Eqtec Regulatory News (EQT)

Kedco plc ("Kedco" or the "Company")

Proposed Restructuring including disposal of interest in SIA Vudlande

Proposed Fundraising of up to £2.5 million

Potential Acquisition

Proposed Share Consolidation

Trading Update

Kedco plc (AIM:KED), the renewable energy group focusing on the production of clean energy in the UK and Ireland, announces a proposed Restructuring to remove debt obligations from the Company such that it will have a suitable basis on which to raise further equity finance. The Company also announces that it is seeking to undertake a Fundraising and a potential Acquisition as well as providing a trading update.

Certain elements of the proposed Restructuring are subject to approval by Shareholders at an Extraordinary General Meeting. The Circular convening the Extraordinary General Meeting will be posted to Shareholders later today.

Key points of the proposed Restructuring:

·; The Restructuring will remove approximately €10.8 million of debt obligations from the Group;

·; Pursuant to the Restructuring, the Company will dispose of its 80 per cent. interest in SIA Vudlande, a Latvian company producing wood and biomass products, to holders of Zero-Coupon Secured Notes at a value of €3 million;

·; Certain Lenders will write off 40 per cent. of the accrued interest owed;

·; Lenders will convert outstanding loan capital and the balance of accrued interest owed into New Ordinary Shares at a price to be determined by the proposed Fundraising;

·; The New Ordinary Shares issued to the Lenders will be subject to a "lock-in" restriction whereby such Shareholders will be unable to dispose of their holding for a period of two years; and

·; Enfield Biomass Limited ("Enfield Biomass") will become a wholly owned subsidiary of the Company.

Key point of the proposed Fundraising:

·; The Company is seeking to raise up to £2.5 million to provide the Group with the means to meet its ongoing working capital requirements including the development of its project pipeline.

Dermot O'Connell, Chairman, commented:

"The proposed Restructuring will allow the Company to adopt a more appropriate capital structure suited to its strategy of constructing, owning and operating heat and electricity generation plans. We are delighted that the Lenders, including the Company's largest shareholder FBD and other shareholders, have agreed to convert certain of their interests into equity in the Company, which we believe shows a confidence in the Company's future, its management and its business strategy.

Since the completion of the strategic review in March 2011, the Company has signed a milestone financing deal with RBS Ulster Bank for a facility of up to £9.44 million for its Newry power plant. On 27 June 2012 the Company announced the initial commissioning of the plant, marking the Company's transition from being a clean energy project developer to becoming a clean energy producer.

It is the Board's belief that the proposed restructuring and fundraising will place Kedco on a solid financial footing to actively pursue other opportunities in its project pipeline and to deliver shareholder value. Kedco is pleased to report that since its first reference site (Newry Biomass) started production of syngas for the generation of electricity, it is now progressing well from preliminary talks with both debt and equity partners for its flagship 12 MW Enfield Biomass project in London. Enfield Biomass has full planning and permitting to convert 60,000 tonnes per annum of waste wood into electricity and heat. A further update will be provided by the board in due course."

Summary proposed timetable:

- Ends -

For further information:

Further information on Kedco plc

Kedco plc's business strategy is to identify, develop, build, own and operate renewable energy electricity and heat generation plants in the UK and Ireland. These plants will contribute to the need for sustainable energy from renewable sources.

The Company possesses significant knowledge of renewable energy markets, clean technologies, biomass and waste fuel sources, project development, project finance and project delivery.

Kedco has a strong pipeline of additional plants at varying stages of development, including a site in North London with full Planning and Environmental Permission for the conversion of 60,000 tonnes of waste timber per annum into up to 12MW of electricity and heat. The Company is also currently engaged in the planning process for proposed biomass projects in Rutland, East Anglia and Clay Cross, Derbyshire.

Kedco was admitted to trading on AIM, a market operated by the London Stock Exchange, in October 2008.

Proposed Restructuring including disposal of interest in SIA Vudlande

Proposed Fundraising of up to £2.5 million

Potential Acquisition

Proposed Share Consolidation

Trading Update

Introduction

In its interim results for the six months ended 31 December 2011, Kedco noted that its ability to continue as a going concern was contingent upon additional finance being made available for the Company's working capital requirements and a successful outcome to debt restructuring initiatives undertaken by the Group.

Since that time, the Board has explored a number of different sources of additional finance. Whilst the Board was confident of raising additional capital, it has become apparent that a combination of the Group's current levels of debt and concerns over the Company's current capital structure, was leading to uncertainty in the market surrounding the Company and its strategy of constructing, owning and operating electricity and heat generation plants.

