Watford Leisure PLC

("Watford Leisure" or the "Company")

Related Party Loan and Update on Financial Position

Watford Leisure announces that it has increased its borrowings from Valley Grown Salads Limited ("VGS"). A related party loan facility agreed with Valley Grown Salads ("VGS"), under which £2.63 million was advanced to the Company, was announced on 11 September 2009. This facility ("VGS Facility"), which is secured against the Vicarage Road Stadium ("Stadium"), is repayable on demand and accrues interest monthly at a rate of 3.5 per cent. over Barclays Base Rate. 

On 26 November 2009, VGS lent a further £1 million to the Company (the "November Loan"), as a further advance under the VGS Facility. In addition, and as a condition to the November Loan, the interest rate payable for the VGS Facility was increased to 4.5 per cent. over Barclays Base Rate and the loan of £1.25 million previously advanced by Giacomo Russo to the Company in August and repayable in three instalments from funds due from the proceeds of player transfers (the "August Loan"), is being repaid to Giacomo Russo and refinanced by way of a further drawdown from VGS by Watford Leisure under the existing secured facility.  As a result, VGS will have the principal amount of £4.88 million in loans (in aggregate) outstanding and secured against the Stadium.

The independent directors of the Company (that is, excluding Vincenzo and Giacomo Russo, who jointly control VGS, and Robin Williams) consider, having consulted with Strand Hanson Limited, that the terms of the November Loan and the terms of the refinancing of the August Loan are fair and reasonable insofar as the Company's shareholders are concerned.

The board of Watford Leisure ("Board") estimates that the Company requires a further £5.5 million to cover projected cash flow requirements for the period to 30 June 2010. The Board has had no success to date in securing agreement between the major shareholders of the Company in relation to a possible equity fundraising although the Board believes that options which it has proposed are still being actively considered. The Board continues to consider all fundraising options open to the Company.

The November Loan will only be sufficient to cover the Company's cash requirements until 22 December 2009. In the event that further funding is not available to the Club before 22 December 2009, then the Board would seek a suspension of trading in Watford Leisure's shares on AIM pending clarification of its financial position. Further announcements will be made in due course.

Enquiries: 

Watford Leisure PLC    

Tel:  01923 496 000

Jimmy Russo, Chairman

Julian Winter, Chief Executive Officer

Strand Hanson Limited

Tel:  020 7409 3494

Rory Murphy