Thomas Cook Regulatory News (TCG)

NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR ANY OTHER JURISIDICTION WHERE THE PUBLICATION, RELEASE OR DISTRIBUTION OF THIS ANNOUCMENT, IN WHOLE OR IN PART, IS NOT PERMITTED BY APPLICABLE LAW OR REGULATION. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF THE INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY THOMAS COOK GROUP PLC IN CONNECTION WITH THE PLACING AND THE RIGHTS ISSUE. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE REGISTERED OFFICES OF EQUINITI.

16 MAY 2013

THOMAS COOK GROUP £1.6 BILLION CAPITAL REFINANCING PLAN

Following on from our announcement on 13 March 2013 that Thomas Cook Group plc ("Thomas Cook" or the "Company") was reviewing its capital structure, and taking into account the progress to date in transforming the business, the Board of Thomas Cook today announces a £1.6 billion capital refinancing plan (the "Capital Refinancing Plan"). The Capital Refinancing Plan comprises the following three inter-conditional financing elements:

·; the raising of approximately £425 million gross proceeds from a fully underwritten placing and rights issue (the "Placing and Rights Issue"), comprising 87,591,241 Placing Shares at 137 pence per share (raising £120 million); and a 2 for 5 Rights Issue of 401,556,476 New Ordinary Shares at 76 pence per share (raising approximately £305 million);

·; the raising of €525 million gross proceeds (approximately £441 million) from the issuance of new bonds maturing 2020 (the "New Bonds"), or if the New Bonds are not issued, utilisations under a fully underwritten bridge facility (the "Bridge Facility"); and

·; £691 million of new facilities (the "New Facilities").

The Capital Refinancing Plan will:

·; significantly reduce the proportion of debt funding of the Group's balance sheet;

·; extend the maturity profile of the Group's financing arrangements;

·; facilitate the implementation of the Group's Business Transformation which is expected to increase the generation of surplus cash flow with a view to deleveraging the Group, while providing a platform for the Group to resume dividends payments in the future; and

·; deliver a strengthened capital base and financial position which is expected to improve the credit perception of Thomas Cook with suppliers and trading counterparties.

Thomas Cook has today also separately announced its results for the six-month period ended 31 March 2013.

Thomas Cook is also pleased to announce the appointment of Jefferies Hoare Govett as joint corporate broker alongside Credit Suisse with immediate effect.

The Placing and the Rights Issue are subject to the approval of Shareholders at the General Meeting to be held on 3 June 2013. An expected timetable of principal events is set out in Appendix I.

Credit Suisse and Gleacher Shacklock are joint sponsors and, together with Short Partners, are acting as joint financial advisers to the Company in relation to the Capital Refinancing Plan. Credit Suisse is the sole global co-ordinator and, together with Jefferies Hoare Govett, are joint corporate brokers on the Placing and Rights Issue. Members of the banking syndicate providing the New Facilities will be joint bookrunners in the proposed issuance of the New Bonds.

Harriet Green, the CEO of Thomas Cook, said:

"Today we are pleased to report improving financial results and announce important measures to strengthen our balance sheet. Earnings before interest and tax and gross margin are well ahead of last year and our cost out and profit improvement actions are going very well, allowing us to increase our target yet again. Our progress transforming the business also enables us to undertake our capital refinancing plan. This will reduce the very significant debt that we inherited, lengthen its repayment profile and consequently help us deliver the full benefits of the strategic plan we set out in March. We look forward to continuing the rapid transformation of the Group so that we fulfil the potential of the Thomas Cook brand for our customers, suppliers and employees."

Michael Healy, the CFO of Thomas Cook, said:

"I am delighted to be able to announce this fully underwritten and comprehensive £1.6bn refinancing of the Group. This successful synchronisation of a new bank facility, new bond issue and new equity issue, which reduces leverage and strengthens our liquidity profile, highlights a new found confidence in our business, not just within the business, but also confidence in the Group from our external stakeholders. The re-rating of our equity, bank debt and bonds is reinforced by S&P's and Fitch's upgrade confirmations as part of this refinancing.

We have significantly strengthened the financial management of the Group, with improved controls and reporting systems and substantial improvements in working capital management. The measures announced today set us on a firm footing for the future, enabling our continuing transformation of the company and bringing forward the time when we can return to paying sustainable dividends to our shareholders."

This summary should be read in conjunction with the full text of this announcement, including its appendices. Defined terms used herein have the meanings given to them in Appendix III.

Presentation to equity analysts

A presentation will be held for equity analysts by invitation today at 9.00 a.m. (BST), at FTI Consulting, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.

Enquiries

IMPORTANT NOTICE

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Placing Shares, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of information in the Prospectus which is expected to be published by the Company today in connection with the Placing and the Rights Issue. Copies of the Prospectus will, following publication, be available from the registered office of Equiniti. This announcement does not constitute, or form part of, any offer or invitation to subscribe for, purchase or otherwise acquire or sell or otherwise dispose of, or any solicitation of any offer to sell or otherwise dispose of or subscribe for, purchase or otherwise acquire, any security in the capital of the Company in any jurisdiction. Any decision to subscribe for, purchase or otherwise acquire, sell or otherwise dispose of any Placing Shares, Provisional Allotment Letters, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares should only be made on the basis of information contained in and incorporated by reference into the Prospectus which contains further details relating to the Company in general as well as a summary of the risk factors to which an investment in the Placing Shares and the New Ordinary Shares is subject. Nothing in this announcement should be interpreted as a term or condition of the Placing or the Rights Issue. Subject to certain exceptions, the Prospectus will not be available to Shareholders located in any Excluded Territory.

This announcement does not constitute, or form part of any offer or invitation to subscribe for, purchase or otherwise acquire or sell or otherwise dispose of, or any solicitation of any offer to sell or otherwise dispose of or subscribe for, purchase or otherwise acquire any New Bonds or any other debt instrument of the Company in any jurisdiction.

