PDG.L Regulatory News (PDG)

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

28 December 2023

Pendragon PLC ("Pendragon" or the "Company")

Update on the Disposal, Subscription by Lithia, Strategic Partnership, and proposed Board changes

Pendragon is pleased to announce that the FCA Conditions have now been satisfied after both Pendragon and Lithia received approval from the FCA for the change of control of Pendragon Finance and Insurance Services Limited.

As a result, and in accordance with the terms of the Sale Agreement, the completion date for the sale of the entire issued share capital of Pendragon NewCo 2 Limited, the entity that holds, either directly or indirectly through its wholly-owned subsidiaries, Pendragon's UK motor business (sale and servicing of vehicles in the UK) and leasing business (fleet and contract hire provider and used vehicle supply), to Lithia is expected to take place, following the satisfaction of the remaining customary completion conditions, on 31 January 2024 ("Disposal Completion") alongside the completion of the Subscription to Lithia and entry into the Strategic Partnership with a wholly-owned subsidiary of Lithia Motors, Inc..

Completion of the Transaction will mark the beginning of the transformation of Pendragon into Pinewood Technologies, a pure-play SaaS business, which operates the Company's dealer management software business. The Board strongly believes that the growth prospects for the Company will be enhanced materially as a result of becoming a standalone business, as well as through the Strategic Partnership with Lithia.

Outstanding Conditions

The Reorganisation Condition and the Pensions Condition remain outstanding and are expected to be satisfied on or before 31 January 2024.

Satisfaction of the Reorganisation Condition is within the control of Pendragon.

The Pensions Condition has been addressed by all relevant parties executing the documentation necessary to satisfy this Condition. Satisfaction of the Pensions Condition remains subject to a technical statutory formality which cannot be addressed earlier than Completion and which is therefore expected to be addressed on Completion.

Transaction Dividend to Shareholders

Following completion of the Transaction, the Company confirms its intention to return a cash amount equivalent to approximately 24.5 pence per Ordinary Share to Shareholders by way of a special dividend (the "Transaction Dividend"). The Transaction Dividend is now expected to be paid in Q1/Q2 2024.

Under the terms of the Transaction, Lithia will waive all rights and entitlements to the Transaction Dividend in respect of the Subscription Shares.

Employee share incentive arrangements

The Company shall issue 40,979,118 new Ordinary Shares (the "EBT Shares") to Accuro Trustees (Jersey) Ltd, trustee of the Pendragon Employee Benefit Trust (the "EBT") which shall be used to satisfy awards and options granted under certain of the Company's employee share incentive arrangements. A listing application has been made by the Company for the EBT Shares to be admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities (the "Main Market") ("EBT Admission"). Admission of the EBT Shares is expected to occur at 8.00 a.m. on 31 January 2024. Immediately following the issue of the EBT Shares, the EBT will hold 67,520,919 Ordinary Shares representing approximately 4.62 per cent. of the Company's issued share capital.

The EBT Shares will be issued fully paid and will rank pari passu in all respects with the existing Ordinary Shares.

Subscription by Lithia

In connection with completion of the Subscription, a listing application has been made by the Company for 279,388,880 new Ordinary Shares (the "Subscription Shares") to be admitted to the premium listing segment of the Official List and to trading on the Main Market ("Subscription Admission"). Admission of the Subscription Shares is expected to occur at 8.00 a.m. on 1 February 2024.

The Subscription Shares will be issued fully paid and will rank pari passu in all respects with the existing Ordinary Shares (save as detailed above in relation to the entitlement of the Transaction Dividend).

Director Appointments and Resignation

Pursuant to the terms of the Subscription, Transfer and Relationship Agreement, Lithia will have the right to nominate up to two non-executive directors ("Lithia Nominee Directors") to be appointed to the Board of Pinewood Technologies for so long as Lithia holds 10 per cent. or more of the voting rights of the Company. In connection thereto, Chris Holzshu, Chief Operating Officer of Lithia, and George Hines, Chief Technology Officer of Lithia, will be appointed to the Board by Lithia as the Lithia Nominee Directors with effect from Subscription Admission.

Additionally, and as previously notified, Mark Willis will step down as Director and Chief Financial Officer of the Company and his successor, Oliver Mann, will be appointed as Director and Chief Financial Officer of the Company. Mark's resignation and Oliver's appointment will take effect from Disposal Completion.

The Company confirms that there is no further information relating to Chris, George and Oliver that requires disclosure under Listing Rule 9.6.13R.

The Lithia Nominee Directors will be considered non-independent for the purposes of the Corporate Governance Code. Nevertheless, following Subscription Admission, the Board shall continue to comprise a majority of independent non-executive directors.

Defined terms used in this announcement have the same meaning where used, or otherwise defined, in the Circular of the Company dated 20 September 2023 or the Supplementary Circular of the Company dated 9 October 2023, unless otherwise defined herein.

Enquiries:

IMPORTANT NOTICE

The contents of this announcement have been prepared by and are the sole responsibility of Pendragon.

This announcement contains inside information. The person responsible for arranging this announcement on behalf of Pendragon is Richard Maloney, Group General Counsel and Group Company Secretary.

Jefferies International Limited ("Jefferies"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting solely for the Company, and for no-one else, as financial adviser in connection with Admission and the Transaction (as amended by the Transaction Amendments) and as sponsor in connection with Admission and the Disposal and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice to any other person in relation to Admission, the Disposal and the Transaction (as amended by the Transaction Amendments), the content of this announcement or any other matters described in this announcement. To the fullest extent permitted by law, neither Jefferies nor any of its affiliates assumes any responsibility whatsoever for or makes any representation or warranty express or implied, in relation to the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf and nothing contained in this announcement is, or shall be, relied upon as a promise or representation in this respect whether as to the past, present or future, in connection with the Company, the Group, the Disposal Group, the Continuing Group, Admission, the Disposal or the Transaction (as amended by the Transaction Amendments). Jefferies and its affiliates accordingly disclaims to the fullest extent permitted by law all and any duty, responsibility and liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this announcement or any such statement or otherwise.

This announcement is not intended to, and does not constitute, or form part of, any offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction.

This announcement has been prepared for the purpose of complying with the applicable law and regulation of the United Kingdom and information disclosed may not be the same as that which would have been disclosed if this announcement has been prepared in accordance with the laws and regulations of jurisdictions outside the United Kingdom.