Ei Group on the Disposal.

The person responsible for arranging the release of this announcement on behalf of Ei Group is Loretta Togher, Legal Counsel and Company Secretary.

Enquiries:

Ei Group plc, Simon Townsend / Neil Smith 0121 272 5000

Rothschild & Co, Alex Midgen / Sam Green 020 7280 5000

Tulchan Communications, Jonathan Sibun / Jessica Reid 020 7353 4200

Important Notices

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 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, industry trends, competition, changes in government and changes in regulation and policy, including in relation to taxation as well as 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.

1. Introduction

The Board of Ei Group, the largest owner and operator of pubs in the UK, is pleased to announce that it has entered into sale agreements, subject to Shareholder approval, with Tavern Propco Limited in relation to 370 properties comprising public houses and other commercial properties on a debt free basis for expected gross aggregate cash consideration of £348 million.

Tavern Propco Limited (the "Purchaser") is a newly incorporated private company, which is owned, through intermediate holding companies, by investment funds managed and/or advised by Davidson Kempner Capital Management LP.

In accordance with the Listing Rules, due to the size of the Disposal in relation to the size of the Company, the Disposal constitutes a Class 1 transaction (as defined in the Listing Rules) and requires the approval of the Company's Shareholders under the Listing Rules. Accordingly, a circular will soon be sent to Shareholders to convene the General Meeting at which Shareholders will be asked to approve the Disposal. Completion is expected to occur in early March 2019.

This announcement describes the background to and reasons for the Disposal, explains why the Board unanimously considers the Disposal to be in the best interests of Ei Group and its Shareholders as a whole and recommends that Shareholders vote in favour of the Disposal Resolution. The principal terms of the Disposal, including the timing of Completion, are set out in paragraph 3 (Principal terms and conditions of the Disposal).

2. Background to and reasons for the Disposal

In May 2015 we announced a new strategy to optimise returns from every asset within the Group's portfolio of pubs and other properties. As part of that strategy, we set out our intention to grow our high quality free-of-tie commercial property portfolio. We have successfully achieved this over the last three years, with the pace of pubs converting from their existing tied agreements to commercial free-of-tie properties steadily increasing, progressively unlocking the embedded value within these properties.

The Group's ability to add further value to the Portfolio is low given the limited opportunity we have to influence the operation of the properties within the Portfolio. We have therefore been exploring strategic options to maximise value for Shareholders in line with the Group's value-led approach. Following the completion of a competitive sales process, the Board has concluded that the Disposal represents the best method to maximise value for Shareholders.

The Board believes that the Disposal is attractive for the following reasons:

· The Group's success in growing the income and quality of the Portfolio has resulted in what the Board believes to be an attractive valuation for the Portfolio which maximises Shareholder value.

· The sale value represents a 13 times multiple of earnings and is in line with the net book value of the assets, reinforcing the Board's confidence in the robustness of the net asset value of the Group.

· A significant proportion of the Disposal proceeds will be used to reduce the level of the Group's outstanding debt, accelerating the delivery of the Group's medium-term target leverage ratio of 6x net debt to EBITDA.

· Along with the accelerated debt reduction, the Disposal provides the Board with the opportunity to consider more immediate returns to Shareholders.

· The Disposal also allows the Group flexibility to invest in driving growth in its core Publican Partnerships, Managed Operations and Managed Investments divisions, whilst at the same time identifying properties to rebuild its Commercial Properties division.

In summary, the Disposal is in line with the Group's stated strategy to maximise value for Shareholders and the Board believes that the Disposal is in the best interests of Shareholders taken as a whole, given the factors set out above.

3. Principal terms and conditions of the Disposal

The sale of the Portfolio is divided into two tranches and the Sale Agreements in respect of the Portfolio comprise two conditional sale agreements (the First Tranche Sale Agreement and the Second Tranche Sale Agreement) entered into on 10 January 2019 between the Sellers, the Purchaser and Tavern Subpropco Limited. The First Tranche comprises 348 freehold and leasehold properties. None of the leasehold properties require landlord consent to be sold. The Second Tranche comprises 22 leasehold properties (or part leasehold properties) where the consent of a superior landlord is required for a sale (which represents approximately 6 per cent. of the Portfolio). The Purchaser may direct that certain of the leasehold properties are transferred to Tavern Subpropco Limited. The expected gross aggregate consideration due to the Sellers in respect of the Disposal is £348 million, subject to customary rent apportionment mechanics at Completion, and includes a deposit of £33.66 million (representing approximately 10 per cent. of the consideration in respect of the First Tranche and which was paid upon signing of the Sale Agreements). The aggregate consideration for the First Tranche is £336.62 million and the Second Tranche is £11.38 million. The consideration for the Second Tranche will be received on a property by property basis.

