NEWBURY RACECOURSE PLC: Announcement re: Proposed Share Buy-Back

Regulatory Announcement 
FOR IMMEDIATE RELEASE 
29 October 2012 
ALL TERMS ARE DEFINED AT THE END OF THIS ANNOUNCEMENT, UNLESS OTHERWISE DEFINED
HEREIN 
Newbury Racecourse PLC 
Proposed Share Buy-Back of 1,428,174 Ordinary Shares owned by GPG (UK) Holdings
plc 
Introduction 
Guinness Peat Group plc ("GPG") is the largest shareholder in Newbury
Racecourse plc ("Newbury Racecourse" or "Company") and currently owns, via its
wholly-owned subsidiary GPG (UK) Holdings plc, 1,428,174 Ordinary Shares in the
Company, representing approximately 29.9 per cent. of the issued share capital
of the Company (the "GPG Shares"). 
Last year GPG stated that it would undertake an orderly disposal, over time, of
its investment portfolio which includes its shareholding in Newbury Racecourse.
This creates a degree of uncertainty for the future of the Company which the
Board would like to resolve. 
The Board of Newbury Racecourse has negotiated an opportunity to purchase the
GPG Shares at 450 pence per Ordinary Share (the "Share Buy-Back"). The Share
Buy-Back is subject to approval by Shareholders at a General Meeting to be held
at 10.00 a.m. on 15 November 2012 at The Racecourse. If Shareholders approve
the proposed Share Buy-Back then the GPG Shares will be purchased by the
Company and then cancelled, reducing the total number of Ordinary Shares in
issue to 3,348,326. Therefore, the effective equity ownership interest of each
Shareholder remaining after the Share Buy-Back would increase by some 42.7 per
cent. 
The Independent Directors (comprising all Directors of the Company except for
Erik Penser and Laurie Todd) unanimously recommend that Shareholders vote in
favour of all the Resolutions to be proposed at the General Meeting to effect
the proposed Share Buy-Back, as they have irrevocably committed to do in
respect of their own beneficial holdings amounting to, in aggregate, 389,387
Ordinary Shares representing approximately 8.2 per cent. of the issued share
capital of the Company. 
The Independent Directors believe that if the Share Buy-Back is approved by
Shareholders, it will: 
* remove the uncertainty relating to the future ownership of the GPG Shares; 


      * create a more stable shareholder base for the Company to execute its stated
    strategy and deliver long term benefits to Shareholders and other key
    stakeholders; and
      * create value for all remaining Shareholders by increasing the net asset
    value of the Company by some 16 per cent.


