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Orchard Furniture (OFU)

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Friday 17 December, 1999

Orchard Furniture

Proposed Voluntary Arrangement with Creditors

Orchard Furniture PLC
17 December 1999

Orchard Furniture PLC ('Orchard' or 'the Company') announced today that it  is
proposing a Company Voluntary Arrangement ('CVA') with its creditors that,  if
accepted  by them and approved by its shareholders, should enable the  Company
to  survive as a 'shell' company. Creditors are offered shares in exchange for
their claims against the Company.

Orchard  also announced that the investors who subscribed for the 9 per  cent.
Convertible  Secured  Loan  Stock 2006 ('CSLS')  in  January  this  year  have
conditionally sold their holdings for a nominal consideration to Bath  Limited
('Bath'). The sale is conditional upon shareholders approving the granting  by
the Company to the former holders of the CSLS of an option over 5 per cent. of
the  share capital as enlarged by the issue of shares to creditors and by  the
first issue of shares to re-capitalise the Company.

Bath,  as  the new holder of all of the CSLS, has agreed, subject to  the  CVA
being  approved  by the Company's creditors and shareholders, to  convert  the
CSLS  into  shares  in  the  Company. The directors  of  Orchard  will  resign
following  the  Extraordinary  General  Meeting  convened  to  approve   these
arrangements, and Bath will appoint new directors to the board. It  is  Bath's
intention  to  seek  to  re-capitalise the Company with  a  view  to  possibly
acquiring a trading business, which may allow some value to be created in  the
existing and new ordinary shares.

Peel Hunt are nominated advisers and brokers to Orchard.


Orchard,  formerly  Wyefield Holdings PLC, acted  as  a  holding  company  for
subsidiaries  who  carried on business as upholstered furniture  manufacturers
under  the  trade  names of Lincoln House, Medallion and Quantum.  In  January
1999,  Orchard  raised approximately £1 million net of new capital  and  moved
from  the full list of the London Stock Exchange to the Alternative Investment
Market  ('AIM').  Shortly afterwards it became clear  to  directors  that  the
Company   was  in  dire  financial  straits  and,  after  a  brief   financial
investigation, it was decided to sell the business assets to satisfy the  more
pressing  creditors,  chiefly the Midland Bank. Following  this,  the  trading
subsidiaries  were  put  into  Liquidation and  share  dealings  on  AIM  were

It  was  clear to the board that the only way in which the remaining creditors
could be paid anything was (a) by parcelling up and selling capital tax losses
within  the  group and (b) by arranging a CVA to invite creditors  to  convert
remaining  debt  into equity and finding a third party to use  the  cleaned-up
shell as a reverse vehicle. The Board accordingly instructed KPMG to carry out
the  necessary reorganisation and to find a buyer for the new subsidiary.  The
Board also entered into an understanding with Bath, that, in parallel with the
CVA,  it  would buy the CSLS from the existing holders, which would give  Bath
effective control of the Company, with a view to injecting a business into it.
This  was  in hand when, on 9th November 1999, the Chancellor of the Exchequer
announced inter alia that he was closing the loophole that allowed capital tax
loss companies to be sold.

Current Position

The  Company  has no trade and assets, other than a small amount in  its  bank
account and a few items of office equipment. Its creditors, some of which  are
disputed, total between £1.1 million and £1.3 million. Some of these creditors
are pressing. The Company is plainly unable to continue its present existence.
The only alternative to liquidation, under which creditors could not expect to
be paid any dividend at all, is the current proposals.


Creditors of the Company have today been sent a letter inviting them to attend
the  CVA  at 30 City Road, London EC1T 2AY at 10.30 am on Monday 10th  January
2000, which would result in their being issued with new ordinary shares in the
Company on the following terms:-

Preferential Creditors     For every £1 of debt, 80 new ordinary shares in the
Company, credited as fully paid at 1.25p per share.

Other  Creditors  For every £1 of debt, 8 new ordinary shares in the  Company,
credited as fully paid at 1.25p per share.

Preferential creditors, principally the Inland Revenue, amount up to  £100,000
and  under  the proposals will receive a maximum of 8 million shares.  In  the
case  of  the unsecured creditors, who could have expected nothing at  all  in
liquidation,  it is proposed to offer them one tenth of the amount  of  shares
being  offered  to  the  preferential creditors. The  maximum  number  of  new
ordinary  shares to be issued to them will be 10 million. In total, therefore,
a  maximum of 18 million new ordinary shares will be issued. This will  result
in  creditors potentially holding 28.7 per cent. of the share capital  of  the
Company before conversion of the CSLS and 13.4 per cent. after conversion.

Arrangements with the holders of the CSLS

At  the  request of the Company, the institutional holders of  the  CSLS  have
disposed of the CSLS to Bath. As part of the arrangements, Orchard has  agreed
to grant an option to these institutions (Pennine AIM VCT plc, Pennine AIM VCT
II plc, Pennine Downing AIM VCT plc and Aim Distribution Trust plc) over 5 per
cent.  of  the Company's share capital as enlarged by the issue of  shares  to
creditors  and by the first issue of shares to re-capitalise the Company.  The
option  price  is par value (0.1p per share) and the option must be  exercised
within two years of the CVA.

Bath  has agreed to provide up to £25,000 solely to meet the costs of the  CVA
and  other proposals to be approved by shareholders, and Bath may convert this
advance into ordinary shares in the Company in due course.


Bath  is  a  Guernsey based company that invests in both listed  and  unlisted
companies. It is the intention of Bath that Orchard survives and that dealings
in  its shares on AIM are restored as soon as possible. The next step will  be
to  re-capitalise  the  Company with a view to possibly  injecting  a  trading
business  which  may allow some value to be created in the  existing  and  new
ordinary shares.

For further information

Nominated Adviser        Peel Hunt      Adam Hart      0171 418 8909
and Stockbroker
to Orchard

Chairman of Orchard                  Hugh Gillespie    01845 587 301

Consultant to Bath                 James Butterfield   01590 623 135


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