RECOMMENDED ACQUISITION

RNS Number : 0859N

Grainger PLC

04 June 2010

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE to do so would constitute a violation of the relevant laws of that jurisdiction.

For immediate release

4 June 2010

RECOMMENDED ACQUISITION

of

Sovereign Reversions plc

by

Grainger plc

to be effected

by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

Summary

·    The boards of Grainger and Sovereign Reversions announce that they have reached agreement on the terms of a recommended acquisition by Grainger (or a subsidiary of Grainger) for all of the issued and to be issued ordinary share capital of Sovereign Reversions. Under the terms of the Transaction, Shareholders will receive 202 pence in cash for every one Share. The offer values the entire issued and to be issued share capital of Sovereign Reversions at approximately £34.6 million.

·    The Sovereign Reversions Directors believe the Transaction presents Shareholders with the opportunity to realise their interests in Shares at a significant premium to their market value prior to the commencement of the Offer Period.

·    The Grainger Board believes this is an opportune time to invest in quality and complementary UK residential assets in Grainger's core locations. The Transaction represents an opportunity to acquire a sizeable reversionary portfolio of assets and Home & Capital Advisers, a leading advisory business in the equity release sector.

·    The Grainger and Sovereign Reversions Directors believe that the Transaction will result in:

o strengthening of Grainger's position as a leading equity release provider in the United Kingdom, a sector which the Grainger and Sovereign Reversions Directors strongly believe will become a mass market product as more and more retirees seek to supplement their inadequate pension savings by releasing capital from their principal asset, their homes;

o economies of scale through the rationalisation of management and operating systems being spread across a larger portfolio of assets;

o enhanced ability to access new sources of finance at more attractive rates than currently available to Sovereign Reversions; and

o expediting the growth of the Enlarged Group through the enhancement of Grainger's distribution and marketing capabilities and raised brand identity.

·    It is intended that the Transaction be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the Act under which Grainger (or a subsidiary of Grainger) will acquire the entire issued and to be issued share capital of Sovereign Reversions. It is expected that the Scheme Document will be posted as soon as practicable, expected to be mid June 2010 and that, subject to the satisfaction, or where relevant waiver, of all relevant conditions and to the sanction of the Court, the Scheme will become Effective and the Transaction completed during August 2010.

·    The Sovereign Reversions Directors, who have been so advised by Charles Stanley Securities and Fairfax I.S. PLC, consider the terms of the Transaction to be fair and reasonable. In providing advice to the Sovereign Reversions Directors, Charles Stanley Securities and Fairfax I.S PLC have taken into account the Sovereign Reversions Directors' commercial assessment of the Transaction.  The Sovereign Reversions Directors intend to recommend unanimously that Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, as the Sovereign Reversions Directors have irrevocably undertaken to do in respect of 1,202,677 Shares representing, in aggregate, approximately 7.09 per cent. of the existing issued share capital of Sovereign Reversions.  In addition, in the absence of a firm third party offer for Sovereign Reversions, the value of which is 222 pence or more per Share, certain of the Sovereign Reversions Directors have irrevocably undertaken to vote their Shares in favour of the Scheme and other resolutions necessary for its implementation at the Meetings in respect of a further 48,543 Shares representing in aggregate approximately 0.29 per cent. of the existing issued share capital of Sovereign Reversions.

·    The Transaction is conditional on, among other things, certain approvals by Shareholders and the sanction of the Scheme by the Court. In order to become Effective, the Scheme must be approved by a majority in number of Shareholders voting at the Court Meeting, representing not less than 75 per cent. in value of the Shares that are voted.

Commenting on the Transaction, Robin Broadhurst, Chairman of Grainger said:

"This transaction will enhance our position as a leading equity release business with a substantial and complementary portfolio of reversionary assets and management expertise. Following the successful conclusion of our rights issue in December 2009, we have been monitoring several acquisition opportunities and I am delighted to see Grainger deploying part of the capital it raised in a manner which will reinforce our presence in this growing and important sector. In addition, acquiring these assets at an attractive price will enhance the Enlarged Group's ability to improve returns for investors."

Commenting on the Transaction, Bob Wigley, Chairman of Sovereign Reversions said:

"Grainger initially approached the Board with a view to making an offer for Sovereign Reversions at 175 pence per Share.  Since Grainger's initial approach, the Board of Sovereign Reversions has been exploring all options to maximise value for Sovereign Reversions shareholders by negotiating with Grainger and other potential offerors.  The board of Sovereign Reversions now believes its shareholders should be given the opportunity to accept Grainger's increased offer of 202 pence per Share, which provides a 65 per cent. premium to the market price prior to the announcement of the approach and is a logical combination of our specialist knowledge and Grainger's access to capital."

Enquiries

Grainger plc	Tel: [phone]
Andrew Cunningham, Chief Executive
Peter Couch, Chief Operating Officer
Dave Butler, Director, Corporate Affairs
J.P. Morgan Cazenove, Financial Adviser to Grainger	Tel: [phone]
Robert Fowlds
Bronson Albery
Financial Dynamics, Financial PR to Grainger	Tel: [phone]
Stephanie Highett
Dido Laurimore
Rachel Drysdale
Sovereign Reversions plc	Tel: [phone]
Graeme Marshall, Chief Executive
Rupert Pearce Gould
Charles Stanley Securities, Joint Rule 3 Adviser and broker to Sovereign Reversions	Tel: [phone]
Dugald Carlean
Ben Johnston
Fairfax I.S. PLC, Joint Rule 3 Adviser to Sovereign Reversions	Tel: [phone]
David Floyd
Andrew Cox
Wriglesworth Consultancy, Financial PR to Sovereign Reversions
Mark Baker	Tel: [phone]
Tom Urpeth	Tel: [phone]

This summary should be read in conjunction with the full text of this announcement. Appendix I to this announcement contains the Conditions to, and certain further terms of, the Transaction. Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III includes details on irrevocable undertakings received from Shareholders to vote for the Transaction at the Court Meeting and at the General Meeting in respect of their holdings of Shares and Appendix IV to this announcement contains definitions of certain expressions used in this summary and in this announcement.

In accordance with Rule 19.11 of the City Code, a copy of this announcement will be published on the following websites: www.sovereign-reversions.co.uk and www.graingerplc.co.uk.

J.P. Morgan Cazenove is a marketing name for the UK investment banking business of J.P. Morgan plc and its associated companies. J.P. Morgan Cazenove is acting exclusively for Grainger and no one else in connection with the possible Transaction and will not be responsible to anyone other than Grainger for providing the protections afforded to customers of J.P. Morgan Cazenove or for providing advice in relation to the possible Transaction or any other matter referred to herein.

Brewin Dolphin Investment Banking acts as joint broker to Grainger.

Fairfax I.S. PLC is acting exclusively for Sovereign Reversions and no one else in connection with the possible Transaction and will not be responsible to anyone other than Sovereign Reversions for providing the protections afforded to customers of Fairfax I.S. PLC or for providing advice in relation to the possible Transaction or any other matter referred to herein.

Charles Stanley Securities, a division of Charles Stanley & Co Limited is acting exclusively for Sovereign Reversions and no one else in connection with the possible Transaction and will not be responsible to anyone other than Sovereign Reversions for providing the protections afforded to customers of Charles Stanley Securities or for providing advice in relation to the possible Transaction or any other matter referred to herein.

Forward looking statements

This document may contain "forward-looking statements" concerning Grainger and Sovereign Reversions.  Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements.  The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.  Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviour of other market participants, and therefore undue reliance should not be placed on such statements.  Sovereign Reversions and Grainger assume no obligation and do not intend to update these forward-looking statements, except as required pursuant to applicable law.

Dealing disclosure requirements

Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (UK time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (UK time) on the 10th business day following the announcement in which any paper offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (UK time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal of informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.  If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on [phone].

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements.  This  announcement has been prepared for the purpose of complying with English law, the Listing Rules, the AIM Rules and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Any person (including, without limitation, any custodian, nominee and trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other related document to any jurisdiction outside the UK should inform themselves of, and observe, any applicable legal or regulatory requirements of that jurisdiction.

The Transaction relates to the shares of an English company and is to be made by means of a scheme of arrangement provided for under the laws of England and Wales. The Transaction is subject to the disclosure requirements and practices applicable in the UK to takeover offers implemented by way of scheme of arrangement, which may differ from the disclosure and other requirements of the securities laws of jurisdictions other than the United Kingdom.  Financial information included in the relevant documentation will have been prepared in accordance with accounting standards applicable in the UK that may not be comparable to the financial statements of non-UK companies.

Notice to US Shareholders

For US securities law purposes, the Transaction described in this announcement will be made in respect of the securities of a foreign company by means of a scheme of arrangement under Part 26 of the Act.  The Transaction is subject to disclosure and procedural requirements of a foreign country that are different from those which would apply in the United States.  Financial statements relating to Sovereign Reversions included or incorporated in this announcement have been prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of US companies.  It may be difficult for you to enforce your rights and any claim you may have arising under United States federal securities laws, since Sovereign Reversions is located in a foreign country, and some or all of its officers and directors may be residents of a foreign country.  You may not be able to sue Sovereign Reversions or its officers or directors in a foreign court for violations of the US securities laws.  It may be difficult to compel Sovereign Reversions and its affiliates to subject themselves to a US court's judgement.  This announcement has not been reviewed by any federal or state securities commission or regulatory authority in the United States, nor has any such commission or authority passed upon the accuracy or adequacy of this announcement.  Any representation to the contrary is unlawful and may be a criminal offence.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE to do so would constitute a violation of the relevant laws of that jurisdiction.

