THO Thistle Hotels

RNS No 9946w
THISTLE HOTELS PLC
7th October 1998

NOT FOR RELEASE INTO THE UNITED STATES OF AMERICA,
CANADA, AUSTRALIA OR JAPAN

THISTLE HOTELS PLC (THE "COMPANY")

PROPOSED RETURN OF CAPITAL TO SHAREHOLDERS BY WAY OF A
BONUS ISSUE OF ONE B SHARE FOR EACH EXISTING ORDINARY
SHARE AND A 50 FOR 57 CAPITAL CONSOLIDATION OF ORDINARY
SHARES (THE "PROPOSALS")

On 9 September, 1998, the Board of Thistle announced its
intention to return #185 million to Thistle shareholders
in two tranches.  A circular dated today will be sent to
shareholders setting out full details of the proposed
return of the initial tranche of approximately #93
million which represents approximately 12 per cent. of
Thistle's market capitalisation at the close of business
on 6 October, 1998.  The second tranche of approximately
#92 million is expected to be returned to shareholders in
April 1999.  Further information on the second tranche
will be announced at the appropriate time.

BACKGROUND

At the time of the announcement by the Company on 17
August, 1998 regarding the termination of the review of
expressions of interest in the Company and certain of its
hotels, the Board indicated that it was considering a
restructuring to enable a substantial return of capital
to shareholders.  The Thistle Group is strongly cash
generative and produced cash flow from operating
activities of #124.0 million in the year ended 28
December, 1997 and #72.5 million in the 28 week period
ended 12 July, 1998.  At 12 July, 1998, Thistle had
gearing of 28 per cent. Further cash resources will be
generated by the sale of a part of the hotel portfolio,
as announced on 3 September, 1998, for a cash
consideration of #66 million.  This sale is expected to
be completed by the end of October 1998.

Against this background the Board believes that a
significant amount of capital can be returned to
shareholders, whilst maintaining a prudent financial
structure and preserving the group's ability to continue
with the future development of the business and its
existing distribution policy.

THE PROPOSALS

In summary, the Proposals are as follows:

- A bonus issue of redeemable preference shares ("B
  Shares") paid up from the share premium account will be
  made to shareholders on the register at 4.30 p.m. on
  Friday, 6 November, 1998 (which is the record date), on
  the basis of one B Share for each existing ordinary
  share ("Existing Ordinary Share") then held.
  
- The B Shares will have a nominal value of 15 pence
  each, limited voting rights and a non-cumulative net
  dividend at a rate of 75 per cent. of LIBOR payable
  annually in arrear on 19 November each year.  The first
  payment will be due on 19 November, 1999.
  
- Shareholders who do not wish to retain their B Shares
  may elect to have them redeemed at their nominal value
  of 15 pence each on Monday, 9 November, 1998 (the
  Initial Redemption Date) or on Friday, 4 December, 1998
  (the Second Redemption Date) free of usual transaction
  costs. Redemptions of B Shares will normally result in
  a disposal for the purposes of UK taxation of capital
  gains.
  
- To receive cash at the earliest opportunity
  shareholders may elect to have their B Shares redeemed
  by returning an initial redemption form (which will be
  despatched to shareholders with the circular) to the
  Company's registrars to arrive by 4.30 p.m. on Friday,
  6 November, 1998.  Cheques relating to B Shares
  redeemed by 4.30 p.m. on 6 November, 1998 will be
  posted by 13 November,1998. Shareholders who return a
  redemption form after 6 November, 1998 but before 4.30
  p.m. on 4 December, 1998 will have their B Shares
  redeemed on 4 December, 1998. Cheques relating to B
  Shares redeemed by 4.30 p.m. on 4 December, 1998 will
  be posted by 10 December,1998.
  
- To reflect the issue of the B Shares, the ordinary
  share capital will be consolidated on the basis of 50
  new ordinary shares of 22 4/5 pence each("New Ordinary
  Shares") for every 57 Existing Ordinary Shares. Where
  fractional entitlements arise from the issue of the New
  Ordinary Shares, they will be aggregated and sold in
  the market and the proceeds will be remitted to
  shareholders.
  
- The New Ordinary Shares (subject to the rights of the B
  Shares) will, in all material respects, have the rights
  and attributes of the Existing Ordinary Shares.
  
- To assist shareholders who do not wish to redeem their
  B Shares immediately, the Board currently intends to
  announce one or more redemption periods in each year
  during which shareholders may elect to redeem B Shares
  at par.
  
- The interim dividend of 1.5 pence(net) announced on 9
  September, 1998 will be paid on 19 November, 1998 to
  holders of Existing Ordinary Shares on the register at
  the close of business on 16 October, 1998.  Future
  dividends per share will be unaffected by the proposals
  and will be payable on the reduced number of New
  Ordinary Shares in issue.

The Proposals are conditional upon the approval of
shareholders and on admission of the New Ordinary Shares
and B Shares to the Official List of the London Stock
Exchange.  The circular to shareholders includes a notice
convening an extraordinary general meeting for Thursday,
5 November, 1998. If the Proposals are approved, dealings
in Existing Ordinary Shares are expected to continue
until the close of business on Friday, 6 November, 1998
and dealings in the New Ordinary Shares and B Shares are
expected to commence on Monday, 9 November, 1998.


ENQUIRIES:


Hartley Sutcliffe/Graham Howden         0113 243 9111
Thistle Hotels

                                        
Simon Borrows/Brian Cassin              0171 440 0400
Greenhill & Co.,
                                        
Chris Snoxall/Jeremy South              0171 885 2500
BT Alex.Brown International

END

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