12 December 2018

TLA Worldwide plc

("TLA" or the "Company", and together with its subsidiaries, the "Group")

Posting of Circular and Notice of General Meeting

Further to the announcement on 3 December 2018, TLA Worldwide plc, a leading athlete representation and sports marketing business, announces that it has posted a circular to shareholders ("Circular") containing details of the proposed sale by its subsidiaries, TLA Acquisitions Limited and TLA Acquisitions (Number Two) Limited, of The Legacy Agency, Inc. and TLA Worldwide Americas, Inc., to a newly-incorporated private company, GCM Sports Holdings, Inc., a Delaware corporation, owned by Gatemore Partners LP, a Guernsey-domiciled fund managed by Gatemore Capital Management LLP (the "Proposed Sale") and a notice of General Meeting.

Unless the context otherwise requires, capitalised terms in this announcement shall have the same meaning ascribed to them in the Circular.

The Proposed Sale falls within Rule 15 of the AIM Rules relating to fundamental changes of business and, as such, is conditional on inter alia the passing of the Resolution at the General Meeting. However, following the Proposed Sale, the Continuing Group will still be considered an operating business rather than an "AIM Rule 15 cash shell" (as defined in the AIM Rules) due to the continuation of its Australian Business.

The General Meeting is to be held at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London, EC4A 1BN at 12 noon GMT on 27 December 2018.

Shareholders attention is drawn to paragraph 13 of the Circular (Recommendation) which should read as follows (with the updates to the Circular highlighted in bold):

13.       Recommendation

On 30 November 2018, the Proposed Sale and Share Purchase Agreement were unanimously approved at a board meeting of the Company, at which each of the Independent Directors (including, for the avoidance of doubt, Ian Robinson) was present. At that meeting, it was resolved that the Proposed Sale should be announced as soon as possible.

Once the Share Purchase Agreement had been signed, following its approval at the board meeting on 30 November 2018 (at which Ian Robinson was present), Ian Robinson requested an independent report on the fairness and reasonableness of the Proposed Sale despite the fact that no new information had come to light.

The Board did not commission an independent report on the fairness and reasonableness of the Proposed Sale and at no point did Ian Robinson request a formal report prior to the date of this document or before the Share Purchase Agreement was entered into. However, having engaged FTI to carry out a strategic review and lead the open market sale process which led to the Proposed Sale, the Company provided additional information to Ian Robinson in connection with the process.

Despite the additional information having been provided by the Company, Ian Robinson subsequently informed the Company that he is unable to form a view that the Proposed Sale is in the best interests of the Company and its Shareholders as a whole. He has stated that:

"I am unable to form a view that this related party transaction is in the best interests of the Company and its shareholders as a whole. In the particular circumstances of this transaction I believe the board should have received an independent written assessment which would have provided a written formal opinion on the fairness and reasonableness of this transaction."

On 3 December 2018, the Company issued an announcement which was formally approved by Ken Wotton, Michael Principe and Dwight Mighty (having received no objections from any of the Directors in relation to its content or release). The announcement stated that:

"The directors of the Company, excluding Mike Principe and Greg Genske for the reasons set out below ("Relevant Directors"), having consulted with the Company's Nominated Adviser, consider the Sale to be fair and reasonable in so far as the Company's shareholders are concerned for the reasons summarised below and to be further explained in the Circular. 

"Having considered possible alternatives for realising value from the US Businesses, further details of which will be provided in the Circular, the directors of the Company (other than the Relevant Directors) concluded that the Sale is in the best interests of the Company and its shareholders as a whole."