For immediate release

4 June 2010

RECOMMENDED ACQUISITION

of

Sovereign Reversions plc

by

Grainger plc

to be effected

by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

1.       Introduction

The boards of Grainger and Sovereign Reversions announce that they have reached agreement on the terms of a recommended acquisition by Grainger (or a subsidiary of Grainger) for all of the issued and to be issued ordinary share capital of Sovereign Reversions. Under the terms of the Transaction, Shareholders will receive 202 pence in cash for every one Share. The offer values the entire issued and to be issued share capital of Sovereign Reversions at approximately £34.6 million.

It is currently intended that the Transaction will be effected by way of a Court-sanctioned scheme of arrangement of Sovereign Reversions under Part 26 of the Act. The Conditions to the Transaction are set out in Appendix I to this announcement.

2.       The Transaction

Pursuant to the Transaction, which will be on the terms and subject to the Conditions and further terms set out below and in Appendix I, and the full terms and conditions to be set out in the Scheme Document, Shareholders will receive:

for each Share, 202 pence in cash

The Transaction values the entire issued and to be issued ordinary share capital of Sovereign Reversions at approximately £34.6 million, and represents:

·    a premium of approximately 65 per cent. to the Closing Price of 122.5 pence per Share on 26 March 2010 (being the last Business Day prior to the commencement of the Offer Period); and

·    a premium of approximately 64 per cent. to Sovereign Reversions' two month volume weighted average share price of 123.41 pence per Share prior to 26 March 2010 (being the last Business Day prior to the commencement of the Offer Period).

3.       Sovereign Reversions Board recommendation

The Sovereign Reversions Directors, who have been so advised by Charles Stanley Securities and Fairfax I.S. PLC, consider the terms of the Transaction to be fair and reasonable. In providing advice to the Sovereign Reversions Directors, Charles Stanley Securities and Fairfax I.S PLC have taken into account the Sovereign Reversions Directors' commercial assessment of the Transaction.

The Sovereign Reversions Directors intend to recommend unanimously that Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, as the Sovereign Reversions Directors have irrevocably undertaken to do in respect of 1,202,677 Shares representing, in aggregate, approximately 7.09 per cent. of the existing issued share capital of Sovereign Reversions.  In addition, in the absence of a firm third party offer for Sovereign Reversions, the value of which is 222 pence or more per Share, certain of the Directors have irrevocably undertaken to vote their Shares in favour of the Scheme and other resolutions necessary for its implementation at the Meetings in respect of a further 48,543 Shares representing in aggregate approximately 0.29 per cent. of the existing issued share capital of Sovereign Reversions.

Further details of these irrevocable undertakings are set out in paragraph 10 below and in Appendix III of this announcement. 

4.       Background to, and reasons for, the Transaction

As the UK's largest specialist residential property owner traded on the London Stock Exchange, Grainger aims to provide investors with exposure to a variety of risks and returns from the residential property sector in the UK and Germany by leveraging the group's existing management, financial and sector experience and expertise.

Grainger targets acquisitions both in its existing asset classes (principally regulated tenancies and home reversions) and in alternative residential asset classes which may include intermediate, retirement or shared equity housing, student accommodation or other residential asset classes through a variety of ownership structures, including joint ventures and associates. In particular, Grainger aims to acquire properties in alternative asset classes at a discount to Vacant Possession Value where it believes that opportunities exist to increase value. Grainger's strategy focuses on crystallising value through the sale of assets when they become vacant, with the target of optimising returns on shareholders' equity. Adding the Sovereign Reversions property portfolio to Grainger's existing portfolio contributes to the implementation of this strategy.

On 5 November 2009, Grainger announced a rights issue raising net proceeds of approximately £238 million, which allowed the Grainger Group to move from a position of cash conservation and generation to one where it is able to recommence active trading as opportunities arise and enhance shareholder value over time. Following the conclusion of its rights issue, Grainger has continued to monitor several acquisition opportunities, including the contemplated acquisition of Sovereign Reversions.

Sovereign Reversions' strategy is to assist homeowners in their later years to fulfil their financial needs in retirement through equity release solutions. The Sovereign Reversions Directors believe that, since listing on AIM in 2004, they have assembled a quality reversionary portfolio. Following its acquisition in 2006,  the Home & Capital Trust has been built into a leading equity release service provider in the market to complement Sovereign Reversions' investment activities. Home & Capital Trust's equity release services comprise the arrangement of home reversion plans, the administration of equity release plans for third party investors and the provision of specialist advice on equity release to elderly homeowners.

However, against a backdrop of banks and other financiers being less willing to provide finance for new property investment, Sovereign Reversions' ability to finance new equity release plans has been curtailed. Furthermore, like many other small listed companies, Sovereign Reversions' share price suffers from a lack of liquidity of its shares and limited institutional interest which the Sovereign Reversions Directors believe are contributing factors resulting in a share price trading at a significant discount to Net Asset Value per Share over the last two years.

The Sovereign Reversions Directors believe the Transaction presents Shareholders with the opportunity to realise their interests in Shares at a significant premium to their market value prior to the commencement of the Offer Period.

The Grainger Board believes this is an opportune time to invest in quality and complementary UK residential assets in Grainger's core locations. The Transaction represents an opportunity to acquire a sizeable reversionary portfolio of assets and Home & Capital Advisers, a leading advisory business in the equity release sector.

The Grainger and Sovereign Reversions Directors believe that the Transaction will result in:

·    strengthening Grainger's position as a leading equity release provider in the United Kingdom, a sector which the Grainger and Sovereign Reversions Directors strongly believe will become a mass market product as more and more retirees seek to supplement their inadequate pension savings via releasing capital from their principal asset, their homes;

·    economies of scale through the rationalisation of management and operating systems being spread across a larger portfolio of assets;

·    enhanced ability to access new sources of finance at more attractive rates than currently available to Sovereign Reversions; and

·    expediting the growth of the Enlarged Group through the enhancement of Grainger's distribution and marketing capabilities and raised brand identity.

5.       Background to and reasons for the Sovereign Reversions Board recommendation

Sovereign Reversions is incorporated and registered in England and Wales and was admitted to trading on AIM during April 2004 to provide exposure to investments and services in the equity release market. Sovereign Reversions' strategy is to assist homeowners in their later years to fulfil their financial needs in retirement through equity release solutions.

Its strategy is to achieve long-term growth in capital value from its investment portfolio through acquiring property-related assets at a discount to their vacant value and realising this discount as they mature. The return on these assets is derived from a combination of the discounts at which the assets are acquired (the actuarial element) and changes in the market value of the properties in which it has invested.

Sovereign Reversions also provides equity release services alongside its investment activity. Its authorised equity release activities, conducted through Home & Capital Trust, encompass advice, product provision and plan administration, and providing operational support to its investment activity and third parties.

Since the onset of the major problems within the international financial system in mid-2007, there has been a substantial reduction in the supply of available finance for property investment. Financial markets continued to deteriorate throughout 2008, necessitating unprecedented support from central banks and governments. Overall, 2008 saw a substantial fall in the volume of residential property transactions in the UK and Sovereign Reversions' results for the two financial years ended 30 April 2008 and 2009 were overshadowed by write-downs in the value of its reversionary interests in residential property.

The speed and extent of these valuation declines and the constrained availability of banking finance have presented Sovereign Reversions with a number of challenges regarding its capital structure, particularly in relation to its liquidity and financing. As a result of these and other factors, Sovereign Reversions' share price has traded at a significant discount to its latest published Net Asset Value, this discount ranging from 31.9 per cent. to 80.0 per cent. during the period from 1 January 2009 to 25 March 2010.

On 21 July 2009, Sovereign Reversions announced a placing and open offer which raised approximately £3.69 million.

On 16 July 2009, a group of dissident shareholders representing, at the time, approximately 17 per cent. of the issued share capital of Sovereign Reversions requisitioned a general meeting to change the Sovereign Reversions Board and adopt a new strategy. At that general meeting, the majority Shareholders remained supportive of the Sovereign Reversions Board strategy and voted against all resolutions, however Sovereign Reversions' share price has continued trading at a large discount to Net Asset Value until Grainger approached Sovereign Reversions in March 2010.

As announced on 29 March 2010, the Sovereign Reversions Board received a preliminary approach relating to a possible offer for the company and entered into discussions with Grainger to explore whether this option could maximise shareholder value. Whilst the Sovereign Reversions Board continued exploring other options including seeking alternative bidders for Sovereign Reversions and/or an orderly disposal of the portfolio, these discussions culminated in a joint announcement on 6 May 2010 by Grainger and Sovereign Reversions stating that they had, subject to due diligence, reached an agreement in principle on the terms of a possible recommended offer on the basis of 202 pence in cash for each Share.

