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19 November 2009

Parkwood Holdings plc ('the Company" or "Parkwood")

PROPOSED DISPOSAL OF CERTAIN SHARES AND SUBORDINATED DEBT HELD WITHIN THE SPECIAL PURPOSE COMPANIES SUB-GROUP OF PARKWOOD HOLDINGS PLC 

This announcement is for information purposes only and does not constitute an offer or invitation to acquire or dispose of any securities or investment advice in any jurisdiction. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The Disposal, because of its size in relation to the Company, is a Class 1 transaction for Parkwood under the Listing Rules and is therefore conditional, inter alia, upon the approval of the Shareholders. A circular will be sent to shareholders shortly containing information relating to the Disposal together with a notice convening the General Meeting, to consider and, if thought fit, approve the Disposal 

Parkwood is pleased to announce that it has conditionally agreed to sell certain shares and subordinated debt held within the special purpose companies sub-group of the Company ("the Disposal Interests") to Equitix for a total gross consideration of £6.55 million payable in cash on completion of the sale. The sale is subject to Shareholder approval at a general meeting and accordingly a Circular will be sent to Shareholders in due course to seek their authority for the Disposal.

Description of the Disposal Interests

The Company is proposing to dispose of its equity and subordinated debt holdings in four SPVs Breckland, Rivendell, Waterfront Leisure and Leisureplan through which five PFI projects are operated. PPM, a wholly owned subsidiary of the Company, has (via Leisureplan Limited) an ultimate 100 per cent. shareholding in each of Breckland and Rivendell and a 50 per cent. shareholding in each of Leisureplan and Waterfront Leisure. Details of the Group's interests in the relevant PFI Projects are summarised in the table below:

Project	Company	Group's interest in the relevant PFI Project	SPV in which the Disposal Interests are held
Waterfront Leisure PFI	Waterfront Leisure	50%	Waterfront Leisure
Bexley Leisure PFI	Boxwood Leisure	50%	Leisureplan
Penwith Leisure PFI	Penzance Leisure	50%	Leisureplan
Breckland Leisure PFI	Breckland Leisure Ltd	100%	Breckland
Rivendell Leisure PFI	Rivendell Leisure Ltd	100%	Rivendell

Set out below is further detail of the five PFI projects which are operated through the four SPVs in which the Group is proposing to dispose of its holding of shares and subordinated debt:

Waterfront Leisure PFI Project

The leisure centre, based on a site facing the Mersey estuary, was the first in the UK to be procured under the Government's PFI. The centre offers a six lane, 25 metre swimming pool plus teaching pool, four-court sports hall, squash courts, fitness suite, dance studio and a cafe.

Bexley Leisure PFI Project

The original scheme involved the refurbishment of two of Bexley's existing leisure centres, at Erith and Crook Log (Bexleyheath), followed by a contract variation in 2006 for the construction of a new leisure centre at Sidcup. The original project reached financial close in July 2003, the Erith and Crook Log leisure centres became operational in July 2005 and the Sidcup leisure centre became operational in March 2008.

Penwith Leisure PFI Project

Penzance Leisure was created to undertake the Penwith Leisure PFI Project on behalf of Penwith District Council. The facility includes a 25-metre swimming pool with water slide and learner pool, a 6-court sports hall, fitness suite, a steam room, sauna, crèche, cafe and ancillary meeting rooms. The project reached financial close in March 2004 and has been in operation since August 2005.

Breckland Leisure PFI Project

This scheme included the provision of a brand new leisure centre in Dereham and a refurbished leisure centre with additional facilities in Thetford. The facilities at Dereham include a six lane 25 metre pool, teaching pool, fitness centre, multi-purpose sports hall, aerobics and dance studio and an indoor bowling rink, cafe, bar and crèche. The facilities at Thetford include a fitness centre, saunas and steam rooms, a leisure pool, floodlit synthetic multi-use games area, facilities for racket sports and aerobics, bar, cafeteria and function rooms. The project reached financial close in November 2005 and has been operational since April 2007.

Rivendell Leisure PFI Project

This scheme involved the construction of a new leisure centre in Solihull to replace Tudor Grange Sports Centre and also the major refurbishment of North Solihull Sports Centre. Facilities at the new Tudor Grange Sports Centre include an eight lane 25 metre pool, learner pool, a diving/multi purpose pool, sports hall, fitness and health suite, cafe and crèche. The project reached financial close in June 2006. The North Solihull Sports Centre became fully operational in August 2007 and the Tudor Grange Sports Centre in June 2008.

The Continuing Group provides a range of services to each of these projects pursuant to leisure operator sub-contracts, life cycle sub-contracts and maintenance sub-contracts. These agreements will remain in place following completion of the Disposal.

The Continuing Group has also entered into management agreements in relation to each of the relevant PFI Projects with the relevant SPVs. These agreements will remain in place following the Disposal.

Under the sub-contracts, PPM has the responsibility for day-to-day maintenance as well as lifecycle obligations. The day-to-day maintenance responsibilities are then further sub-contracted to Parkwood Leisure whilst PPM retains responsibility for the lifecycle elements. PPM also retains building lifecycle obligations for Penzance.

Immediately prior to and conditional on the disposal of the Disposal Interests, the Company intends to reorganise its share and subordinated debt holdings in D4E. D4E is currently a 25% subsidiary of Leisureplan (and therefore a 12.5% subsidiary of the Company via PPM). As D4E does not form part of the Disposal Interests, the intention is that:

• Leisureplan will declare dividends in specie of its shareholding in D4E which will be payable to PPM and Hendersons as shareholders in Leisureplan;

• Leisureplan will transfer its subordinated debt interests in D4E to PPM and HPFI with the consideration to be left outstanding as inter-company loans;

• the loan notes in Leisureplan held by PPM and HPFI will be redeemed and the sums due on such redemption will be set off against the inter-company loans arising on the transfers of the subordinated debt in D4E; and

• immediately following the payment of such dividends in specie and the transfer of the subordinated debt, PPM will acquire from Hendersons its entire holding of equity (12.5% of D4E's equity) and will acquire from HPFI its entire holding of subordinated debt in D4E.

