Announcement re: Rights Issue

RNS Number : 6251S

Shanks Group PLC

21 May 2009

Shanks Group plc

21 May 2009

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA.

SHANKS GROUP PLC

PROPOSED RIGHTS ISSUE TO RAISE APPROXIMATELY £71.4 MILLION

The Board of Directors of Shanks Group plc ('Shanks', or the 'Company') today announces a Rights Issue to raise approximately £71.4 million.

Highlights of the transaction

Proposed 2 for 3 fully underwritten Rights Issue to raise approximately £71.4 million (£66.7 million net of expenses) through the issue of 158.7 million Rights Issue Shares at a price of 45 pence per Rights Issue Share
The Rights Issue Price represents a 50.8 per cent. discount to the closing middle market price of 91.5 pence per share on 20 May 2009, being the last practicable date before the announcement of the Rights Issue, and a 38.3 per cent. discount to the theoretical ex-rights price on the same basis
The proceeds of the Rights Issue will be used to reduce the Group's indebtedness:
- This will create a more appropriate capital structure providing greater resilience and financial flexibility in the event of a more serious downturn in general economic conditions than anticipated
- The associated reduction in financial indebtedness will provide appropriate headroom under the covenant levels in Shanks' New Facilities
- Following the Rights Issue the Group will target a maximum core net debt / EBITDA ratio of 2.5x
- As a result of the Rights Issue the Group will be able to reinvest its strong underlying cash flow and the proceeds from any non-core asset disposals (including the recent divestment of the UK landfill joint venture, Avondale) and, mindful of gearing levels, will be well-positioned to take advantage of value enhancing organic investment opportunities that currently exist within the Group's core focus area

Greenhill & Co. International LLP is acting as Financial Adviser and Sponsor to the Company with respect to the Rights Issue. RBS Hoare Govett Limited is acting as Sole Bookrunner and Underwriter with respect to the Rights Issue.

The Rights Issue is fully underwritten by RBS Hoare Govett and is subject to the approval of Shanks' Shareholders.

Shanks has also, today, released its results for the financial year ended 31 March 2009, details of which are set out in a separate announcement.

A prospectus containing details of the Rights Issue ('Prospectus') is expected to be posted to Shareholders and made available on the Company's website (www.shanksplc.co.uk) today. An Extraordinary General Meeting ('EGM') to approve the Rights Issue is expected to be held at 11.00 a.m. on 8 June 2009. A notice of EGM can be found in the Prospectus.

Tom Drury, Chief Executive Officer of Shanks, commented:

'The Rights Issue announced today is a welcome step forward for Shanks. In conjunction with the increased €360m bank refinancing that we announced on 7 April 2009, the cost savings and the cash management initiatives being undertaken by the strengthened management team, it will give the Group the capital structure and headroom required should a more serious downturn than we currently anticipate occur.

Moreover, following the Rights Issue, the Group should be able to take advantage of attractive investment opportunities in the three principal areas of Recycling, Organic Processing and UK PFI using our strong underlying cash flows and the proceeds from any disposals of non-core assets. There is a limited window for Shanks to take advantage of these opportunities and, together with Shanks' proven track record and broad range of technologies, the Rights Issue should enable the Group to emerge from the downturn stronger than before and ahead of the competition.'

An analyst presentation and investor meeting will be held at 9.00 a.m. today at the offices of RBS Hoare Govett at 250 Bishopsgate, London, EC2M 4AA.

For further information, please contact:

Shanks Group plc Tom Drury, Group Chief Executive Chris Surch, Group Finance Director	+44 (0) 1908 650 582
Tulchan Communications David Allchurch Stephen Malthouse John Sunnucks	+44 (0) 20 7353 4200
Greenhill & Co. (Financial Adviser and Sponsor) James Lupton Jean-Philippe Verdier	+44 (0) 20 7198 7400
RBS Hoare Govett (Sole Bookrunner and Underwriter) Neil Collingridge John MacGowan Hugo Fisher	+44 (0) 20 7678 8000

IMPORTANT NOTICE:

This announcement is not an offer of securities for sale in the United States. The securities discussed herein have not been and will not be registered under the US Securities Act of 1933, as amended (the 'US Securities Act') and may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act. No public offering of the securities discussed herein is being made in the United States and the information contained herein does not constitute an offering of securities for sale in the United States, Canada, Australia, Japan or South Africa or in any other jurisdiction where to do SO would violate local securities laws or regulations.

