LXB.L Regulatory News (LXB)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

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 of such jurisdiction

5 February 2018

LXB Retail Properties Plc

(the "Company" or the "Group")

Proposed Scheme of Arrangement

Proposed Returns of Cash

and

Notices of Court Meeting and Annual General Meeting

LXB Retail Properties Plc, the Jersey resident closed-ended real estate investment company focused on edge of town and out of town retail assets, announces that on 3 February 2018 it posted to its Shareholders ("Shareholders") documentation regarding:

· a proposed reorganisation of the Company (the "Reorganisation") by way of a Jersey Scheme of Arrangement (the "Scheme");

· the convening by the Royal Court of Jersey Samedi Division (the "Court") of a meeting of the Shareholders to consider the Scheme (the "Court Meeting"), the notice of which is contained in the scheme circular (the "Scheme Circular");

· a proposal to enable the directors of the Company (the "Directors") to make returns of cash to Shareholders on an ongoing basis (the "Returns of Cash"); and

· the convening by the Company of its 2018 annual general meeting (the "Annual General Meeting") to consider for approval the Returns of Cash and certain other ordinary business, notice of which is contained in the circular (the "Return of Cash Circular").

Both the Court Meeting and the Annual General Meeting have been convened for 27 February 2018 at the offices of the Company Secretary, Intertrust Fund Services (Jersey) Limited, 44 Esplanade, St Helier, Jersey, JE4 9WG. The Court Meeting will commence at 12.00 noon and the Annual General Meeting will commence at 12.30 p.m. (or as soon thereafter as the Court Meeting is concluded or adjourned).

Copies of the documents posted to Shareholders and of this announcement will be available on the Company's website (www.lxbproperties.com) from later today.

Summary of the Scheme

As previously indicated in the Chairman's Statement of 5 December 2017 accompanying the results for the year ended 30 September 2017, the Company is now proposing the Reorganisation (which will constitute Proposals for the purposes of its articles of association) in line with the Shareholders' mandate to the board of Directors (the "Board") to return as much cash as possible to Shareholders in the short term and to bring the life of the Company to an end.

If the Scheme becomes effective in accordance with its terms, it would enable the Group to return value to Shareholders in the period up to 31 March 2019 and for the possibility of the Company being dissolved shortly thereafter, thereby providing the finality desired.

In summary, the Reorganisation, which is explained in detail in the Scheme Circular, will involve:

· shortly after the Scheme becoming effective (which is currently anticipated to be on or around 19 March 2018), the transfer of certain assets and associated liabilities (actual and contingent) of the Company's group of companies (the "Group"), which will endure beyond 31 March 2019, to IW Midco Limited ("IW Midco"), a third party company owned and managed by Brendan O'Grady a current member of the Investment Adviser team, together with an appropriate amount of cash to collateralise those liabilities;

· a payment to IW Midco to provide for its operating costs (including remuneration) for the period for which it is expected to manage the transferred liabilities;

· the Company realising as much value as possible from its remaining assets and agreeing to return the resulting cash to Shareholders by means of the Returns of Cash prior to the dissolution of the Company in accordance with the Scheme or otherwise in connection with it (please see below for further information);

· the transfer to IW Midco of any assets and associated liabilities remaining in the Group which have not otherwise been disposed of or discharged by that time; and

· as soon as possible after 31 March 2019, the cancellation of trading in the Company's ordinary shares on AIM and the delisting of the Company from the International Stock Exchange (the TISE) shortly prior to the dissolution of the Company pursuant to the Scheme subject, respectively, to the approval of Shareholders and the discretion of the Court at the relevant time.

As part of the actions to be completed following the Effective Time pursuant to the Scheme, the Company has agreed to pay the running costs (including remuneration) of the IW Group for the period from the Effective Time until the fifth anniversary of the Effective Time, for its services managing the transferred assets and associated liabilities it will have assumed under the Scheme. Further particulars of these arrangements are set out in the Scheme Circular.