Completion of the First Tranche is conditional on (i) the approval by the FCA of the circular to be sent by the Company to Shareholders in respect of the Disposal; and (ii) Shareholder approval of the Disposal Resolution. If the conditions referred to above do not occur within 180 days from the date that the First Tranche Sale Agreement was entered into, then the Sale Agreements may be terminated by either Ei Group or the Purchaser and the deposit of £33.66 million will be returned to the Purchaser (and any such termination would apply to both the First Tranche and the Second Tranche).

Each completion in respect of the Second Tranche is conditional on (i) the approval by the FCA of the circular to be sent by the Company to Shareholders; (ii) Shareholder approval of the Disposal Resolution; and (iii) the Sellers obtaining the superior landlord consent required for the sale of each Second Tranche leasehold property. The consideration due to the Sellers in respect of the Second Tranche will be paid on an ad hoc basis as and when the particular properties that comprise the Second Tranche are individually sold. The Sellers have 12 months (calculated from the date the Second Tranche Sale Agreement is entered into) to obtain the required superior landlord consent referred to in condition (iii) above. If any consents are not obtained within the period of 12 months, the relevant leasehold properties will be excluded from the Disposal and those properties will continue to comprise part of the Commercial Properties division of Ei Group.

If the FCA does not approve the circular to be sent by the Company to Shareholders in respect of the Disposal or Shareholder approval of the Disposal Resolution is not obtained, the Purchaser has the right to terminate the Sale Agreements in which case the Sellers will pay the fees and costs properly incurred by the Purchaser subject to a cumulative cap of £1,000,000 (plus any irrecoverable VAT).

The Sellers have given various warranties to the Purchaser in respect of the Portfolio (and to Tavern Subpropco Limited in respect of any of those leasehold properties which are transferred to it) including warranties relating to specific financial information provided to the Purchaser, for example, in respect of total net income per site, rent deposit balances and historic bad debts. No liability shall arise in respect of the financial warranties unless the value of such claim exceeds £20,000 and no claims for breach of the financial warranties may be made against the Sellers until the aggregate amount of such claims exceeds £1.5 million. Warranties have also been given in relation to certain non‑financial information, for example, none of the properties are tied properties, the validity of premises licences, the absence of disputes in relation to access ways to or from the properties and the current use of the properties. No liability shall arise in respect of the non-financial warranties unless the value of such claim exceeds £5,000 and no claims for breach of the non-financial warranties may be made against the Sellers until the aggregate amount of such claims exceeds £250,000. Notwithstanding the claim thresholds of £1.5 million (financial warranty claims) and £250,000 (non-financial warranty claims), if financial warranty claims in excess of £1.25 million arise and non-financial warranty claims in excess of £250,000 arise then these claims may be aggregated in order to bring a claim against the Sellers. The total aggregate liability of the Sellers for any and all warranty claims is £35,000,000.

Ei Group will continue to provide certain management services in respect of the Portfolio for a transitional period of up to 12 months. These management services include rent collection, instructing third party agents to carry out rent reviews and lease renewals and reporting on financial performance of the Portfolio.

4. Information on Ei Group plc

We are the largest pub company in the UK in terms of number of operating sites as at 30 September 2018. We began our trading operations in 1991 and had 4,485 operating sites across England and Wales as at 30 September 2018. Our revenue and underlying EBITDA for the twelve months to 30 September 2018 were £695 million and £287 million, respectively. Our portfolio of high-quality assets was valued at £3.62 billion as at 30 September 2018, of which 95 per cent. by value, constituted freehold properties. The basis of the valuation is consistent with prior years with 95 per cent. of the property portfolio valued by independent external valuers.

In May 2015, we outlined the results of a fundamental strategic review with the aim of optimising our returns from every asset within our property portfolio. In order to achieve this, we established our new strategic plan (2020 Strategy) to increase our operational flexibility by continuing to reinvigorate our tied leased and tenanted business, which is to remain the core of our business, establishing and expanding our managed pubs and developing our portfolio of free-of-tie commercial properties.