Sovereign Reversions' interim results at 31 October 2009 reported a Net Asset Value per Share of 220 pence, based on independent asset valuations at 30 April 2009. In the statement accompanying those interim results, the Sovereign Reversions Board separately estimated that greater stability in the property market had led to Net Asset Value per Share at 251.7 pence.  Based on this latest announced Net Asset Value per Share, an orderly disposal of the portfolio might have been expected to deliver more value for Shareholders. However, when assessing the Transaction with Grainger, the Sovereign Reversions Board also considered:

·    the inherent uncertainty as to the valuations that might have been achieved had an orderly disposal of Sovereign Reversions' portfolio been pursued;

·    possible or likely bidders for all or part of the portfolio;

·    the risk exposure to changes in market conditions during the disposal period;

·    the likely delayed receipt of any resultant proceeds; and

·    the costs, some of which are fixed, involved in managing a dwindling portfolio and eventually winding up the company.

The Sovereign Reversions Board took a wide range of factors into consideration before reaching a decision on whether to recommend the Offer.  These included consideration of the present Net Asset Value, the promising long term prospects and shorter term concerns described in paragraph 8 below. The Sovereign Reversions Board also considered the views of major shareholders on the Transaction, some of whom have undertaken to accept or vote in favour of it, and recognised that the 202 pence per Share offer price represents a premium of 64 per cent. to Sovereign Reversions' two month volume weighted average share price of 123.41 pence per Share prior to the announcement on 26 March 2010.

Accordingly, the Sovereign Reversions Board has concluded that it should recommend Grainger's offer to Shareholders.

6.       Information on Sovereign Reversions

Sovereign Reversions is a public limited company traded on AIM. Sovereign Reversions' business activities are all based in the UK and focused on four key areas of the equity release market:

·    investment in home reversion plans. Sovereign Reversions buys property assets at a discount to Vacant Possession Value. It benefits from the elimination of this discount when the homeowners leave their home or die, and from the long term appreciation of property values;

·    advice to homeowners provided through Home & Capital Advisers on which equity release products are suitable for them, either a lifetime mortgage with another provider or one of the Sovereign Reversions Group's own home reversion plans;

·    home reversion products through Home & Capital Trust which originates plans financed by the Sovereign Reversions Group and third parties; and

·    plan administration for third parties, turning the infrastructure required to manage its own plans into a business in its own right. These are long term contracts, usually for the life of the product, with stable, recurring income.

7.       Information on Grainger

Grainger is the UK's largest specialist residential property owner traded on the London Stock Exchange, directly owning approximately £2.04 billion (unaudited) of assets as at 31 March 2010 (of which approximately 77.5 per cent. are in the UK, with the remainder in Germany) as well as having interests in certain joint ventures and associates holding additional assets.

Grainger owns, acquires and trades regulated and market-let tenanted properties and has a substantial portfolio of home reversion properties. Grainger also undertakes fund, property, and asset management with a further £0.7 billion (unaudited) of assets under management in the UK as at 31 March 2010. Grainger is also active in residential-led development. As at 31 March 2010, Grainger directly owned 13,048 properties across the UK and 7,189 primarily residential units (in each case unaudited) in Germany.

Grainger also provides asset and/or property management services (as at 31 March 2010) for 36,524 properties in its owned portfolio and under its JVs/associates, of which (as at 31 March 2010) 19,669 were units in Grainger's German portfolio.

Grainger aims to maintain its position as the UK's largest specialist residential property owner traded on the London Stock Exchange and to provide investors with exposure to a variety of risks and returns from that sector in the UK and Germany by leveraging Grainger's existing management, financial and sector experience and expertise.

Grainger continues to invest in its residential portfolio (principally comprising assets subject to regulated tenancies and home reversion plans). In particular, Grainger aims to acquire properties in alternative asset classes at a discount to Vacant Possession Value where it believes that opportunities exist to increase value.

8.       Sovereign Reversions current trading and prospects

Sovereign Reversions' most recent published results were for the six months ended 31 October 2009 and the preparation of its results for the year to 30 April 2010 is underway, but not yet complete. This paragraph contains a description of the material changes in Sovereign Reversions' financial and trading position during the financial year ended 30 April 2010.

A reversionary property valuation (including the shared equity and shared ownership loans and vacant properties) prepared by Allsop LLP (see * below) as at 30 April 2010, which is available at www.sovereign-reversions.co.uk, shows a portfolio value of £69.3 million (30 April 2009: £67.0 million).  The principal changes comprise a revaluation gain of £7.3 million, disposals of 71 equity release investments which realised proceeds during the year of £6.9 million and additions of three properties to the portfolio which together with increments amounted to £0.5 million. As at 30 April 2010, Sovereign Reversions' portfolio comprised 1,081 equity release investments.

Proceeds from disposals of properties and shared equity loans were 53 per cent. higher than in the year to April 2009. Sovereign Reversions has used the net surplus to repay bank debt and reduce its gearing ratio. 68 properties were vacated, compared with 65 in the previous year.

Borrowings as at 30 April 2010 amounted to £29.2 million (2009 £31.5 million) including £15.2 million was drawn on facilities from Allied Irish Bank which were due for renewal in June 2010.  It was announced on 5 May 2010 that a two year extension of this facility had been approved. In addition to these borrowings the Group held net cash balances of £4.2 million as at 30 April 2010 (2009: £0.35 million).  Overall the net reduction in the portfolio contributed to a reduction of net debt of approximately £6.15 million.

In September 2009, Home & Capital Trust successfully bid for a contract to manage over 1,000 equity release plans for a major financial institution. As a result, at the year end the management division is now responsible for over 3,000 properties that have an estimated combined vacant open market value of around £600 million, making it one of the largest specialist operators in this market.

In the financial year to 30 April 2010, Home & Capital Advisers arranged £14.2 million of equity release plans. This represented a 22 per cent. fall in the level of activity in the previous year. In the year to 31 March 2010, the value of equity release plans written by members of Safe Home Income Plans (the industry body) declined by 27 per cent  to £862 million.  

Save as set out above, there has been no material change to Sovereign Reversions' financial or trading position or the level of its activities since 30 April 2010.

The Sovereign Reversions Board believe that the long term prospects for the reversions segment of the equity release market are good; supported by the demographic trend of increasing longevity. Events in the credit markets over the last couple of years, which both reduced the amounts available as lifetime mortgages and the appetite of competitors in the reversions segment of the equity release market, combine to give Sovereign Reversions' business potentially exciting future prospects, which could in due course lead to enhanced returns on capital, justifying a share price at a premium to Net Asset Value.  However, the Sovereign Reversions Directors also recognise that increases in UK residential property prices over the next couple of years could be constrained by interest rate increases and potentially by cutbacks in public sector employment offsetting the demand for non-rental housing during the expected economic recovery in the private sector. In addition, a lack of new finance could limit its ability to take full advantage of the opportunities in its market.

* Allsop LLP, which was appointed by Sovereign Reversions to value its portfolio of property interests, also provides valuation services to Grainger.  Sovereign Reversions, Grainger and the Panel have all consented to the appointment of Allsop LLP to provide an asset valuation in accordance with Rule 29 of the Takeover Code, notwithstanding that it has provided valuations for both parties.  The team at Allsop LLP who valued Sovereign Reversions' portfolio will not provide any services for Grainger while Sovereign Reversions is in an offer period (as defined in the Takeover Code) in relation to Grainger.

9.       Grainger current trading and prospects

For the year ended 30 September 2009 Grainger reported audited revenue of £302.3 million (2008: £246.2 million) and audited losses before tax of £170.0 million (2008: £112.1 million).  As at 30 September 2009, Grainger had total assets of £1,949.2 million (2008: £2,113.5 million) and net assets of £128.5 million (2008: £229.8 million).

On 20 May 2010, Grainger reported its unaudited interim results for the six months to 31 March 2010. The first half of the financial year had evidenced a recovery in asset values after the significant decline experienced in the sector from mid 2007 to the latter part of 2009. Those unaudited interim results reported:

·    Operating profit of £48.0 million (31 March 2009 £41.3 million) (before valuation movements and nonrecurring items), an increase of 16 per cent. over the same period in 2009.

·    Profit before tax improved to £3.5 million (31 March 2009: £143.0 million loss).

·    Gross NAV per share of 191 pence (30 Sept 2009: 194 pence); Grainger NAV of 173 pence per Grainger Share (30 Sept 2009: 177 pence), noting that a  full valuation is not undertaken at half year.

·    Residential sales of £79 million completed (2009: £55 million) with margins on sales of vacant properties improving to 42 per cent. from 37 per cent. in 2009. These sales have been made at values approximately 6 per cent. above September Vacant Possession Values, during which time the average Nationwide and Halifax indices increased by 3 per cent.

·    Total sales pipeline (including properties in solicitors' hands and contracts exchanged) at 31 March 2010 was £108 million (2009: £86 million) and this had increased to £121 million at 14 May 2010.

·    At 31 March 2010, cash and committed facilities amounted to c.£300 million.

·    Interim dividend of 0.5 pence per Grainger Share (2009: nil).

·    Following improved market stability and strengthening of its financial position, Grainger has commenced selective residential acquisitions at attractive prices. For the six month period ending on 31 March 2010, property valued at £43 million had been acquired (completed, exchanged contracts or put into solicitors' hands).