This announcement is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The Shares mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"). Any securities contemplated herein may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of securities in the United States.

Each of Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale is authorised and regulated in the United Kingdom by the FCA (Credit Suisse and Société Générale are also regulated by the PRA) and is acting for Thomas Cook and no one else in connection with the Placing and the Rights Issue and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Placing and the Rights Issue and will not be responsible to anyone other than Thomas Cook for providing the protections afforded to its clients or for providing advice in relation to the Placing and the Rights Issue or any matters referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas or Société Générale by FSMA or the regulatory regime established thereunder or otherwise under law, Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale do not accept any responsibility whatsoever for the contents of this announcement, and no representation or warranty, express or implied, is made by Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas or Société Générale in relation to the contents of this announcement, including its accuracy, completeness or verification or regarding the legality of any investment in the Placing Shares, the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares by any person under the laws applicable to such person or for any other statement made or purported to be made by it, or on its behalf, in connection with Thomas Cook, the Placing Shares, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Placing or the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. To the fullest extent permissible Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.

No person has been authorised to give any information or make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied upon as having been authorised by Thomas Cook or by any of Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale. Neither the delivery of this announcement nor any acquisition or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Thomas Cook since the date of this announcement or that the information in this announcement is correct as at any time after its date.

This announcement contains ''forward-looking statements'' that are based on estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements are all statements other than statements of historical fact or statements in the present tense, and can be identified by words such as "targets", "aims", "aspires", "assumes" ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', "hopes", ''may'', ''would'', ''should'', "could", ''will'', ''plans'', ''predicts'' and ''potential'', as well as the negatives of these terms and other words of similar meaning. The forward-looking statements in this announcement are made based upon the Company's estimates, expectations and beliefs concerning future events affecting the Group and are subject to a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which it will operate, which may prove not to be accurate. The Company cautions that these forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in these forward-looking statements. Undue reliance should, therefore, not be placed on such forward-looking statements. Any forward-looking statements contained in this announcement apply only as at the date of this announcement and are not intended to give any assurance as to future results. The Company will update this announcement as required by applicable law, including the Prospectus Rules, the Listing Rules, the Disclosure and Transparency Rules, and any other applicable law or regulations, but otherwise expressly disclaims any obligation or undertaking to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

The contents of this announcement are not to be construed as legal, business or tax advice. Each prospective investor should consult his or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.

The contents of the websites of the Group do not form part of this announcement.

NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR ANY OTHER JURISIDICTION WHERE THE PUBLICATION, RELEASE OR DISTRIBUTION OF THIS ANNOUCMENT, IN WHOLE OR IN PART, IS NOT PERMITTED BY APPLICABLE LAW OR REGULATION. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF THE INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY THOMAS COOK GROUP PLC IN CONNECTION WITH THE PLACING AND THE RIGHTS ISSUE. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE REGISTERED OFFICES OF EQUINITI.

16 MAY 2013

THOMAS COOK GROUP £1.6 BILLION CAPITAL REFINANCING PLAN

1. Introduction

Following on from our announcement on 13 March 2013 that Thomas Cook was reviewing its capital structure, and taking into account the progress to date in transforming the business, the Board of Thomas Cook today announces a £1.6 billion Capital Refinancing Plan. The Capital Refinancing Plan comprises the following three inter-conditional financing elements:

·; the raising of approximately £425 million in gross proceeds (approximately £400 million net of estimated expenses (excluding VAT)) through (i) a fully underwritten Placing of 87,591,241 Placing Shares at 137 pence per Placing Share (raising £120 million) and (ii) a fully underwritten 2 for 5 Rights Issue of 401,556,476 New Ordinary Shares at 76 pence per New Ordinary Share (raising £305 million);

·; the raising of €525 million in gross proceeds (€500 million net of estimated expenses (excluding VAT)) through the issue of the New Bonds, which are expected to mature in 2020, or, if the New Bonds are not issued, utilisations under the Bridge Facility, which term can be extended to seven years after the date of first utilisation thereunder; and

·; the New Facilities, comprising a £300 million New Revolving Facility, £200 million New Bonding Facilities (comprising a £30 million New 2015 Bonding Facility and a £170 million New 2017 Bonding Facility) and a euro equivalent of £191 million New Additional Facility, each maturing in May 2017, except for the New 2015 Bonding Facility, which matures in May 2015.

As a result of the Capital Refinancing Plan being implemented the Current Facilities will be replaced and cancelled and, to the extent drawn down, repaid in full.

2. Background and reasons

2.1 Background

Thomas Cook has a strong market position in its most significant source markets (being the UK, Germany and Northern Europe), where it enjoys a number one or two position (measured by revenues) among traditional package tour operators. Thomas Cook's Northern European business has consistently delivered strong financial results and, supported by the successful implementation of a restructuring programme in FY 2009, the Group's German business is also performing well. Further, the Group as a whole has delivered consistent levels of revenue and gross margin in recent years.

However, the Board considers that the Group is over-leveraged as a result of a combination of factors including past share buybacks and acquisitions. In addition, the Group has a number of businesses which have, in recent years, underperformed, being either loss-making or experiencing low or reduced profitability (including the UK, North America, France and the CIS). This underperformance has adversely affected the financial condition of the Group and made it vulnerable to the challenging trading and macroeconomic conditions which it has faced since 2009 and a number of exceptional external shocks, such as the closure of European airspace due to volcanic ash clouds in April 2010 and the ongoing political and civil unrest in important MENA destinations, such as Egypt and Tunisia.

The combination of the Group's excessive levels of debt, underperforming businesses in significant source markets, and external events and conditions which have been adverse to the Group's businesses and operations, has significantly reduced the Group's profitability and financial flexibility. This position has also been exacerbated at times by concerns as to the financial strength of the Group. For example, such concerns arose as a result of negative publicity in November 2011 when the Company announced it was in discussions with its principal lending banks following a deterioration of trading and of its cash and liquidity position.