Kedco has therefore pursued discussions with certain of its existing providers of debt finance with a view to restructuring certain of its debts such that the Company would have a suitable basis on which to raise further equity finance to meet its working capital requirements. This process has culminated in the Company entering into binding agreements with the Lenders (the "Restructuring"). Pursuant to the Restructuring, the Company has agreed to the disposal of its 80 per cent. indirect interest in SIA Vudlande (the "Disposal").

The Restructuring, which will involve the issue of New Ordinary Shares, will significantly strengthen the Group's balance sheet through the reduction of its debt by approximately £8.5 million (€10.8 million) and a reduction in its annual interest charge of £1.2 million (€1.5 million).

The New Ordinary Shares issued pursuant to the Restructuring will be issued at a price (the "Conversion Price") equivalent to that received by the Company in respect of an equity fundraising that it intends to undertake upon the Resolutions being passed at the EGM (the "Fundraising"). The Restructuring is conditional, inter alia, upon the Fundraising occurring and the granting by Ordinary Shareholders of share allotment authorities and the approval by Ordinary Shareholders of the Resolutions to be proposed at the EGM.

The Board is of the view that the Restructuring represents the only realistic prospect for reducing the Group's debt burden and securing the finance required to meet its working capital requirements and to advance the development of its portfolio of renewable energy projects.

The Board is also of the view that the decision of the Lenders, including the Company's largest shareholder FBD and other shareholders in their capacities as Lenders, to convert their debt into equity in the Company shows a confidence in the Company's future, its management and its business strategy.

If the Resolutions are not passed then, in the absence of the Restructuring, Lenders may seek to withdraw their support for the Company. The Board is of the view that any such process, coupled with the lack of working capital resources, would mean that the Company would have to reconsider its ability to continue as a going concern and, in the absence of viable alternatives, might lead to the Company ceasing to trade and entering insolvency.

The principal elements of the Restructuring include: (i) the issue of New Ordinary Shares to the Lenders in full and final settlement of the loan capital and interest repayments due to them; and (ii) the disposal of the Company's entire interest in SIA Vudlande, a Latvian registered company engaged in the sawmilling business, to the holders of the Zero-Coupon Secured Notes.

As the price at which the New Ordinary Shares will be issued is not currently known but will be determined by the Fundraising and the prevailing Sterling/Euro exchange rate at the date of the EGM, the Board is seeking authorities that it considers will be sufficient to allow the Restructuring, Fundraising and Acquisition to occur. The exchange rate at which the Conversion Price will be converted into Euros is not currently known. Based on the Sterling /Euro exchange rates as at 30 August 2012, in the event that the anticipated maximum number of New Ordinary Shares were to be issued pursuant to the Restructuring, Existing Shareholders would hold 35.19 per cent. of the issued share capital of the Company. In the event that the anticipated maximum number of New Ordinary Shares were to be issued pursuant to the Restructuring, Fundraising and Acquisition, Existing Shareholders would hold 22.31 per cent. of the issued share capital of the Company.

In addition and as required by the AIM Rules, Ordinary Shareholders will also be asked to approve the disposal by the Company of its interest in SIA Vudlande to the holders of the Zero-Coupon Secured Notes.

Finally, Ordinary Shareholders are being asked to approve the consolidation of the Ordinary Shares.

Background to and Reasons for the Restructuring

In its interim results for the six months ended 31 December 2011, Kedco noted that its ability to continue as a going concern was contingent upon additional finance being made available for the Company's working capital requirements and a successful outcome to debt restructuring initiatives undertaken by the Group.

The Group's debts which are currently or imminently due comprise the obligation to repay:

·; £3.6 million (€4.5 million) to the holders of the Zero-Coupon Secured Notes by 31 October 2012; and

·; £3.9 million (€4.9 million) to holders of the Other Secured Notes and providers of the Unsecured Loans.

In order to be able to meet the Company's obligations, the Board has undertaken a number of actions including the attempted disposal of its 80 per cent. interest in SIA Vudlande, the Group's Latvian subsidiary that is engaged in sawmilling activities. It was intended that the proceeds from such a disposal would be used to meet the amounts due in respect of the Zero-Coupon Secured Notes. However, given the ongoing turmoil in the Euro-zone region, the Company was ultimately unable to secure a purchaser on acceptable terms.

