SERVICED OFFICE GROUP PLC
Renegotiation of bank facilities

Serviced Office Group plc ("SOG" or the "Group") is pleased to announce that it has completed the renegotiation of the Group's banking facilities with The Royal Bank of Scotland plc ("RBS").

The Group's facilities, including the loans of £25,968,750, have been renewed for a three year term until the end of December 2012.

Interest will be payable in cash over the life of the facilities at a rate equal to 2 per cent per annum over LIBOR. A further margin (the amount of which is dependant on the amount of the loans outstanding from time to time compared to the value of the group's freehold properties) will also accrue. This further margin will be rolled up and is payable with the loans at the end of December 2012.  

The last valuation amounting to £27,990,000 includes a valuation on Teddington of £2.3mill. The Group has entered into an option agreement subject to planning based on a minimum purchase price of £2.5mill and a share of up to 50% of any subsequent planning gain. Furthermore the Group plans to retire £500k of debt during 2010 both of these actions will improve the LTV and correspondingly reduce the overall interest charge to the Group. 

The Group is also considering the prospects of the sale and lease back of certain assets. The objective will be to further reduce the interest cost to the Group. However there may be risk that the benefit of any subsequent planning opportunity may be lost. The Board is mindful of the loss of benefit and as with Teddington shall seek to secure a percentage of any potential capital gain in the event of a disposal of freehold assets. 

Michael Kingshott, Chairman, comments:

"As referred to in our recent announcements regarding the investment in SOG by Lexton Assets SA and our appointment as property manager to the Broadgate business centre, we have had a very busy year repositioning the group's activities and stabilising our financing. I am glad that this process is complete and we believe that the group is now in a strong position to take advantage of the opportunities available to us to enhance our business. 

We continue to evaluate new proposals and several are under negotiation. We are confident of further expansion in 2010 ".

29 December 2009

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