5 November 2008

Adili plc

('Adili' or 'the Company')

Proposed Loan Conversion 

Further to the announcement issued on 3 October 2008, reporting the Company's final results, the placing of new ordinary shares in the capital of Adili ('Ordinary Shares') at 5.5p per share ('Placing') and the Company's entry into a secured convertible loan facility ('Loan') with its largest shareholder, Hawk Investment Holdings Limited ('Hawk'), the Company announces that it has today posted a circular to shareholders ('Circular'). The Circular seeks approval, amongst other things, to convert the Loan into new Ordinary Shares and of a waiver under Rule 9 of the Takeover Code ('Code').

The purpose of the Placing and the Loan was to provide short and medium term working capital and funds to enable continued investment in the Adili 'own label' range. The principal amount outstanding under the Loan, together with accrued interest, automatically converts into Ordinary Shares at a conversion price of 5.5p per share, subject to the Panel on Takeovers and Mergers ('Panel') granting a waiver of any obligation on Hawk to make a general offer pursuant to Rule 9 of the Code and subject to independent shareholder approval thereof.

Hawk is an investment company owned by Bob and Susan Morton. It currently holds 9,608,578 Ordinary Shares, equivalent to 29.95 per cent. of Adili's existing share capital. On completion of the conversion of the Loan, Hawk would hold 21,407,348 Ordinary Shares, equivalent to 48.78 per cent. of the enlarged issued share capital. Since this conversion will result in Hawk being interested in more than 30 per cent. of the enlarged issued share capital, in the absence of a waiver from the provisions of Rule 9 of the Code being granted by the Panel, Hawk would be obliged to make a general offer to all remaining shareholders of the Company. The Panel has agreed, however, to waive this obligation, subject to the appropriate resolution being passed on a poll by the independent shareholders at the annual general meeting of the Company ('AGM').

The Loan is repayable on (or, at the Company's discretion, before) 2 October 2009 and bears interest at a rate of 12 per cent. per annum. The first payment is payable three months in arrears and thereafter monthly in arrears.

The directors have concluded that the conversion of the Loan is in the best interests of the Company and an AGM has been convened for 1.00 p.m. on 28 November 2008 at which time the Company will seek approval of the appropriate resolutions. Notice of the AGM is included in the Circular and the AGM will be held at the offices of the Company at Blandford Hill, Milborne St. Andrew, Blandford Forum, Dorset DT11 0HZ. 

Following conversion of the Loan, the Company will have 43,881,704 Ordinary Shares in issue. Application will be made for the admission of the new Ordinary Shares to trading on AIM and dealings are expected to commence on 1 December 2008.

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