(BSLA.L) Blacks Leisure Group PLC Buy/Sell

For further information, please contact:

Citigate Dewe Rogerson 020 7638 9571

Simon Rigby

Kevin Smith

Singer Capital Markets 020 3205 7500

Jeff Keating

Jos Trusted

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

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Commenting on the CVA Proposal and the new financing arrangements, Neil Gillis, Chief Executive, said:

"After several years of losses Blacks embarked on a turnaround plan in early 2008. That plan successfully reduced the cost base of the business, reduced our working capital requirements, improved retail standards and created a successful new retail format. However, the severity of the current trading environment and the drag of the loss-making Boardwear business has required a more radical set of measures to complete the turnaround of this business. The restructuring plan announced today and the new banking facility supporting it provide a realistic opportunity to ensure the survival of the core outdoor business which has the potential to become a strong successful retailer."

This summary should be read in conjunction with the full text of this announcement.

For further information, please contact:

Blacks Leisure Group plc 01604 597 222

Neil Gillis, Chief Executive

Citigate Dewe Rogerson 020 7638 9571

Simon Rigby Kevin Smith

Singer Capital Markets 020 3205 7500

Jeff Keating Jos Trusted

Blacks Leisure Group plc

Update on Proposed Restructuring Plan

Further to the announcement made on 22 September 2009, Blacks Leisure Group plc ("Blacks" or the "Company") announces an update in relation to its proposed restructuring plan as well as new bank facilities with Bank of Scotland plc ("BoS"). The proposed plan seeks to address the Group's current financial difficulties by achieving an exit for the Group from its loss-making stores and thereby creating a more stable financial platform for the revitalisation of its core outdoor retail business.

1. Proposed company voluntary arrangements

The Company has finalised the terms of a restructuring plan which is supported by Lloyds Banking Group (of which BoS is a subsidiary). Under the proposed restructuring plan, company voluntary arrangements are being proposed for the Company and its wholly owned subsidiary, The Outdoor Group Limited ("TOG"), to unsecured creditors and shareholders of the Company and TOG (the "CVA Proposal"). TOG is the lessee for a number of the Group's retail stores.

The terms of the CVA Proposal are contained in a document (the "CVA Proposal Document") to be posted to unsecured creditors and shareholders of both the Company and TOG shortly by the joint nominees, Richard Fleming and Brian Green of KPMG LLP, appointed in relation to the CVA Proposal.

A company voluntary arrangement or CVA is a formal procedure under the Insolvency Act 1986 which enables a company to agree with its unsecured creditors a composition in satisfaction of its debts or a scheme of arrangement of its affairs which can determine how its debts should be paid and in what proportions.

In summary terms, if approved and not successfully challenged, the CVA Proposal will:

The Company and TOG will remain liable for rates on the closed retail stores until those stores are surrendered/forfeited or assigned, which shall be at the landlord's discretion. The landlords of open retail stores will not be able to claim against the £7.25 million fund and will not otherwise receive any payment in relation to the CVA Proposal. Save as set out above, in general terms the CVA Proposal will not seek to compromise claims of any other creditors (such as suppliers and employees).

Throughout the CVA process, the Company and TOG will continue trading under the control of their respective directors, operating as going concerns. The Company and TOG are not in and will not be in administration as result of commencing the CVA process.

The CVA Proposal Document will contain notices of meetings ("CVA Meetings") of the unsecured creditors and members of both the Company and TOG to consider and, if thought fit, approve the CVA Proposal. To become effective, the CVA for the Company will require the approval of the requisite majority of the unsecured creditors of the Company and the CVA for TOG will require the approval of the requisite majority of unsecured creditors of TOG. The CVA relating to the Company will be conditional upon the CVA relating to TOG being implemented and this conditionality cannot be waived. The CVA relating to TOG will be conditional upon the CVA relating to the Company being implemented but this condition can be waived by the TOG directors subject to first obtaining the consent of BoS. If this happens, the TOG CVA can come into effect even if the CVA for the Company does not.

