RNS Number:3298N
Ashtenne Holdings PLC
09 July 2003


9 July 2003




         Acquisition of Mentmore plc's Serviced Business Space division
               and disposal of certain of the acquired properties
                        to the Ashtenne Industrial Fund



Ashtenne Holdings plc today announces it has entered into a conditional
agreement with Mentmore plc to acquire its Serviced Business Space Division,
which comprises Birkby Limited and In Shops Limited for a cash consideration
equal to #189.0 million less a sum of #6.5 million to take account of estimated
debt, tenant deposits and certain other items.  On completion of the acquisition
of Birkby and In Shops, Ashtenne has contracted to sell certain of the Birkby
properties for #90.6 million to the Ashtenne Industrial Fund, in which Ashtenne
currently has a 22 % interest, and for which it is asset manager.


Highlights

  * Purchase of Birkby and In Shops from Mentmore for #182.5 million
  * Sale of #90.6 million of the Birkby properties to the Ashtenne Industrial
    Fund through which Ashtenne will benefit from asset management fees,
    performance fees and its 22% interest
  * Opportunity for Ashtenne and AIF to purchase a large, high yielding,
    industrial and business property portfolio
  * Ashtenne believes it can increase the occupancy level of Birkby and In
    Shops which is currently 81.7% and 72.4%


James Hambro, Chairman of Ashtenne, commented:


"We are pleased to have purchased this large portfolio which contains properties
suitable for both Ashtenne and the Ashtenne Industrial Fund.  The properties
have plenty of growth potential and Ashtenne intends to apply its asset
management skills to increase the occupancy and thereby increase the value of
these properties."



Your attention is drawn to the full text of the announcement as detailed below.




Enquiries


Ashtenne Holdings plc


Morgan Jones               Joint Chief Executive                 020 7930 9425
Ian Watson                 Joint Chief Executive



Cazenove & Co. Ltd

Richard Cotton                                                   020 7588 2828



Tavistock Communications


Jeremy Carey                                                     020 7600 2288
Marylene Guernier





Ashtenne will make a presentation to analysts at 10.30am on Wednesday 9 July
2003 at the offices of Tavistock Communications, 17th Floor, One Angel Court,
London EC2R 7HX.



Cazenove & Co. Ltd is acting exclusively for Ashtenne and no one else in
connection with the acquisition and disposal and will not be responsible to
anyone other than Ashtenne for providing the protections afforded to customers
of Cazenove & Co. Ltd or for providing advice in connection with the acquisition
or the disposal.



Introduction

Ashtenne Holdings plc ("Ashtenne") announces today that a wholly owned
subsidiary has entered into a conditional agreement with Mentmore plc ("Mentmore
") to acquire its Serviced Business Space Division ("SBS"), which comprises
Birkby Limited ("Birkby") and In Shops Limited ("In Shops"), for a cash
consideration equal to #189.0 million less a sum of #6.5 million to take account
of estimated debt, tenant deposits and certain other items.  On completion
Ashtenne has agreed to procure the repayment to Mentmore of the estimated debt
of #1.7 million owed by SBS (after taking account of cash in Birkby and In
Shops). On completion of the acquisition of Birkby and In Shops, Ashtenne has
contracted to sell certain of the Birkby properties for #90.6 million to the
Ashtenne Industrial Fund Limited Partnership ("AIF"), in which Ashtenne
currently has a 22% interest, and for which it is asset manager.


Description of Birkby and In Shops

Birkby owns and operates the IMEX and Argo businesses' properties, which are
freehold or long leasehold properties that are predominantly let to SME
customers for industrial, workshop and office use. The Birkby properties
comprises 167 properties with a valuation of approximately #197.1 million and
current net annual rent receivable of approximately #20.2 million as at the date
of this announcement. The current occupancy level is 81.7%.

In Shops owns and operates 58 properties of which 7 are freehold and the
remainder are leasehold. These properties are let to approximately 1,300
independent traders for use as indoor markets. This portfolio has a valuation of
approximately #13.8 million and current net annual rent receivable of
approximately #5.0 million as at the date of this announcement. The current
occupancy level is 72.4%.

The Birkby and In Shops properties have been individually valued by King Sturge.

As part of acquiring Birkby and In Shops, Ashtenne will be taking on the
administrative overheads associated with these businesses. The administrative
overheads totalled #5.7 million for the year ended 30 April 2003 (2002:
#4.8million, 2001: #4.2million).