·    Acquisitions' focus is on well priced, quality properties in areas where Grainger anticipates that long term capital growth will be the strongest and where values will be most protected against any future downturn.

·    Grainger's ability to generate income in adverse conditions remains strong, with cashflow from operating activities of £50 million (31 March 2009: £55 million).

In addition to the appointment of Andrew Cunningham as Chief Executive in October 2009, in April 2010 the Group announced the appointments to the board of Grainger, on a date to be confirmed, of Nick Jopling (Executive Director responsible for property and real estate matters), Mark Greenwood (Finance Director) and, with effect from 1 June 2010, Peter Couch (Chief Operating Officer and Executive Director responsible for Grainger's Retirement Solutions business).

10.     Irrevocable undertakings

As announced to Shareholders on 6 May 2010, Grainger has received irrevocable undertakings to vote in favour of the Scheme and the other resolutions necessary to facilitate the implementation of the Scheme at the Court Meeting and the General Meeting from Shareholders (including the Directors) holding in aggregate 5,292,373 Shares, representing approximately 31.21 per cent. of the existing issued share capital of Sovereign Reversions.

Of these irrevocable undertakings:

·    the irrevocable undertakings given by the Sovereign Reversions Directors in respect of their direct personal shareholdings, and that given by Rockhopper Investments Limited (and which together relate to an aggregate of 2,727,736 Shares representing approximately 16.09 per cent. of Sovereign Reversions' existing issued share capital), remain binding in the event of a higher offer for the Sovereign Reversions;

·    the irrevocable undertakings given by other Shareholders holding in aggregate 1,376,293 Shares (representing approximately 8.12 per cent. of Sovereign Reversions' existing issued share capital), cease to be binding if a firm offer for Sovereign Reversions, the value of which is 222 pence or more per Share, is announced by a third party; and

·    the remaining irrevocable undertakings given by Shareholders holding in aggregate 1,188,344 Shares (representing approximately 7.01 per cent. of Sovereign Reversions' existing issued share capital), cease to be binding if a firm offer for Sovereign Reversions, the value of which is more than 202 pence per Share, is announced by a Third Party.

Further details of these irrevocable undertakings are set out in Appendix III to this announcement.

11.     Financial effects of implementing the Transaction

Under the terms of the Transaction, Shareholders will receive 202 pence for every one Share, payable in cash.

12.     Cash confirmation

Full implementation of the Transaction (assuming the exercise of options in respect of 355,098 Shares in accordance with the Sovereign Reversions Share Schemes on or prior to the Effective Date) would result in the payment by Grainger of approximately £34.6 million in cash. The cash consideration payable to Shareholders pursuant to the Transaction will be satisfied out of Grainger's existing cash resources.

J.P. Morgan Cazenove is satisfied that the necessary financial resources are available to Grainger to enable it to satisfy in full the cash consideration payable by Grainger as a result of the implementation of the Transaction.

13.     Scheme of Arrangement

It is intended that the Transaction will be implemented by way of a Court-sanctioned scheme of arrangement between Sovereign Reversions and its Shareholders under Part 26 of the Act, including a reduction of capital under section 645 of the Act.  The Scheme procedure requires approval by Shareholders at the Court Meeting and the General Meeting, sanction of the Scheme by the Court and confirmation by the Court of the cancellation of the Scheme Shares. If the Scheme becomes fully effective in accordance with its terms, Sovereign Reversions will become a wholly-owned subsidiary of Grainger or one of its subsidiaries.

The Transaction, and its implementation by the Scheme, is subject to the Conditions, including the sanction of the Scheme by the Court.

The Scheme requires approval by Shareholders at both the Court Meeting and the General Meeting and the sanction of the Court at the Scheme Court Hearing.  The Court Meeting and the General Meeting and the nature of the approvals required to be given at them are described in more detail below.  All Shareholders are entitled to attend the Scheme Court Hearing in person or through representation to support or oppose the sanctioning of the Scheme and/or the Capital Reduction.

The Scheme can only become effective if all Conditions to the Scheme, including Shareholder approvals and the sanction of the Court, have been satisfied or, where permitted, waived.  The Scheme will become effective in accordance with its terms on delivery of copies of the Scheme Court Order and the Reduction Court Order to the Registrar of Companies.  Unless the Scheme becomes effective by 30 October 2010, or such later date as Grainger and Sovereign Reversions may agree and the Court may allow, the Scheme will not become effective and the Transaction will not proceed.

Before the Court's sanction can be sought for the Scheme, the Scheme requires the approval of Shareholders at the Court Meeting and the passing of the special resolution to be proposed at the separate General Meeting.  The Court Meeting is being held at the direction of the Court to seek the approval of Shareholders for the Scheme.  The General Meeting is being convened to pass a special resolution to facilitate the implementation of the Scheme and to amend the articles of association of Sovereign Reversions as described below.

If the Scheme becomes Effective, it will be binding on all Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting.

At the Court Meeting voting will be by poll and each member present in person or by proxy will be entitled to one vote for each Share held.  The approval required at the Court Meeting is a simple majority in number representing 75 per cent. in value of the Shares held by those Shareholders present and voting in person or by proxy.

It is intended that the General Meeting will convened as soon as the Court Meeting is concluded or adjourned to consider and, if thought fit, pass a special resolution (which requires a vote in favour of not less than 75 per cent. of the votes cast in person or by proxy) to:

·    approve the Scheme;

·    amend the articles of association of Sovereign Reversions in the manner described below; and

·    approve the cancellation of the Scheme Shares and subsequent issue of New Shares to Grainger or its nominee in accordance with the Scheme.

It is proposed, as part of the special resolution to be proposed at the General Meeting relating to the Scheme, to amend Sovereign Reversions' articles of association to ensure that any Shares issued under the Sovereign Reversions Share Schemes or otherwise between the Voting Record Time and the Scheme Record Time will be subject to the Scheme.  It is also proposed to amend Sovereign Reversions' articles of association so that any Shares issued to any person other than Grainger or any of its subsidiaries or their respective nominees at or after the Scheme Record Time will be automatically acquired by Grainger on the same terms as under the Scheme.  This will avoid any person (other than Grainger, or its subsidiary or their shareholders/or their nominee(s), or in the case of Shares held in treasury, Sovereign Reversions) being left with Shares after completion of the Transaction. 

The Scheme will contain a provision for Sovereign Reversions and Grainger jointly to consent on behalf of all persons concerned to any modification of, or addition to, the Scheme or to any condition approved or imposed by the Court.  The Court would be unlikely to approve or impose any modification of, or addition or condition to, the Scheme which might be material to the interests of the Scheme Shareholders unless Scheme Shareholders were informed of such modification, addition or condition. It would be a matter for the Court to decide, in its discretion, whether or not a further meeting of Scheme Shareholders should be held in those circumstances.

The Scheme Document will include full details of the Scheme, together with notices of the Court Meeting and the General Meeting and the expected timetable, and will specify the action to be taken by Scheme Shareholders. It is expected that the Scheme will become Effective and the Transaction completed during August 2010.

Grainger reserves the right, subject to Panel consent, to decide to implement the Transaction by way of an Offer for the issued and to be issued share capital of Sovereign Reversions. In such event, such Offer will be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in method of effecting the Offer, including, subject to the consent of the Panel, an acceptance condition set at 90 per cent. (or such lesser percentage, being more than 50 per cent., as Grainger may decide).

The Sovereign Reversions Board has confirmed that, in the event that the Transaction is implemented by way of an Offer, the Sovereign Reversions Board will recommend, on a unanimous and unqualified basis, that Shareholders accept the offer except to the extent that the Sovereign Reversions Directors take legal advice in relation to their duties and decide that to give such a recommendation or to fail to withdraw, modify or qualify or amend it is reasonably likely to be a breach of their duties as directors or their obligations under the City Code.

14.     Inducement Agreement and Transaction Agreement

Inducement Agreement

Grainger and Sovereign Reversions have entered into an Inducement Agreement in relation to the Transaction which contains provisions regarding the implementation of the Transaction and certain assurances and confirmations between the parties.

Under the terms of the Inducement Agreement, Sovereign Reversions has agreed to pay Grainger a compensation fee equal to £300,000 (inclusive of irrecoverable VAT), if:

·    at any time on or before midday on 4 June 2010, Grainger confirms in good faith in writing to Sovereign Reversions that it (or any of its group undertakings) is in a position to release an announcement in accordance with Rule 2.5 of the City Code in relation to the Transaction at a price per Share of not less than 202 pence, subject only to the formal, public recommendation of the Sovereign Reversions Board, such confirmation to be accompanied by a finalised draft of the announcement; and

·    the Board (for whatever reason) either fails to confirm to Grainger within 24 hours of receipt of the confirmation above that it intends to unanimously (and without qualification) recommend the Transaction to Shareholders or having made such recommendation subsequently:

o in any way withdraws, qualifies, modifies or amends the terms of its proposed recommendation of the Transaction;

o refuses to give its consent to references to its intention to recommend the Transaction included in this announcement;

o Sovereign Reversions or any of its group undertakings announces any Major Transaction or enters into any agreement or contract in relation to a Major Transaction;

o the Sovereign Reversions Board recommends, or agrees to recommend, or announces that it intends to recommend, any Competing Proposal;

o a Competing Proposal is declared unconditional in all respects or is completed; or

o Sovereign Reversions or any Connected Persons is in breach of any of the undertaking set out in paragraph 10 of the Inducement Agreement (which are summarized immediately below) and Grainger decides not to proceed with the Transaction.