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Securities referred to in this announcement except on the basis of information in the Prospectus. This announcement does not constitute, or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Securities should only be made on the basis of information contained in and incorporated by reference into the Prospectus which contains further details relating to the Company in general as well as a summary of the risk factors to which any investment is subject. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue. This announcement is not directed to, or intended for distribution or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability, or use would be contrary to law or regulation which would require any registration or licensing within such jurisdiction. In particular, this announcement is not for distribution in the United States, Australia, Canada, Japan or South Africa. The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this announcement in whole or in part is unauthorized. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.

RBS Hoare Govett Limited ('RBS Hoare Govett') and Greenhill & Co. International LLP ('Greenhill'), each of which is authorised and regulated in the United Kingdom by the FSA, are acting exclusively for the Company and no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue or any matters referred to in this announcement.

This announcement has been issued by, and is the sole responsibility of the Company. This announcement should not be considered a recommendation by the Company, RBS Hoare Govett or Greenhill or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings or in relation to any purchase of or subscription for Securities. Apart from the responsibilities and liabilities, if any, which may be imposed on RBS Hoare Govett and Greenhill by the FSMA, each of RBS Hoare Govett and Greenhill or any of their respective directors, officers, employees, advisers or any of their respective affiliates, accept(s) no responsibility whatsoever for, and makes no representation or warranty, express or implied, in relation to, the contents of this announcement (including, but not limited to, its accuracy, fairness, sufficiency completeness or verification) or any other opinion or statement made or purported to be made by it, or on its behalf, in connection with the Company, the Rights Issue or any of the Securities. RBS Hoare Govett and Greenhill and each of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability, whether arising in tort, contract or otherwise, which it might otherwise have in respect of this announcement or any such opinion or statement.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom 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 and regulations of any jurisdiction outside the United Kingdom.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS:

This announcement contains certain forward-looking statements which may include reference to one or more of the following: the Group's financial condition, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies or synergies, budgets, capital and other expenditures, competitive positions, growth opportunities for existing products, plans and objectives of management and other matters. Statements in this announcement that are not historical facts are hereby identified as 'forward-looking statements'. Such forward-looking statements, including, without limitation, those relating to future business prospects, revenue, liquidity, capital needs, interest costs and income, in each case relating to Shanks Group plc, wherever they occur in this announcement, are necessarily based on assumptions reflecting the views of Shanks Group plc and involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various important factors. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: economic and business cycles, the terms and conditions of Shanks Group plc's financing arrangements, foreign currency rate fluctuations, competition in Shanks Group plc's principal markets, acquisitions or disposals of businesses or assets and trends in Shanks Group plc's principal industries. These forward-looking statements speak only as at the date of this announcement. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any law, Shanks Group plc does not have any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, further events or otherwise. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any law, Shanks Group plc expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Shanks Group plc's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this announcement might not occur.

Appendix I contains an expected timetable of principal events.

Appendix II contains the definitions of certain terms used in this announcement.

This summary should be read in conjunction with the full text of the following announcement.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA.

SHANKS GROUP PLC

PROPOSED RIGHTS ISSUE TO RAISE APPROXIMATELY £71.4 MILLION

1. Introduction

On 7 April 2009, your Board announced that Shanks had reached agreement to re-finance its £250 million core bank facility into a new, increased, €360 million facility (the 'New Facilities') expiring in April 2012. The New Facilities are provided by an enlarged group comprising six banks and are denominated in Euros, but can also be drawn in Sterling or Canadian Dollars, and the margin payable, although higher than in the past, is in line with current market conditions. As at 20 May 2009 (being the latest practicable date prior to the publication of this document), the Group has drawn down €240 million, CAD$23 million and £14 million under the term loan facility, and £7 million and CAD$10 million under the revolving facility.

