Supplementary prospectus

R.E.A.Hldgs PLC
15 February 2006


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

Supplementary Prospectus and Proposed Reduction of Capital


REA announces that it has published a supplementary prospectus (the
'supplementary prospectus') supplemental to the base prospectus (the 'base
prospectus') published on 17 August 2005 relating to an issue by REA of up to
$30,000,000 of 7.5 per cent dollar notes 2012/14 ('dollar notes').

Currently, $4,972,281 nominal of dollar notes are in issue. As announced on 24
January 2006, REA has agreed to issue a further $19,000,000 nominal of dollar
notes pursuant to the terms of an agreement (the 'settlement agreement') dated
23 January 2006 between REA and certain of its directors and subsidiaries of the
one part and Mr M E Zukerman and connected parties of the other part (the 'MEZ
group') as consideration for the acquisition by REA of all of the shares in
REA's subsidiary, Makassar Investments Limited, owned by the members of the MEZ
group.

The supplementary prospectus contains information relating to certain
significant new factors relating to the information provided in the base
prospectus which have arisen since the date of publication of the base
prospectus. Details of such factors have already been announced in press
announcements issued by REA save as regards the fact that the directors of REA
have concluded that they should seek shareholder approval for a reduction in the
capital of REA of £6 million in aggregate involving the cancellation of the
entire balance of £3,239,666 standing to the credit of REA's capital redemption
reserve and a reduction of £2,760,334 in the amount standing to the credit of
REA's share premium account.

This reduction of capital was envisaged in the base prospectus, and the trust
deed constituting the dollar notes contains provisions pursuant to which the
trustee for the holders of the dollar notes has irrevocably consented, on behalf
of itself and holders of the dollar notes, to a reduction in the capital of REA
of the magnitude that is proposed. However, at the time that the base prospectus
was published, the directors had no immediate plans to propose the reduction of
capital. That has now changed.

The REA group's profits are currently derived almost entirely from the oil palm
operations in Indonesia of REA's subsidiary, PT REA Kaltim Plantations ('REA
Kaltim'). That subsidiary has substantial local borrowings in Indonesia and the
covenants to which those borrowings are subject impose restrictions on payments
by REA Kaltim of dividends and of interest on loans made by REA to REA Kaltim.
REA's own profits are materially dependent upon receipt of such payments.
Moreover, even to the extent that the payment of dividends by REA Kaltim is
permitted by its local bankers, the availability of tax losses brought forward
in REA Kaltim (resulting from accelerated depreciation for tax purposes in
respect of the substantial capital expenditure that has been incurred in the
establishment of REA Kaltim's present operations), would make it, for the time
being, fiscally disadvantageous for the REA group if REA Kaltim were to pay
significant dividends.

REA is permitted by law to pay dividends on its shares only out of its own
distributable reserves. The level of distributable reserves shown by the REA
balance sheet as at 31 December 2004 (being the latest audited balance sheet of
the company) amounted to just £1.6 million. As the servicing cost of the
additional $19 million of dollar notes to be issued pursuant to the settlement
agreement will result in an increase in future charges against REA's own
revenues, the directors of REA are concerned to ensure that, if there is an
erosion in REA's distributable reserves, such a technical limitation should not
inhibit the payment of dividends (especially dividends on the preference shares
of REA) which the directors would, from a commercial viewpoint, feel able to
recommend. The directors consider that the likelihood of such an occurrence
would be significantly reduced by the release to distributable reserves of £6
million in aggregate from the amounts at present standing to the credit of REA's
share premium account and capital redemption reserve.

Accordingly, subject to the placing of the 1,372,000 ordinary shares at 260p per
share that was agreed on 14 February 2006 being duly completed and to the
proposals for the issue of an additional 2,828,000 ordinary shares at 260p per
share pursuant to a further placing and open offer (such placing and proposals
for a further placing and open offer being as announced on 14 February 2006),
REA intends that the circular to be sent to shareholders in connection with the
proposed issue of the 2,828,000 additional ordinary shares should include
proposals for a reduction in the capital of REA to the extent described above.
The proposed reduction would be conditional upon the further placing and open
offer of the 2,828,000 ordinary shares becoming unconditional and upon the
passing of resolutions of warrant holders and shareholders necessary to effect
the reduction. The proposed reduction of capital would further be conditional
upon confirmation by the High Court.

A copy of the supplementary prospectus has been submitted to the UK Listing
Authority, and will shortly be available for inspection at the UK Listing
Authority's Document Viewing Facility, which is situated at:

Financial Services Authority,
25 The North Colonnade,
Canary Wharf,
London,
E14 5HS

Telephone: [phone]


A copy of the supplementary prospectus may also be inspected at the offices of
REA at 3rd Floor, 40-42 Osnaburgh Street, London NW1 3ND and in electronic form
on the website maintained by REA at www.rea.co.uk. A copy of the base prospectus
is similarly available for inspection.




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