In addition, Sovereign Reversions has undertaken:

·    not directly or indirectly to solicit (and has procured that no Connected Person shall directly or indirectly solicit) any Competing Proposal or Major Transaction, including by disclosing information to any Third Party in connection with a Competing Proposal (other than as may be required under the City Code or as necessary to comply with the fiduciary duties of Sovereign Reversions Directors); and

·    to notify Grainger as soon as practicable in the event that it or any Connected Person receives any approach in relation to a possible Competing Proposal or Major Transaction or if it or they receive a request for information from any third party under Rule 20.2 of the City Code in connection with a Competing Proposal.

Grainger has the right, upon receiving details of the price and the terms and conditions of a Competing Proposal or proposed Competing Proposal, to match or better the value implied by that Competing Proposal by:

·    confirming in writing to either the Sovereign Reversions Directors or Sovereign Reversions' financial adviser before 5 p.m. on the first Business Day after the date of any announcement of a Competing Proposal that it intends to increase the consideration under the Transaction to a value per Share at the time of announcement equal to or greater than that provided under the Competing Proposal or to make an offer or proposal which would, in the reasonable opinion of Sovereign Reversions' financial adviser, provide equal or superior financial value to Shareholders in comparison to the Competing Proposal (the "Revised Transaction"); and

·    confirming in writing to either the Sovereign Reversions Directors or Sovereign Reversions' financial adviser before 5 p.m. on the second Business Day after the date of the announcement of a Competing Proposal that it is ready to announce, or by such time announces, the Revised Transaction in accordance with Rule 2.5 of the City Code

and in these circumstances the Sovereign Reversions Directors shall make a unanimous and unqualified recommendation of the Revised Transaction to the Shareholders and Grainger shall be entitled to refer to such recommendation in any announcement of its Revised Transaction referred to above and the Sovereign Reversions Directors shall not recommend the Competing Proposal.

Transaction Agreement

Grainger and Sovereign Reversions have entered into the Transaction Agreement, which contains certain assurances in relation to the implementation of the Scheme and the conduct of the Sovereign Reversions Group's business prior to the Effective Date, and provisions in relation to the termination of the Transaction Agreement.  A summary of the Transaction Agreement will be contained in the Scheme Document.

15.     Management, employees and locations

Grainger recognises the importance of retaining a highly competent and motivated workforce. Grainger has given assurances to the Sovereign Reversions Board that, when the Transaction becomes Effective, the existing employment rights, including pension rights, of all Sovereign Reversions employees will be fully safeguarded in accordance with applicable laws.

16.     Sovereign Reversions Share Schemes

The Scheme will extend to any Scheme Shares unconditionally allotted or issued prior to the Scheme Record Time, including shares issued pursuant to the exercise of options granted under the Sovereign Reversions Share Schemes. Appropriate proposals will be made on or about the date of the publication of the Scheme Document to participants in the Sovereign Reversions Share Schemes.

17.     Interests in Sovereign Reversions securities

As at the close of business on 3 June 2010, being the last practicable date prior to the date of this announcement, neither Grainger nor any Grainger Director, nor, so far as the directors of Grainger are aware, any other person acting in concert with Graingerfor the purposes of the Transaction, had any interest in, right to subscribe for or short position in respect of relevant Sovereign Reversions securities and no such person had borrowed or lent any such securities (save for borrowed shares which have been either on-lent or sold).

However, it is intended that, in the period after the General Meeting and before the Scheme Court Hearing, Grainger will acquire at least one Share which will mean that Grainger will be a member of Sovereign Reversions on the Effective Date and accordingly there will be no requirement under section 593 of the Act for an independent valuation of the new Shares to be issued credited as fully paid up to Grainger or its nominee pursuant to the Scheme.

18.     Cancellation of admission to trading and re-registration

The last day of dealings in, and registration of transfers of, Shares, will be the Business Day immediately prior to the Reduction Court Hearing, following which Shares will be suspended from AIM.  No transfers of Shares will be registered after that date.

It is anticipated that an application will be made to the London Stock Exchange to cancel admission to trading in Shares on AIM, to take effect on the Effective Date.

On the Effective Date, share certificates in respect of Scheme Shares held in certificated form which are to be cancelled will cease to be valid documents of title and should be destroyed or, at the request of Sovereign Reversions, delivered up to Sovereign Reversions, or to any person appointed by Sovereign Reversions to receive the same.  On the Effective Date, entitlements to Scheme Shares held within CREST will be cancelled.  It is intended that shortly after the Scheme becomes effective, Sovereign Reversions will be re-registered as a private limited company.

If the Transaction is effected by way of an Offer, it is anticipated that the cancellation of admission to trading of Shares on AIM will take effect no earlier than 20 Business Days afterthe date on which the Offer becomes or is declared unconditional in all respects.Delisting would significantly reduce the liquidity and marketability of any Shares not assented to the Offer at that time.

If the Transaction is effected by way of an Offer and such Offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Grainger intends to exercise its rights to acquire compulsorily the remaining Shares in respect of which the Offer has not been accepted.

19.     Overseas Shareholders

This announcement has been prepared for the purposes of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the UK.

It is the responsibility of any person into whose possession this announcement comes to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection with the Transaction and the Scheme including the obtaining of any governmental, exchange control or other consents which may be required and/or compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes or levies due in such jurisdiction. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for shares in any jurisdiction in which such offer or solicitation is unlawful.

Overseas Shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme.

20.     General

The Transaction will be on the terms and subject to the conditions set out herein and in Appendix I, and to be set out in the Scheme Document. The formal Scheme Document will be sent to Shareholders as soon as practicable.

The Scheme will be governed by English law and will be subject to the jurisdiction of the English courts.  The Scheme will be subject to the applicable requirements of the City Code, the Panel, the London Stock Exchange and the Financial Services Authority.

Appendix I to this announcement contains the Conditions to, and certain further terms of, the Transaction.

Appendix II contains the sources and bases of certain information contained in this announcement.

Appendix III contains details of the irrevocable undertakings received by Grainger.

The definitions of certain terms used in this announcement are set out in Appendix IV.

In accordance with Rule 19.11 of the City Code, a copy of this announcement will be published on the following websites: www.sovereign-reversions.co.uk and www.graingerplc.co.uk

APPENDIX I

CONDITIONS AND FURTHER TERMS OF THE SCHEME

The Transaction is conditional upon the Scheme becoming unconditional and becoming effective by not later than 30 October 2010 or such later date (if any) as Sovereign Reversions and Grainger may agree and the Court may allow.

Part A
Conditions of the Scheme

1.         The Scheme is subject to the following conditions:

(a)        the approval by a majority in number of the holders of Scheme Shares present and voting at the Court Meeting, either in person or by proxy, representing not less than three-quarters in value of the Scheme Shares held by such holders;

(b)        any special resolution required to implement the Scheme (including, without limitation, to amend the Company's articles of association) being duly passed by the requisite majority of the Shareholders at the General Meeting;

(c)        the sanction of the Scheme and confirmation of the Capital Reduction involved therein by the Court (in both cases with or without modifications, on terms reasonably acceptable to Sovereign Reversions and Grainger);

(d)        a copy of the Scheme Court Order and the Reduction Court Order (and the statement of capital in respect of the Capital Reduction) being delivered to the Registrar of Companies and, in the case of the Reduction Court Order, being registered by him;

(e)        no Third Party having intervened (as defined in paragraph 2 below) and there not continuing to be outstanding any statute, regulation or order of any Third Party in each case which would or might:

(i) make the Scheme, its implementation, the Transaction or the acquisition or proposed  acquisition by Grainger or any member of the Wider Grainger Group of any shares or other securities in, or control or management of, Sovereign Reversions or any member of the Wider Sovereign Reversions Group void, illegal or unenforceable in any jurisdiction, or otherwise directly or indirectly restrain, prevent, prohibit, restrict or delay the same or impose additional conditions or obligations with respect to the Scheme or such acquisition, or otherwise impede, challenge or interfere with the same or require amendment to the terms of the Scheme, the Transaction or the acquisition or proposed acquisition of any Shares or the acquisition of control or management of Sovereign Reversions or the Wider Sovereign Reversions Group by Grainger or any member of the Grainger Group;

(ii) limit or delay, or impose any limitations on, the ability of any member of the Wider Grainger Group or any member of the Wider Sovereign Reversions Group to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or other securities in, or to exercise voting or management control over, any member of the Wider Sovereign Reversions Group or any member of the Wider Grainger Group;

(iii) require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Wider Grainger Group of any shares or other securities in Sovereign Reversions;

(iv) require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Wider Grainger Group or by any member of the Wider Sovereign Reversions Group of all or any portion of their respective businesses, assets or properties or limit the ability of any of them to conduct any of their respective businesses or to own or control any of their respective assets or properties or any part thereof;