A number of measures have been pursued by the Group to improve performance. These measures targeted stabilisation of the balance sheet, improvements to liquidity, a reduction in net borrowings and improved profitability over the medium term, and included the following:

·; In FY 2011, the Group commenced the implementation of the UK Turnaround Plan, focusing on optimising the UK airline and product strategy, improving yield management, rationalising distribution of the Group's products and services and improving operational efficiency within the Group's UK business. In addition, the Group announced a non-core asset disposal programme targeting a net debt impact on the Group of up to £200 million. In FY 2012, this disposal programme (which included the HCV Disposal and the Thomas Cook India Disposal) delivered a reduction of net debt of £196.5 million in net cash proceeds. In FY 2012, Thomas Cook also successfully completed the 2012 Aircraft Sales and Leasebacks, generating cash inflows of £189.4 million.

·; In May 2012, the Group agreed a number of amendments to its debt facilities with its lending banks, which culminated in the agreement of a new financing package in May 2012, comprising facilities totalling £1.4 billion. This financing package included an extension of maturities to May 2015, removal of scheduled repayments and revised financial covenants which offered the Group greater flexibility and the ability to retain the net proceeds from certain disposals.

·; Alongside the implementation of the Group's new financing package in May 2012, the completion of a full strategic review was announced. The outcome of the strategic review brought together a range of existing actions and new initiatives focused on a number of key areas, including a continued focus on the turnaround of the Group's UK business, building on the solid performance of the Group's Northern European and German businesses, turning around under-performing businesses, reducing debt and improving the resilience of the Group's financing and capital structure.

2.2 The Business Transformation

Since FY 2010, there have been significant changes at Board and senior management level within the Group. These changes included the appointment of Harriet Green as Chief Executive Officer, Michael Healy as Chief Financial Officer, Frank Meysman as Non-Executive Chairman and Emre Berkin and Richard Pennycook as Independent Non-Executive Directors.

The Group has also significantly strengthened its senior executive management team in recent months, in particular through the appointment of Peter Fankhauser as the CEO of the UK and Continental Europe (having previously been the CEO of Central Europe), Christoph Debus as the Group Head of Air Travel, Reto Wilhelm as the Managing Director of the Group's businesses in East and West Europe, John Straw as Global Head of Web, Tomasz Smaczny as Chief Technology Officer and Craig Stoehr as Group General Counsel. Following these Board and senior management changes, the Board believes the Group is better positioned to implement a wider Business Transformation. The Business Transformation includes a number of initiatives and programmes which are designed to consolidate and improve upon the progress that the Group has made to drive profitable growth and improve its cash and working capital position. The Business Transformation encompasses the following:

Building a more effective organisation

A number of initiatives are underway with the aim of reshaping the Thomas Cook organisation and increasing its effectiveness and focusing on the enhancement of the management team's depth of skills and experience, the facilitation of greater cross-functional and Group-wide co-ordination and the implementation of structures which provide for more structured and rapid decision making, clearer accountability and defined performance metrics.

The Board believes that the ongoing implementation of these initiatives is enabling the Business Transformation to progress rapidly while delivering greater efficiencies and collaboration between the Group's businesses.

The Improvement Initiatives

Following the Group's decline in profitability from FY 2010 to FY 2012, and an extended period of challenging trading and macroeconomic conditions, the Board's priority has been to address the Group's high cost base and at times weak cash position, and create a foundation from which to launch a new strategy aimed at delivering sustainable, profitable growth. A number of projects have been initiated that aim to reduce the Group's cost base substantially and sustainably, and to increase the Group's profitability, through a series of restructuring measures being implemented across the Group. These measures are generally focused on extracting efficiencies and cost savings through better collaboration across the Group and the implementation of structural changes; the measures include the UK Turnaround Plan, the Group Profit Improvement Programme and the Cash Initiatives.

UK Turnaround Plan

The UK Turnaround Plan, adopted by the Group in FY 2011, comprises a number of improvement measures seeking to return the UK business to sustainable profitability. This plan was initially focused on optimising yield, reducing retail and tour operator discounts, improving the operational efficiency of the organisation and facilitating faster and more focused decision-making. Further improvement measures forming part of the UK Turnaround Plan include improved yield management of the Group's independent and specialist businesses, the closure of certain head office locations and the consolidation of management and back office functions in order to drive further efficiencies. The UK Turnaround Plan is proposed to be fully implemented in 2014.

Group Profit Improvement Programme

The Group Profit Improvement Programme was announced in November 2012. This programme includes both new and incremental measures seeking to achieve further efficiencies and EBIT improvements within the UK business beyond those being implemented as part of the UK Turnaround Plan, as well as new measures aimed at reducing costs and improving profits across the rest of the Group. The measures which are being implemented, or which the Group proposes to implement, pursuant to the Group Profit Improvement Programme, comprise the following key elements:

·; the creation of the Group Airline Segment, through the integration of selected operations of the Group's UK, Belgian and German airlines;

·; the simplification of the UK organisational structure and streamlining of decision-making processes; and

·; the implementation of a Group-wide approach to purchasing hotel capacity and consolidated marketing activities.

Cash Initiatives

In addition to implementing various measures and initiatives aimed at reducing costs and improving profit, the Group is also implementing measures to improve its working capital management practices in order to address the Group's cash position directly. These measures, which the Group is seeking to apply to all business segments, include improving the management and collection of receivables; implementing earlier customer payment terms, including larger deposits and revising payment terms with suppliers. Thomas Cook has also undertaken a review to assess whether the divestment of any of its businesses, including those which are less material or non-strategic, should be pursued. The first disposal resulting from this review is the disposal of the Group's North American business, which was completed on 1 May 2013.