Benefits of the Scheme

In arriving at the proposals comprising the Reorganisation, the Board has considered a number of alternative options to satisfy the mandate of the Shareholders that the life of the Company be brought to an end as soon as possible whilst ensuring that value is maximised from its remaining assets and that longer-term obligations can still be satisfied. These options, together with the Board's evaluation of each, are set out in detail in the Scheme Circular. The Board is satisfied that the cost for Shareholders of alternatives would be significantly greater than the costs involved with the proposed Scheme and, for the reasons set out in the Scheme Circular, the Board, having been advised by BDO LLP, considers the terms of the Reorganisation to be effected by the Scheme, to be fair and reasonable.

In providing advice to the Directors, BDO LLP has taken into account the commercial assessments of the Directors.

The Board has concluded that there are a number of benefits of the Scheme, as follows:

· in terms of market capitalisation, the Company is now so relatively small that it is no longer investable for the majority of the Shareholder base and accordingly, an end to the life of the Company in the foreseeable future is considered highly desirable;

· by extending the Company's life beyond the expected completion of further phases at Rushden Lakes and the cinema at Stafford, the Scheme provides an opportunity to maximise the value of those two significant investments and for Shareholders to participate fully in that prior to 31 March 2019;

· the Scheme provides a cost-effective mechanism whereby all of the readily realisable value in the Company's other assets may also be realised, and for cash to be returned to Shareholders in stages in the period to 31 March 2019, after which dissolution of the Company will be sought, thereby giving relative certainty to ending Shareholders' investment in the Group;

· the Scheme allows for all of the remaining liabilities of the Group, both actual and contingent, to be dealt with so that the remaining companies in the Group can, after the Scheme becomes effective, be wound up or transferred during the process;

· the cost of funding the IW Group in order for it to assume and manage the residual assets and associated liabilities of the Group proposed to be transferred to IW Midco under the Scheme and the anticipated costs of the Company up to 31 March 2019 is, the Board believes, in aggregate likely to be significantly less than the costs of continuing to run the Company for the period of time it would take to deal with and discharge these liabilities as part of a winding up of the Company or of appointing a liquidator; and

· the Scheme provides for the transfer to IW Midco of any Group liabilities and assets that cannot be dealt with before the dissolution of the Company (proposed to be shortly after 31 March 2019, subject to the discretion of the Court), together with an appropriate amount of cash to collateralise and manage those liabilities. Any remaining value that may be transferred to IW Midco as part of the Scheme will, in the Board's view, almost certainly be out-weighed by the cost saving achieved by terminating the current Group structure earlier than would otherwise be the case.

Conditions to the Scheme

The Scheme is conditional upon the following being satisfied by 30 April 2018, or such later date as the Company and IW Topco Limited (the sole shareholder of IW Midco) ("IW Topco") may agree and the Court (if required) may allow;

· the approval by a majority in number representing not less than 75 per cent. of the voting rights of the holders of Scheme Shares (or the relevant class or classes thereof, if applicable) present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court;

· the resolutions required to authorise the Returns of Cash to be proposed at the Annual General Meeting being duly passed by the requisite majority and, where applicable, becoming unconditional in accordance with its terms;

· no material amendment, unless approved by the Court, having been made to the executed framework agreement entered into by, among others, the Company and IW Topco to implement certain steps and undertake certain actions required to give effect to parts of the Scheme;

· IW Topco, IW Midco and Mr O'Grady and his immediate family members that directly or indirectly hold Ordinary Shares each undertaking to the Court to be bound by the Scheme;

· the Company not having withdrawn the Scheme, which it shall be entitled to do at any time, and for any reason, prior to the point at which the Jersey Court issues an order sanctioning the Scheme pursuant to Article 125 of the Jersey Companies Law; and

· the sanction of the Scheme by the Jersey Court with or without modification (but subject to any such modification being acceptable to the Company and IW Midco) and the delivery of the relevant court order to the Registrar of Companies for Jersey.

Returns of Cash

The Company is also proposing resolutions at the Annual General Meeting to authorise the Directors to return cash to Shareholders as it is realised from time to time without the need for multiple ongoing general meetings in respect of such returns, as was the case in 2016 (being the Returns of Cash).

Although the Returns of Cash are not conditional on the Scheme becoming effective in accordance with its terms, the Scheme itself is conditional upon the relevant resolutions in respect of the Returns of Cash being approved at the Annual General Meeting.