As announced on 2 July 2012, the Company sought and received an extension of the repayment date on the Zero-Coupon Secured Notes from 30 June 2012 to 31 October 2012. Since that time, the Company has continued discussions with the Lenders with the objective of agreeing a consensual restructuring of the Company's balance sheet in a manner that would avoid the need to rely upon a court-administered process. These discussions have culminated in the Restructuring.

It is the view of the Board that the Restructuring represents the best outcome for all stakeholders having due regard to the current financial circumstances of the Company. In the absence of the Restructuring, Lenders may seek to withdraw their support for the Company. The Board is of the view that any such process, coupled with the lack of working capital resources, would mean that the Company would have to reconsider its ability to continue as a going concern and, in the absence of viable alternatives, might lead to the Company ceasing to trade and entering insolvency.

Benefits of the Restructuring

Kedco is a renewable energy development company focused on delivering quality electricity and heat generating plants. The objectives of the Restructuring are to:

·; stabilise the Company's financial affairs;

·; position the Company in a manner which will enable it to raise further capital; and

·; enable the Company to adopt a more appropriate capital structure, which will facilitate the advancement of its development project pipeline through the planning and permitting process.

The Board believes that the implementation of the Restructuring will create a stable foundation for the Company. The Restructuring will achieve a reduction in the Group's obligations of approximately £8.5 million (€10.8 million). It is the Board's view, after consulting with SVS Securities, that this should provide the Company with an opportunity to raise further equity finance through the Fundraising to meet its working capital and project development requirements.

The Restructuring

The principal elements of the Restructuring include: (i) an agreed issue of New Ordinary Shares to the Lenders in full and final settlement of the loan capital and a negotiated reduction in the interest repayments due to them; and (ii) the disposal of the Company's entire interest in SIA Vudlande. The debt structure of the Group following the Restructuring is anticipated to be as follows:

The pre-Restructuring debt structure above reflects outstanding principal and interest up to the date of the EGM.

Kedco Power Limited, a Group company, issued 500,000, 8 per cent. cumulative redeemable convertible preference shares of €1 each at par to Enterprise Ireland, the Irish Government agency responsible for the global expansion of Irish companies, in the year ended 30 June 2011, raising €500,000. The preference shares will be convertible at the option of the holder in the event that investment of at least €2.0 million is secured by Kedco plc, or Kedco Power Limited, within five years from the date of allotment of the preference shares and if the option is exercised, will convert into ordinary shares in Kedco plc at the Conversion Price.

The remaining bank debt resides in Kedco Block Holdings Limited, Kedco Energy Limited, Granig Trading Limited and Castle Homes Supplies Limited, which are all Group companies. These loans are secured on assets in these companies and by personal guarantees given by certain directors. There is no contractual recourse to Kedco plc in relation to these loans.

In addition, Enfield Biomass, the project joint-venture entity relating to Kedco's biomass development in Enfield, London in which Kedco currently holds a 50 per cent. interest through a subsidiary, will reduce its own borrowings by €230,000 and remove a contingent €1.5 million obligation from the Group as detailed below.

Zero-Coupon Secured Notes

On 5 July 2010 the Company raised £2,583,780 from the issue of 3,588,583 Zero-Coupon Secured Notes. These were issued at a subscription price of £0.72 and were to be redeemed at par value (being £1) on 30 June 2012.

Newry Biomass Limited ("Newry Biomass"), a joint venture company established for the purposes of the Newry project, agreed to pay the holders of the Zero-Coupon Secured Notes a royalty of five per cent. of the proceeds arising from the sale of energy from the Newry project (the "Investor Royalty"). The royalty payments were to commence with the initial generation of 1 megawatt ("MW") of energy from Newry and to conclude following 24 months of continuous generation of 2MW electricity.

Pursuant to a separate royalty agreement, Newry Biomass agreed to pay a royalty of two per cent. of the proceeds arising from the sale of energy from the Newry project to Cornhill Asset Management Limited, adviser to the holders of the Zero-Coupon Notes, for the same period as that which applied to the Investor Royalty.

The Company granted the holders of the Zero-Coupon Secured Notes, a second-ranking security charge over its 80 per cent. interest in SIA Vudlande.

As part of the Restructuring, the Company and the holders of the Zero-Coupon Secured Notes have agreed in principle to:

·; the acquisition of the entire issued share capital by Cornhill Asset Management Limited, for and on behalf of the holders of the Zero-Coupon Secured Notes, of Kedco Block Limited for £2,379,253 (€3,000,000), the proceeds of which will correspondingly reduce amounts due to the holders of the Zero-Coupon Secured Notes. Kedco Block Limited is the registered shareholder of the Group's 80 per cent. shareholding in SIA Vudlande;

·; a 40 per cent. reduction in the interest payable on the Zero-Coupon Secured Notes, (being the difference between the issue price and par value), equivalent to £401,922 (€506,783);

·; the conversion of remaining amounts due (being £807,409) into New Ordinary Shares at the Conversion Price with such New Ordinary Shares being subject to a "lock-in" restriction whereby such Shareholders will be unable to dispose of their holding for a period of two years from the date of Admission;

·; the release of all security currently held over the Group's assets by holders of the Zero-Coupon Secured Notes;

·; the cancellation of the royalty agreements in respect of the Newry project; and

·; the assignment to Cornhill Asset Management Limited of €128,237 of amounts due from SIA Vudlande to the Group.

The transfer of Kedco Block Limited to Cornhill Asset Management Limited will also remove €1.4 million of secured bank debt, borrowed by SIA Vudlande, from the Group's consolidated balance sheet.

Holders of the Zero-Coupon Secured Notes include Eddie Barrett and Diarmuid Lynch, who are also directors of Kedco. Accordingly, neither Eddie Barrett nor Diarmuid Lynch have participated nor will participate in the recommendation of the Resolutions to Ordinary Shareholders.

Other Secured Notes

The Group owes €150,000 to two individuals which are secured on certain assets of the Company. Pursuant to the Restructuring these individuals will take possession of the secured assets, which have a book value of €50,000, and convert the balance of €100,000 into New Ordinary Shares at the Conversion Price and on the basis of the prevailing Sterling/Euro exchange rate at the date of the EGM. Such New Ordinary Shares will be subject to a "lock-in" restriction whereby such Shareholders will be unable to dispose of their holding for a period of two years from the date of Admission.

Unsecured Notes

As part of the Restructuring, the Company has also engaged in discussions with other Lenders including the Company's major shareholder, Farmer Business Developments plc ("FBD") and Eddie Barrett, a director of Kedco. These other Lenders and the Company have agreed in principle to:

·; a 40 per cent. reduction in all interest that has been accrued and remains unpaid to date; and

·; the conversion of all remaining monies owed by the Company and its subsidiaries, totalling €4,440,734, into New Ordinary Shares at the Conversion Price and on the basis of the prevailing Sterling/Euro exchange rate at the date of the EGM. Such New Ordinary Shares will be subject to a "lock-in" restriction whereby such Shareholders will be unable to dispose of their holding for a period of two years from the date of Admission.

Shareholders should note that as Dermot O'Connell, Chairman of Kedco is an appointee of FBD and accordingly he has not participated and will not participate in the recommendation of the Resolutions to the Ordinary Shareholders.

Wellwin Notes

Enfield Biomass, a company in which Kedco currently holds a 50 per cent. interest, owes capital and accrued interest of €230,000 from Wellwin Investments Limited ("Wellwin"). Wellwin currently owns the remaining 50 per cent. of Enfield Biomass. As part of its original investment, Wellwin received an option under which it can require Kedco to purchase its interest in Enfield Biomass for €1.5 million.

Pursuant to the Restructuring, Wellwin has agreed in principle to transfer all shares held by it in Enfield Biomass to a wholly owned member of the Group, relinquish its option in relation to Enfield Biomass and convert its loan plus accrued interest into New Ordinary Shares at the Conversion Price and on the basis of the prevailing Sterling/Euro exchange rate at the date of the EGM. Such New Ordinary Shares will be subject to a "lock-in" restriction whereby such Shareholders will be unable to dispose of their holding for a period of two years from the date of Admission. In addition, Wellwin will receive a development fee of €255,000 upon Enfield Biomass raising the requisite debt and equity finance for its continued development. It is intended that the representatives of Wellwin on the board of Enfield Biomass will resign. As a result of the Restructuring, Enfield Biomass will become a wholly-owned subsidiary of the Group.

Brendan Halpin, a director of Kedco is also a shareholder of Wellwin. Accordingly, Brendan Halpin has not participated and will not participate in the recommendation of the Resolutions to Ordinary Shareholders.

Information on SIA Vudlande

SIA Vudlande is a limited liability company registered in Latvia. The Company owns its 80 per cent. interest in the share capital of SIA Vudlande via its wholly-owned subsidiary, Kedco Block Limited.