(v) require any member of the Wider Grainger Group or of the Wider Sovereign Reversions Group to acquire, or to offer to acquire, any shares or other securities (or the equivalent) in any member of either Group owned by any third party;

(vi) limit the ability of any member of the Wider Grainger Group or of the Wider Sovereign Reversions Group to conduct or integrate or co‑ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the Wider Grainger Group or of the Wider Sovereign Reversions Group;

(vii) result in any member of the Wider Sovereign Reversions Group or the Wider Grainger Group ceasing to be able to carry on business under any name under which it presently does so; or

(viii) otherwise adversely affect any or all of the business, assets, profits, financial or trading position or prospects of any member of the Wider Sovereign Reversions Group or of the Wider Grainger Group,

and all applicable waiting and other time periods during which any Third Party could intervene under the laws of any relevant jurisdiction having expired, lapsed or been terminated;

(f)         without limitation to condition (e) above:

(i) the relevant period established under section 191 FSMA not having expired and the FSA giving (and not having withdrawn or amended) written notice under section 189(4) FSMA of its approval of Grainger and all other prospective controllers (as defined in section 422 FSMA) acquiring control (as defined for the purposes of section 178 FSMA) of Home & Capital Advisers Limited, Home & Capital Trust Limited, Home & Capital Trustee Company Limited and The Welfare Dwellings Trust Limited, such approval being either unconditional in all respects (save as to the period within which the change in control must occur) or subject to conditions satisfactory to the Grainger or the FSA being treated as having approved the acquisition of control by each such person by virtue of section 189(6) FSMA;

(ii) in the event that Grainger notifies the Transaction to the Office of Fair Trading, the Office of Fair Trading having indicated, in terms satisfactory to Grainger, that the Office of Fair Trading does not intend to refer the Transaction, or any matters arising from the Transaction, to the Competition Commission; and

(iii) all appropriate time periods (including any extensions of such time periods) for any person to apply for a review of any decision taken by the Office of Fair Trading pursuant to a notification under paragraph (f)(ii) having expired or lapsed (as appropriate) without any such application for review having been made;

(g)        all notifications and filings which are necessary or are considered appropriate by Grainger having been made, all appropriate waiting and other time periods (including any extensions of such waiting and other time periods) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory or regulatory obligations in any relevant jurisdiction having been complied with in each case in connection with the Scheme, the Transaction or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Sovereign Reversions or any other member of the Wider Sovereign Reversions Group by any member of the Wider Grainger Group or the carrying on by any member of the Wider Sovereign Reversions Group of its business;

(h)        all Authorisations which are necessary in any relevant jurisdiction for or in respect of the Scheme, the Transaction or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Sovereign Reversions or any other member of the Wider Sovereign Reversions Group by any member of the Wider Grainger Group or the carrying on by any member of the Wider Sovereign Reversions Group of its business having been obtained, in terms and in a form satisfactory to Grainger, from all appropriate Third Parties or from any persons or bodies with whom any member of the Wider Sovereign Reversions Group has entered into contractual arrangements and all such Authorisations remaining in full force and effect and there being no notice or intimation of any intention to revoke, suspend, restrict, modify or not to renew any of the same;

(i)         since 30 April 2009 and except as disclosed in Sovereign Reversions' annual report and accounts for the year then ended or as otherwise publicly announced by Sovereign Reversions prior to the date hereof (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to the date of this announcement to Grainger, in writing, by or on behalf of Sovereign Reversions in the course of negotiations, there being no provision of any arrangement, agreement, licence, permit, franchise or other instrument to which any member of the Wider Sovereign Reversions Group is a party, or by or to which any such member or any of its assets is or are or may be bound, entitled or subject or any circumstance, which, in each case as a consequence of the Scheme, the Transaction or the acquisition or proposed acquisition of any shares or other securities in, or control of, Sovereign Reversions or any other member of the Wider Sovereign Reversions Group by any member of the Wider Grainger Group or otherwise, could or might result in:

(i) any monies borrowed by or any other indebtedness or liabilities (actual or contingent) of, or any grant available to, any member of the Wider Sovereign Reversions Group being or becoming repayable or capable of being declared repayable immediately or prior to its stated repayment date or the ability of any member of the Wider Sovereign Reversions Group to borrow monies or incur any indebtedness being withdrawn or inhibited or becoming capable of being withdrawn;

(ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property, assets or interests of any member of the Wider Sovereign Reversions Group or any such mortgage, charge or other security interest (wherever created, arising or having arisen) becoming enforceable;

(iii) any such arrangement, agreement, licence, permit, franchise or instrument, or the rights, liabilities, obligations or interests of any member of the Wider Sovereign Reversions Group thereunder, being, or becoming capable of being, terminated or adversely modified or affected or any adverse action being taken or any obligation or liability arising thereunder;

(iv) any asset or interest of any member of the Wider Sovereign Reversions Group being or falling to be disposed of or ceasing to be available to any member of the Wider Sovereign Reversions Group or any right arising under which any such asset or interest could be required to be disposed of or could cease to be available to any member of the Wider Sovereign Reversions Group otherwise than in the ordinary course of business;

(v) any member of the Wider Sovereign Reversions Group ceasing to be able to carry on business under any name under which it presently does so;

(vi) the creation of liabilities (actual or contingent) by any member of the Wider Sovereign Reversions Group other than in the ordinary course of business;

(vii) the rights, liabilities, obligations or interests of any member of the Wider Sovereign Reversions Group under any such arrangement, agreement, licence, permit, franchise or other instrument or the interests or business of any such member in or with any other person, firm, company or body (or any arrangement or arrangements relating to any such interests or business) being terminated or adversely modified or affected; or

(viii) the financial or trading position or prospects or the value of any member of the Wider Sovereign Reversions Group being prejudiced or adversely affected,

and no event having occurred which, under any provision of any such arrangement, agreement, licence, permit or other instrument, any of the events or circumstances which are referred to in paragraphs (i) to (viii) of this condition (i);

(j)        since 30 April 2009 and except as disclosed in Sovereign Reversions' annual report and accounts for the year then ended or as otherwise publicly announced by Sovereign Reversions prior to the date hereof (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to the date of this announcement to Grainger, in writing, by or on behalf of Sovereign Reversions in the course of negotiations, no member of the Wider Sovereign Reversions Group having:

(i) issued or agreed to issue, or authorised the issue of, additional shares of any class, or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or transferred or sold any shares out of treasury, other than as between Sovereign Reversions and wholly‑owned subsidiaries of Sovereign Reversions;

(ii) purchased or redeemed or repaid any of its own shares or other securities or reduced or made any other change to any part of its share capital;

(iii) recommended, declared, paid or made any dividend or other distribution whether payable in cash or otherwise or made any bonus issue (other than to Sovereign Reversions or a wholly‑owned subsidiary of Sovereign Reversions);

(iv) made or authorised any change in its loan capital;

(v) merged with, demerged or acquired any body corporate, partnership or business or acquired or disposed of or transferred, mortgaged, charged or created any security interest over any assets or any right, title or interest in any assets (including shares in any undertaking and trade investments) or authorised the same in each case to an extent which is material in the context of the Sovereign Reversions Group taken as a whole;

(vi) issued or authorised the issue of, or made any change in or to, any debentures or incurred or increased any indebtedness or liability (actual or contingent);

(vii) entered into, varied, or authorised any agreement, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which:

(A)       is of a long term, onerous or unusual nature or magnitude or which could involve an obligation of such nature or magnitude; or

(B)       could restrict the business of any member of the Wider Sovereign Reversions Group; or

(C)       is other than in the ordinary course of business;

(viii) entered into, implemented, effected or authorised any merger, demerger, reconstruction, amalgamation, scheme, commitment or other transaction or arrangement in respect of itself or another member of the Wider Sovereign Reversions Group;

(ix)  entered into or varied the terms of, any contract, agreement or arrangement with any of the directors or senior executives of any member of the Wider Sovereign Reversions Group;

(x) taken any corporate action or had any legal proceedings instituted or threatened against it or petition presented or order made for its winding‑up (voluntarily or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any part of its assets and revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction;

(xi) been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xii) waived or compromised any claim (otherwise than is the ordinary course of business);

(xiii) made any alteration to its memorandum or articles of association;

(xiv) made or agreed or consented to:

(A) any change to:

(I) the terms of the trust deeds constituting the pension scheme(s) established for its directors, employees or their dependants; or

(II)  the benefits which accrue or to the pensions which are payable thereunder; or

(III) the basis on which qualification for, or accrual or entitlement to such benefits or pensions are calculated or determined; or

(IV) the basis upon which the liabilities (including pensions) of such pension schemes are funded or made; or

(B) any change to the trustees including the appointment of a trust corporation;

(xv) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider Sovereign Reversions Group; or

(xvi) entered into any agreement, commitment or arrangement or passed any resolution or made any Scheme (which remains open for acceptance) or proposed or announced any intention with respect to any of the transactions, matters or events referred to in this condition (j);

(k)       since 30 April 2009 and except as disclosed in Sovereign Reversions' annual report and accounts for the year then ended or as otherwise publicly announced by Sovereign Reversions prior to the date hereof (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to the date of this announcement to Grainger, in writing, by or on behalf of Sovereign Reversions in the course of negotiations:

(i) there having been no adverse change or deterioration in the business, assets, financial or trading positions or prospects of any member of the Wider Sovereign Reversions Group;

(ii) no contingent or other liability of any member of the Wider Sovereign Reversions Group having arisen or become apparent or increased;

(iii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Sovereign Reversions Group is or may become a party (whether as plaintiff, defendant or otherwise) having been threatened, announced, implemented or instituted by or against or remaining outstanding against or in respect of any member of the Wider Sovereign Reversions Group;

(iv) (other than as a result of the Scheme) no enquiry or investigation by, or complaint or reference to, any Third Party having been threatened, announced, implemented, instituted by or against or remaining outstanding against or in respect of any member of the Wider Sovereign Reversions Group; and

(v) no member of the wider Sovereign Reversions Group having taken (or agreed or committed to take) any action which requires, or would require, the consent of the Panel or the approval of Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the City Code;

(l)         Grainger not having discovered:

(i) that any financial or business or other information concerning the Wider Sovereign Reversions Group disclosed at any time by or on behalf of any member of the Wider Sovereign Reversions Group, is misleading or contains any misrepresentation of fact or omits to state a fact necessary to make any information contained therein not misleading, in any such case which is material in the context of the Wider Sovereign Reversions Group taken as a whole, and which was not subsequently corrected before the date hereof by disclosure either publicly or otherwise in writing to Grainger;

(ii) that any member of the Wider Sovereign Reversions Group is subject to any liability (actual or contingent) which is not disclosed in Sovereign Reversions' annual report and accounts for the financial year ended 30 April 2009; or

(iii) any information which affects the import of any information disclosed at any time by or on behalf of any member of the Wider Sovereign Reversions Group;

(m)       Grainger not having discovered:

(i) that any past or present member of the Wider Sovereign Reversions Group has not complied with any applicable legislation or regulations of any jurisdiction with regard to the use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health, or otherwise relating to environmental matters or the health and safety of any person, or that there has otherwise been any such use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission (whether or not this constituted a non‑compliance by any person with any legislation or regulations and wherever the same may have taken place) which, in any case, would be likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Wider Sovereign Reversions Group;

(ii) that there is, or is likely to be, any material liability, whether actual or contingent, to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the Wider Sovereign Reversions Group or any other property or any controlled waters under any environmental legislation, regulation, notice, circular, order or other lawful requirement of any relevant authority or third party or otherwise; or

(iii) that circumstances exist whereby a person or class of persons would be likely to have a claim in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider Sovereign Reversions Group;

(iv) that any past or present member of the Wider Sovereign Reversions Group has not complied with any applicable planning requirement, permission, regulation or legislation.

2.         For the purpose of these conditions:

(a)       "Third Party" means any central bank, government, government department or governmental, quasi‑governmental, supranational, statutory, regulatory or investigative body, authority (including any national anti‑trust or merger control authority), court, trade agency, association, institution or professional or environmental body or any other person or body whatsoever in any relevant jurisdiction;

(b)       a Third Party shall be regarded as having "intervened" if it has decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or made, proposed or enacted any statute, regulation, decision or order or taken any measures or other steps or required any action to be taken or information to be provided or otherwise having done anything and "intervene" shall be construed accordingly; and

(c)       "Authorisations" means authorisations, orders, grants, recognitions, determinations, certificates, confirmations, consents, licences, clearances, provisions and approvals.

Grainger reserves the right to waive all or any of the above conditions, in whole or in part.

Grainger shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of the conditions by a date earlier than the latest date specified above for the fulfillment of that condition, notwithstanding that the other conditions of the Scheme may at such earlier date have been waived or fulfilled and that there are, at such earlier date, no circumstances indicating that any condition may not be capable of fulfillment.

Grainger reserves the right to elect to implement the acquisition by way of a takeover offer (as defined in section 974 of the Companies Act 2006). In such event, such offer will be implemented on the same terms (subject to appropriate amendments, including (without limitation) an acceptance condition set at ninety per cent. (or such lesser percentage (being more than fifty per cent.) as Grainger may decide and the Panel shall approve) of the Shares to which such offer relates, so far as applicable, as those which would apply to the Scheme.

If the Panel requires Grainger to make an offer for Shares under the provisions of Rule 9 of the City Code, Grainger may make such alterations to any of the terms and conditions of the Scheme as are necessary to comply with the provisions of that Rule.

The Transaction will lapse and the Scheme will not proceed if the Transaction or any part of it is referred by the Office of Fair Trading to the Competition Commission before the date of the Court Meeting.

Part B

Certain Further Terms of the Transaction

In the event that the Transaction is to be implemented by way of an Offer:-

·    the Shares will be acquired by Grainger fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and any other third party rights of any nature whatsoever and together with all rights attaching to them including the right to receive in full all dividends and other distributions (if any) declared, paid or made on or after the date of this announcement.

·    such Offer will be on the terms and will be subject to, inter alia, the Conditions set out in this announcement and such other terms as may be set out in the Scheme Document or as may be required to comply with the Listing Rules, AIM Rules and the provisions of the City Code.  This announcement and any rights or liabilities arising under it, the Transaction, the Scheme and any proxies will be governed by English law and be subject to the jurisdiction of the English courts.

APPENDIX II

SOURCES AND BASES OF INFORMATION

Save as otherwise stated, the following constitute the sources and bases of certain information referred to in this announcement:

1.    Financial information relating to Grainger has been extracted or provided (without material adjustment) from the audited annual report and accounts for Grainger for the year ended 30 September 2009 and the unaudited half year accounts for the six months ended 31 March 2010, reported under IFRS.

2.    Financial information relating to Sovereign Reversions has been extracted or provided (without material adjustment) from the audited annual report and accounts for Sovereign Reversions for the year ended 30 April2009 and the unaudited half year accounts for the six months ended 31 October 2009, reported under IFRS and property valuations undertaken as at 30 April 2010.

3.    The terms of the Transaction value the entire issued and to be issued ordinary share capital of Sovereign Reversions at £34.6 million, based on 16,954,855, being the number of Shares in issue on 3 June 2010 (excluding 195,050 Shares held in Treasury by Sovereign Reversions), the last practicable date prior to this announcement and 355,098 Shares which are, or are expected to be, the subject of options granted under the Sovereign Reversions Share Schemes which would become exercisable on or prior to the Effective Date and the price of 202 pence per Share under the terms of the Transaction.

4.    Reported discount to Net Asset Values between 1 January 2009 and 26 March 2010 are based on the following information:

Range	Date	Share price (pence)	Last reported Net Asset Value (pence)	Implied discount to Net Asset Value
Start:	1 January 2009	106.36	31 October 2008: 308.8p	(65.6%)
Maximum discount	30 January 2009	61.84	31 October 2008: 308.8p	(80.0%)
Minimum discount	20 November 2009	150.00	31 October 2009: 220.4p	(31.9%)
End	26 March 2010	122. 50	31 October 2009: 220.4p	(44.4%)

5.    All share prices have been extracted from Datastream.

APPENDIX III

SCHEDULE OF IRREVOCABLE UNDERTAKINGS

Name of Shareholder	Number of Shares	Percentage of Sovereign Reversions issued share capital	Type of irrevocable
Bob Wigley	50,035	0.30 per cent.	Hard
Graeme Marshall	1,071,964	6.32 per cent.	Hard
Graeme Marshall nominee	5,424	0.03 per cent.	Soft with a hurdle
Robert Lo	62,150	0.37 per cent.	Hard
Rupert Pearce Gould	18,527	0.11 per cent.	Hard
Rupert Pearce Gould nominee	43,119	0.25 per cent.	Soft with a hurdle
Rockhopper Investments Limited	1,525,060	8.99 per cent.	Hard
Pension Insurance Corporation	1,327,750	7.83 per cent.	Soft with a hurdle
JPMorgan Asset Management (UK) Limited	694,050	4.09 per cent.	Soft without a hurdle
El Oro and Exploration Company Limited	288,069	1.70 per cent.	Soft without a hurdle
AXA Investment Managers UK Limited	206,225	1.22 per cent.	Soft without a hurdle
Total	5,292,373	31.21 per cent.

1       The 'hard' irrevocable undertakings referred to above do not fall away in the event of a higher offer.

2       The 'soft with a hurdle' irrevocable undertakings referred to above cease to be binding if a firm offer is announced by a third party, the value of which is 222 pence or more per Share.

3       The 'soft without a hurdle' irrevocable undertakings referred to above cease to be binding if a firm offer is announced by a third party, the value of which is more than 202 pence per Share.

4       Each irrevocable undertaking referred to above lapses if:

·    Grainger announces, with the consent of the Panel, that it does not intend to proceed with the Transaction; or

·    The Transaction lapses or is withdrawn

 and no replacement offer or scheme is announced in accordance with rule 2.5 of the City Code.