The Company now proposes to raise approximately £71.4 million by way of a 2 for 3 Rights Issue of 158,679,867 Rights Issue Shares at a price of 45 pence per Rights Issue Share (which represents a 50.8 per cent. discount to the closing middle market price per Share on 20 May 2009, the latest practicable date before the announcement of the equity raising and a discount of 38.3 per cent. to the theoretical ex-rights price on the same basis). The Rights Issue Shares, when issued, will represent 40.0 per cent. of the fully diluted issued share capital of the Company (assuming no exercise of outstanding options between the date of this document and completion of the Rights Issue) and, when fully paid, will rank pari passu with the existing Shares. The Rights Issue has been fully underwritten by RBS Hoare Govett. Greenhill is acting as Financial Adviser and Sponsor to Shanks.

2. Background to the Rights Issue

Despite the poor economic environment, the Group continues to demonstrate a relatively resilient operational performance and to generate a strong underlying cash flow. The Group's vision has recently been clarified, aligning it with legislative and regulatory trends that seek to increase recycling and the generation of renewable energy from waste. It has leading market positions in the Benelux and has added to this strong base through recent targeted acquisitions, organic investments and UK PFI projects to give it a strong platform for growth.

The outlook for the Group's markets remains challenging as a consequence of the sharp slowdown in the global economy. This has notably affected the 85 per cent. of the Group's revenues that come from industrial and commercial customers, in particular construction related industries in The Netherlands.

In response to this challenging outlook, the Directors have taken measures to manage the Group's gearing and improve profitability, including a £10m per annum cost savings initiative, capital expenditure reductions, improvements in net working capital and targeted divestment of non-core assets, as demonstrated by last Friday's announcement of the sale of our interest in Avondale.

In April 2009 the Company successfully refinanced its existing bank borrowings with a new, increased, €360 million facility from an enlarged group of six banks. The main elements of the New Facilities can be summarised as follows:

the facilities comprise a €270 million term loan facility and a €90 million revolving facility;
the facilities are denominated in Euros, but can also be drawn in Sterling or Canadian Dollars; and
the facilities are available until 7 April 2012.

In line with current market conditions the margin payable on the New Facilities is higher than in the past. However, the ratchet based margin formula of the New Facilities means that the lower the amount of core net debt the lower the interest margin payable on the Group core net debt. As a result, the Company will benefit from lower interest margins as the Group reduces gearing.

3. Reasons for the Rights Issue

The Group is pleased to have secured its banking requirements for the foreseeable future, however, the Directors believe that given the uncertain economic outlook it is in the best interests of the Company and its Shareholders for the Group to target a reduction in its core net debt/EBITDA ratio to below 2.5x. The primary purpose of the Rights Issue is to provide flexibility in the event of a more serious downturn in economic conditions than the Company anticipates. This will provide further downside protection for the Group as well as ensuring value preservation for Shareholders. Following the Rights Issue the Group will be able to reinvest its strong underlying cash flow and the proceeds from any non-core asset disposals and, mindful of gearing levels, will be well positioned to take advantage of attractive investment opportunities that currently exist within the Group's core focus area.

The Board believes that together with the New Facilities, the proceeds from the Rights Issue will provide Shanks with a robust capital structure in the current challenging economic and financial environment, and the appropriate financial flexibility to perform strongly and continue to consider attractive investments in the business, such as the recent acquisitions of Foronex and Orgaworld.

4. Use of Proceeds and Effect on Earnings

The proceeds of the Rights Issue will be used to reduce the Group's net indebtedness in order to create additional headroom over the Group's borrowing covenants.

Had the Rights Issue taken place at the date of the Group's latest balance sheet, being 31 March 2009, the effect on the balance sheet would have been an increase in cash equal to the proceeds (net of expenses) of the Rights Issue.

