Offer Update

Pathfinder Properties PLC
25 April 2001

Pathfinder Properties Plc



Text of letters sent to shareholders of Pathfinder Recovery 1 PLC and
Pathfinder Recovery 2 PLC re recommended offer by Pathfinder Properties PLC



24 April 2001



Re: Recommended Offers (each 'the Offer') by Pathfinder Properties PLC
('Properties') to acquire the whole issued share capitals of Pathfinder
Recovery 1 PLC ('Reco 1') and Pathfinder Recovery 2 PLC ('Reco 2')



I am writing following the letter to Reco 1 Shareholders from Kerrington
Limited ('Kerrington') dated 16 April 2001 ('the Kerrington Letter') and the
alternative proposals contained therein.



I should like to apologise to Shareholders for the barrage of letters which
you are now receiving and may receive in the future.



This letter does not contain a point-by-point rebuttal of all the issues
raised in the Kerrington Letter, although we reserve the right to do this at a
later stage, if it becomes appropriate.



Directors' salaries

The one issue raised in the Kerrington Letter I would like to clarify is the
reference in paragraph A.7 to the executive directors' salaries.



Malcolm Bacchus and Simon Dawkins, the executive directors of Reco 1, are paid
a basic salary of £25,750 each per annum in relation to your Company which is
reviewed annually by the Company's Remuneration Committee.  They are also
entitled to participate in an annual bonus scheme, effective 1st January 2001
that is based upon performance targets and is limited and cannot exceed their
annual salary.



Reco 1 Shareholders were consulted

The Kerrington Letter speculates as to Shareholder wishes. However Reco 1
Shareholders were consulted by the Reco 1 board in 1999 on the various exit
route alternatives, including liquidation.  This consultation formed the basis
upon which the terms of the Offer were formulated, in conjunction with Reco 1
board and its advisers.



The Offer is designed to deliver a close match to Reco 1 Shareholders' wishes,
as expressed in the consultation process.



Share Offer maintains Reco 1 net asset value per share

The Share Offer is designed to produce a merger between the three companies
which leaves each set of shareholders in a broadly neutral position as regards
underlying net assets per share.



The Share Offer maintains underlying net asset value per share for Reco 1
Shareholders.



Kerrington's tax position differs from original BES investors

The BES Capital Gains Tax exemption only applies to original BES investors.
The Share Offer preserves your BES tax exemption.



Kerrington bought its shares direct from Andrew de Candole and from other
shareholders and does not benefit.  In this respect, therefore, the interests
of Kerrington and other shareholders may not be aligned.



Do not lightly give up your tax break, which lasts as long as you hold your
original Reco 1 shares or any Properties shares for which you exchange them.



The Kerrington Proposal

If the Kerrington directors were to take control, they would be under no legal
or contractual obligation to proceed in the manner they have described.  At
this point, unlike your Reco board, they have no fiduciary duty to you the
Shareholder.



Think carefully about Kerrington's motivation and their ability to deliver the
unspecified benefits of their proposal.



CONCLUSION



The Properties Offer is both fair and in line with Shareholders' previously
expressed wishes.



Accordingly, we urge you to:



*         ACCEPT our Offer and return your form of acceptance by 3pm on 30th
          April 2001;



*         Vote AGAINST the resolutions when the extraordinary general meeting
          is convened.



Yours faithfully



Sir Christopher Leaver,

For and on behalf of Pathfinder Properties PLC



The directors of Pathfinder Properties PLC accept responsibility for the
information contained in this letter and to the best of the directors'
knowledge and belief (having taken all reasonable care to ensure that such is
the case), the information contained in this letter is in accordance with the
facts and does not omit anything likely to affect the import of such
information.



This letter has been approved for the purposes of section 57 of the Financial
Services Act by Nabarro Wells & Co. Limited, which is regulated by the
Securities and Futures Authority Limited.



The close period for purchases of Property shares by directors ended on 28th
March 2001. On 9th April 2001, Malcolm Bacchus purchased 33,000 ordinary
shares in Properties at 15p per share giving him a holding of 0.12% of issued
Properties shares. On 12th April 2001, Simon Dawkins purchased 10,000 ordinary
shares in Properties at 15p per share giving him a holding of 0.01% of issued
Properties shares.