A CVA also requires the approval of more than 50 per cent. In value of the members of the Company or TOG (as the case may be) present in person or by proxy and voting at a meeting on the resolution to approve the CVA. However, in accordance with section 4(A)(2) of the Insolvency Act, if the outcome of the meeting of members differs from the outcome of the meeting of a company's creditors, the decision of the creditors will prevail, subject to the right of any member to apply to the Court to challenge the approval of the CVA.

The directors of the Company and TOG believe that the CVA Proposal and the CVA process in general will facilitate a better outcome for creditors than would occur if the Group was placed into administration or liquidation.

The CVA Meetings for creditors of the Company and TOG are expected to be held later this month. Details will be contained in the CVA Proposal Document to be published shortly.

2. New bank facilities and issue of warrants

As announced on 23 September 2009, the Company entered into a formal standstill agreement with BoS, in respect of its August financial covenant breach until 30 November 2009. The standstill was subject to the Company delivering a restructuring plan acceptable to the bank by 30 October 2009. This requirement has been satisfied and BoS has agreed to an extension of the standstill through to 23 December 2009, subject to approval of the CVA Proposal. BoS will be entitled to terminate the standstill if, among other things, either of the CVAs for the Company or TOG is not approved or if either CVA is subject to a challenge which BoS reasonably considers is capable of being adversely determined or if either CVA is revoked or suspended or if there is a breach of certain undertakings relating to the conduct of the CVAs.

In addition, BoS has agreed to make available to the Group new banking facilities subject to the CVA Proposal being approved and not challenged and satisfaction of conventional documentary conditions precedent. Under the new facilities, initial committed facilities of £42.5 million will be made available to the Group which will be used in part to repay in full the existing bank facilities of £35 million with BoS. Of the new facilities, Facility A of £35 million is regarded by the Company as a core facility and Facility B of £7.5 million is regarded as a 'seasonal peak' facility to meet seasonal peaks. The new facilities will be committed for a period of 2 years from the date on which the new facilities become unconditional.

The Company has agreed to pay an initial arrangement fee of £425,000 to BoS in connection with the new facilities provided the new facilities become unconditional. A further fee of £2 million is payable on the third anniversary of the date on which the new facilities become unconditional. The Company has also agreed to pay a fee of £1 million (inclusive of a fee of £175,000 carried forward from when the group's facilities with BoS were extended in August 2009) to BoS under the terms of the standstill, which will not be paid in the event the CVAs are approved and the new facilities become unconditional.

In exchange for the continuing support of BoS pursuant to the new facilities, the Company has agreed to issue to BoS (or any affiliate of BoS) warrants to subscribe for new ordinary shares in the Company (the "Warrants") representing approximately 5 per cent. of the Company's current issued share capital at an exercise price of 1 penny per share, subject to shareholder approval. The number of ordinary shares to be issued on exercise of the Warrants is subject to customary adjustment provisions. The Warrants will be unlisted, in certificated form, detachable from the new facilities and exercisable at any time prior to the fifth anniversary of the date on which the Warrants are issued.

If the Warrants are issued, BoS has agreed, for the period of twenty four months following the first issue of the relevant ordinary shares, to effect any sale of ordinary shares issued to it on the exercise of the Warrants through the Company's broker, subject to the ability of BoS to use another broker at its discretion (acting reasonably).

Because the exercise price of the Warrants is to be less than the current 50p nominal value of the Company's ordinary shares, due to Companies Act 2006 restrictions, the Company will need to carry out a subdivision and reclassification of its ordinary shares before granting the Warrants. It also intends to seek specific authority under the Companies Act 2006 to issue, and to disapply the statutory pre-emption rights in relation to the issue of, the Warrants. These matters will require shareholder approval. Consequently, a general meeting of the Company is to be convened. Further information in relation to the Warrants and the timing of the general meeting will be contained in a shareholder circular that is to be posted to shareholders shortly (the "Shareholder Circular").

In the event that shareholder approval for the issue of the Warrants is not obtained, the Company has agreed (in addition to the fees referred to above) to pay an arrangement fee to BoS of £2 million on the second anniversary of the date on which the new facilities become unconditional. The issue of the Warrants to BoS is not a condition of the new facilities being available.