Background to the acquisition and the disposal

Ashtenne's objective is to achieve consistently high returns for its
shareholders by identifying properties which present value opportunities and
managing them vigorously to realise the value identified. Ashtenne's business is
divided into two complementary areas. The first is the fund management and
coinvestment business consisting of two funds, the Ashtenne Industrial Fund, a
limited partnership between Ashtenne, Morley Fund Management, and a number of
institutional investors which invests in high yielding industrial property in
the UK. The other fund is Ashtenne's Trade Park Fund, a limited partnership
which is focussed on assembling a portfolio of trade retail properties, an
emerging and specialist sub-sector of industrial properties. Ashtenne's
remaining capital is invested directly in properties, typically mixed use,
complex acquisitions and opportunistic property investments. Acquisitions
include the Ascot PLC portfolio, Sittingbourne Research Centre , the Marconi
portfolio and the Rexel portfolio. Ashtenne has a network of highly skilled
property executives located throughout the UK. This depth of property skill and
knowledge is focused on acquiring property assets, adding value through
marketing, letting, planning or development and reselling the properties to
crystallise returns. Due to active disposals by the direct side of the Ashtenne
business and successful fund raisings in AIF, Ashtenne and AIF have financial
resources available for acquisitions.


Reasons for and benefits of the acquisition and the disposal

Ashtenne is familiar with the Birkby business  which trades under the name of
IMEX. In Ashtenne's view, IMEX is an industrial property business with assets
compatible with Ashtenne's intensive management approach. Ashtenne believes that
the acquisition of Birkby provides an opportunity for Ashtenne and AIF to
purchase a large, high yielding, predominantly well maintained, industrial and
business property portfolio.

During the last two years, Mentmore has embarked upon a programme of substantial
capital investment in its properties, which has improved the quality of its
portfolio and which the Directors believe provides an opportunity to improve
occupancy levels.

Mentmore has run IMEX as an earnings driven business, which has meant limited
selling of properties. On completion of the acquisition from Mentmore, Ashtenne
has contracted to sell 69 of the Birkby industrial properties to AIF.  Ashtenne,
which is the asset manager to AIF, will benefit from the disposal through
increased management fees from AIF and believes that the quality of the disposal
properties will improve the likelihood of Ashtenne achieving higher performance
fees.  Ashtenne will also benefit through its 22% interest in AIF. The remaining
IMEX properties will be managed by Ashtenne so as to achieve cost savings and
increase their value and will then be sold over a period of years as they mature
as investments.

The In Shops business is primarily an indoor markets business. In Shops leases
large floorplate retail space in secondary locations and licenses small parts of
this space to local traders. Ashtenne believes that there is an opportunity to
improve the In Shops occupancy level in the short term which has suffered due to
radical refurbishment over the last two years.


Terms of the acquisition and the disposal

Ashtenne has agreed to acquire from Mentmore its SBS division for an initial
cash consideration of #180.7 million and additional consideration estimated at
#1.8 million.  Ashtenne has also agreed to procure the repayment to Mentmore of
#1.7 million of debt owed by SBS (after taking account of cash in Birkby and In
Shops).  The Birkby properties and the In Shop properties are valued at #197.1
million and #13.8 million respectively. In arriving at the initial consideration
for the SBS division Ashtenne has allowed #30.2 million to take account of tax
and other net liabilities associated with Birkby and In Shops at completion,
transaction costs and Ashtenne's estimate of the contingent capital gains tax
associated with the properties.

The additional consideration relates to Brunswick Business Park, Sefton Street,
Liverpool, a property currently owned by Birkby ("Brunswick Property") which
Ashtenne will acquire from Mentmore.  The Brunswick Property is not included in
the above reference to the Birkby properties which have been valued at #197.1
million.  The Brunswick Property is currently under offer to a third party.  The
additional consideration that Ashtenne will pay to Mentmore will equal the net
proceeds received by Ashtenne on completion of the sale of this property.
Mentmore has advised Ashtenne that the current book value of this property is
#1.8 million and this figure has been used in estimating the consideration.

The acquisition is conditional on approval by Mentmore shareholders as well as
the approval of Ashtenne's shareholders.

In addition, on completion of the acquisition, Ashtenne has contracted to sell
#86.8 million of the Birkby properties, as valued by King Sturge, to AIF for a
consideration of #90.6 million.  The acquisition is not conditional on the
disposal taking place.


Financial effect of the acquisition and disposal

The net assets of Birkby and In Shops at completion, allowing for transaction
costs, are expected to be #182.4 million. The initial cash consideration of
#180.7 million and the repayment of #1.7 million of SBS indebtedness, will be
satisfied by existing cash and bank resources and a new bank facility of #145
million to be provided by Royal Bank of Scotland.  The additional consideration
will be satisfied from the net proceeds Ashtenne receives from the sale of the
Brunswick Property as described above.

As explained above, Ashtenne will dispose of certain of the Birkby properties to
AIF for a cash consideration of #90.6 million. These properties have current net
annual rent receivable of approximately #8.2 million as at the date of this
announcement.  The majority of the proceeds from the disposal will be used
immediately to repay part of the Royal Bank of Scotland bank facility.


Extraordinary General Meeting and Circular

In view of the size of both the acquisition and disposal, shareholder approval
is required.  A circular containing further details and convening the
extraordinary general meeting to be held on 31 July 2003, is expected to be sent
to Ashtenne shareholders shortly.


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

ACQEAAXPEADDEAE