The Profitable Growth Strategy

Thomas Cook's new strategy, announced on 13 March 2013, is designed to drive profitable growth by seeking to provide trusted, personalised holiday experiences through a ''high-tech'', ''high-touch'' approach. The Profitable Growth Strategy involves the following four major pillars, developed through the accumulated institutional knowledge of the Group, senior management insight into each of the Group's key source markets, research into the competitive dynamics of, and trends within, the leisure travel industry and an in-depth survey conducted by Thomas Cook of the attitudes and travel habits of almost 18,000 people across the Group's key source markets:

·; Expansion of Thomas Cook's exclusive and international concept hotels. The Group already has successful concept hotels in Northern Europe and Continental Europe, which the Group intends to both expand in existing source markets and roll out to new source markets. These hotels have, in comparison to the Group's other products, generated significantly greater margins, engendered higher levels of customer loyalty and led to an increase in early booking rates.

·; Product and service innovation. Thomas Cook has a history of product and service innovation, supported by a structured approach to product development and deployment. Building upon this track record, the Group intends to continue its approach of developing new, flexible products and services which are closely tied to customer demands and preferences, in order to drive revenue growth.

·; Single customer gateway. Thomas Cook intends to provide a personalised and consistent customer experience, by making access to products, services and recommendations available across all distribution channels.

·; Execution supported by brand and technology. The Board believes that the Thomas Cook umbrella brand and other regional brands, such as Neckermann, Condor, Jet tours, Ving, Spies and Tjäreborg, are valuable in terms of customer trust and loyalty and name recognition. The Group intends to leverage these brands in support of the other components of its Profitable Growth Strategy. In addition, Thomas Cook is in the process of drawing together the Group's IT capabilities to facilitate the delivery of each component of the Profitable Growth Strategy.

2.3 Business Transformation Update

Transforming Thomas Cook

The transformation of Thomas Cook is well underway with results already being delivered. Although still in its early stages, the Company's results for the six months ended 31 March 2013 have already demonstrated progress. Underlying EBIT compared with the corresponding period in FY 2012 improved by £58.7 million on a like for like basis. UK underlying EBIT improved by £29.5 million, reflecting the encouraging impact of the initial cost out and profit improvement benefits in this business. Primarily driven by the decision at the beginning of the financial year to reduce capacity and strengthen our yield management processes, the Group's underlying gross profit margin improved, on a like for like basis, by 110 basis points compared with the corresponding six-month period last year, and the UK underlying gross margin also improved by 110 basis points, on a like for like basis. The other notable improvement was the reduction in our net debt compared with the previous year. This declined by £175.4 million primarily due to better working capital management processes.

Encouraging current trading

Current trading is encouraging and continues to reflect our strategy of optimising returns by more closely managing committed capacity to demand, giving increased flexibility as the season develops.

For the Summer 2013 season, bookings in our mainstream businesses are slightly ahead of last year despite planned capacity reductions of 7%. The reduction in capacity continues to allow us to focus on achieving quality business, reflected in increased average selling prices and gross margin on these bookings. UK planned capacity has been reduced by 4% but our bookings to date have reduced by less than 2%. Average selling prices are up by 4% and the percentage gross margin achieved on bookings so far has improved significantly. With committed capacity left to sell 7% lower, compared with the same time last year, our ability to preserve this quality of business is increased.

Bookings in Continental Europe are up over 1% from last year despite implemented capacity reductions of 13%. Average selling prices are up by over 1% with the percentage gross margin also up slightly on last year. Our French business is now being managed as part of our Continental European segment and will be included in this for reporting purposes. Our turnaround plans for France are in place and consultation over restructuring has commenced. While our structural changes are being implemented, our new management in France is focussed on aligning capacity with demand and increasing the quality of business transacted. Capacity has been reduced significantly but average selling prices and gross margin are both strongly up.

Our Northern European business continues to perform well with bookings up by 11% and average selling prices and gross margins also well ahead of last year. This business has increased capacity slightly. However, the strength of bookings to date leaves the capacity left to sell 7% lower compared with the same time last year.

Our airline business in Germany is benefitting from increased alignment with our group airline resource management. Bookings are up over 4% on last year, capacity is 2% higher, and average selling prices have increased by over 3%.

Delivering against targets and KPIs

In total, we achieved £47 million of the Improvement Initiative benefits in the six months ended 31 March 2013, which contributed towards the £58.7 million improvement in underlying EBIT compared with the corresponding period in FY 2012. This takes the cumulative achievement by the end of March 2013 to £107 million, which represents 74% of the target of £145 million that we had planned to achieve by the end of FY2013.

Of the previously announced Improvement Initiatives of £350 million, £140 million was targeted to come from the UK Turnaround Plan and £210 million from Group Profit Improvement Programme. Following our announcement today, the Improvement Initiatives target has now increased from £350 million to £390 million.

In FY 2012 we delivered the first £60 million of benefits from the UK Turnaround Plan. Of the additional £80 million targeted under the UK Turnaround Plan, we delivered £30 million as planned in the six months ended 31 March 2013. Improved yield management accounted for half of this benefit, with the other half coming from reduced personnel costs. We remain firmly on track to deliver the remaining £50 million, of which we expect approximately £30 million to be realised in the second half of this financial year and the remainder in FY 2014.

Following our announcement today, the Group Profit Improvement Programme target has now increased from £210 million to £250 million. Of the newly increased Group Profit Improvement Programme target of £250 million, we delivered £17 million in the six months ended 31 March 2013, ahead of plan. Having delivered these benefits earlier than planned, we are bringing forward the timetable of expected benefits and now expect to achieve £50 million by the end of FY 2013 instead of our earlier estimate of £25 million.

The Group also made good progress against its KPIs of improving underlying gross margin and underlying UK EBIT margin, delivering a 110 basis point improvement in the six-month period ended 31 March 2013 compared with the corresponding period in FY 2012, on a like for like basis.

Cash conversion (that is net cash from operating activities less interest paid as a percentage of underlying EBITDA) increased to 47 per cent. (FY 2012: 11 per cent.) calculated over the 12-month period ended 31 March 2013.

