Update on Investment

Craven House Capital Plc

("Craven House" or the "Company")

Update on Investment

The Company today announces that it has signed a settlement agreement ("Settlement Agreement") with Farm Lands of Africa Inc. ("FLAF") in light of breaches of certain investor protection mechanisms contained in the terms of the subscription which the Company announced on 9 August 2011 ("Subscription"). 

The breaches of the investor protection mechanisms derive from the merger of FLAF in September 2012 with the Indian-owned Guinean agricultural company, Buddhavarapu Farms SA.

As part of the Subscription, the Company acquired, for $1 million, 50,000 units ("Units"), which comprised 200,000 shares in FLAF as well as 50,000 Series A Warrants to purchase shares at $7.50 per share and 50,000 Series B Warrants to purchase shares at $10.00 per share. Around a similar time, four other investors partook in a placing with the Company, purchasing, in aggregate, a further 50,000 Units (the "Minority Shareholders"). Under the terms of the Settlement Agreement, the Company and the Minority Shareholders will return their Units to FLAF and receive, pro rata, $120,000 and 100% of Farm Lands of Africa Ltd ("FLAL"), a BVI registered company which owns 90% of Land and Resources (Guinea) SA ("LRG"). This will give Craven House an effective 45% stake in LRG as well as $60,000 cash.

LRG holds options over various agricultural assets and operations in the Republic of Guinea, including leases over up to 110,000 hectares of arable land. The board of Craven House believe that partially exiting FLAF, but increasing the Company's effective holding in LRG to 45%, will have a positive effect on the net asset value ascribed to this investment. It was the LRG assets which originally attracted the interest of the Company, and with the management of FLAL now wholly focused on the business of LRG, the board believes that the potential upside in the business will be easier to exploit.

The Company will also retain a holding of 517,350 shares in FLAF. These shares are currently suspended but FLAF is engaged in a fundraising process to help restructure the business. The value of the Company's previous stake of 717,350 shares in FLAF was approximately $1.1m when FLAF was suspended from trading. Given the Company's increased holding in the underlying assets of LRG, the directors do not envisage any significant change in the Company's net asset value arising from the Settlement Agreement. 

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