Settlement of litigation

R.E.A.Hldgs PLC
24 January 2006


R.E.A. Holdings plc ('REA')

Acquisition of minority shareholding in Makassar Investments Limited
('Makassar') and settlement of litigation

REA announces that it has reached agreement with Mr Morris E. Zukerman and his
associates, Bodley Investment Company, M. E. Zukerman & Co Incorporated ('MEZ
Inc'), M. E. Zukerman Investments Limited and the Zukerman Family Trust,
(together the 'Zukerman parties') on the settlement of (a) litigation claims
made or threatened by the Zukerman parties against REA and three of its
directors, Charles Letts, John Oakley and Richard Robinow, (together with
Makassar, its subsidiary, PT REA Kaltim Plantations, and another subsidiary of
REA, Makassar Participation plc, the 'REA parties') and (b) litigation claims
threatened by the REA parties against the Zukerman parties.

Pursuant to the settlement agreement (the 'Settlement Agreement'), REA has
agreed to acquire the minority shareholding in Makassar (the 'Zukerman held
Makassar shares') owned by certain of the Zukerman parties for a consideration
of $19 million. In addition, PT REA Kaltim Plantations ('REA Kaltim') has,
subject as noted below, agreed to pay a total of $6 million as additional
interest on former loans to REA Kaltim from certain of the Zukerman parties and
in settlement of various claims by MEZ Inc against REA Kaltim for fees in
respect of past services and financial support. Upon completion of the
Settlement Agreement (which has been scheduled for 21 February 2006), all actual
and potential claims relating to Makassar and REA Kaltim between the Zukerman
parties and the REA parties will be released and the proceedings commenced in
New York in November 2001 by certain of the Zukerman parties against certain of
the REA parties will be dismissed with each side bearing its own costs.

Save to the extent otherwise required by law or regulation (including, in the
case of REA, compliance with the rules of the Financial Services Authority), the
REA parties and the Zukerman parties have given mutual undertakings to keep
confidential the terms of the Settlement Agreement and all matters discussed in
the mediated negotiations from which the Settlement Agreement has resulted.

The consideration of $19 million payable by REA for the Zukerman held Makassar
shares will be satisfied by the issue by REA of $19 million nominal of 7.5 per
cent dollar notes 2012/14 of REA ('Zukerman dollar notes') ranking pari passu in
all respects and forming a single issue with the existing 7.5 per cent dollar
notes 2012/14 of REA.

Pursuant to an agreement (the 'Supplemental Rights Agreement') made concurrently
with the Settlement Agreement, REA and those Zukerman parties who will initially
hold the Zukerman dollar notes (the 'Zukerman dollar noteholders') have agreed
that (a) subject to certain limitations, REA may at any time acquire from the
Zukerman dollar noteholders some or all of their holdings of Zukerman dollar
notes (the 'call rights') and (b) in certain circumstances, the Zukerman dollar
noteholders may require REA to purchase the Zukerman dollar notes (the 'put
rights'), in both cases at par plus accrued interest up to the date of
completion of the exercise of such rights. The rights of the Zukerman dollar
noteholders under the Supplemental Rights Agreement may be assigned (in whole or
part) by those persons to a limited class of assignees subject to assumption by
the assignees of obligations like to those of the Zukerman dollar noteholders
under the agreement.

The limitations upon the exercise by REA of the call rights are effectively that
by such exercise the nominal amount of the Zukerman dollar notes (as reduced by
any previous exercises of the call rights) should not, unless the entire
outstanding holding of Zukerman dollar notes is to be acquired by REA, be
reduced in nominal amount to below 25 per cent of the nominal amount of all then
outstanding 7.5 per cent dollar notes 2012/14 of REA (including any further
notes constituted by deed supplemental to the trust deed of 12 September 2005
constituting the 7.5 per cent dollar notes 2012/14 of REA (the 'trust deed')).

The circumstances under which the Zukerman dollar noteholders may exercise the
put rights are occurrences of events that supplement the events of default
contained in the trust deed. The principal of these supplemental events comprise
(a) material disposals of assets by REA and its subsidiaries, (b) any person or
group of persons acting in concert obtaining the right to exercise more than 50
per cent of the votes that may generally be cast at a general meeting of REA and
(c) if UK withholding tax becomes payable in respect of any principal or
interest payments on the Zukerman dollar notes, REA not paying such additional
amounts as will result in the net amounts receivable by holders remaining as
they would have been had no such withholding tax been payable.

The payment of $6 million to be made by REA Kaltim pursuant to the Settlement
Agreement is to be made in cash and is conditional upon receipt by REA Kaltim of
necessary consents to the making of such payment from its lending banks. Should
such consents not be obtained, REA has agreed to pay the $6 million on behalf of
REA Kaltim.

The Zukerman held Makassar shares comprise ordinary shares in Makassar
representing 12.3 per cent of the issued ordinary share capital of Makassar. The
profit before taxation and assets attributable to that interest in Makassar,
based on the audited consolidated accounts of REA for the year ended 31 December
2004 (which were prepared under UK Generally Accepted Accounting Practice),
amounted to, respectively, £754,000 and £2,721,000. The audited consolidated
balance sheet of REA at 31 December 2004 included provisions equivalent in total
to $3.6 million against the liabilities now to be settled under the Settlement
Agreement by the $6 million payment to be made by REA Kaltim.

The Zukerman held Makassar shares have for several years been the only issued
shares in Makassar not owned by REA and its subsidiaries. The directors of REA
consider that the Settlement Agreement will benefit REA both in terms of giving
REA ownership of the whole of the issued share capital of Makassar and in
settling all outstanding disputes with the Zukerman parties.



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