Following completion of such reorganisation, PPM will therefore be a 25% share and loan note holder in D4E.

Terms of the Sale Agreement

The Sale Agreement is conditional upon the Resolution being passed no later than 23 December 2009. This will require the Circular and notice of meeting required under the Listing Rules to be posted to Shareholders no later than Monday 30 November 2009. 

Application of proceeds

The Company has agreed to sell the Disposal Interests to Equitix for a total gross consideration of £6.55m, payable in cash upon completion of the Sale Agreement. After adjustments of £575,000 for the costs of the Disposal, £350,000 for the cost of acquiring a further 12.5% in D4E and £1,583,000 for the settlement of tax liabilities in the SPC Group, the Company will use the net proceeds of £4,042,000 from the Disposal to reduce the Company's level of indebtedness.

Following the decision to sell the Disposal Interests in 2008, Parkwood's 2009 interim results for the six months ended 30 June 2009 separate the assets and liabilities of the Disposal Interests from those of the Continuing Group. The assets of the Disposal Interests at 30 June 2009 were £25.7m while the liabilities of the Disposal Interests were £27.2m. Following the Disposal, the Continuing Group's cash balance will increase by £4.04m and the Continuing Group's net assets will increase by £8.0m. The Disposal Interests contributed £0.28m profit towards the Company's result before tax in the year to 31 December 2008 and £0.71m profit in the six months to 30 June 2009. The Disposal will also result in an exceptional pre-tax profit of £5.5 million.

Contact:

For further information please contact either:

Parkwood Holdings plc

Tony Hewitt, Executive Chairman    01772 627111.

Brewin Dolphin Investment Banking

Neil Baldwin                0845 213 4730

Definitions 

The following definitions apply throughout this announcement unless the context otherwise requires or unless otherwise stated:

''Board'' or ''Directors''	the directors of the Company
''Boxwood''	Boxwood Holdings Limited, a wholly owned subsidiary of Leisureplan Projects and parent company of Boxwood Leisure
''Boxwood Leisure''	Boxwood Leisure Limited, a wholly owned subsidiary of Boxwood
''Breckland''	Breckland Holdings Limited, a wholly owned subsidiary of Leisureplan Limited and parent company of Breckland Leisure Limited
''Brewin Dolphin''	Brewin Dolphin Limited, the Company's sponsor and broker
''Circular''	this document to be sent to Shareholders as required by the Listing Rules
''Company'' or ''Parkwood''	Parkwood Holdings plc
''Disposal''	the proposed disposal of the Disposal Interests
''Disposal Interests''	together the Company's holdings of shares and subordinated debt in: (a) (via PPM and Leisureplan Limited) Rivendell and Breckland; (b) (via PPM) Waterfront Leisure; and (c) (via PPM, Leisureplan and Leisureplan Projects) Boxwood and Penzance,
''D4E''	D4E Mulberry (Holdings) Limited, a company in which Leisureplan has a 25 per cent. Shareholding
''Equitix''	Equitix Leisure Ltd
''General Meeting'' or ''GM''	the general meeting of the Company to be convened for no later than 23 December 2009 to approve the Resolution or any amendment to it
''Group''	the Company and its subsidiaries
''Hendersons''	HPC Nominees Limited
''HPFI''	HPFI Finance Sarl
''Leisureplan''	Leisureplan Investments Limited, a company in which the Company (via PPM) has a 50 per cent. shareholding and which is the parent company of Leisureplan Projects
''Leisureplan Limited''	a wholly owned subsidiary of PPM and parent company of Rivendell and Breckland
''Leisureplan Projects''	Leisureplan Projects Limited, a wholly owned subsidiary of Leisureplan and the parent company of Boxwood and Penzance
''Listing Rules''	the listing rules of the Financial Services Authority
''Ordinary Shares''	the issued ordinary shares of 1p each in the capital of the Company
''Parkwood Leisure''	Parkwood Leisure Limited, a wholly owned subsidiary of the Company
''Penzance''	Penzance Holdings Limited, a wholly owned subsidiary of Leisureplan Projects and parent company of Penzance Leisure
''Penzance Leisure''	Penzance Leisure Limited, a wholly owned subsidiary of Penzance
''PFI''	Private Finance Initiative
''PPM''	Parkwood Project Management Limited, a wholly owned subsidiary of the Company
''Resolution''	the ordinary resolution to dispose of the Disposal Interests to be proposed at the General Meeting
''Rivendell''	Rivendell Leisure (Holdings) Limited, a wholly owned subsidiary of Leisureplan Limited and parent company of Rivendell Leisure Limited
''Sale Agreement''	the conditional sale and purchase agreement dated 19 November 2009 between (1) PPM and Leisureplan Limited and (2) Equitix, for Equitix to acquire the Disposal Interests
''Shareholders''	the holders from time to time of the Ordinary Shares
''SPC Group''	the Group's special purpose companies sub-group which includes Rivendell, Breckland, Leisureplan, Boxwood, Penzance and Waterfront Leisure
''SPV(s)''	Special Purpose Vehicle(s)
''Waterfront Leisure''	Waterfront Leisure (Crosby) Limited, a company in which the Company (via PPM) has a 50 per cent. shareholding

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