The price at which the Company will, subject to Shareholder approval, effect
the Share Buy-Back has been agreed at 450 pence per Ordinary Share which
compares very favourably with the current net asset value of 789 pence per
Ordinary Share. The price of the proposed Share Buy-Back of 450 pence per
Ordinary Share represents a premium of approximately 16.1 per cent. to the
closing mid-market price of 387.5 pence on 26 October 2012 (being the latest
practicable date prior to this announcement). 
A circular, containing full details of the proposed Share Buy-Back and giving
notice to Shareholders of the General Meeting to be held at 10.00 a.m. on 15
November 2012 to consider and, if thought fit, pass the resolutions to approve
the Share Buy-Back, will be published and will be despatched to Shareholders
shortly ("Circular"). 
The Circular will also be available, free of charge, at Newbury Racecourse's
registered office, The Racecourse, Newbury, Berkshire RG14 7NZ, and on its
website at www.racecoursenewbury.co.uk/About-Newbury/Investor-Relations. 
The Circular contains independent valuation reports which have been prepared to
support the current Net Asset Value of the Company. 
Waiver of Rule 9 of the Takeover Code 
Compton Beauchamp Estates Limited ("Compton Beauchamp Estates") is a family
company in which Erik Penser is interested. Erik Penser is also a Director of
Newbury Racecourse. Compton Beauchamp Estates and Erik Penser are deemed to
form a concert party for the purposes of the City Code on Takeovers and Mergers
("Takeover Code") (together the "Compton Beauchamp Estates Concert Party"). 
As at 26 October 2012, the Compton Beauchamp Estates Concert Party, were
interested in a total of 1,370,400 Ordinary Shares representing 28.7 per cent.
of the issued ordinary share capital of the Company. If the proposed Share
Buy-Back is approved by Shareholders, and consequently the GPG Shares are
cancelled, then the Compton Beauchamp Estates Concert Party's interest will
increase to, in aggregate, 40.9 per cent. of the issued ordinary share capital
of the Company. 
Erik Penser, together with his family company Compton Beauchamp Estates, would
be the largest Shareholder of the Company if the Share Buy-Back is completed. 
Under Rule 9 of the Takeover Code, any person who acquires an interest (as
defined in the Takeover Code) in shares which, taken together with shares in
which he is already interested and in which persons acting in concert with him
are interested, carries 30 per cent. or more of the voting rights of a company
which is subject to the Takeover Code, is normally required to make a general
offer to all the remaining shareholders to acquire their shares. 
An offer under Rule 9 must be in cash and at the highest price paid by the
person required to make the offer, or any person acting in concert with him,
for any interest in shares of the company during the 12 months prior to the
announcement of the offer. 
At the request of the Independent Directors, the Panel on Takeovers and Mergers
(the "Panel") has agreed to waive any requirement on the Compton Beauchamp
Estates Concert Party to make a general offer to all Shareholders which would
otherwise arise as a result of completion of the Share Buy-Back. This is known
as a Rule 9 Waiver. 
In accordance with the Takeover Code and to permit the Rule 9 Waiver, the Panel
requires that the Independent Shareholders (which excludes for these purposes
Erik Penser, Compton Beauchamp Estates and GPG Holdings (UK) plc) must pass an
ordinary resolution (taken on a poll) to approve the Rule 9 Waiver. 
Financing of the Proposed Share Buy-Back 
The price to be paid by the Company for the GPG Shares has been agreed at 450
pence for each Ordinary Share. The total cash consideration to be paid by the
Company to GPG (UK) Holdings plc on the completion of the Share Buy-Back will
be approximately £6.4 million. 
The Independent Directors considered various debt arrangements to finance the
proposed Share Buy-Back. The board of Compton Beauchamp Estates offered to make
available to the Company a sterling committed term loan facility of £6.5
million to finance the proposed purchase by the Company of the GPG Shares
("Compton Beauchamp Estates Loan"). 
The Independent Directors determined, having been so advised by Strata
Partners, that the terms of the Compton Beauchamp Estates Loan are fair and
reasonable and in the best interests of the Independent Shareholders and the
Company as a whole. Accordingly, the Board has today entered into an agreement
with Compton Beauchamp Estates for the Compton Beauchamp Estates Loan. 
The principal terms of the Compton Beauchamp Estates Loan are set out in the
Circular. In particular, there are no financial covenants; interest is payable
at the rate of 2.0 per cent. per annum over the cost of funds (as defined in
such loan agreement) and is rolled-up and added to the principal amount of the
loan; the term of such loan is 6 years with pre-payments being permitted
without penalty; the loan is secured by way of a legal mortgage. The agreement
relating to such loan is available for inspection at the address and on the
website stated in the Circular. 
Net Asset Value of the Company 
The value of the Company comprises: 
 i. the value of the Racecourse itself on a continuing use basis (before the 


    Planned Redevelopment and excluding the Residential Development Sites and
    the Hotel Development Site);
    ii. the land value realised by the Company from the disposal of the Residential
    Development Sites to David Wilson Homes pursuant to the terms of the
    Development Agreement (less expected payments in respect of taxation
    liabilities of the Company thereon and to Network Rail in respect of the
    easement for the bridge over the railway);
    iii. any further value representing development profits to which the Company
    may become entitled arising from the development of Residential Development
    Sites;
    iv. the market value established in respect of the proposed site for the 123
    room mid-market hotel ("Hotel Development Site"); and
     v. the liability in respect of net indebtedness of the Company as at 30 June
    2012 being the date of the interim accounts of the Company, prior to the
    Share Buy-Back and, if the Share Buy-Back is approved, as adjusted for the
    value of the Compton Beauchamp Estates Loan used to finance the Share
    Buy-Back and the costs relating to the Share Buy-Back.


