R.e.a.hldgs. Regulatory News (RE.)

R.E.A. Holdings plc ("REA")

Proposed issue

As anticipated in its interim management statement issued today, R.E.A. Holdings plc ("REA") announces that it proposes to issue, to the extent that markets permit, up to 9 million 9 per cent cumulative preference shares of £1 each ("new preference shares") by way of a placing at 100p per share. Guy Butler Limited has undertaken to use its reasonable endeavours to effect the placing on the company's behalf.

It is expected that the results of the placing will be announced on 28 October 2010 and that dealings in the new preference shares issued pursuant to the placing will commence on 29 October 2010.

The placing is conditional upon the new preference shares to be issued pursuant to the placing being admitted to the standard listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. 

Reasons for the proposed issue and use of proceeds

The capital of the group currently comprises issued ordinary shares, issued preference shares, 7.5 per cent dollar notes 2012/14 ("dollar notes"), 9.5 per cent sterling notes 2015/17 (issued by REA Finance B.V. and guaranteed by REA) ("sterling notes") and other borrowings. The capital represents permanent capital (the preference shares are not redeemable shares). The balance of the capital is debt, which is repayable. In particular, the dollar notes and the sterling notes, which represent the major part of the debt capital of the group, are repayable by instalments over a six year period commencing 31 December 2012. 

The company is of the opinion that it has sufficient working capital for its present requirements, that is for at least twelve months following the date of this document. Looking beyond twelve months, the directors believe that the group should be in a position to meet its debt repayments as these fall due without the need to raise any additional capital but the directors also believe that the group can comfortably support the current level of prior ranking capital (comprising the aggregate of the issued preference shares, the dollar notes, the sterling notes and other borrowings). Since the leverage that that capital provides will anyway reduce if, as the directors hope will be the case, shareholders' funds continue to grow, the directors believe that the interests of the holders of the ordinary shares will be better served by replacing maturing borrowings with new prior ranking capital (thus increasing the cash available to the group for future expansion and payment of dividends) than by paying off such borrowings with cash.

Accordingly, the directors consider that it is prudent, when market conditions permit, to retire existing debt and replace it with preference share capital or new debt of a longer tenor ahead of such retirement and replacement becoming necessary. The proposed issue of new preference shares is intended to be a first step in this direction.

Reflecting the above, the net proceeds of the proposed issue will be applied in reducing existing group indebtedness and related engagements (being cash flow hedges against dollars of the sterling component of the group's indebtedness) including, to the extent prudent, in purchasing dollar notes and/or sterling notes.

Rights attaching to the new preference shares

The preference shares entitle the holders to be paid out of the profits of the company available for dividend and resolved to be distributed, in priority to the payment of any dividend to the holders of any other class of shares in the capital of the company, a fixed cumulative preferential dividend of 9 per cent per annum on the nominal amount paid up on such preference shares payable half-yearly in equal amounts on 30 June and 31 December. The preference shares are not redeemable.

The new preference shares will, upon issue, rank pari passu in all respects with the preference shares already in issue, save that the preference dividend payable in respect of new preference shares on the first preference dividend payment date following the date of issue of such shares will be that proportion of 4.5p per share which is equal to the proportion that the period from the date of issue to such first preference dividend payment date is of six months.

Further information

A copy of the prospectus being issued in connection with the placing may be obtained free of charge from the company at its registered office: First Floor, 32-36 Great Portland Street, London W1W 8QX. A copy of the prospectus is also being placed on the company's website at www.rea.co.uk and will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.Hemscott.com/nsm.do

Enquiries:

R.E.A Holdings plc

Tel: 020 7436 7877