Had the Rights Issue taken place at the beginning of the 2008/2009 financial year, being 1 April 2008, the effect on the Group's 2008/2009 earnings would have been positive. However, the increased number of Shares in issue following the Rights Issue would have had a negative effect on the Company's earnings per share for the same period.

5. Principal Terms and Conditions of the Rights Issue

The Company is proposing to offer 158,679,867 new Shares by way of a Rights Issue. The Rights Issue Price of 45 pence per Rights Issue Share represents a 50.8 per cent. discount to the closing middle-market price of 91.5 pence per Share on 20 May 2009, being the last business day before the announcement of the Rights Issue, and a 38.3 per cent. discount to the theoretical ex-rights price, on the same basis. The Rights Issue is expected to raise approximately £71.4 million.

The Rights Issue will be made on the basis of:

2 Rights Issue Shares for every 3 Shares held on the Record Date

at 45 pence per Rights Issue Share

on the terms and conditions set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders only, the Provisional Allotment Letter. Holdings of Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue. Fractional entitlements to Rights Issue Shares will not be allotted and, where necessary, entitlements will be rounded down to the nearest whole number (nil paid) of Rights Issue Shares. Fractional entitlements will be aggregated and sold in the market for the benefit of the Company.

The Rights Issue Shares will, when issued and fully paid, rank pari passu in all respects with the Shares.

Upon completion of the Rights Issue, the Rights Issue Shares will represent approximately 40.0 per cent. of the enlarged issued share capital of the Company, assuming no exercise of outstanding options between the date of the Prospectus and completion of the Rights Issue. Application has been made to the Financial Services Authority for the Rights Issue Shares to be admitted to the Official List. Application has also been made to the London Stock Exchange for the Rights Issue Shares to be admitted to trading on the London Stock Exchange's market for listed securities. It is expected that Admission will become effective and that dealings in the Nil Paid Rights will commence on 9 June 2009.

6. Current Trading

The Group has today announced its results for the year ended 31 March 2009, showing revenues of £697m (2008: £564m) and trading profit of £66.4m (2008: £55.9m).

Shanks has responded swiftly to the current market conditions by reducing its cost base going forward by £10m and right sizing the business for the current environment. In addition, Shanks has prioritised cash generation and financial strength with actions taken to realise value from non-core activities and investments. The Board will continue to manage the business tightly and prudently.

In the short term, trading in Belgium and the UK is expected to be satisfactory but challenging and the Group's exposure to the Dutch construction sector will continue to impact negatively revenue and profitability of the Solid Waste business in The Netherlands.

The Group remains well aligned with the legislative and regulatory trends that seek to accelerate the diversion of waste from landfill, and its longer term vision remains to make the Group the preferred provider of sustainable waste management solutions. The cash generation of the Group and the planned disposals of non-core activities should enable Shanks to take full advantage of value enhancing organic investment opportunities. The Group will continue to develop its three key principal growth opportunities of Recycling, Organic Processing and UK PFI.

Currency

While the Group has little transactional exposure to movements in exchange rates, its reported results are impacted by the translation of non-UK results into sterling. Approximately 77 per cent. of the Group's revenues and 97 per cent of its trading profit are currently generated in euros. Compared to full year 2008, sterling has weakened significantly against the euro, particularly in the second half of the year, and this has had the effect of increasing reported trading profit for the financial year ended 31 March 2009 by £9.3 million (14 per cent.).

Conversely, this weakening of sterling has had an adverse impact on the Group's level of reported core net debt through the translation impact on non-sterling denominated debt. During the financial year ended 31 March 2009, currency translation increased net debt by £38 million, although euro-denominated cash flow against which this debt is secured has in parallel benefited from the translation effect.

The New Facilities now remove the currency exposure risk that previously existed when testing the Group's borrowing covenants. Going forward, both the Group's EBITDA and core net debt in foreign currencies will be converted to sterling at the same average exchange rates.