The Independent Directors, other than Ian Robinson, have considered the feasibility of such a report and concluded that it would have been both impractical, not least considering the impending expiry of the forbearance period granted by SunTrust on 31 December 2018, and of no additional value in the current circumstances of the Existing Group. Their reasons include, but are not limited to, its position with its bank. In order to ensure that the Company receives full value for the US Businesses, the Company appointed FTI as its financial adviser to assist in the sale process for the US Businesses. FTI approached over 20 potential purchasers, of which three made indicative offers for the US Businesses. Two of these were subsequently withdrawn, one on the basis that certain agents had left the US Businesses and the other on the basis that employees within the US Businesses indicated that they would also leave in the event that the US Businesses were sold to the potential purchaser who had made that offer. This left the offer from Gatemore as the only remaining viable offer for the US Businesses. In the Independent Directors' opinion (excluding that of Ian Robinson), having considered the sale process conducted by FTI, the Independent Directors (other than Ian Robinson) believe that the Proposed Sale will achieve the best value attainable for the US Businesses. The Proposed Sale was also independently approved by SunTrust, who was satisfied that it was the best offer obtainable for the US Businesses in light of the current circumstances. Based on the sale process undertaken by FTI and the decline in the future financial prospects of both the Company and the US Businesses, the Independent Directors (other than Ian Robinson) have concluded that the Proposed Sale represents the best value that the Company can obtain for the US Businesses at the current time.

As such, the Independent Directors (other than Ian Robinson) still consider the Proposed Sale to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend Shareholders to vote, or procure the vote, in favour of the Resolution to be proposed at the General Meeting.

Keith Sadler

Senior Independent Non-Executive Director

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Copies of the Circular and the Notice of General Meeting are available on the Group's website (www.tlaworldwide.com) and the text of the Letter from the Senior Independent Non-Executive Director of the Company is set out in the Appendix to this announcement.

Enquiries:

About the Group

TLA is a leading, fully integrated talent representation, sports marketing and event management company. The Group derives its revenues from long-term agency relationships with many prominent US and international sports stars (including Olympic medal winners), broadcasters and media personalities associated with major sports including the MLB, NFL, NBA, PGA TOUR, AFL and cricket.  In addition, it also provides a range of services in respect of media consultancy, sports sponsorship and event creation and ownership. The Group serves its clients from ten locations worldwide including its offices in London, UK; New York, Newport Beach, Houston, Charleston, San Francisco, USA; Melbourne, Perth, Adelaide and Sydney, Australia. For more information, please visit www.tlaworldwide.com.

APPENDIX

LETTER FROM THE SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR OF

TLA WORLDWIDE PLC

                                                            11 December 2018

To holders of Ordinary Shares

Dear Shareholder,

Proposed Sale by TLA Acquisitions Limited and TLA Acquisitions (Number Two) Limited of TLA Worldwide Americas, Inc. and The Legacy Agency, Inc.

and

Notice of General Meeting

1.         Introduction

On 3 December 2018, the Company announced the proposed sale of its US Businesses for an enterprise value of $8.5 million, comprising $6.175 million payable in cash and the assumption by the Purchaser of $2.468 million of liabilities, including certain earn-out liabilities. On 30 November 2018, two of the Company's subsidiary companies, TLAA and TLAA2 each entered into the Share Purchase Agreement pursuant to which they conditionally agreed to sell all of the issued and outstanding shares of capital stock of their respective wholly-owned subsidiaries, Legacy and TLA Americas (including TLA Americas' wholly-owned subsidiary, Legacy New York) to the Purchaser.

The Proposed Sale falls within Rule 15 of the AIM Rules relating to fundamental changes of business and, as such, is conditional on inter alia the passing of the Resolution at the General Meeting. However, following the Proposed Sale, the Continuing Group will still be considered an operating business rather than an "AIM Rule 15 cash shell" (as defined in the AIM Rules) due to the continuation of its Australian Business.

Accordingly, your approval to the Proposed Sale is being sought at a General Meeting of the Company to be held at the offices of DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN at 12 noon on 27 December 2018. The notice convening the General Meeting and setting out the Resolution to be considered at it is set out at the end of this document. A summary of the action you should take is set out in paragraph 12 of this letter and on the Form of Proxy, which accompanies this document.