As a result of our implementation of the 2020 Strategy, we now have three reportable segments:

· Publican Partnerships: this segment is our core leased and tenanted business, made up of pubs owned/leased by us and operated by publicans as their own business. As part of their lease or tenancy agreements with us, publicans also agree to purchase all or some of their beer and other beverages which they require for sale at their premises through us, which is referred to as a "tie" arrangement. The Publican Partnerships segment derives its income predominantly from rental revenue and revenue from supply of drinks and gaming machines. As at 30 September 2018, we had 3,718 Publican Partnerships (83 per cent. of our property portfolio based on the number of sites), which accounted for 74 per cent. and 85 per cent. of our total revenue and underlying EBITDA (before central overhead costs) for the twelve months ended 30 September 2018, respectively;

· Managed Pubs: this segment includes our Managed Operations division, made up of pubs owned/leased and operated by us, and our Managed Investments division, made up of joint ventures with experienced retail partners. The Managed Pubs segment derives its income predominantly from revenue from the retail sale of food and drinks, accommodation and gaming machines. As at 30 September 2018, we had 355 Managed Pubs (8 per cent. of our property portfolio based on the number of sites), which accounted for 22 per cent. and 8 per cent. of our total revenue and underlying EBITDA (before central overhead costs) for the twelve months ended 30 September 2018, respectively; and

· Commercial Properties: this segment is our free-of-tie pub and non-pub property business. The Commercial Properties segment derives its income predominantly from rental revenue. As at 30 September 2018, we had 412 Commercial Properties (9 per cent. of our property portfolio based on the number of sites), which accounted for 4 per cent. and 7 per cent. of our total revenue and underlying EBITDA (before central overhead costs) for the year ended 30 September 2018, respectively.

During the periods under review, as part of our implementation of the 2020 Strategy, we have established and grown our Managed Pubs and Commercial Properties segments and have disposed of a number of underperforming Publican Partnership pubs. We continue to grow our Managed Pubs and Commercial Properties segments by converting assets previously operated within our leased and tenanted business and investing in them where appropriate. In order to implement our strategy and provide proceeds to enable investment in our more profitable pubs, we have disposed of more than 800 pubs since the beginning of 2015.

5. Summary of the Portfolio

The Portfolio comprises a significant proportion of Ei Group's Commercial Properties segment. It includes 370 public houses and other commercial properties and for the year ended 30 September 2018 it generated net income of £26 million and with a book value of £347 million. Properties within the Portfolio are leased to third parties on commercial property terms.

The Portfolio incorporates predominantly pub assets, which are let to tenants on a commercial free-of-tie basis and also assets that were previously pubs, now converted to an alternative use (such as a convenience store). Tenants are predominately independent public house and restaurant operators along with some household names.

Ei Group's Portfolio Income Statement

Notes to Ei Group's Portfolio Income Statement above for the financial years ended 30 September 2016, 30 September 2017 and 30 September 2018 are as follows:

(1) Insurance costs have been allocated to the Portfolio sites amounting to £nil. This is consistent with the assumption that insurance costs would be covered by recharges to publicans, consistent with how the Group operates the Portfolio insurance arrangements, once the Portfolio is separate from the Group.

(2) Items below operating profit primarily relate to finance costs and taxation. An estimate has been included for corporation tax within the Portfolio balance sheet as at 30 September 2018 based on the statutory tax rate. Finance costs do not relate to the Portfolio and therefore have not been allocated.

The financial information set out above has been extracted without material adjustment from the consolidation schedules that underlie the audited consolidated financial information of the Group.

6. Information on the Purchaser

The Purchaser is a newly incorporated private limited company which is owned, through intermediate holding companies, by private investment funds managed and/or advised by Davidson Kempner Capital Management LP (DKCM). DKCM is a Securities and Exchange Commission registered global institutional investment management firm with over 30 years of experience, currently managing assets in low volatility, multi-strategy and event-driven strategies. DKCM currently has over US$ 31 billion in assets under management.

