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Probus Estates PLC (PBE)

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Tuesday 18 December, 2001

Probus Estates PLC

Acquisition

Probus Estates PLC
18 December 2001


                              PROBUS ESTATES PLC
                     ('Probus Estates' or 'the Company')

                 Proposed Residential Development Project at
                   Can Vinyes, Gava, Near Barcelona, Spain

Probus Estates, which invests in commercial and leisure developments in
Continental Europe, today announces a new project, to develop two sites of
prime land outside Barcelona into high quality residential villas and
condominiums.


KEY POINTS


*     The proposed development is located in a picturesque rural setting        
      approximately 20 km south west of Barcelona.

*     The land acquired comprises more than 2 million square metres, embracing a
      development of two sites, totaling more than 250,000 square metres and    
      with approximately 140,000 square metres of buildable area, on which a    
      range of high quality luxury villas and condominiums will be marketed.    
      There will also be a nine-hole golf course adjacent to the development.

*     The entire development is expected to be complete and fully marketed by   
      2007.

*     The land value of the two sites is estimated at EURO 50 million (£31.0    
      million) by Healey & Baker, the international property consultants. (1)

*     To acquire the holding companies that own options over the land to be     
      developed, and to exercise those options, Probus Estates is paying a total
      of EURO 49.1 million (£30.4 million), to be satisfied as follows:

          -   the issue of EURO 11.85 million (£7.3 million) of loan notes
              convertible into Probus Estates shares at a price of EURO 0.140444
              per share (equivalent to 8.7p per share);

          -   the issue of EURO 16 million (£9.9 million) of unconvertible loan
              notes;

          -   the payment of EURO 3.25 million (£2.0 million) in cash; and

          -   for the exercise of the options to acquire the land, a payment of
              EURO 18 million (£11.2 million), to be financed by a loan         
              facility.


Lars-Erik Magnusson, Chairman of Probus Estates, commented:


'Can Vinyes is precisely the type of project in which we want to be involved.
Local market conditions suggest there is likely to be a significant level of
demand for high quality luxury properties of the sort this development
envisages.  I am confident that it can yield extremely healthy returns for our
shareholders.'

                                                              18 December 2001


ENQUIRIES:


Probus Estates PLC
Lars-Erik Magnusson, Chairman          Tel: 00 31 20 669 7032
Patrick Browning, Finance Director     Tel: 020 7479 7020

College Hill                           Tel: 020 7457 2020
Archie Berens                          Email: [email protected]


                 Proposed Residential Development Project at
                   Can Vinyes, Gava, Near Barcelona, Spain

The Board of Probus Estates is pleased to announce that it has reached
agreement with Rocurin Development N.V. for the acquisition of companies
holding options to purchase development land at Can Vinyes, Gava, which is
located approximately 20 km to the south-west of Barcelona.

The Proposed Development

The land to be developed consists of two sites, strategically located in a
peaceful and picturesque countryside location, a short distance inland from
the Mediterranean coast and totalling 2 million square metres, of which
549,000 square metres have been approved for development.  From certain points
within the two sites the sea can be seen and there are also views of
Barcelona.  Despite being located in a rural setting, the proposed development
is within easy drive time of central Barcelona, the International Airport and
the beaches of Costa del Garraf.

The luxury residential development will comprise approximately 210,000 square
metres of land available for the sale of exclusive residential villa plots, on
which it is likely that villas with a total buildable area of approximately
20,000 square metres can be constructed, and approximately 40,000 square
metres of land on a separate site for the development of condominium
buildings, which will allow up to 105,000 square metres of buildable area.
The condominiums will have a net sellable area of 84,000 square metres.  The
total amount of land for residential use in the development will therefore be
more than 250,000 square metres.  In addition, there will be a nine-hole golf
course built within the centre of the villa site and related infrastructure
developed around the dwellings.