Save for the above purchases there have been no material changes to the
information contained in the Offer document dated 9th April 2001 and sent to
Reco 1 shareholders.




24 April 2001





Re: Recommended Offers (each 'the Offer') by Pathfinder Properties PLC
('Properties') to acquire the whole issued share capitals of Pathfinder
Recovery 1 PLC ('Reco 1') and Pathfinder Recovery 2 PLC ('Reco 2')





I am writing following the letter to Reco 2 Shareholders from Kerrington
Limited ('Kerrington') dated 16 April 2001 ('the Kerrington Letter') and the
alternative proposals contained therein.



I should like to apologise to Shareholders for the barrage of letters which
you are now receiving and may receive in the future.



This letter does not contain a point-by-point rebuttal of all the issues
raised in the Kerrington Letter, although we reserve the right to do this at a
later stage, if it becomes appropriate.



Directors' salaries

The one issue raised in the Kerrington Letter I would like to clarify is the
reference in paragraph A.7 to the executive directors' salaries.



Malcolm Bacchus and Simon Dawkins, the executive directors of Reco 2, are paid
a basic salary of £29,125 each per annum in relation to your Company which is
reviewed annually by the Company's Remuneration Committee.  They are also
entitled to participate in an annual bonus scheme, effective 1st January 2001
that is based upon performance targets and is limited and cannot exceed their
annual salary.



Reco 2 Shareholders were consulted

The Kerrington Letter speculates as to Shareholder wishes. However Reco 2
Shareholders were consulted by the Reco 2 board in 1999 on the various exit
route alternatives, including liquidation.  This consultation formed the basis
upon which the terms of the Offer were formulated, in conjunction with Reco 2
board and its advisers.



The Offer is designed to deliver a close match to Reco 2 Shareholders' wishes,
as expressed in the consultation process.



Share Offer maintains Reco 2 net asset value per share

The Share Offer is designed to produce a merger between the three companies
which leaves each set of shareholders in a broadly neutral position as regards
underlying net assets per share.



The Share Offer maintains underlying net asset value per share for Reco 2
Shareholders.



Kerrington's tax position differs from original BES investors

The BES Capital Gains Tax exemption only applies to original BES investors.
The Share Offer preserves your BES tax exemption.



Kerrington bought its shares direct from Andrew de Candole and from other
shareholders and does not benefit.  In this respect, therefore, the interests
of Kerrington and other shareholders may not be aligned.



Do not lightly give up your tax break, which lasts as long as you hold your
original Reco 2 shares or any Properties shares for which you exchange them.



The Kerrington Proposal

If the Kerrington directors were to take control, they would be under no legal
or contractual obligation to proceed in the manner they have described.  At
this point, unlike your Reco board, they have no fiduciary duty to you the
Shareholder.



Think carefully about Kerrington's motivation and their ability to deliver the
unspecified benefits of their proposal.



CONCLUSION



The Properties Offer is both fair and in line with Shareholders' previously
expressed wishes.



Accordingly, we urge you to:



*         ACCEPT our Offer and return your form of acceptance by 3pm on 30th
          April 2001;



*         Vote AGAINST the resolutions when the extraordinary general meeting
          is convened.





Yours faithfully



Sir Christopher Leaver,

For and on behalf of Pathfinder Properties PLC





The directors of Pathfinder Properties PLC accept responsibility for the
information contained in this letter and to the best of the directors'
knowledge and belief (having taken all reasonable care to ensure that such is
the case), the information contained in this letter is in accordance with the
facts and does not omit anything likely to affect the import of such
information.



This letter has been approved for the purposes of section 57 of the Financial
Services Act by Nabarro Wells & Co. Limited, which is regulated by the
Securities and Futures Authority Limited.



The close period for purchases of Property shares by directors ended on 28th
March 2001. On 9th April 2001, Malcolm Bacchus purchased 33,000 ordinary
shares in Properties at 15p per share giving him a holding of 0.12% of issued
Properties shares. On 12th April 2001, Simon Dawkins purchased 10,000 ordinary
shares in Properties at 15p per share giving him a holding of 0.01% of issued
Properties shares.



Save for the above purchases there have been no material changes to the
information contained in the Offer document dated 9th April 2001 and sent to
Reco 2 shareholders.



Further Information:

Andrew Marshall

Marshall Robinson Roe

Tel: [phone]