7. Use of proceeds, financial effects of the Disposal and strategy of the Continuing Group

The expected net cash proceeds arising from the Disposal are £344.3 million and the Disposal is expected to be initially dilutive to earnings. The net proceeds will be utilised in accordance with the Group's capital allocation framework. The majority of the net proceeds is expected to be used to repay Group indebtedness, significantly strengthening the balance sheet. Disposal proceeds generated from the sale of Portfolio properties within the Unique securitisation must be used in repayment of associated debt (as required under the terms of the Unique facility and security package). Approximately £180 million of net proceeds will be generated from the sale of Portfolio properties within the Unique securitisation and will therefore be used in the full repayment of the Class A3 Notes, part repayment of the Class A4 Notes and meeting associated costs of approximately £14 million arising on the early repayment of the Class A3 Notes and Class A4 Notes.

The remaining net proceeds will be available as cash for general corporate purposes. The Board intends to use approximately £35 million of the remaining net proceeds to repay the outstanding balance on the Group's £50 million term loan facility agreement with the balance of approximately £130 million initially being used to reduce amounts drawn under the Group's £150 million revolving credit facility agreement. The Board plans to assess the most appropriate methods by which returns to Shareholders can potentially be made. Some of the available net proceeds may be used to fund an additional share buyback programme. Shareholders should note that no final decision has yet been made on the timing, amount or structure of any distribution of net cash proceeds, and there can be no assurance that the Company will be able to implement any such distribution in a tax efficient manner.

After the Disposal, the Group intends to continue to expand the retained part of the Commercial Properties division with a view to further future monetisation where this maximises value for Shareholders.

8. Current trading, trends and future prospects for the Continuing Group

The Company published its annual results for the year ended 30 September 2018 on 20 November 2018, which included the following statements about current trading and prospects:

"We are pleased to report our preliminary results for the year ended 30 September 2018, the third complete financial year following the launch of the Group's new strategy in May 2015. We have delivered underlying EBITDA of £287 million, in line with the prior year, despite the continuation of planned asset disposals. Underlying profit before taxation was £122 million, up £1 million on the prior year as lower interest costs, resulting from reduced levels of debt, have offset higher depreciation charges.

The Group has made good progress in each of its three reportable segments: Publican Partnerships, our leased and tenanted business; Commercial Properties, our free-of-tie and non-pub property business; and Managed Pubs, which include Managed Operations that are 100 per cent. owned by the Group and Managed Investments that are joint ventures with experienced retail partners.

As our business has evolved since we launched our new strategy, we have modified the execution of that strategy, reflecting on our experiences to date and also taking account of the rapidly changing marketplace in which we operate. At the same time as building a substantial managed business which now comprises 355 outlets, with the necessary skills and infrastructure to operate such a business successfully and efficiently, we have grown a high quality, diversified commercial property business comprising 412 sites, predominantly pubs and restaurants but also including a variety of other commercial and residential uses. The Group has continued to optimise both its organisational structure and the deployment of resources in order to accommodate such a transformation, as assets have transferred out of the leased and tenanted estate into the managed and commercial property estates.

Against this background, it is testament to the skill and professionalism of our operational teams in the Publican Partnerships business, and the strength of relationships that they have built with the vast majority of lessees and tenants, that we have continued to deliver growth in like-for-like net income across the estate throughout the financial year. In addition to the transition of 180 sites into alternative operating models, the Publican Partnerships team have also accommodated the ongoing complexity of the Pubs Code Regulations 2016 (the "Pubs Code") which came into effect in July 2016 and the Market Rent Only (MRO) option that it provides, whilst at the same time deploying capital into growth opportunities across the estate and delivering a substantial range of services and support to our publicans.

As our managed businesses grow in scale, diversity and geographic reach, delivering increased earnings to the Group, we are able to bring more examples of best practice to bear in our leased and tenanted pub business and utilise our purchasing scale to greater effect to help our publicans grow their sales and reduce their costs. By adding operational value in this way, and by deploying the Group's capital to drive earnings growth, we will continue to create sustainable value in our two primary businesses of leased and tenanted pubs and wholly-owned Managed Operations.

Separately, through the progressive transfer of selected assets to commercial property lease agreements, we are unlocking the embedded value that resides in such properties. Our ability thereafter to add further value to the Portfolio is limited, to the extent that the potential disposal of some, or all, of the Portfolio is likely to realise best value for shareholders. Similarly, we have built our Managed Investments joint ventures specifically to realise value in selected sites to a much greater extent than would be achievable under our own Managed Operations, with a clear objective to monetise the value of those businesses when appropriate. We anticipate that, over time, the Group will realise proceeds which may then be deployed to create further value through repayment of debt, investment in our retained businesses or returns to Shareholders.