The following table summarises certain financial information in respect of 100 per cent. of SIA Vudlande:

The Company has sought purchasers for its interest in SIA Vudlande over a 14 month period. The highest offer received for the Company's interest as a result of this process was €2.5 million. The Board is satisfied that the amount of €3.0 million attributed to SIA Vudlande as a result of the Restructuring represents the best achievable outcome at the current time.

The Fundraising

Upon approval of the Resolutions at the EGM, the Company intends to undertake an equity fundraising to raise up to £2.5 million. The purpose of the Fundraising is to provide the Group with the means to meet its ongoing working capital requirements including the development of its project pipeline.

There can be no guarantee that the Fundraising will be successful. The Company expects to make further announcements in respect of the Fundraising in due course.

The Acquisition

The Company is currently contemplating a potential acquisition. The Board considers that the target has an attractive and diverse portfolio of complimentary projects as well as a strong and experienced management team.

The consideration for the Acquisition, if completed, would be satisfied by the issue of New Ordinary Shares and would not involve cash consideration.

Shareholders should note that the Acquisition is conditional upon the Restructuring and the Fundraising and therefore there can be no certainty that the Acquisition will be successfully completed. The Company will make further announcements in respect of the Acquisition in due course.

The Consolidation

The Board is proposing to carry out a share consolidation on a one-for-ten basis in order to enhance the marketability of the Company's Ordinary Shares and decrease the volatility of their market price (the "Consolidation").

The price levels at which the Company's shares have recently traded (averaging 1.3 pence over the six months preceding the date of this announcement) mean that small absolute movements in the share price represent large percentage movements, resulting in share price volatility. In addition, the Directors believe that the bid offer spread at these price levels can be disproportionate, to the detriment of Shareholders.

The Board holds the view that the increased share price resulting from consolidation would be more appropriate for the Company. Such a change is expected also to enhance the market perception of the Company in the longer term.

Extraordinary General Meeting

A notice convening the Extraordinary General Meeting is set out in the Circular being posted to Shareholders later today. The Circular will contain resolutions to:

·; approve the disposal by the Company of its entire interest in SIA Vudlande;

·; renew the Director's authority to allot relevant securities;

·; dis-apply pre-emption rights; and

·; consolidate the Ordinary Shares.

Current Trading and Prospects

The Company undertook a strategic review in early 2011 with the aim of refocusing the business portfolio towards core, renewable energy, power generation activities. Cost savings were delivered by the Company through the exit from non-core and non-profitable business segments, thereby creating a leaner, more efficient business structure with the focus purely on the renewable energy power generation business. This decision meant that the Company's interest in the Latvian sawmill was deemed to be non-core and therefore the proposed disposal of the Company's interest in SIA Vudlande as part of the Restructuring fulfils a strategic objective.

The Board has taken the opportunity to refocus and reposition the Company as a 'technology neutral' renewable energy business with a core focus on developing and delivering electricity and heat generation projects into operation. The Company will focus on both large and small scale projects, providing flexibility to maximise existing land positions whilst diversifying development and technology risks. This flexible business model will deploy capital where it can achieve the best return for Shareholders whilst still keeping the focus on the generation of clean energy from either electricity or heat.

The Company's ultimate aim is to be one of the UK and Ireland's largest independent renewable energy companies, with a diverse portfolio of operating and development assets across various renewable energy technologies. To this end, the Company will focus on developing its existing portfolio as well as considering strategic bolt-on acquisition opportunities that add generating potential to its project portfolio.

The Company currently has 27.80MW at various stages of development as set out in the table below:

Newry Biomass - 4MW Biomass combined heat and power ("CHP")

The Company recently announced that its plant in Newry, Northern Ireland, commenced the production of syngas for the generation of electricity from its biomass electricity and heat generation plant. The plant has achieved Form G59 certification which means that the connection to the electricity grid is certified by the Distribution Network Operator confirming its integrity and safety to export electricity. This plant is due to generate up to 4MW of electricity and heat once fully commissioned.

Kedco has invested £6 million through a combination of equity and loan notes in the project corporate entity and owns 50 per cent. of the ordinary equity and 92 per cent. of the economic return from the project.

FBD owns the remaining 50 per cent. of the ordinary equity but is only entitled to 8 per cent. of the economic return from the project. The balance of the project funding was arranged through a financing deal with RBS Ulster Bank, which committed project finance facilities of up to £8 million.

Further updates will be provided in the near future as the project moves towards full commissioning of the first phase.

Enfield Biomass - 12MW Biomass CHP

The Company's other key asset is the 12MW Enfield Biomass project located in Enfield, London. This project has full planning and permitting to convert 60,000 tonnes per annum of waste wood and has entered into advanced discussions in relation to an offer to connect to the national grid. The Company has already entered into a 20 year lease in relation to the site. The Company has various options available in relation to feedstock sourced locally for the plant.

The Directors believe that this project is one of the most advanced biomass development projects located in the London region and the Company intends to progress the project towards financial close and commencement of construction.

In line with this aim the Company has already conducted preliminary discussions with debt and equity partners regarding the project and these are expected to intensify over the course of the next few months. A further update will be provided as appropriate.

Cork and Kerry AD projects

The Company has full planning and permitting for two sites located in the South of Ireland which could convert 40,000 tonnes of agricultural and food waste per annum into up to 1.5MW of electricity and 1.4MW of heat.

These projects will qualify for the Irish Government support scheme for renewable energy under REFIT III, which covers biomass technologies for the period 2010 to 2015. This scheme provides for a fixed feed in tariff rate of between €0.10-0.13 per kilowatt hour ("kWh") produced, depending on the use of heat generated from the plant.

A strategic decision regarding the development of these two projects will be made over the course of the next few months.

Clay Cross Biomass CHP and AD and Rutland AD

The Company has also invested heavily in planning and permitting over the last 18 months and it is currently in the planning process for an 8MW site in Derbyshire and 1.3MW AD site in East Anglia, both in the UK. In addition to these two projects the Company has other possible heat and electricity generating projects at various stages in its pipeline.

Future prospects and acquisitions

The Company believes that the existing development portfolio will continue to add shareholder value as projects are brought through the various development stages and into operation. In addition the Company intends to re-evaluate its existing pipeline to determine whether it is possible to develop other forms of renewable energy projects on these sites.

As well as organic growth in order to achieve its aim of being one of the UK and Ireland's largest independent renewable energy companies the Company will also consider strategic bolt-on acquisitions and joint venture opportunities. Such opportunities will be considered in light of the Company's ongoing funding requirements and are likely to be on a non-cash consideration basis.

The future prospects of the Company are dependent on its ability to fund the development of projects in its pipeline to a stage where financial close on a funding package can be achieved at project level allowing projects move from development to operational phase.

The Board believes that the Restructuring and Fundraising will allow the Company the opportunity to pursue its business strategy and deliver value for all its stakeholders.

Sources and Bases

Unless otherwise stated, for the purposes of converting € to £, a currency exchange rate of €1 to £1.2609 has been applied, being the Oanda rate on 30 August 2012.

References to time are to London time.

Directors' interests

The interests of the Directors in the Restructuring are set out below. Given the interests of Dermot O'Connell, Eddie Barrett, Diarmuid Lynch and Brendan Halpin in the Restructuring, they have not participated in the recommendation of the Resolutions to Shareholders.

(1) as Board representative of FBD, a substantial shareholder of Kedco

(2) as shareholder of Wellwin

The transactions entered into with each of FBD, Eddie Barrett, Diarmuid Lynch and Wellwin constitute related party transactions for the purposes of the AIM Rules (the "Related Party Transactions"). The Independent Directors consider, having consulted with Deloitte Corporate Finance, that the terms of the Related Party Transactions are fair and reasonable insofar as its Shareholders are concerned.

IMPORTANCE OF APPROVAL OF RESOLUTIONS

It is the view of the Board that the Company's continued existence is entirely dependent upon the continued forbearance of the Lenders who have, to date, refrained from taking any enforcement action against the Company in relation to their legal entitlements.

It is also the view of the Board that, in the absence of a restructuring solution, Lenders may seek to withdraw their support for the Company. The Board is of the view that any such process, coupled with the lack of working capital resources, would mean that the Company would have to reconsider its ability to continue as a going concern and, in the absence of viable alternatives, might lead to the Company ceasing to trade and entering insolvency.

In such circumstances, no assurance can be given to Shareholders as to the level of distribution that would be made to them (if any). The Board believes that the Restructuring represents a substantially better outcome for Shareholders than they would receive in an Examinership or other court administered insolvency process.

RECOMMENDATION

The Independent Directors believe that the approval of the Resolutions is in the best interests of the Company, and its Shareholders as a whole and in the best interests of its creditors. Accordingly, the Independent Directors recommend that Ordinary Shareholders vote in favour of the Resolutions as they intend to do in respect of their own respective beneficial holdings, which amount, at the date of this document, in aggregate to 16,863,068 Ordinary Shares, representing approximately 5.41 per cent. of the existing issued share capital.

DEFINITIONS

In this announcement the following expressions have the following meanings.