As was the case in 2016, the Returns of Cash have been structured to give Shareholders a choice between receiving their cash proceeds as capital, income or a combination of the two. This method of return has been chosen as it allows Shareholders to be treated equally, and gives each Shareholder (save for certain overseas restricted Shareholders) the choice of the form in which to receive the Return of Cash.

The Company currently intends to make a Return of Cash following completion of the Riverside sale of approximately £10 million (approximately 6 pence per ordinary share) and thereafter will consider making one or more Returns of Cash prior to or in connection with the dissolution of the Company in accordance with the Scheme, or if the Scheme does not become effective in accordance with its terms, at the appropriate time following the realisation of value from the sale of the Group's remaining assets.

It is anticipated that, if implemented in full, the Returns of Cash would have the effect of returning to Shareholders substantially all of the Group's available cash representing the completion of the sale of all of its material investments prior to the dissolution of the Company in accordance with the Scheme. However, as noted above the Returns of Cash are not conditional on the Scheme itself becoming effective in accordance with its terms and will, if the Scheme does not become effective, be available to the Directors to enable them to return value so realised.

Action to be taken by Shareholders

Detailed instructions on the actions to be taken by Shareholders in relation to both the Court Meeting and the Annual General Meeting are set out in, respectively, the Scheme Circular and the Return of Cash Circular.

Timetable

The following timetable sets out the expected dates for implementation of the Scheme and the Returns of Cash (some of which are indicative):

Note 1: Or as soon thereafter as the Court Meeting is concluded or adjourned.

For further information please contact:

LXB Adviser LLP Tel: 020 7432 7900

Tim Walton, CEO

Brendan O'Grady, FD

J.P. Morgan Cazenove (NOMAD) Tel: 020 7742 4000

Bronson Albery/Paul Hewlett

Buchanan Tel: 020 7466 5000

Charles Ryland/Victoria Hayns

BDO LLP Tel: 0207 486 5888

John Stephan

Further information

This Announcement is not intended to and does not constitute, or form part of, an 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 the Reorganisation, Returns of Cash or otherwise. The Reorganisation and Returns of Cash will be made solely on the terms set out in, respectively, the Scheme Circular and Return of Cash Circular, which (as applicable) contain the full terms and conditions of the Scheme and Returns of Cash including details of how to vote in respect of them. Any vote in respect of the Scheme and Returns of Cash or other response in relation to them should be made only on the basis on the information contained in the Scheme Document and Return of Cash Circular (as the case may be). Shareholders are advised to read carefully the Scheme Document and Return of Cash Circular related forms of proxy.

Overseas jurisdictions

The release, publication or distribution of this announcement in, into or from jurisdictions other than the UK and Jersey may be restricted by law and therefore any persons who are subject to the law of any jurisdiction other than the UK and Jersey should inform themselves about, and observe, any applicable legal or regulatory requirements. In particular the ability of persons who are not resident in the UK or Jersey, to vote their Ordinary Shares with respect to the Scheme at the Court Meeting and/or the Return of Cash at the Annual General Meeting, or to appoint another person as proxy to vote at the Court Meeting and/or the Annual General Meeting on their behalf, or to participate in parts of the Returns of Cash may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction.

Shareholders who are not resident in the UK or Jersey or who are citizens, residents or nationals of jurisdictions other than the UK or Jersey should consult their professional advisers to ascertain whether the Scheme and/or the Returns of Cash will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Shareholder not resident in the UK or who is a citizen, resident or national of a jurisdiction other than the UK to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the Scheme and the Returns of Cash.

To the fullest extent permitted by applicable law, the Company disclaims any responsibility or liability for the violation of such restrictions by any person. This announcement has been prepared for the purposes of complying with Jersey and English law and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England and Wales and Jersey.

Further details in relation to Overseas Shareholders is contained in the Scheme Document and the Return of Cash Circular.

Publication on website and hard copies

Copies of the documents posted to Shareholders and of this announcement will be available on the Company's website (www.lxbproperties.com) from later today.

Time

All times shown in this announcement are London times, unless otherwise stated.