The new financial year has started well, and the trading performance of our portfolio of businesses, together with the transfer of assets into alternative operating models, is progressing in line with our expectations.

Notwithstanding the current uncertainty which prevails across the UK, and the expectation of rising input costs, the underlying quality, diversity and resilience of our leased and tenanted and wet-led managed estate, combined with our ongoing investment and support, give us confidence that we can continue to deliver sustainable growth in like-for-like net income for the full year in our Publican Partnerships and Commercial Properties businesses, and like-for-like sales growth for the full year in our expanding managed house businesses."

The Board remains confident in the Continuing Group's prospects for the current financial year. 

9. General Meeting

The Company will shortly be sending Shareholders a circular setting out further details of the Disposal, the Board's recommendation to vote in favour of the Disposal Resolution and convening the General Meeting. The General Meeting is expected to be held on 7 February 2019 immediately following the annual general meeting of the Company being held on that day.

10. Recommendation to Shareholders

The Board has received financial advice from Rothschild & Co on the Disposal, and in giving its financial advice to the Board, Rothschild & Co has relied on the Board's commercial assessment of the Disposal.

The Board considers that the Disposal and the passing of the Disposal Resolution are in the best interests of the Company and its Shareholders taken as a whole and intends to recommend that Shareholders vote in favour of the Disposal Resolution to be proposed at the General Meeting.

Appendix 

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

"Board": means the board of directors of the Company.

"Class A3 Notes": means the £435 million 6.542 per cent. Class A3 Asset Backed Notes due 2021.

"Class A4 Notes": means the £535 million 5.659 per cent. Class A4 Asset Backed Notes due 2027.

"Companies Act": means the Companies Act 2006, as amended from time to time.

"Company" or "Ei Group": means Ei Group plc.

"Completion": means completion of the transactions contemplated by the First Tranche Sale Agreement.

"Continuing Group": means Ei Group and its subsidiaries with effect from Completion of the Disposal.

"Directors": means the directors of the Company.

"Disclosure Guidance and Transparency Rules": means the disclosure guidance and transparency rules made by the FCA under section 73A of FSMA, as amended from time to time.

"Disposal": means the sale of the Portfolio in accordance with the terms of the Sale Agreements.

"Disposal Resolution": means the ordinary resolution required to implement and give effect to the transactions contemplated by the Sale Agreements and which is to be proposed and considered at the General Meeting.

"EBITDA": means earnings before finance costs, taxation, depreciation and amortisation.

"FCA": means the UK Financial Conduct Authority.

"First Tranche": means the first tranche of properties of the Portfolio to be sold pursuant to the First Tranche Sale Agreement.

"First Tranche Sale Agreement": means the conditional sale agreement in respect of the First Tranche dated 10 January 2019.

"FSMA": means the Financial Services and Markets Act 2000, as amended from time to time.

"General Meeting": means the general meeting of the Company to be convened for the purpose of asking Shareholders to approve the Disposal.

"Group": means Ei Group and its subsidiaries.

"Listing Rules": means the listing rules made by the FCA under section 73A of FSMA, as amended from time to time.

"Ordinary Shares": means the ordinary shares of 2.5 pence each in the share capital of the Company.

"Portfolio": means the 370 freehold and leasehold properties which are the subject of the Sale Agreements.

"Purchaser": means Tavern Propco Limited.

"Sale Agreements": means the First Tranche Sale Agreement and the Second Tranche Sale Agreement both dated 10 January 2019 and entered into between the relevant Sellers, the Purchaser and Tavern Subpropco Limited, a wholly-owned subsidiary of the Purchaser.

"Second Tranche": means the second tranche of properties of the Portfolio to be sold pursuant to the Second Tranche Sale Agreement.

"Second Tranche Sale Agreement": means the conditional sale agreement in respect of the Second Tranche dated 10 January 2019.

"Sellers": means the Company, Unique Pub Properties Limited, Unique Pub Properties Alpha Limited, Unique Pub Properties Beta Limited, Unique Pub Properties Gamma Limited and Unique Pub Properties Theta Limited.

"Shareholder": means a holder of Ordinary Shares from time to time.

"UK" or "United Kingdom": means the United Kingdom of Great Britain and Northern Ireland.

All references to legislation in this announcement are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension of it.

For the purpose of this announcement, "subsidiary" and "subsidiary undertaking" have the meanings given by the Companies Act.

Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.