APPENDIX IV

DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

"Act"	the Companies Act 2006, as amended
"AIM Rules"	the AIM Rules for Companies published by the London Stock Exchange from time to time
"AIM"	the AIM  Market operated by the London Stock Exchange
"Authorisations"	has the meaning given to it in paragraph 2 of Part A of Appendix 1 of this Announcement
"Business Day"	a day on which the London Stock Exchange is open of business
"Capital Reduction"	the reduction of the capital of Sovereign Reversions pursuant to section 645 of the Act, as provided for by the Scheme
"City Code"	the Code on Takeovers and Mergers
"Closing Price"	the closing middle market price of a relevant share as derived from the AIM appendix to the SEDOL on any particular day
"Competing Proposal"	any offer, scheme of arrangement, merger or business combination, or similar transaction, which is announced or entered into, or is proposed, by a third party which is not acting in concert (as defined in the City Code) with Grainger, including any revisions thereof, and the purpose of which is, or would be, to enable that third party (or any other person) to acquire, directly or indirectly, all or a significant proportion (being 20 per cent. or more when aggregated with the shares already held by the third party and any person acting in concert (as defined in the City Code) with that third party) of the share capital of Sovereign Reversions, or all or a significant proportion (being 20 per cent. or more) of its undertaking, assets or business, or any other arrangements or transactions or series of the same which is inconsistent with the implementation of the Transaction or, if relevant, the exercise of Grainger's rights under section 979 of the Act
"Conditions"	the conditions to the Transaction as set out in Appendix I of this announcement
"Connected Persons"	in relation to any person, a person whose interest in shares is one which the first mentioned person is also taken to be interested pursuant to Part 22 of the Act
"Court Meeting"	the meeting of Shareholders convened by an order of the Court pursuant to section 896 of the  Act to consider and, if thought fit, approve the Scheme (with or without amendment), including any adjournment thereof
"Court"	The High Court of Justice in England and Wales
"Effective Date"	the date that the Transaction becomes Effective
"Effective"	(i) if the Transaction is implemented by way of the Scheme, the Scheme having become effective pursuant to its terms; or (ii) if the Transaction is implemented by way of an Offer, such offer having been declared or become unconditional in all respects in accordance with the requirements of the City Code
"Enlarged Group"	with effect from the Effective Date, the combined Grainger Group and Sovereign Reversions Group
"FSA" or "Financial Services Authority"	the United Kingdom Financial Services Authority
"General Meeting"	the general meeting of Shareholders to be convened in connection with the Scheme
"Grainger"	Grainger plc, incorporated in England and Wales with registered number 125575
"Grainger Board" or "Grainger Directors"	the board of directors of Grainger
"Grainger Group"	Grainger, its subsidiaries and subsidiary undertakings
"Grainger NNNAV"	the gross net asset value of Grainger adjusted for deferred and contingent tax on revaluation gains and for mark to market adjustments
"Gross NAV"	Gross NAV is defined as the market value of Grainger's net assets before deduction for deferred tax on property revaluations and before adjustments for the fair value of derivatives
"Grainger NAV"	the unaudited estimated value of Grainger reversionary surplus added to the Grainger NNNAV, assuming no future movements in residential property values and at a fixed discount rate
"Grainger Share(s)"	ordinary shares of 5 pence each in the capital of Grainger
"Grainger Shareholders"	holders of Grainger Shares
"holder"	a registered holder and includes any person(s) entitled by transmission
"Home & Capital Trust"	The Home & Capital Trust Group Ltd, a wholly owned subsidiary of Sovereign Reversions which provides equity release services through subsidiaries separately regulated by the FSA
"Home & Capital Advisers"	Home & Capital Advisers Ltd, a wholly owned subsidiary of Home & Capital Trust
"Inducement Agreement"	the inducement agreement entered into by Grainger and Sovereign Reversions on 5 May 2010
"intervened"	has the meaning given to it in paragraph 2 of Part A of Appendix 1 of this Announcement
"J.P. Morgan Cazenove"	J.P. Morgan Cazenove is a marketing name for J.P. Morgan plc
"J.P. Morgan plc"	J.P. Morgan plc (CN 248609)
"Listing Rules"	the listing rules issued by the UK Listing Authority pursuant to Part VI of the Financial Services and Markets Act 2000
"London Stock Exchange"	London Stock Exchange plc
"Major Transaction"	any proposal by Sovereign Reversions or any of its group undertakings to dispose of any significant part (being 10 per cent. or more) of its undertaking, business or assets or any other transaction requiring the approval of Shareholders under the London Stock Exchange's AIM Rules for Companies or under Rule 21.1 of the City Code or the consent of the Panel under Rule 21.1 of the City Code
"Net Asset Value"	the market value of Sovereign Reversions' net assets after deduction for deferred tax on property revaluations and after adjustments for the fair value of derivatives
"Offer Document"	should Grainger decide to implement the Transaction by way of an Offer, the document which would be dispatched to Shareholders containing and setting out the terms and conditions of the offer
"Offer Period"	the period commencing on (and including) 29 March 2010 and expected to end on the Effective Date
"Offer"	a takeover offer as that is defined in section 974 of the  Act
"Official List"	the Official List of the UKLA
"Panel"	the Panel on Takeovers and Mergers
"pence" and "£"	the lawful currency of the United Kingdom
"Reduction Court Hearing"	the hearing by the Court  to confirm the Capital Reduction
"Reduction Court Order"	the order of the Court, confirming the Capital Reduction
"Registrar of Companies"	the Registrar of Companies in England and Wales
"Regulatory Information Service"	a service approved by London Stock Exchange plc for the distribution to the public of AIM announcements and included within the list on London Stock Exchange plc's website
"Scheme"	this scheme of arrangement in its present form or with or subject to any modification, addition or condition approved or imposed by the Court and agreed by Sovereign Reversions and Grainger
"Scheme Court Hearing"	the hearing by the Court to sanction the Scheme
"Scheme Court Order"	the order of the Court, sanctioning the Scheme pursuant to section 899 of the Act
"Scheme Document" or "Scheme Documentation"	the document to be addressed to, among others, Shareholders, which contains, among other things, the terms and conditions of the Scheme and the notices convening the Court Meeting and the General Meeting
"Scheme Record Time"	6.00 pm (UK time) on the Business Day immediately prior to the Reduction Court Hearing
"Scheme Shareholders"	the holders of the Scheme Shares
"Scheme Shares"	(i)     the Shares in issue at the date of this document; (ii)     any Shares issued after the date of this document and prior to the Voting Record Time; and (iii)    any Shares issued on or after the Voting Record Time and on or prior to the Scheme Record Time either on terms that the original or any subsequent holders of such Shares are to be bound by the Scheme, or in respect of which their holders are, or have agreed in writing to be, bound by the Scheme, but excluding any Shares held by any member of the Grainger Group and any Shares held in treasury by Sovereign Reversions as at the Effective Date
"SEDOL"	the Stock Exchange Daily Official List
"Share" and "Shares"	the ordinary shares of 50 pence each in the capital of Sovereign Reversions
"Shareholders"	holders of Shares
"Sovereign Reversions"	Sovereign Reversions plc incorporated in England and Wales with number 2696924
"Sovereign Reversions Directors"	the directors of Sovereign Reversions
"Sovereign Reversions Group"	Sovereign Reversions and its subsidiaries and subsidiary undertakings
"Sovereign Reversions Share Schemes"	the Sovereign Reversions Approved  Company Share Option Plan and Unapproved Share Option Scheme, the Sovereign Reversions Long Term Incentive Plan and the Option Agreement date 17 December 2009 between Sovereign Reversions and Robert Wigley
"subsidiary" and "subsidiary undertaking"	have the meanings given to them in the Act
"Substantial Interest"	a direct or indirect interest in 20 per cent. or more of the voting equity capital of an undertaking
"Third Party"	has the meaning given to it in paragraph 2 of Part A of Appendix 1 of this Announcement
"Transaction Agreement"	the transaction agreement entered into by Grainger and Sovereign Reversions on 4 June 2010, governing the implementation of the Transaction;
"Transaction"	the recommended proposed acquisition by Grainger of all of the issued and to be issued ordinary Shares to be effected by means of the Scheme or, should Grainger so elect, by means of an Offer on the terms and subject to the conditions set out in the Scheme Document or, if applicable, the Offer Document;
"UK Listing Authority" or "UKLA"	the Financial Services Authority as the competent authority under Part VI of the Financial Services and Markets Act 2000
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"United States"	the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia, and all other areas subject to its jurisdiction
"Vacant Possession Value"	The market value of a property free from any tenancies (unaudited)
"Wider Grainger Group"	Grainger and the subsidiaries and subsidiary undertakings of Grainger and associated undertakings (including any joint venture, partnership, firm or company in which any member of the Grainger Group is interested or any undertaking in which Grainger and such undertakings (aggregating their interests) have a Substantial Interest
"Wider Sovereign Reversions Group"	Sovereign Reversions and the subsidiaries and subsidiary undertakings of Sovereign Reversions and associated undertakings (including any joint venture, partnership, firm or company in which any member of the Sovereign Reversions Group is interested or any undertaking in which Sovereign Reversions and such undertakings (aggregating their interests) have a Substantial Interest

Unless otherwise stated, all times referred to in this document are references to London time.

Any reference to any provision of any legislation shall include any amendment, modification, re enactment or extension thereof.

 

END

 

 

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