TAX.L Regulatory News (TAX)

11 May 2012

Eco City Vehicles PLC

("ECV" or "the Group")

Revised Financing Arrangement with Mercedes-Benz

Eco City Vehicles PLC, a developer and supplier of eco-friendly commercial vehicles and the London licensed Mercedes Vito taxi, is pleased to announce the agreement of revised financing arrangements with Mercedes-Benz.

Effective immediately, Mercedes-Benz has increased the Group's existing stocking facilities to £5.75m from £4.95m in order to support the working capital required for the continued growth of the business. The terms of the facilities are in line with the Group's existing facilities and will enable the Group to order additional taxis from Mercedes-Benz when required.

In order to facilitate the extension of this stocking facility, KPM-UK Taxi Plc Discretionary Pension Scheme (the "Pension Scheme"), whose beneficiaries are Peter DaCosta, Michael Troullis and Keith Marder (all directors and/or shareholders of the Group), has agreed a letter of subordination addressed to Mercedes-Benz Financial Services UK Limited ("MBFS") in relation to the balance of £1.0 million (the "Pension Loan") of the Pension Scheme's loans to the Group which were in existence prior to ECV's 2 May 2012 announcement. Pursuant to this letter the Pension Scheme has undertaken, inter alia, to MBFS to maintain the Pension Loan until 31 March 2013 by lending back to the Group, subject to HMRC rules, within 30 days of receipt any repayment of principal amounts. If ECV raises further capital, or acquires any asset, by issue of shares, the level at which the Pension Scheme is obliged to maintain the Pension Loan shall reduce by the same amount.

The cash position of the Group remains tight following the challenging conditions in 2011. In addition to the extension of this facility by Mercedes-Benz and the loans provided by the Pension Scheme, announced on 2 May 2012, the Group maintains the full support of its bank and continues to consider other funding options.

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