The additional £40 million of targeted benefits by FY15 is primarily due to changes in risk weighting of a number of existing initiatives, mainly in organisational structure from the execution of the UK Turnaround Plan and the initiation of the France turnaround. There is further progress from our airlines synergies, hotel negotiations and marketing savings as benefits have become more quantifiable as they have progressed through our validation process. Compared to the announcement made on 13 March 2013, we expect an additional cash flow cost of £15m to achieve this higher target, due to increased airline configurations and the turnaround in France.

1 Cumulative EBIT improvement run-rate.

2 Compounded annual growth rate of the Group's sales from FY 2013 to FY 2015.

3 Delivery of FY 2015 targets will be measured on a full year basis, adjusted for disposal, against a FY 2012 underlying gross margin level of 21.3 per cent.

4 Underlying profit from operations of the Group's UK operating segment (excluding Thomas Cook India) as a percentage of its revenue.

5 Net cash from operating activities less interest paid as a percentage of underlying EBITDA.

6 Calculated over the 12-month period ended 31 March 2013.

7 In the six-month period ended 31 March 2013, the Group delivered a 1.1 percentage point improvement in underlying gross margin, on a like for like basis, as compared with the same period in FY 2012.

Outlook

Bookings for the Summer 2013 season are developing well with c.60% of planned capacity sold, 2% higher than at the same time last year. As a consequence of this, together with planned reductions in committed capacity of c.6%, the Group has 10% less "left to sell" compared to last year. We anticipate that the current booking position should support prices and margins during the remainder of the season, recognising that the "lates" market last year was particularly strong due to inclement weather throughout much of Europe.

Given the backdrop of encouraging trading for the Summer 2013 season, continued progress with the Business Transformation, including the increased targets for the Group Profit Improvement Programme announced today, and the improved financial performance in the six months ended 31 March 2013, the Board is confident of a satisfactory result for the full year.

2.4 The Capital Refinancing Plan

Capital structure review

On 13 March 2013, alongside the announcement of the Profitable Growth Strategy, Thomas Cook announced that it was undertaking a review of its capital structure. The Board considers that successful delivery of the Business Transformation will improve the Group's capital structure in the medium to longer term. However, the Board believes that the Group should take additional steps to address the Group's significant levels of leverage, particularly given the maturities of the Current Facilities in May 2015 and the 2015 Euro Notes in June 2015. The Board believes that the Group's current level of leverage, and the terms and maturity profile of the Group's existing financing arrangements, would otherwise act as a significant constraint on Thomas Cook.

The Board has therefore concluded that the Group should seek to implement a capital refinancing plan, including an injection of equity capital, to accelerate the deleveraging which is expected to arise from the implementation of the Business Transformation and to extend the maturity profile of the Group's financing arrangements. A capital refinancing plan is also being pursued to provide the Group with a strengthened capital base and financial position. This is expected to facilitate the implementation of the Business Transformation, to improve the credit perception of Thomas Cook with suppliers and trading counterparties and provide a platform to enable the Group to resume dividend payments in the future.

With these objectives in mind, Thomas Cook has engaged with a group of its core lending banks and various other stakeholders to develop a capital refinancing plan. The Group has obtained the support of these nine core lenders, as well as its joint corporate brokers (Credit Suisse and Jefferies Hoare Govett), to the Business Transformation and the Capital Refinancing Plan which Thomas Cook is proposing to implement. However, the Board believes that the Group should also access the capital markets to provide more of Thomas Cook's capital requirements, particularly whilst market conditions remain favourable to the Group.

Assessment of the Capital Refinancing Plan

The Capital Refinancing Plan will deliver the Group's key objectives of:

·; accelerating the deleveraging of the Group's balance sheet (the Group's pro forma net debt as at 31 March 2013 would have been, as a result of the Capital Refinancing Plan, £822.1 million);

·; extending the maturity profile of Thomas Cook's existing financing arrangements by replacing and refinancing Current Facilities and weighting the maturity of the Group's financing arrangements to FY 2017 and beyond. In this context, the Capital Refinancing Plan is expected to provide the Group with the flexibility and balance sheet strength to address the maturity of the 2015 Euro Notes either using the Group's future cash flows or through utilisation of the New Facilities in conjunction with such cash flows;

·; facilitating and allowing the Company to focus its efforts on the implementation of the Business Transformation. The Board considers that successful delivery of the Business Transformation, in combination with the implementation of the Capital Refinancing Plan, will enable Thomas Cook to generate increased surplus cash flows with a view to further deleveraging the Group, while providing a platform for the Group to resume dividend payments in the future; and

·; delivering a strengthened capital base and financial position which will improve the credit perception of Thomas Cook with suppliers and trading counterparties.

The Board, having carefully considered the available alternatives, believes that the Capital Refinancing Plan is the optimal solution available at present to address the Group's objectives.

Use of proceeds

As a result of the Capital Refinancing Plan being implemented, the Current Facilities will be cancelled, replaced and, to the extent drawn down, repaid in full. Thomas Cook therefore intends to use the net proceeds from the Placing and the Rights Issue and from the issue of the New Bonds (or, if the New Bonds are not issued on or by Placing Admission and Admission, the Bridge Facility) to repay in full the amounts drawn down under the Current Facilities (as at 31 March 2013, £552.1 million was outstanding under the Current Facilities), with the remaining net proceeds being used for general corporate purposes, including to meet the Group's working capital requirements and to pursue the implementation of the Business Transformation (including the Profitable Growth Strategy).

The New Revolving Facility and the New Bonding Facilities will be utilised to replace the Current Facilities which will be cancelled.

3. Structure and terms of the Placing and the Rights Issue

The Board has considered the best way to structure the proposed equity capital raising in light of the Capital Refinancing Plan. The decision to structure the equity capital raising by way of a combination of a Placing and a Rights Issue takes into account a number of factors, including the total net proceeds to be raised. The Board believes that the Placing as part of the Capital Refinancing Plan enables the Company to satisfy demand from potential new investors as well as current shareholders wishing to increase their positions. While recognising the importance of pre-emption rights, the Board believes that to attract new investors the equity capital raising structure needs to include a firm allocation of Ordinary Shares under the Placing to the Placees combined with the ability for the Placees to participate in the Rights Issue. The Board has sought to restrict the size of the Placing in order to minimise the dilution to existing Shareholders who do not participate in the firm placing and are also seeking the approval of Shareholders to the proposed equity capital raising structure, including this non pre-emptive element, by way of a special resolution.