In terms of analysing the value of the Company on a per share basis, the issued
ordinary share capital of the Company as at the date of this announcement is
4,776,500 Ordinary Shares and, as if the Share Buy-Back had been completed and
the GPG Shares had been cancelled, will be 3,348,326 Ordinary Shares. 
To ascertain these property values, the Company has commissioned independent
valuation reports which have been included in the Circular. 
The Net Asset Value of the Company before the Share Buy-Back and the Pro Forma
Net Asset Value as if the Share Buy-Back had been completed and the GPG Shares
had been cancelled are set out in Appendix 1 to this announcement. 
Current Trading and Prospects 
The Company continues to enjoy an on-going relationship with Turf TV, which
supplies live horseracing pictures from the Racecourse to licensed betting
shops in the UK and Ireland. As announced at the time of publication of the
interim financial results on 27 September 2012, the new media rights agreement
with Turf TV is expected to generate revenues of approximately £9.0 million
over the five year term from 1 April 2013. This reflects a significant uplift
of approximately 80 per cent. on the circa. £5.0 million that will be received
over the course of the current five year contract. Media rights will play an
important part in the longer term profitability of the Company. 
As noted at the time of publication of the interim financial results on 27
September 2012, the Company continues to trade in line with the Board's
expectations and the Board looks forward to the future with optimism. 
Dividends and Return of Capital to Shareholders 
The Board is appreciative of the loyal and strong support of Shareholders over
many years as well as the additional capital provided at the time of the 2009
Rights Issue. The Board unanimously intends to reward this loyalty with two
forms of return: 
(i) Dividend from Trading Activities 
The continued progress made by the core, non-property, trading activities,
together with the enhanced revenues from the 2013 media rights agreement with
Turf TV, and the additional opportunities provided for the trading business by
the DWH Infrastructure Enhancements and the Racecourse Refurbishment Works, are
expected to assist the Board in recommencing the payment of dividends from the
Company's trading activities, and adopting a progressive dividend policy. 
(ii) Return of Capital from Property Activities 
It remains the Board's strategy to return capital to Shareholders in a tax
efficient manner, either as dividends or as capital payments as the development
of the Residential Development Sites generates cash receipts for the Company in
excess of its requirements. The Board anticipates that these returns will be
made from 2016, phased in tranches in accordance with the cash flows arising
from the Development Agreement, and that, in aggregate, they will be
significant in comparison to the current share price of the Company. 
Current intentions of Erik Penser and Compton Beauchamp Estates 
The Compton Beauchamp Estates Concert Party is fully supportive of the
management and strategic direction of the Company. 
Erik Penser and Compton Beauchamp Estates have each informed the Board that
they intend to allow the Board to run the Company in line with the Company's
current proposed strategy, as generally communicated to Shareholders up to and
including the date of this announcement. 
Neither Erik Penser nor Compton Beauchamp Estates has any intentions regarding
Newbury Racecourse's business that would affect: 
* the current business activities of the Company; 


      * the current strategic plans of the Company;
      * the location of Newbury Racecourse's business or operating subsidiaries;
      * the maintenance of any trading facilities for the Company's Ordinary
    Shares; or
      * the employment of the Company's staff, including the continued employment
    of, or the conditions of employment of, any of the Company's employees,
    senior management or Directors or the composition of the Board of the
    Company.


Neither Erik Penser nor Compton Beauchamp Estates has any intentions to seek to
procure the disposal of or otherwise change the use of any of the fixed assets
of Newbury Racecourse. 
Compton Beauchamp Estates and Erik Penser have each confirmed to the Company
that if the Company acquires all of the Ordinary Shares currently held
(directly or indirectly) by GPG, then each of Compton Beauchamp Estates and
Erik Penser (together with certain persons connected with them and any parties
acting in concert with them) will not for a period of 365 days following
completion of the Share Buy-Back announce a firm intention to make an offer for
the Company, seek to make any offer or possible offer for the Company or
acquire any interest in Ordinary Shares of the Company if such acquisition
would result in a mandatory offer for the Company. The confirmations given to
the Company by Compton Beauchamp Estates and Erik Penser are subject to their
respective rights to make an offer for the Company if any unrelated third party
announces a firm intention to make an offer for the Company or otherwise in
accordance with Note 2 to Rule 2.8 of the Takeover Code. 
Definitions 
"2009 Rights Issue"              the rights issue by the Company of 1,592,167   