Further details of the Proposed Sale and the Share Purchase Agreement are set out below and in Part 2 of this document.

The purpose of this document is to give you further details of the Proposed Sale, including the background to and reasons for it, to explain why the Independent Directors (other than Ian Robinson for the reasons set out in paragraph 13 of this letter) consider it to be in the best interests of the Company and its Shareholders as a whole and unanimously recommend that you vote in favour of the Resolution to be proposed at the General Meeting.

The Company has received from certain Shareholders irrevocable undertakings to vote in favour of the Resolution in respect of holdings totalling in aggregate 46,962,335 Ordinary Shares, representing approximately 32.74 per cent. of the Company's existing issued share capital. This does not include an irrevocable undertaking from Gatemore, which is the beneficial owner of 14.7 per cent. of the entire issued share capital of the Company and associated with the Purchaser. However, it does include irrevocable undertakings from certain Directors. Further details are set out in paragraph 10 of this letter.

2.         Information on TLA and the Sale Companies

Information on TLA

TLA is a leading, fully integrated talent representation, sports marketing and event management company, with operations in the US and Australia.

TLA derives its revenues from long term agency relationships with many prominent US and international sports stars (including Olympic medal winners), broadcasters and media personalities associated with major sports including the MLB, NFL, NBA, PGA TOUR, AFL and cricket.  In addition, it also provides a range of services in respect of media consultancy, sports sponsorship and event creation and ownership, including soccer games in Australia. The Group serves its clients from ten locations worldwide including its offices in London, UK; New York, Newport Beach, Houston, Charleston, San Francisco, USA; Melbourne, Perth, Adelaide and Sydney, Australia.

Information on the Sale Companies

Together, the Sale Companies comprise the baseball and US sports marketing business ("SMUS") of the Existing Group.

The baseball business represents over 200 player-clients and advises the on-field activities of baseball players, including all aspects of players' contract negotiations throughout their careers.

SMUS represents athletes, coaches and commentators across a range of sports including baseball, basketball, football, golf and tennis. In addition, SMUS delivers corporate activation and operates in the speaking engagement sector, for both sporting and non-sporting individuals.

In the Company's unaudited interim results for the half year ended 30 June 2018, the US Businesses made a contribution to operating profits of approximately $0.2 million and had, as at that date, net assets (before indebtedness owing to SunTrust) of approximately $21.7 million (audited accounts to 31 December 2017: approximately $1.8 million and approximately $21.6 million respectively).

3.         Current trading

On 4 September 2018, the Company issued a trading and business update to the market. The Company announced that it had organised fewer events in 2018 than expected due to certain anticipated events not being successfully contracted and others failing to secure venues or teams, which meant they were unable to proceed. Additionally, the Company announced that its baseball representation business was expected to generate lower profits than previously forecasted which was primarily as a result of higher ongoing operating costs. As a result, the Company stated that it expects its results for the year ending 31 December 2018 to be significantly below market expectations. The update also stated that the Existing Group anticipated that its net debt for the 2018 full year would be significantly higher than previously expected and, consequently, the Existing Group was likely to breach its banking covenants with SunTrust.

On 28 September 2018, the Company released its unaudited interim results for the half year ended 30 June 2018 in which the Company announced that operating income had decreased by 6.6 per cent. to $15.2 million (H1 2017: $16.3 million) and headline EBITDA had decreased by 148 per cent. to a loss of $1.2 million (H1 2017: (profit) $2.5 million). The decline in headline EBITDA was driven by a 71 per cent. decrease in the sports marketing business to $964,000 (H1 2017: $3.3 million), due to previously-forecasted events having been cancelled or there having been difficulties in securing teams and venues. In addition, the baseball representation business had seen headline EBITDA decrease by 99.2 per cent. to $13,000 (H1 2017: $1.7 million), driven mainly by higher people-related costs.

The unaudited performance of the US Businesses (including central costs) for the nine month period ended 30 September 2018 showed revenue of $15.847 million and EBITDA of $1.868 million. These amounts include the revenue contribution of $7.5 million relating to the baseball agents that have now left the US Businesses. As set out in the Company's annual accounts for the year ended 31 December 2017, the revenue for baseball is recognised across the six months of the baseball season, beginning in April and ending in September. Therefore, the underlying revenue for the US Businesses will be reduced by the loss of these agents.

On 10 October 2018, the Company, the Sellers and the Sale Companies entered into a forbearance agreement with SunTrust (the "Forbearance Agreement") pursuant to which SunTrust agreed to forbear from exercising remedies under the Credit Agreement with respect to certain defaults by the Existing Group, including the Existing Group's obligation to make certain payments of principal and interest that were due in September 2018. The forbearance period expires on 31 December 2018. The Forbearance Agreement provides the Company with working capital headroom as a result of the deferment of these past due principal and interest payments. The Forbearance Agreement requires the Company to pursue a sale of assets that would result in a substantial repayment of the loan by 31 December 2018.

Currently, the Existing Group is reliant on the ongoing support of SunTrust. If the Proposed Sale is not approved by the Shareholders at the General Meeting, then the Existing Group would have failed to achieve the substantial repayment of the loan in the short term sought by SunTrust under the Forbearance Agreement. In this situation, there can be no assurance that SunTrust will not exercise its remedies under the Credit Agreement. This could result in acceleration of the maturity of the outstanding loans and foreclosure. 

In addition, if the Proposed Sale is not approved by the Shareholders at the General Meeting, the Company would need to seek an alternative source of financing to enable it to fund its immediate working capital needs and there is no guarantee that such funds would be available to the Company or permitted by SunTrust. In the event that the Company does not obtain an alternative source of financing, the Directors would then need to consider the best path for the Company.  Such considerations may include ceasing to trade, entering into administration or another insolvency process, in which event, the Directors expect that there would be a material and adverse impact on the value of Shareholders' interests in the Company.

The ongoing support of SunTrust will be required even if the Proposed Sale completes. Whilst the Company will continue to own and operate its Australian Business, the expectation is that this business alone will be unable to support the anticipated level of the Continuing Group's debt following Completion.

Pursuant to the terms of Michael Principe's employment agreement with Legacy dated 8 December 2011 (as amended from time to time) ("Employment Agreement"), Mr Principe's employment with Legacy had an initial five-year term but since 8 December 2016, it automatically renews for an additional 12 month period each year unless notice is served before a specified date. On 28 September 2018, Legacy served a notice of termination on Mr Principe with the effect that the Mr Principe's employment would terminate on 8 December 2018. At the request of the Purchaser, Legacy and Michael Principe subsequently agreed on 7 December 2018 that Mr Principe's employment will be renewed on amended terms in light of the Proposed Sale such that the Employment Agreement will remain effective until the earlier of (i) the date on which a new employment agreement is entered into by Mr Principe and Legacy prior to 31 December 2018; and (ii) Completion. Mr Principe will receive his salary on the same basis and is entitled to participate in the pension plans referred to in the Employment Agreement. Mr Principe will not be eligible to receive the annual bonus described in the Employment Agreement or any compensation upon termination of his employment with Legacy. In addition, the remaining provisions of the Employment Agreement remain in full force and effect.

4.         Background to and reasons for the Proposed Sale

On 17 September 2018, the Company announced the appointment of Ian Gray to lead a strategic review of the business and the Board identified the various options available to it. These options included an equity fundraising from its existing or new shareholders, closure of the US Businesses and run-off of the debtor book, rescue refinancing at subsidiary or top company levels and a Chapter 11 bankruptcy.

Following the initial strategic review, the Company considered the options which would have ordinarily been available to pursue further. However, at that time, the Existing Group was in default under the Credit Agreement pursuant to which the Existing Group owed SunTrust an amount equal to $26,625,000 (plus accrued interest and fees). In addition, the Existing Group was required to make earn-out payments to certain vendors who remained within the Existing Group and these had become due and payable. Although SunTrust was permitted under the Credit Agreement to exercise the rights available to it on the occurrence of an event of default, the Existing Group negotiated the Forbearance Agreement with SunTrust. Whilst this meant that SunTrust would refrain from exercising its right to enforce its security, SunTrust only agreed to enter into the Forbearance Agreement on the condition that, amongst other things, the Existing Group agreed to diligently pursue the sale of all or substantially all of the stock or assets of the Sale Group, with the net proceeds of such sale exceeding $15 million and becoming payable on or before 31 December 2018. In addition, the departure of key personnel and clients from the US Businesses, with the imminent risk of further departures, also resulted in the Company having limited alternative solutions. As such, whilst the Board could have ordinarily considered other options available to it in more detail, the only viable option available to the Existing Group at that time was the sale of the US Businesses, regard being had to the overdue payments owing to SunTrust. As a result, on 24 September 2018, TLA announced that it had appointed FTI as financial adviser to the Company to assist in the sale process for the US Businesses following the receipt of a number of preliminary approaches. 

The sale process concluded with the Purchaser's offer (resulting in the Proposed Sale) representing the best offer received by the Existing Group for the US Businesses. In coming to this conclusion, the Board considered the fact that certain agents of the US Businesses had left the business which will materially affect future year earnings and therefore have a direct effect on the valuation of the US Businesses. The net sale proceeds from the Proposed Sale will be used to contribute towards repaying the Continuing Group's indebtedness to SunTrust pursuant to the Forbearance Agreement.

Ian Gray has not been appointed to the board of directors of the Company on the basis that the conclusion of the strategic review was to sell the US Businesses and the Australian Business. As Ian Gray has not been appointed to the Board, as announced on 17 September 2018, I remain the Interim Chairman of the Company.

5.         Principal terms of the Proposed Sale

Pursuant to the terms of the Share Purchase Agreement, TLAA and TLAA2 conditionally agreed to sell all of the issued and outstanding shares of capital stock of their respective wholly-owned subsidiaries, Legacy and TLA Americas (including TLA Americas' wholly-owned subsidiary, Legacy New York), to the Purchaser, based on an enterprise value of $8.5 million comprising cash consideration of $6.175 million and the assumption of certain indebtedness of the Sale Companies by the Purchaser amounting to $2.468 million in aggregate. 

Based on the adjusted revenue attributable to the US Businesses, after deducting the revenue of the agents that have left the Existing Group, the enterprise value for the US Businesses  represents a one times multiple being applied to turnover, which the Independent Directors do not consider to be an unreasonable multiple for a business of this nature in its distressed circumstances. Other value measures, such an EBITDA multiple, are not considered by the Independent Directors to be an appropriate measure in accessing the Proposed Sale given the underlying revenue, following the departure of the agents within the US Businesses.

Completion is conditional upon certain closing conditions, including (amongst others) the approval of the Resolution at the General Meeting of the Company.

On and with effect from Completion, Michael Principe and Greg Genske will resign as directors of the Company.

There are no financial arrangements in place, directly or indirectly, between any of Greg Genske, Michael Principe, Dwight Mighty, Ken Wotton, Ian Robinson, Keith Sadler or Ian Gray and the Purchaser or its associates. Ian Gray is, however, a non-executive director of DX (Group) Plc, a company in which Gatemore holds 35.63 per cent. of the entire issued share capital.

Further details of the Share Purchase Agreement are set out in Part 2 of this document.

6.         Information on the Purchaser

The Purchaser is a corporation incorporated under the laws of Delaware, USA and is a wholly-owned subsidiary of Gatemore Partners LP, a Guernsey-domiciled fund, which is managed and owned by Gatemore Capital Management LLP ("Gatemore"). Gatemore is an independent multi-asset investment firm operating out of offices in London and Paris.

7.         Related party transaction

The Purchaser is associated with Gatemore which, as of 11 September 2018, is TLA's largest shareholder and is interested in 14.7 per cent. of the entire issued share capital of the Company. Accordingly, the Proposed Sale is a related party transaction for the purposes of Rule 13 of the AIM Rules.

Michael Principe, Chief Executive Officer, is expected to have a continued role in the US Businesses and Greg Genske is the Head of Baseball for the US Businesses. Accordingly, they are not being treated as independent for the purposes of Rule 13 of the AIM Rules and were not involved in the negotiations or decision-making process relating to the Proposed Sale.

The Independent Directors (other than Ian Robinson for the reasons set out in paragraph 13 below) consider, having consulted with Beaumont Cornish (the Company's nominated adviser), that the terms of the Proposed Sale are fair and reasonable insofar as the Shareholders are concerned.

In coming to this decision, the Independent Directors (other than Ian Robinson) have taken into account the following:

·     the guidance provided by its nominated adviser, Beaumont Cornish, who have relied upon the commercial assessments of the Proposed Sale by the Independent Directors;

·     FTI, the Company's financial adviser appointed to assist in the sale process in relation to the US Businesses, having carried out a thorough and competitive auction and negotiation process, the result of which has been the Proposed Sale as the best offer received by the Existing Group for the US Businesses;

·     the US Businesses' and the Existing Group's recent trading history, further details of which are set out in paragraph 3 of this letter;

·     the fact that the US Businesses rely on strong relationships between individuals within the US Businesses and its clients means that staff retention is important to maintain existing client relationships and ultimately, retain those clients;

·     the risk of any prolonged sale process both to the Continuing Group and to the execution of the Proposed Sale and the risk of not being able to find a new purchaser in the event the Proposed Sale does not proceed to Completion;

·     the Existing Group's financial indebtedness owing to SunTrust and the terms of the Credit Agreement pursuant to which SunTrust's consent is required for the purposes of any disposal above a certain threshold;

·     the likelihood that in the event the Proposed Sale does not proceed to Completion on or before 31 December 2018, SunTrust may exercise its remedies under the Credit Agreement with respect to certain defaults by the Existing Group (such remedies including acceleration of the outstanding loans and foreclosure, further details of which are set out above in paragraph 3 of this letter) and therefore the risk that the Company may cease to trade, enter into administration or another insolvency process, in which event, the Independent Directors expect that there would be a material and adverse impact on the value of Shareholders' interests in the Company;

·     the net sale proceeds from the Proposed Sale will be used to contribute towards reducing the Existing Group's indebtedness to SunTrust;

·     the Proposed Sale is subject to shareholder approval at the General Meeting which is not a requirement under Rule 13 of the AIM Rules (Related Party Transactions); and

·     alternatives to the Proposed Sale, such as an equity fundraising, a closure of the US Businesses and run-off of the debtor book, rescue refinancing at subsidiary or top company levels or a Chapter 11 bankruptcy, have been considered by the Company. However, regard being had to the nature of the Existing Group's business as a 'people business' and the Existing Group's indebtedness owing to SunTrust and the expiry of the forbearance period on 31 December 2018, it has been concluded that these would be impractical, risk further agent departures (thereby potentially further affecting value and future earnings) and would not result in a better deal for the Existing Group. As such, it would not therefore be in the interests of the Shareholders as a whole to pursue these alternative options at the risk of the Proposed Sale not proceeding to Completion.

8.         Financial effects of the Proposed Sale and use of the proceeds

It is expected that net proceeds of the Proposed Sale on Completion, after payment of transaction costs and escrow, will be approximately $4.5 million. In addition, upon Completion, the Board intends to use the net sale proceeds from the Proposed Sale to contribute towards repaying the Continuing Group's indebtedness to SunTrust.

The Proposed Sale will result in the Group reviewing goodwill of the US Businesses at its financial year. This is expected to result in a material loss on disposal of the US Businesses.

9.         Strategy for the Continuing Group

Further to the Company's announcement on 3 December 2018, TLA is continuing to make good progress regarding the sale of its Australian Business.

If such a sale of the Australian Business (the "Australian Sale") proceeds, this transaction will also require approval of Shareholders under Rule 15 of the AIM Rules. If the Proposed Sale and the Australian Sale both complete, then the Company will become an "AIM Rule 15 cash shell" (as defined in the AIM Rules). Further information in this regard will be provided as and when appropriate.

It is intended that the entire net sales proceeds from both the Proposed Sale and the proposed sale of the Australian Business will be used to discharge the indebtedness to SunTrust in full which, in turn, would leave a modest cash balance in TLA.

10.       Irrevocable undertakings

Certain Shareholders have given irrevocable undertakings to the Company to vote in favour of the Resolution to be proposed at the General Meeting (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not one of them) in respect of their beneficial holdings totalling, in aggregate, 46,962,335 Ordinary Shares, representing approximately 32.74 per cent. of the Company's entire issued share capital.  This does not include an irrevocable undertaking from Gatemore, which is associated with the Purchaser and is interested in 14.7 per cent. of the entire issued share capital of the Company.

Insofar as they are interested in Ordinary Shares, the Directors have given irrevocable undertakings to the Company to vote in favour of the Resolution (and, where relevant, to procure that such action is taken by the relevant registered holders if that is not them), in respect of their entire beneficial holdings totalling, in aggregate, 11,171,839 Ordinary Shares, representing approximately 7.79 per cent. of the Company's issued share capital. 

11.       The General Meeting

You will find set out at the end of this document a notice convening the General Meeting to be held on 27 December 2018 at the offices of the Company's solicitors, DAC Beachcroft LLP, 100 Fetter Lane, London EC4A 1BN at 12 noon, at which the Resolution will be proposed.

The Resolution, which will be proposed at the General Meeting as an ordinary resolution, is to approve the Proposed Sale and to authorise the Directors to take all steps necessary or desirable to complete the Proposed Sale.

In order for the Resolution to be passed, a simple majority is required.

Shareholders should read the Notice of General Meeting at the end of this document for the full text of the Resolution and for further details about the General Meeting.

Shareholders have the right to attend, speak and vote at the General Meeting (or, if they are not attending the meeting, to appoint someone else as their proxy to vote on their behalf) if they are on the Register at the Voting Record Time (namely 12 noon on 21 December 2018). Changes to entries in the Register after the Voting Record Time will be disregarded in determining the rights of any person to attend and/or vote at the General Meeting. If the General Meeting is adjourned, only those Shareholders on the Register 48 hours before the time of the adjourned General Meeting (excluding any part of a day that is not a Business Day) will be entitled to attend, speak and vote or to appoint a proxy.

The number of Ordinary Shares a Shareholder holds as at the Voting Record Time will determine how many votes a Shareholder or his proxy will have in the event of a poll.

12.       Action to be taken

A Form of Proxy for use at the General Meeting accompanies this document. The Form of Proxy should be completed and signed in accordance with the instructions thereon and returned to the Company's registrars, Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD, as soon as possible, but in any event so as to be received by no later than 12 noon on 21 December 2018 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a Business Day) before the time fixed for the adjourned meeting).

If you hold your Ordinary Shares in uncertificated form in CREST, you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual. Further details are also set out in the notes accompanying the Notice of General Meeting at the end of this document. Proxies submitted via CREST must be received by Neville Registrars Limited (ID 7RA11) by no later than 12 noon on 21 December 2018 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a Business Day) before the time fixed for the adjourned meeting).

The completion and return of a Form of Proxy or the use of the CREST Proxy Voting Service will not preclude Shareholders from attending the General Meeting and voting in person should they so wish.

13.       Recommendation

On 30 November 2018, the Proposed Sale and Share Purchase Agreement were unanimously approved at a board meeting of the Company, at which each of the Independent Directors (including, for the avoidance of doubt, Ian Robinson) was present. At that meeting, it was resolved that the Proposed Sale should be announced as soon as possible.

Once the Share Purchase Agreement had been signed, following its approval at the board meeting on 30 November 2018 (at which Ian Robinson was present), Ian Robinson requested an independent report on the fairness and reasonableness of the Proposed Sale despite the fact that no new information had come to light.

The Board did not commission an independent report on the fairness and reasonableness of the Proposed Sale and at no point did Ian Robinson request a formal report prior to the date of this document or before the Share Purchase Agreement was entered into. However, having engaged FTI to carry out a strategic review and lead the open market sale process which led to the Proposed Sale, the Company provided additional information to Ian Robinson in connection with the process.

Despite the additional information having been provided by the Company, Ian Robinson subsequently informed the Company that he is unable to form a view that the Proposed Sale is in the best interests of the Company and its Shareholders as a whole. He has stated that:

"I am unable to form a view that this related party transaction is in the best interests of the Company and its shareholders as a whole. In the particular circumstances of this transaction I believe the board should have received an independent written assessment which would have provided a written formal opinion on the fairness and reasonableness of this transaction."

On 3 December 2018, the Company issued an announcement which was formally approved by Ken Wotton, Michael Principe and Dwight Mighty (having received no objections from any of the Directors in relation to its content or release). The announcement stated that:

"The directors of the Company, excluding Mike Principe and Greg Genske for the reasons set out below ("Relevant Directors"), having consulted with the Company's Nominated Adviser, consider the Sale to be fair and reasonable in so far as the Company's shareholders are concerned for the reasons summarised below and to be further explained in the Circular. 

"Having considered possible alternatives for realising value from the US Businesses, further details of which will be provided in the Circular, the directors of the Company (other than the Relevant Directors) concluded that the Sale is in the best interests of the Company and its shareholders as a whole."

The Independent Directors, other than Ian Robinson, have considered the feasibility of such a report and concluded that it would have been both impractical, not least considering the impending expiry of the forbearance period granted by SunTrust on 31 December 2018, and of no additional value in the current circumstances of the Existing Group. Their reasons include, but are not limited to, its position with its bank. In order to ensure that the Company receives full value for the US Businesses, the Company appointed FTI as its financial adviser to assist in the sale process for the US Businesses. FTI approached over 20 potential purchasers, of which three made indicative offers for the US Businesses. Two of these were subsequently withdrawn, one on the basis that certain agents had left the US Businesses and the other on the basis that employees within the US Businesses indicated that they would also leave in the event that the US Businesses were sold to the potential purchaser who had made that offer. This left the offer from Gatemore as the only remaining viable offer for the US Businesses. In the Independent Directors' opinion (excluding that of Ian Robinson), having considered the sale process conducted by FTI, the Independent Directors (other than Ian Robinson) believe that the Proposed Sale will achieve the best value attainable for the US Businesses. The Proposed Sale was also independently approved by SunTrust, who was satisfied that it was the best offer obtainable for the US Businesses in light of the current circumstances. Based on the sale process undertaken by FTI and the decline in the future financial prospects of both the Company and the US Businesses, the Independent Directors (other than Ian Robinson) have concluded that the Proposed Sale represents the best value that the Company can obtain for the US Businesses at the current time.

As such, the Independent Directors (other than Ian Robinson) still consider the Proposed Sale to be in the best interests of the Company and its Shareholders as a whole and accordingly recommend Shareholders to vote, or procure the vote, in favour of the Resolution to be proposed at the General Meeting.

Keith Sadler

Senior Independent Non-Executive Director