7. Dividend Policy

On 21 May 2009, the Board announced that the Company would not be paying a final dividend in respect of the year ended 31 March 2009. Following the Rights Issue, the Board's intention is to pay an interim and final dividend for the year to 31 March 2010, with a progressive policy within the range of 2.0 to 2.5 times dividend cover in the medium term.

8. Prospectus and Extraordinary General Meeting

The prospectus containing details of the Rights Issue is expected to be posted to Shareholders shortly. For the purposes of effecting the Rights Issue, the Resolution will be proposed at an Extraordinary General Meeting, which is to be held at Ashurst LLP, Broadwalk House, 5 Appold Street, London, EC2A 2HA at 11.00 a.m. on 8 June 2009.

appendix I: EXPECTED TIMETABLE OF PRINCIPAL EVENTS

2009

Announcement of Rights Issue 21 May

Record Date for the Rights Issue close of business on 5 June

Latest time and date for receipt of Forms of Proxy 11.00 a.m. on 6 June

Extraordinary General Meeting 11.00 a.m. on 8 June

Despatch of Provisional Allotment Letters (to Qualifying non-CREST Shareholders only) 8 June

Stock accounts credited with Nil Paid Rights (for Qualifying CREST Shareholders) 9 June

Nil Paid Rights enabled in CREST 8.00 a.m. on 9 June

Admission and commencement of dealings in
the Nil Paid Rights on the London Stock Exchange 8.00 a.m. on 9 June

Shares marked 'ex-rights' by the London Stock Exchange 8.00 a.m. on 9 June

Recommended latest time and date for requesting withdrawal of
Nil Paid Rights from CREST (i.e. if your Nil Paid Rights are in
CREST and you wish to convert them into certificated form) 4.30 p.m. on 16 June

Latest time and date for depositing renounced Provisional
Allotment Letters, nil paid, into CREST or for dematerialising Nil Paid
Rights into a CREST stock account 3.00 p.m. on 18 June

Latest time and date for splitting Provisional Allotment Letters, nil paid 3.00 p.m. on 19 June

Latest time and date for acceptance and payment in full 11.00 a.m. on 23 June

Commencement of dealing in Rights Issue Shares fully paid,
Rights Issue Shares credited to CREST stock accounts 8.00 a.m. on 24 June

Despatch of definitive share certificates for Rights Issue Shares
in certificated form 1 July

Note:

The dates set out in the expected timetable of principal events above and mentioned throughout this announcement are indicative only and may be adjusted by Shanks Group plc in which event details of the new dates will be notified to the FSA, to the London Stock Exchange and, where appropriate, to Shareholders.

appendix II: DEFINITIONS

The following definitions apply throughout this document, unless the context otherwise requires