The Company proposes to offer 87,591,241 Placing Shares (representing approximately 9.6 per cent. of the existing issued ordinary share capital as at 15 May 2013) to Placees, at a Placing Price of 137 pence per share, raising £120 million. The Placing Price represents a 5 per cent. discount to the Closing Price of 144.7 pence on 15 May 2013 (being the last Business Day before the announcement of the Placing and the Rights Issue).

The Company proposes to offer 401,556,476 New Ordinary Shares by way of a 2 for 5 Rights Issue at a Rights Issue Price of 76 pence per New Ordinary Share. The Rights Issue is expected to raise gross proceeds of approximately £305 million.

The Rights Issue Price represents a discount of approximately 36.4 per cent. to the theoretical ex-rights price calculated by reference to the Placing Price.

The Rights Issue will result in 401,556,476 New Ordinary Shares being issued, representing approximately 43.8 per cent. of the existing issued ordinary share capital as at 15 May 2013 and 28.6 per cent. of the enlarged issued ordinary share capital immediately following completion of the Placing and Rights Issue.

4. Dividend policy

On 29 September 2011, Thomas Cook announced that it would not propose any further dividend payments while the Group rebuilds its balance sheet. Further, the Current Facilities Agreement does not permit Thomas Cook, and the New Facilities Agreement and the New Bonds will impose certain restrictions on Thomas Cook's ability, to make dividend payments. Under the indenture for the New Bonds, the Company will be restricted from making dividend payments and certain other restricted payments in an amount that would exceed 50 per cent. of the consolidated net income (as calculated under the indenture), on a cumulative basis from the date of issue of the New Bonds, of the Company and its restricted subsidiaries, subject to certain adjustments and other conditions set forth in the indenture. Under the New Facilities Agreement, a dividend would be permitted once the New Facilities have been reduced to £400 million or less and the Company has confirmed to the facility agent that certain financial tests will be satisfied on a forward-looking basis, provided that on the date the dividend is declared (i) no event of default under the New Facilities Agreement is continuing or could reasonably be expected to occur as a result of the declaration or payment of the dividend and (ii) the dividend, when aggregated with any other dividend declared in the same financial year, does not exceed 50 per cent. of the retained earnings of the Group for the immediately preceding financial year. Once Thomas Cook is permitted to make dividend payments, its ability to do so will depend on (among other things) improved financial performance.

The Board understands the importance of optimising value for Shareholders and believes that implementation of the Capital Refinancing Plan will provide a platform for reinstating the payment of dividends in the future, which the Board will do when it becomes appropriate and permissible to do so.

5. Directors' intentions

Each of the Directors who is a Shareholder intends to (i) vote in favour of the Resolution at the General Meeting and (ii) take up in full his or her entitlement to subscribe for New Ordinary Shares under the Rights Issue. The Directors current shareholding comprises 1,217,663 Existing Ordinary Shares in aggregate, representing in aggregate 0.13 per cent. of the issued share capital of the Company as at the Reference Date.

6. General Meeting

The General Meeting is expected to be held at 11.00 a.m. on 3 June 2013 at Sofitel London St James, 6 Waterloo Place, London SW1Y 4AN.

At the General Meeting, Shareholders will be asked to approve (among other things) the Placing and the Rights Issue.

7. Miscellaneous

Further details of the Capital Refinancing Plan, including the interconditionality of the Capital Refinancing Plan, the structure and principal terms and conditions of the Placing and the Rights Issue and the New Facilities Agreement and the New Bonds, are set out in Appendix II.

Credit Suisse and Gleacher Shacklock are joint sponsors, and together with Short Partners are acting as joint financial advisers to the Company in relation to the Capital Refinancing Plan. Credit Suisse is the sole global co-ordinator and together with Jefferies Hoare Govett are joint corporate brokers on the Placing and Rights Issue. Members of the banking syndicate providing the New Facilities will be joint bookrunners in the issuance of the New Bonds.

In aggregate, the estimated expenses of implementing the Capital Refinancing Plan (including underwriting commissions, arrangement and commitment fees and professional adviser costs, but excluding VAT) are £74 million.

In the opinion of the Company, taking into account the net proceeds of the Placing and the Rights Issue, the working capital available to the Group is sufficient for its present requirements, that is for at least 12 months following the date of publication of the prospectus.

IMPORTANT NOTICE

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Placing Shares, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of information in the Prospectus which is expected to be published by the Company today in connection with the Placing and the Rights Issue. Copies of the Prospectus will, following publication, be available from the registered office of Equiniti. This announcement does not constitute, or form part of, any offer or invitation to subscribe for, purchase or otherwise acquire or sell or otherwise dispose of, or any solicitation of any offer to sell or otherwise dispose of or subscribe for, purchase or otherwise acquire, any security in the capital of the Company in any jurisdiction. Any decision to subscribe for, purchase or otherwise acquire, sell or otherwise dispose of any Placing Shares, Provisional Allotment Letters, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares should only be made on the basis of information contained in and incorporated by reference into the Prospectus which contains further details relating to the Company in general as well as a summary of the risk factors to which an investment in the Placing Shares and the New Ordinary Shares is subject. Nothing in this announcement should be interpreted as a term or condition of the Placing or the Rights Issue. Subject to certain exceptions, the Prospectus will not be available to Shareholders located in any Excluded Territory.

This announcement does not constitute, or form part of any offer or invitation to subscribe for, purchase or otherwise acquire or sell or otherwise dispose of, or any solicitation of any offer to sell or otherwise dispose of or subscribe for, purchase or otherwise acquire any New Bonds or any other debt instrument of the Company in any jurisdiction.