Timetable

The proposed development is expected to be phased over a timescale lasting a
little over six years, as follows:


Now - 2002:  Detailed work up of design, submit and obtain all necessary
             planning approvals

2003 - 2004: Basic infrastructure work carried out  (e.g. access and tributary
             service roads, overall site landscaping)

2003 - 2006: Phased programme of villa plot sales, with project marketing
             taking place during build-up to construction

2004 - 2006: Three-phased development of condominium buildings


2005 - 2007: Phased sale of condominium units (420 units planned in total)


It is intended that a local project manager will be appointed.

The Local Residential Market


The residential market in Catalonia has been buoyant in recent years, fuelled
by the fast growing economy and increasing levels of employment.  The
percentage of home ownership in Spain is high, representing approximately 85
per cent., with strong demand for new residential accommodation in particular.
  There has been a high volume of residential construction activity in the
surrounding areas of Barcelona.  Gava, especially, along with Castelldefels
and Viladecans, has been the focus for a number of new residential schemes,
targeting an expanding population of inhabitants migrating out of central
areas of Barcelona, as well as new inhabitants moving into the area.

Barcelona is the second largest city in Spain after Madrid.  There is now a
wide range of modern residential accommodation in and surrounding the city
compared to only 10 years ago, with different scheme profiles covering the
various different populations of the urban area.  However, Can Vinyes will
offer something relatively unique compared to the large majority of existing
residential stock surrounding central Barcelona, as the concept provides a
distinctly upmarket, low density urbanization in a countryside setting
although within close proximity to Barcelona.

The Directors believe that Can Vinyes will be a very high profile and
exclusive luxury residential development for the Barcelona area, once
completed.  The site should provide a high quality living environment with
both large and smaller luxury units of accommodation benefiting from
attractive grounds and impressive surroundings. The combination of a high
quality residential scheme set in an attractive countryside environment, yet
being close to important communications and the sea, should therefore prove
very attractive to purchasers within the luxury residential market.

Furthermore, the proposed villa plots at Can Vinyes will offer much larger
sites than offered in the existing local market.  Comparables of luxury villas
as those proposed can be found further afield in affluent locations such as
Marbella, where there are various examples of large 5, 6 and 7 bedroom villas
of around 1,000 square metres set in exclusive plots of between 4,500 square
metres to 10,000 square metres.  However, no such comparable villas yet exist
in the Barcelona area.

Comparative land values for the development of villas in the area suggest an
average sale value of approximately EURO 330 (£204) per square metre for the
sale of the exclusive villa plots to private purchasers, on the assumption
that such plots will be served by access roads and other common infrastructure
such as street lights, pavements, drainage and utility connections.

Comparative prices for similar condominium developments in the area suggest a
range of sale values of between EURO 2,404 (£1,489) and EURO 2,554 (£1,582)
per square metre, which would therefore imply an average sale price per
condominium of approximately EURO 495,800 (£307,130).

Infrastructure

The Directors believe that Can Vinyes will be an important addition to the
luxury residential market along the north east coast of Spain.  The proposed
project will represent a high quality living environment being set in an
exclusive location on the edge of the picturesque mountains to the south of
Barcelona.  Whilst being adjacent to Parc Natural de Garraf, the location is
close to the International Airport, the surrounding beaches at Gava and
Castelldefels and within an easy driving distance of Barcelona's shops,
restaurants and other sights and facilities.


Valuation & Cost Development

Healey & Baker, the international property consultants, have produced a report
on the proposed development of Can Vinyes and they have confirmed a valuation
for the land of EURO 50 million (£31.0 million) (1).

Infrastructure cost for the villa plots, including the 9 hole golf course, has
been estimated EURO 9.3 million (£5.8 million) and the construction cost of
the condominiums has been estimated at EURO 900 (£558) per square metre.

Transaction Structure & Financing

Probus Estates has acquired Bardotte 8 B.V. from Rocurin Development N.V. for
a consideration of EURO 31.1m (£19.3m) to be satisfied by the issue of 8per
cent. loan notes for an amount of EURO 27,850,000 (£17,252,059) and cash of
EURO 3,250,000 (£2,013,007).    The loan notes are in two series.  Series A,
of which notes with a nominal value of EURO 16 million (£9.9 million) will be
issued, will have interest paid in cash.  Series B, of which notes with a
nominal value of EURO 11.85 million (£7.3 million) will be issued, will have
interest which can be paid in shares or in cash, at the option of the Company.
  The Series B loan notes are convertible into shares of Probus Estates at a
price of EURO 0.14044 per share (equivalent to 8.7p per share).

Bardotte 8 B.V. owns Rilantecson SL, which on 17 December 2001 exercised
options to purchase the land at Can Vinyes.  In order to provide Rilantecson
with the funds to exercise these options and to meet other obligations
relating to the land purchase (totalling approximately EURO 18 million (£11.2
million)), Probus Estates has borrowed EURO 29.1 million (£18.0 million) from
a Spanish bank on a guaranteed basis and has lent the necessary funds to
Rilantecson.  The guarantee for the borrowing has been provided by Uni-Invest
N.V. ('Uni-Invest'), which is a substantial shareholder in Probus Estates.
Lars-Erik Magnusson, the Chairman of Probus Estates, has provided an
additional guarantee to Uni-Invest in respect of this borrowing.

In return for the provision of its guarantee, interest on the amount
outstanding will be due to Uni-Invest at a rate calculated as the difference
between the market interest rate paid to the Spanish bank and 12 per cent.
Interest to Uni-Invest will be payable in cash or Probus shares at the option
of the Company.  Mr Magnusson will receive no consideration for the provision
of his additional guarantee.

As Uni-Invest is a substantial shareholder in the Company, the granting of the
guarantee represents a related party transaction under the AIM Rules.  The
Directors of the Company, having consulted with Brown, Shipley & Co. Limited,
the Company's nominated adviser, consider that the terms of the guarantee are
fair and reasonable insofar as shareholders are concerned.

As Mr Magnusson is a director and substantial shareholder in the Company, the
granting of his additional guarantee also represents a related party
transaction under the AIM Rules.  The Directors of the Company (with the
exception of Mr Magnusson), having consulted with Brown, Shipley & Co.
Limited, the Company's nominated adviser, consider that the terms of the
guarantee by Mr Magnusson are fair and reasonable insofar as shareholders are
concerned.

The land will initially be valued at EURO50 million (£31.0 million), which
represents the total costs incurred in its acquisition.  The land will be
treated as a current asset.

During 2002, once a master plan for the development has been approved,
arrangements will be made for the financing of the infrastructure cost.  It is
expected that the construction costs for the condominiums, starting in 2004,
will be largely met by the prior sale of the villa plots, which will start in
2003.

This new project is expected to have little impact upon the Group Profit &
Loss Account in the immediate future as interest and other costs will be
capitalised and added to the carrying value of the land. No revenues are
expected before 2003.

Conclusion

The Directors consider that the proposed development at Can Vinyes is entirely
consistent with their strategy of seeking above average returns from investing
in property and leisure assets.  The initial research conducted on the Can
Vinyes project shows an existing infrastructure and market that would support
such a development and gives the Directors every confidence that such returns
can be achieved.  The Directors therefore look forward to commencing the
project and to reporting further progress at Can Vinyes during 2002 and
beyond.

Assumptions (1)

In reaching their valuation, Healey & Baker have made the following specific
assumptions:


-    full planning permissions will be granted for all aspects of the           
     development project and that there will be no further additional charges or
     planning gain, except for those reflected in their valuation report;

-    a waste disposal site, which is located to the rear of the site planned for
     the construction of condominiums and which currently shares the
     same access road as that part of the development site, will be fully closed
     and non-operational before the construction of the condominium development.
     Closure and relocation of this waste disposal site has already commenced;  
     and

-    all parts of the site can be obtained with vacant possession, including two
     existing country houses and a dog kennel business.  One of these country   
     houses is listed and it has been assumed that it will be retained as part  
     of the proposed development.


All sterling equivalents in this announcement have been calculated using a
rate of EURO 1.6143 per £1.




                                                                                
                                                                   

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