RNS Number:4274O
Marchpole Holdings PLC
07 August 2003



FOR IMMEDIATE RELEASE : 7 AUGUST 2003



             Marchpole Holdings plc ('Marchpole' or the 'Company')



                            Cancellation of Deferred
                 Shares and reduction of share premium account



The following text has been extracted from a circular dated 7 August 2003 sent
to all shareholders in the Company today containing a letter from the chairman
of Marchpole which explains the background to the board's decision to seek
shareholders' authority for the Company to cancel the Deferred Shares of 1p each
in the capital of the Company and reduce its share premium account:



'Introduction



At 31 March 2003, the Company had accumulated losses on its profit and loss
account of approximately #36,766,000. These losses have arisen principally as a
result of reduced profitability of the Company's main operating subsidiary,
Marchpole Group Limited, over a period of years to 2002, resulting in the
Company writing down its investment in Marchpole Group Limited in 2002 by
#37,526,000. The existence of these losses will prevent the Company from paying
any dividends to Shareholders out of future profits until such losses have been
eliminated. Given the substantial size of the losses there is, in the opinion of
the Board, no reasonable prospect of them being eliminated in the short term.



The Deferred Shares were created by means of a special resolution passed at the
Company's annual general meeting in 2002 as a result of a reorganisation of the
Company's share capital involving the consolidation and sub-division of the
ordinary shares of 20p each in the capital of the Company then in issue. The
Deferred Shares have no economic value and the Directors' expectation when
created was that they would be cancelled in due course.



Since the flotation of the Company in 1997, the Company has had a substantial
share premium account arising on the issue of shares for cash at prices in
excess of the nominal value of those shares. At the date of this document, the
balance on the share premium account is approximately #15,626,000.



Reason for the Proposals



The Directors consider that the accumulated losses reflected in the Company's
profit and loss account represent a permanent loss of capital and they propose
that the permanence of this loss should be recognised by eliminating fully the
deficit on the profit and loss account. This would be achieved by the
cancellation of the entire class of Deferred Shares comprising #22,696,368 of
paid up share capital and reducing the amount standing to the Company's share
premium account by #14,070,000 to #1,556,000.



The rights attaching to the Deferred Shares entitle the payment of no more than
1p in total to each holder of Deferred Shares for his/her entire holding of
Deferred Shares. The cancellation of Deferred Shares is proposed to be
implemented without the 1p repayment since the payment of 1p would impose on the
Company an administrative burden out of proportion to the benefit to the holders
of Deferred Shares. A Class Meeting of the holders of Deferred Shares is
necessary to approve their cancellation without such repayment and to give their
consent to any variation of class rights this represents. Eliminating the
deficit on the profit and loss account will enable the Company to pay dividends,
in due course, out of any future profits credited to that account.



It is the Board's stated intention to return to the payment of a dividend at the
earliest practicable opportunity.



Effect of the Proposals



Implementation of the Proposals will have the effect of cancelling the entire
class of Deferred Shares. The number of Ordinary Shares in issue and the amount
paid up on each such share will not be affected by the Proposals. The effect the
Proposals will have on shareholders' funds is set out below:


                                          Before implementation of            After implementation of
                                             the Proposals (#'000)              the Proposals (#'000)


Share capital                                               23,901                              1,205
Share premium                                               15,626                              1,556
Profit and loss account                                   (36,766)                                  -
Shareholders' funds                                          2,761                              2,761



As soon as practicable after the passing of the Resolutions at the Extraordinary
General Meeting, application will be made to the Court to confirm the reduction.
In giving its confirmation, the Court is generally concerned to protect the
interests of creditors at the date of the proposed capital reduction and may
require certain forms of protection from the Company such as an undertaking to
create a special reserve equal to the amount of any undistributed profits
arising prior to the Effective Date, which reserve shall remain undistributable
for so long as the Company's creditors at the Effective Date remain
undischarged.



The proposed cancellation of amounts standing to the credit of the Company's
share premium account and the reduction of the Company's share capital will
become effective once the order confirming the reduction is registered with the
Registrar of Companies. In these circumstances, it is anticipated that
confirmation will be obtained from the Court by the end of September 2003.



The Proposals, if carried through, would not have any effect on the tax position
of the Company.



Extraordinary General Meeting and Class Meeting



An Extraordinary General Meeting of the Company is to be held at Founders Hall,
3 Cloth Fair, London EC1A 7AD at 9.30 am on 1 September 2003 or immediately
following the conclusion of the Company's annual general meeting, whichever is
the later. Notice convening such meeting is set out on page 6 of this document.
At this meeting, the Resolutions will be proposed respectively to approve the
cancellation of the entire class of Deferred Shares (subject to and conditional
upon the resolution at the Class Meeting being passed) and reduction of the
share premium account. To be passed the Resolutions will each require a 75 per
cent. majority of the votes cast in person or by proxy at the EGM.



A Class Meeting of the holders of the Deferred Shares is to be held at Founders
Hall, 3 Cloth Fair, London EC1A 7AD at 9.35 am on 1 September 2003 or
immediately following the conclusion of the EGM, whichever is the later. Notice
convening such meeting is set out on page 7 of this document. At this meeting an
extraordinary resolution to approve the cancellation of the entire class of
Deferred Shares without any repayment will be proposed. To be passed, the
resolution will require a 75 per cent. majority of the votes cast in person or
by proxy at the Class Meeting.



Recommendation



The Board believes that both the proposed cancellation of the Deferred Shares
and the reduction of the Company's share premium account described in this
circular are in the best interests of shareholders as a whole. Accordingly, the
Board recommends Shareholders to vote in favour of the Resolutions to be
proposed at the Extraordinary General Meeting and the resolution to be proposed
at the Class Meeting, as they intend to do in respect of their own beneficial
holdings totalling 1,500,000 Ordinary Shares, representing approximately 1.2%
per cent. of the existing issued share capital of the Company.



Yours faithfully
Christopher Phillips
Chairman'



Unless the context otherwise requires, the definitions contained in this
announcement are the same as those used in the circular to shareholders dated 7
August 2003.





7 August 2003



For further information contact



Justin Hampshire, Marchpole                           020 7908 7777


Jonathan Nelson/Simon Edwards, Shore Capital          020 7408 4090


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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