'Admission'	the admission of the Rights Issue Shares (nil paid) (i) to the Official List and (ii) to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance, respectively, with the Listing Rules and the Admission and Disclosure Standards;
'Admission and Disclosure Standards'	means the Admission and Disclosure Standards of the London Stock Exchange, as revised from time to time;
'Australia'	the Commonwealth of Australia, its territories and possessions;
'Benelux'	the economic union of Belgium, The Netherlands and Luxembourg;
'Board'	the Board of Directors of the Company;
'Business Day'	any day (excluding Saturdays and Sundays) on which banks are open in London for normal banking business;
'Canada'	Canada, its provinces and territories and all areas under its jurisdiction and political subdivisions thereof;
'certified' or 'certificated form'	not in uncertificated form;
'CCSS'	the CREST Courier and Sorting Office established by Euroclear UK & Ireland to facilitate, amongst other things, the deposit and withdrawal of securities;
'Company' or 'Shanks'	Shanks Group plc;
'CREST'	the relevant system (as defined in the CREST Regulations) for paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which Euroclear UK & Ireland is the operator (as defined in the CREST Regulations);
'CREST Manual'	the rules governing the operation of CREST consisting of the CREST Reference Manual, the CREST International Manual, the CREST Central Counterpart Service Manual, the CREST Rules, the CCSS Operations Manual, and the CREST Glossary of Terms (as amended from time to time);
'CREST Regulations'	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended;
'Disclosure and Transparency Rules'	the rules made by the FSA under Part VI of FSMA relating to the disclosure of information (as amended from time to time);
'Directors' or the 'Board'	the current directors of the Company;
'Euroclear UK & Ireland'	Euroclear UK & Ireland Limited, the operator of CREST;
'Extraordinary General Meeting'	the general meeting of the Company to be held at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA at 11.00 a.m. on 8 June 2009, notice of which will be set out in the Prospectus;
'FSA'	the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of admission to the Official List otherwise than in accordance with Part VI of FSMA;
'FSMA'	the Financial Services and Markets Act 2000, as amended from time to time;
'Fully Paid Rights'	rights to acquire Rights Issue Shares, fully paid;
'Greenhill & Co.'	Greenhill & Co. International LLP;
'Group'	the Company and its subsidiaries from time to time;
'Japan'	Japan, its territories and possessions and any areas subject to its jurisdiction;
'London Stock Exchange'	London Stock Exchange plc;
'New Facilities'	the new debt finance facilities provided to the Group as announced on 7 April 2009;
'Nil Paid Rights'	Rights Issue Shares in nil paid form provisionally allotted to Qualifying Shareholders pursuant to the Rights Issue;
'Notice of Extraordinary General Meeting'	the notice of extraordinary general meeting set out at the end of this document;
'Official List'	the Official List of the FSA;
'Overseas Shareholders'	Qualifying Shareholders who have registered addresses, outside the UK;
'PFI'	Private Finance Initiative, an initiative developed in the UK as a way of funding major capital investments without recourse to the public purse, using private consortia to design, build and sometimes manage major capital projects with the public sector then paying for the use of the new development;
'Provisional Allotment Letter' or 'PAL'	the renounceable provisional allotment letter expected to be sent to Qualifying Non-CREST Shareholders, other than Overseas Shareholders in the United States, Canada, Japan, the Republic of South Africa and Australia, in respect of the Rights Issue Shares to be provisionally allotted to them;
'Qualifying CREST Shareholders'	Qualifying Shareholders whose Shares on the register of members of the Company at the close of business on the Record Date are in uncertificated form;
'Qualifying non-CREST Shareholders'	Qualifying Shareholders whose Shares on the register of members of the Company at the close of business on the Record Date are in certificated form;
'Qualifying Shareholders'	holders of Shares on the register of members of the Company at the close of business on the Record Date;
'RBS Hoare Govett'	RBS Hoare Govett Limited;
'Record Date'	close of business on 5 June 2009;
'Regulations'	the Uncertificated Securities Regulations 2001, as amended from time to time;
'Resolution'	the special resolution to (a) increase the authorised share capital of the Company, (b) grant authority to allot Shares (including the Rights Issue Shares) and (c) confer authority to allot Shares (including the Rights Issue Shares) free from statutory pre-emption rights, as set out in the Notice of Extraordinary General Meeting;
'Rights Issue'	the proposed offer by way of rights of the Rights Issue Shares to Qualifying Shareholders at the Issue Price on the terms and subject to the conditions set out in the Prospectus and, in the case of Qualifying non-CREST Shareholders only, the Provisional Allotment Letter;
'Rights Issue Price'	45 pence per Rights Issue Share;
'Rights Issue Shares'	the 158,679,867 new Shares to be issued by the Company pursuant to the Rights Issue;
'Securities'	the Rights Issue Shares, the Provisional Allotment Letters, the Nil Paid Rights and the Fully Paid Rights;
'Shareholders'	holders of Shares;
'Shares'	the ordinary shares of 10 pence each in the capital of the Company;
'Underwriting Agreement'	the agreement between the Company and RBS Hoare Govett dated 21 May 2009;
'United Kingdom' or 'UK'	the United Kingdom of Great Britain and Northern Ireland;
'United States' or 'US'	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;
'£', 'pence' or 'sterling'	the lawful currency of the UK;
'€', 'euros'	the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended.

IMPORTANT NOTICE:

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS: