RNS Number:6151J
Groupe Chez Gerard PLC
03 April 2003

Groupe Chez Gerard Plc

3 April 2003

Not for release in, into or from the United States, Canada, Australia or Japan.

Groupe Chez Gerard Plc ("the Company")

Offer from Paramount Plc ("Paramount")

The Independent Directors of the Company have today written to shareholders
detailing their advice on the Offer and the action shareholders should take.

A copy of that letter is incorporated in this announcement and shareholders are
advised to read the full text of the letter before taking any action.


Enquiries:

Groupe Chez Gerard Plc                              020 7257 8403

Doug Gardner, Independent Director and Finance Director

Investec Investment Banking                         020 7597 5970

Erik Anderson

Lee Aston

Prospero Financial                                  020 7898 9394

Michael Oke                                         07778 469630


The Directors accept responsibility for the information contained in this
announcement, save that the only responsibility accepted by them in respect of
information in this announcement relating to Paramount, which has been compiled
from published sources, has been to ensure that such information has been
correctly and fairly reproduced and presented. Save as aforesaid, to the best of
the knowledge and belief of the Directors (who have taken all reasonable care to
ensure that such is the case), the information contained in this document is in
accordance with the facts and does not omit anything likely to affect the import
of such information.


Investec Investment Banking, a division of Investec Bank (UK) Limited, which is
regulated in the United Kingdom by The Financial Services Authority, is acting
for the Independent Directors of Groupe Chez Gerard Plc and no one else in
connection with the offer from Paramount Plc and will not be responsible to any
other person for providing the protections afforded to clients of Investec
Investment Banking or for giving advice in relation to the Offer.


Set out below is the full text of the letter from the Independent Directors to
be posted to shareholders later today.



               "OFFER BY PARAMOUNT PLC FOR GROUPE CHEZ GERARD PLC




Introduction


You should have received the Offer document posted by Paramount on 20 March
2003, setting out the terms of an offer by Dawnay Day on behalf of Paramount for
the issued share capital of Groupe Chez Gerard. On the same day, the Board of
Groupe Chez Gerard was informed that the MBO Team was interested in possibly
making an alternative offer for the Company. Following receipt of this
expression of interest, a committee of Independent Directors was formed,
comprising Doug Gardner (Finance Director), Harry Hyman (Non-Executive) and John
McLaren (Non-Executive), to assess the Offer and any alternative offer. On 2
April 2003, however, the MBO Team confirmed to the Independent Directors that it
was not able to announce a firm offer for the Company in the timescale
available.


This letter sets out the background to the Offer and the Independent Directors'
recommendation as to the action you should take.


Background to the Offer and factors relevant to the Independent Directors'
recommendation


On 25 September 2002, Paramount announced that it had made an approach to Groupe
Chez Gerard; this approach indicated a share offer with a fully underwritten
cash alternative of 100p per share. Following a long period of due diligence,
Paramount announced, on 13 March 2003, a share offer with a full cash
alternative of only 75p, citing reasons for the reduction in the offer price
which included a lower level of cashflow for the Company than Paramount had
projected.


Paramount has received an irrevocable undertaking from JOHCM to accept the Share
Offer, in the absence of a higher alternative offer, and letters of intent to
accept the Offer and to elect for the Cash Alternative from Invesco Perpetual,
AXA Investment Managers and Milor Limited holding, in aggregate, 9,857,481
Groupe Chez Gerard Shares, representing approximately 47.8 per cent. of the
issued share capital of the Company. Together with Paramount's holding of
655,000 Groupe Chez Gerard Shares, these represent approximately 51 per cent. of
the Company's issued share capital.


The Independent Directors believe that Groupe Chez Gerard has a viable future as
an independent listed company and that its prospects have improved as a result
of the changes that have been made over the last 12 months. As noted in the
Chairman's Statement in the announcement of interim results for the half year
ended 29 December 2002, released on 28 February 2003, "the Group has made
further strong progress with the recovery plan, despite the continuing poor
economic backdrop. We have, to a large extent, arrested the decline in
restaurant performance and have restored the basics of our core customer
proposition. We have succeeded in downsizing to 23 restaurants, in cutting
central costs significantly and reducing debt to #3.7 million at period end." In
addition, Simon Binder, an experienced restaurant operator, has been appointed
to the board as Managing Director to assist in driving the business forward.