                                 additional Ordinary Shares announced on 18    
                                 December 2009                                 


                                                                           
"David Wilson Homes" or "DWH"    David Wilson Homes Limited, a company          


                                 registered in England and Wales with number   
                                 00830271 and whose registered office is at    
                                 Barratt House, Cartwright Way, Forest Business
                                 Park, Bardon Hill, Coalville, Leicestershire  
                                 LE67 1UF                                      


                                                                           
"Development Agreement"          means the agreement between DWH, the Company,  


                                 Newbury Racecourse Enterprises Limited and    
                                 Barratt Developments PLC (as guarantor)       
                                 exchanged on 1 May 2008 comprising (i) the    
                                 agreement for DWH to purchase certain         
                                 residential development sites at the Company's
                                 racecourse; and (ii) the agreement to carry   
                                 out the residential development in respect of 
                                 such residential development sites and certain
                                 infrastructure enhancement works as amended by
                                 the Deed of Variation                         


                                                                           
"DWH Infrastructure              infrastructure improvements to the Racecourse,
Enhancements"                    including, in particular, construction of a    


                                 new bridge to access the Residential          
                                 Development Sites and provide enhanced access 
                                 to the Racecourse, new parking facilities for 
                                 visitors and enhanced road infrastructure, a  
                                 new multi-functional accommodation facility   
                                 for stable staff, refurbished stables and a   
                                 new children's nursery, with all such works to
                                 be carried out, and paid for, by DWH in       
                                 accordance with the Development Agreement     


                                                                           
"Hotel Development Site"         the site for the proposed development of a 123 


                                 bedroom midmarket hotel, as described in the  
                                 valuation report of Montagu Evans set out in  
                                 the Circular                                  


                                                                           
"Net Asset Value"                the net asset value of the Company or for each 


                                 Ordinary Share (as the case may be) determined
                                 on the basis of Appendix 1 of this            
                                 announcement                                  


                                                                           
"Planned Redevelopment"          includes (1) the development of the            


                                 Residential Development Sites and             
                                 implementation of the DWH Infrastructure      
                                 Enhancements to the Racecourse to be carried  
                                 out in accordance with the Development        
                                 Agreement by DWH; and (2) implementation of   
                                 the Racecourse Refurbishment Works to be      
                                 carried out and paid for by the Company       


                                                                           
"Pro Forma Net Asset Value"      the Net Asset Value determined on a pro forma  


                                 basis as if the Share Buy-back had been       
                                 completed. The adjustments made are set out in
                                 Appendix 1 of this announcement and reflect   
                                 the Compton Beauchamp Estates Loan to effect  
                                 the Share Buy-Back, Transaction Costs and the 
                                 cancellation of the GPG shares                


                                                                           
"Racecourse"                     the racecourse operated by the Company         
                                                                           
"Racecourse Refurbishment Works" include the refurbishment of the Berkshire     


                                 stand, a new weighing room, a new paddock, a  
                                 pre-parade ring and general landscaping around
                                 the grandstands, new administrative offices,  
                                 enhanced facilities for owners and trainers   
                                 and new entrances to the Racecourse all of    
                                 which are under assessment and review by the  
                                 Board and, to the extent carried out, will be 
                                 paid for by the Company and will be pursued as
                                 part of the Planned Redevelopment             


                                                                           
"Residential Development Sites"  three areas of land at the Racecourse known as 


                                 the Western, Central and Eastern sites on     
                                 which, in aggregate, up to 1,500 residential  
                                 units are proposed to be constructed as part  
                                 of the Planned Redevelopment                  


                                                                           
"Transaction Costs"              the professional fees, stamp duty and          


                                 financing arrangement fees (together with     
                                 irrecoverable value added tax thereon) which  
                                 are expected to be incurred by the Company to 
                                 effect the Share Buy-Back. In aggregate these 
                                 are expected to be approximately £450,000,    
                                 excluding value added tax                     

ENQUIRIES

Newbury Racecourse plc Tel: 01635 40015

Sarah Hordern (Joint Managing Director)

Strata Partners (Financial Advisor to Newbury Racecourse plc)
Tel: 0207 730 1200

Edward Roskill

Hudson Sandler Tel: 020 7796 4133

Michael Sandler/Charlie Jack/Katie Matthews

Strata Technology Partners LLP ("Strata Partners"), which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is acting
exclusively for Newbury Racecourse PLC and no one else in connection with the
Share Buy-Back and will not be responsible to anyone other than Newbury
Racecourse PLC for providing the protections afforded to clients of Strata
Partners nor for providing advice in relation to the Share Buy-Back, the
contents of this announcement or any transaction or arrangement referred to
herein.