This announcement is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The Shares mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"). Any securities contemplated herein may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of securities in the United States.

Each of Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale is authorised and regulated in the United Kingdom by the FCA (Credit Suisse and and Société Générale are also regulated by the PRA) and is acting for Thomas Cook and no one else in connection with the Placing and the Rights Issue and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Placing and the Rights Issue and will not be responsible to anyone other than Thomas Cook for providing the protections afforded to its clients or for providing advice in relation to the Placing and the Rights Issue or any matters referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas or Société Générale by FSMA or the regulatory regime established thereunder or otherwise under law, Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale do not accept any responsibility whatsoever for the contents of this announcement, and no representation or warranty, express or implied, is made by Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas or Société Générale in relation to the contents of this announcement, including its accuracy, completeness or verification or regarding the legality of any investment in the Placing Shares, the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares by any person under the laws applicable to such person or for any other statement made or purported to be made by it, or on its behalf, in connection with Thomas Cook, the Placing Shares, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Placing or the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. To the fullest extent permissible Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.

No person has been authorised to give any information or make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied upon as having been authorised by Thomas Cook or by any of Credit Suisse, Gleacher Shacklock, Jefferies Hoare Govett, Short Partners, Barclays, BNP Paribas and Société Générale. Neither the delivery of this announcement nor any acquisition or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Thomas Cook since the date of this announcement or that the information in this announcement is correct as at any time after its date.

This announcement contains ''forward-looking statements'' that are based on estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements are all statements other than statements of historical fact or statements in the present tense, and can be identified by words such as "targets", "aims", "aspires", "assumes" ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', "hopes", ''may'', ''would'', ''should'', "could", ''will'', ''plans'', ''predicts'' and ''potential'', as well as the negatives of these terms and other words of similar meaning. The forward-looking statements in this announcement are made based upon the Company's estimates, expectations and beliefs concerning future events affecting the Group and are subject to a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which it will operate, which may prove not to be accurate. The Company cautions that these forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in these forward-looking statements. Undue reliance should, therefore, not be placed on such forward-looking statements. Any forward-looking statements contained in this announcement apply only as at the date of this announcement and are not intended to give any assurance as to future results. The Company will update this announcement as required by applicable law, including the Prospectus Rules, the Listing Rules, the Disclosure and Transparency Rules, and any other applicable law or regulations, but otherwise expressly disclaims any obligation or undertaking to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

The contents of this announcement are not to be construed as legal, business or tax advice. Each prospective investor should consult his or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.

The contents of the websites of the Group do not form part of this announcement.

APPENDIX I(Expected timetable of principal events in relation tothe General Meeting, the Placing and the Rights Issue)

Each of the times and dates in the table below is indicative only and may be subject to change.

Notes:

1. The ability to participate in the Placing and the Rights Issue is subject to certain restrictions relating to Shareholders with registered addresses outside the United Kingdom, details of which will be set out in the Prospectus.

2. These times and dates and those mentioned throughout this announcement may be adjusted by Thomas Cook in consultation with Joint Sponsors, in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, Qualifying Shareholders and Placees.

3. References to times in this timetable are to London time.

APPENDIX II(Further details of the Capital Refinancing Plan)

Interconditionality of the Capital Refinancing Plan

The Placing and the Rights Issue are conditional upon (among other things) Placing Admission and Admission becoming effective by not later than 8.00 a.m. on 5 June 2013 (or such later date as the Company and the Joint Sponsors may agree).

The New Revolving Facility and the New Bonding Facilities will be available following (among other things) receipt by the facility agent of evidence that (i) the Group has received or will receive not less than €500 million in net proceeds from the issuance of the New Bonds (or where such net proceeds are less than €500 million, that all conditions precedent under the Bridge Facility Agreement have been satisfied and the Bridge Facility is available to be drawn in an amount at least equal to the shortfall), (ii) the Company has received not less than £400 million in gross proceeds from the Placing and the Rights Issue and (iii) the Current Facilities will be prepaid and cancelled in full.

The New Additional Facility will become available upon the maturity of the 2015 Euro Notes, in 22 June 2015, for the purpose of repaying the 2015 Euro Notes and after 22 June 2015, for general corporate and working capital purposes of the Group.

Further details of the structure and principal terms and conditions of the Placing and the Rights Issue

General

The Placing and the Rights Issue are fully underwritten by the Underwriters and conditional upon (among other things) (i) the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Placing Admission and Admission) and (ii) Placing Admission and Admission becoming effective by not later than 8.00 a.m. on 5 June 2013 (or such later date as the Company and the Joint Sponsors may agree). The Underwriting Agreement is conditional upon certain matters being satisfied and may be terminated by either of Credit Suisse or Jefferies Hoare Govett (and, in certain cases, any of Credit Suisse, Jefferies Hoare Govett or the Joint Sponsors) prior to Admission upon the occurrence of certain specified events, in which case the Placing and the Rights Issue will not proceed. The Underwriting Agreement is not capable of termination following Admission. The Company reserves the right to decide not to proceed with the Placing and the Rights Issue at any time prior to Admission and commencement of dealings in the New Ordinary Shares (nil paid).

Application will be made to the UK Listing Authority for the Placing Shares and the New Ordinary Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Placing Shares and the New Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that admission to listing of the Placing Shares and the New Ordinary Shares, nil paid, and dealings in the Placing Shares and the New Ordinary Shares, nil paid, on the London Stock Exchange's main market for listed securities will commence, at 8.00 a.m. on 5 June 2013.

The Placing Shares and New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with, and will carry the same voting and dividend rights as, the Existing Ordinary Shares.

If a Qualifying Shareholder does not take up any Placing Shares in the Placing nor any New Ordinary Shares under the Rights Issue, such Qualifying Shareholder's shareholding in the Company will be diluted by up to in aggregate 34.8 per cent. as a result of the Placing and the Rights Issue. Furthermore, Qualifying Shareholders who do not participate in the Placing but do take up their entitlements in full in respect of the Rights Issue will experience a 8.7per cent. dilution to their shareholdings in the Company as a result of the Placing.