However, the Independent Directors recognise that the offer from Paramount is
supported by shareholders (including Paramount) controlling more than 50 per
cent. of the issued share capital of Groupe Chez Gerard. In considering the
merits of the Offer on behalf of all shareholders, the Independent Directors
have had regard to the following:


 i. if, on 10 April 2003, Paramount has received acceptances of the Offer, which,
    together with Groupe Chez Gerard Shares already owned by Paramount,
    represent more than 50 per cent. of Groupe Chez Gerard's issued voting share
    capital then, subject to the remaining conditions being satisfied or waived
    as outlined in Appendix 1 to the Offer document, Paramount will be able to
    declare the Offer wholly unconditional. Paramount has stated that it intends
    to delist Groupe Chez Gerard once it has declared the Offer wholly
    unconditional. In this event, shareholders who do not accept the Offer will
    have equity holdings in an unlisted company, which is majority owned by
    Paramount. In such circumstances, the liquidity and marketability of Groupe
    Chez Gerard Shares is likely to be significantly reduced and shareholders
    might well find it difficult to sell their shares or might only be able to
    do so on unfavourable terms;


        (ii)     the Independent Directors are not in a position to comment in
        detail upon Paramount's plans for the future of the business of Groupe
        Chez Gerard or the likely future value of Paramount Shares but note that
        acceptance of the Share Offer would give shareholders an equity holding
        in a company whose trading assets would comprise solely the existing
        business of Groupe Chez Gerard, operated by a new management team. As
        far as the Independent Directors are aware, the only member of that new
        management team having any significant experience of restaurant
        management will be a non-executive director;


        (iii)     as set out in Paramount's announcement dated 13 March 2003, if
        the Offer becomes wholly unconditional, the combined holdings of JOHCM
        and the directors of Paramount may exceed 75 per cent. of Paramount's
        issued share capital. In this event, the liquidity of trading in
        Paramount Shares is likely to be significantly lower than the current
        liquidity of trading in Groupe Chez Gerard Shares and might lead to
        volatility in the share price of Paramount. Additionally, shareholders
        accepting the Share Offer could become minority shareholders in
        Paramount and might be unable collectively to block either ordinary or
        special resolutions of Paramount supported by JOHCM and the directors of
        Paramount;



iv. the Cash Alternative offers Groupe Chez Gerard shareholders an immediate
    opportunity to realise their investment in Groupe Chez Gerard, in cash, at a
    premium of 19 per cent. to the middle market quotation (as derived from the
    London Stock Exchange Daily Official List) of 63p per Groupe Chez Gerard
    Share at the close of business on 24 September 2002, being the last dealing
    day prior to the announcement by Paramount of a possible offer for Groupe
    Chez Gerard;


 v. as at the close of business on 2 April 2003 (being the latest practicable
    date prior to the publication of this document), the value of the Share
    Offer was 63.75p per share, based upon the closing middle market quotation
    at that time (as derived from the London Stock Exchange Daily Official List)
    of 17p per Paramount Share, representing a discount of 15 per cent. to the
    value of the Cash Alternative; and


vi. Paramount has stated that if the Offer is declared unconditional as to
    acceptances on 10 April 2003, the Cash Alternative will close at 3.00 p.m.
    on that day. The effect of this is that shareholders who have not accepted
    by that date and time will no longer be able to elect to receive the 75p in
    cash offered under the Cash Alternative. In view of the level of support for
    the Offer indicated by shareholders (including Paramount) and, in the
    absence of a higher competing offer, it is likely that Paramount will be in
    a position to declare the Offer unconditional as to acceptances on 10 April
    2003 and that the Cash Alternative will therefore close on that date.


Recommendation


The Independent Directors cannot advise shareholders to take action which would
result in them becoming shareholders in a controlled company. As described
above, this may be the outcome if shareholders were to reject the Offer in
favour of retaining their Groupe Chez Gerard Shares or if shareholders were to
accept the Share Offer.


In view of this and having regard to the other matters outlined above, and in
particular to the level of shareholder support for the Offer and the fact that
Paramount has stated that the Cash Alternative will close at 3.00 p.m. on 10
April 2003 and will not be extended (if Paramount has shareholdings and
acceptances of the Offer totalling more than 50 per cent. of the Groupe Chez
Gerard Shares then in issue), the Independent Directors, who have been advised
by Investec Investment Banking, recommend shareholders to accept the Offer and
elect for the Cash Alternative. In providing advice to the Independent
Directors, Investec Investment Banking has relied upon the commercial
assessments of the Independent Directors.


Shareholders are therefore advised to accept the Offer and elect for the Cash
Alternative as soon as possible, as the Independent Directors intend to do in
respect of their own beneficial holdings.


Neville Abraham and Simon Binder, in view of their having pursued a possible
management buyout, Laurence Isaacson, who indicated he might participate in any
management buyout and Nicholas Measham, in view of his directorship of JOHCM,
have taken no part in the discussions of the Independent Directors concerning
the Offer.


Action to be taken to accept the Offer and elect for the Cash Alternative


To accept the Offer and elect for the Cash Alternative, you should ensure that,
where you hold your Groupe Chez Gerard Shares in certificated form, you return
your completed Form of Acceptance so as to be received by no later than 3.00
p.m. on 10 April 2003. Your share certificate(s) should be enclosed with your
Form of Acceptance. Where you hold your Groupe Chez Gerard Shares in
uncertificated form, you should ensure that the relevant transfer to escrow
instruction is given so as to settle no later than 3.00 p.m. on 10 April 2003."


                      This information is provided by RNS
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