Appendix 1 - Summary financial effects of the Share Buy-Back
                                                         Net Asset    Pro Forma
                                                             Value          Net
                                                                    Asset Value
                                                        Before the    as if the
                                                             Share        Share
                                                                       Buy-Back
                                                          Buy-Back     had been
                                                                      completed
                                                                               


                                                             £            
£ 
                                                                           
Independent valuation of the Racecourse on a continuing    £14.50m      
£14.50m 
                                                                           
use basis (Notes 1 and 2)                                                       
                                                                           
Independent valuation of the Residential Sites to be       £24.10m      
£24.10m
developed                                                                       
                                                                           
by DWH (Note 3)                                                                 
                                                                           
Independent valuation of the Hotel Development Site         £1.20m       
£1.20m
(Note 4)                                                                        
                                                                           
Total Asset Value                                          £39.80m      
£39.80m 
                                                                           
Net Indebtedness at 30 June 2012(Note 5)                  (£2.11m)     
(£2.11m) 
                                                                           
Compton Beauchamp Estates Loan and Transaction Costs           n/a     
(£6.95m)
(Note 6)                                                                        
                                                                           
Total Net Asset Value                                      £37.69m      
£30.74m 
                                                                           
Total Issued Ordinary Shares(Note 7)                          4.78         3.35 


                                                           million      million 
       


                                                                           
Total Net Asset Value for each issued Ordinary Share         £7.89        
£9.18 
                                                                           
Increase in Net Asset Value for each issued Ordinary                      16.3%
Share as if the Share Buy-Back had been completed and                          
the GPG Shares had been cancelled                                               
Notes: 
 1. From the Savills' independent valuation report in respect of the Racecourse 


    (excluding the Residential Development Sites and the Hotel Development
    Site) on a continuing use basis.
     2. No corporation tax is expected to arise on a disposal of the Racecourse
    site (excluding the Residential Development Sites and the Hotel Development
    Site) due to the tax base cost the Company has in its land assets
    (excluding the Residential Development Sites and the Hotel Development
    Site). Furthermore, it is considered unlikely that a tax liability would
    occur in practice, since any sale of the Racecourse would normally be
    achieved by means of a share sale.
     3. From the Montagu Evans' independent valuation report in respect of the
    future receipts arising from the sale of the Residential Development Sites.
    The valuation of £24.1 million has been determined on an NPV basis using a
    blended discount rate of approximately 7.5 per cent. per annum and after
    the deduction of the expected Network Rail Payments and the Tax on Disposal
    relating to the Residential Development Sites (also discounted at
    approximately 7.5 per cent. per annum). Tax on Disposal has been determined
    by the Company's professional taxation advisers. The expected Network Rail
    Payments have been determined by Montagu Evans.
     4. From the Montagu Evans' valuation report in respect of the Hotel
    Development Site. No corporation tax is expected to arise on a disposal of
    the Hotel Development Site due to the tax base cost the Company has in its
    land assets.
     5. The "Net Indebtedness" has been determined on the basis of the balance
    sheet of the Company as at 30 June 2012 without taking any account of the
    financial effects of the Development Agreement having become unconditional
    with effect from 18 September 2012.
     6. The Compton Beauchamp Estates Loan Agreement is being entered into so that
    the Company can fund the Share Buy-Back. Transaction Costs relating to the
    Share Buy-Back are estimated to be £450,000 (excluding VAT, save for
    irrecoverable VAT).
     7. The GPG Shares will be cancelled upon completion of the Share Buy-Back.
    Hence, the total number of Ordinary Shares in issue following completion of
    the Share Buy-Back will reduce from 4,776,500 to 3,348,326.
    

END

-0- Oct/29/2012 11:10 GMT


 
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