The Placing

Under the Placing, Credit Suisse and Jefferies Hoare Govett have agreed to procure Placees for an aggregate of 87,591,241 Placing Shares at a Placing Price of 137 pence per Placing Share.

The Placing Price (including the size of the Placing discount) has been determined, following discussions with both existing and potential new Shareholders, to be at the level which the Directors consider necessary to ensure the success of the Placing and the Rights Issue, taking into account the aggregate proceeds to be raised. The Board believes that the Placing Price and the discount which it represents are appropriate.

The Rights Issue

The Company proposes to offer 401,556,476 New Ordinary Shares by way of rights to (i) Qualifying Shareholders (other than, subject to certain exceptions, Qualifying Shareholders with a registered address, or located or resident (as applicable), in the United States or any of the other Excluded Territories) and (ii) Placees, at a Rights Issue Price of 76 pence per New Ordinary Share, payable in full on acceptance no later than 11.00 a.m. on 19 June 2013.

The offer of the New Ordinary Shares under the Rights Issue is proposed to be made on the following basis:

2 New Ordinary Shares at 76 pence for every 5 Ordinary Shares

held by (i) Qualifying Shareholders on the Record Date and so in proportion to any other number of Ordinary Shares each Qualifying Shareholder then holds and (ii) Placees as a result of the Placing and so in proportion to any number of Ordinary Shares each Placee would have held on the Record Date if the Placing had occurred immediately prior to the Record Date.

Qualifying Shareholders with registered addresses in the United States or in any of the other Excluded Territories will not be sent Provisional Allotment Letters and will not have their CREST stock accounts credited with Nil Paid Rights, except where the Company, and Credit Suisse and Jefferies Hoare Govett, are satisfied that such action would not result in the contravention of any registration or other legal or regulatory requirement in such jurisdiction.

The terms and conditions of the Rights Issue will be set out in full in Part V (Terms and Conditions of the Rights Issue) of the Prospectus.

The Capital Reorganisation

Each of the Placing and the Rights Issue constitutes an Adjustment Event under the Warrant Instruments, as a result of which the number of Warrants and the subscription price of the Warrants will be adjusted pursuant to customary adjustment provisions. The operation of such adjustment provisions will (among other things) result in the subscription price under the Warrants falling below the nominal value of the Existing Ordinary Shares, being €0.10. The Company has, however, undertaken not to do anything which would (or could reasonably be expected to) result in the subscription price being adjusted to an amount which is less than the nominal value of an Existing Ordinary Share (which at present is €0.10). The Company, therefore, proposes a Capital Reorganisation to take effect before Placing Admission and Admission. Under the Capital Reorganisation, each Existing Ordinary Share of €0.10 nominal value will be subdivided into one Ordinary Share of €0.01 nominal value and one New Deferred Share of €0.09 nominal value. Each of the Placing and the Rights Issue is conditional upon (among other things) the completion of the Capital Reorganisation.

The proportion of the issued share capital of the Company held by each Shareholder immediately following the Capital Reorganisation will remain unchanged. In addition, apart from having a different nominal value, each €0.01 Ordinary Share will carry the same rights as set out in the Articles of Association that currently apply to the Existing Ordinary Shares.

A request will be made to the UK Listing Authority and the London Stock Exchange to reflect, on the Official List and the London Stock Exchange's main market for listed securities, respectively, the subdivision and conversion of the Existing Ordinary Shares.

The New Facilities Agreement and the New Bonds

In conjunction with the Placing and the Rights Issue, the Company has entered into the New Facilities Agreement with a syndicate of lenders. Utilisations under the New Facilities Agreement, together with the proceeds of the Placing and the Rights Issue and the New Bonds (or utilisations under the Bridge Facility Agreement), will be applied to refinance the Current Facilities. The New Facilities Agreement will make available a £300 million New Revolving Facility, £200 million New Bonding Facilities and a euro equivalent of £191 million New Additional Facility. The New Bonding Facilities comprise a £30 million New 2015 Bonding Facility and a £170 million New 2017 Bonding Facility. The New Revolving Facility, the New Bonding Facilities and the New Additional Facility will be available following (among other things) receipt by the facility agent of evidence that (i) the Group has received or will receive not less than €500 million in net proceeds from the issuance of the New Bonds (or where such net proceeds are less than €500 million, that all conditions precedent under the Bridge Facility Agreement have been satisfied and the Bridge Facility is available to be drawn in an amount at least equal to the shortfall), (ii) the Company has received not less than £400 million in gross proceeds from the Placing and the Rights Issue and (iii) the Current Facilities will be prepaid and cancelled in full. The New Additional Facility will become available upon the maturity of the 2015 Euro Notes, in 22 June 2015, for the purpose of repaying the 2015 Euro Notes and after 22 June 2015, for general corporate and working capital purposes of the Group.

The Group will seek to raise €525 million (€500 million, net of estimated expenses (including underwriting commissions but excluding VAT)) through the offer and issue of the New Bonds, and intends to commence a roadshow in the week commencing 20 May 2013. The offer of the New Bonds will not be underwritten. Accordingly, the Company has obtained commitments from Barclays, BNP Paribas, Credit Suisse, DNB Markets (a part of DNB Bank ASA), Jefferies Finance LLC, Lloyds TSB Bank plc, Société Générale and the Royal Bank of Scotland plc for €525 million under the Bridge Facility Agreement. The Bridge Facility will only be utilised if the New Bonds are not issued on or by Placing Admission and Admission. In such circumstances, the Company intends to refinance the Bridge Facility with high yield bonds when market circumstances permit.

After the Current Facilities have been cancelled and the New Bonds have been issued, the Company will take steps to arrange for the guarantors of the New Bonds to guarantee the 2015 Euro Notes and the 2017 Sterling Notes subject to their respective existing terms and conditions and the terms of their respective trust deeds.

APPENDIX III(Definitions)