3. Working Capital

Following the implementation of the CVA Proposal, the Company is of the opinion that the group has sufficient working capital for its present requirements, that is, for at least the next 12 months.

If the standstill from BoS is terminated as described in paragraph 2 above, or if the CVA for TOG is not approved at the creditors' meeting or is approved but is subject to any challenge within the statutory challenge period which BoS reasonably considers is capable of being adversely determined, then all outstanding amounts under the group's existing bank facilities with BoS will become capable of being declared due and payable and one of the conditions precedent to the new facilities with BoS being made available to the group will not be satisfied. In these circumstances, unless BoS agrees to provide alternative funding (and the Directors do not believe that such alternative funding will be forthcoming), the Company and TOG will immediately cease to have working capital sufficient to continue trading which will result in the directors having to seek the appointment of administrators or liquidators. The unsecured creditors and members of the Company and the unsecured creditors and members of TOG will be unlikely to receive any dividend in administrations of (respectively) the Company and TOG.

Therefore the approval of the CVA in relation to TOG is crucial to the survival of the group.

If the CVA for the Company is not approved at the Company creditors' meeting or is approved but is subject to any challenge within the statutory challenge period which BoS reasonably considers is capable of being adversely determined, then all outstanding amounts under the group's existing facilities with BoS will become capable of being declared due and payable and one of the conditions precedent to the new facilities with BoS being made available to the group will not be satisfied. If this happens then, unless BoS agrees to provide alternative funding (and the Directors do not believe that such alternative funding will be forthcoming), the Company will immediately cease to have working capital sufficient to continue trading which will result in the directors of the Company having to seek the appointment of administrators or liquidators in respect of the Company.

If the CVA for the Company is not approved but the CVA for TOG is approved, the TOG directors have the power to waive the condition to the TOG CVA which requires the CVA for the Company to have been approved but because one of the conditions precedent to the new facilities being made available to the Group is the approval of the CVA for the Company, TOG would in these circumstances have to seek alternative funding from BoS (and the Directors do not believe that such alternative funding will be forthcoming) whether the TOG directors exercise their power of waiver or not, the Directors believe that if the CVA for the Company is not approved then the unsecured creditors and members of the Company will be unlikely to receive any dividend in an administration or liquidation of the Company.

4. Administration of Blacks Outdoor Leisure Limited and Voluntary Liquidation of Blacks
Camping and Leisure Limited and Outdoor Stores Limited.

As part of the wider restructuring of the Group, the Company's wholly owned non-trading subsidiary, Blacks Outdoor Leisure Limited ("BOLL") will later today be put into administration. BOLL is the tenant of two leases for open retail stores. In addition, the Company's wholly owned non-trading subsidiaries Blacks Camping and Leisure Limited ("BCL") and Outdoor Stores Limited ("OSL"), will later today send out notices to convene meetings of members and creditors regarding a creditors voluntary liquidation for these companies. BCL is the tenant of a lease of one of the Group's closed retail stores and OSL has a small intra-group receivable, holds four dormant subsidiaries and is the guarantor of the leases of four closed stores.

5. New employee incentive arrangements

The Company wishes to adopt new employee incentive arrangements in order to incentivise the Group's senior managers (including the executive Directors) and align their interests with those of shareholders.

Although the executive Directors and the majority of the senior managers have been granted share options in the past two years, these options do not currently have an incentive value as their performance conditions were set by reference to the market conditions and the state of the business prior to the current economic environment, with target share prices of £3.50, £4.25 and £5.00 as compared with the current share price of 28.5 pence (as at close of business on 2 November 2009, being the last business day prior to the publication of this announcement). Accordingly, these options no longer form any meaningful incentive for individuals involved.

It is therefore proposed that at the general meeting at which the special resolution required to issue the Warrants to BoS will be proposed, ordinary resolutions will also be proposed to adopt The Blacks Leisure Group plc Turnaround Incentive Plan, The Blacks Leisure Group plc Joint Share Ownership Plan, the Blacks Leisure Group plc Employee Benefit Trust No. 1 and The Blacks Leisure Group Employee Benefit Trust No. 2. Further details of these plans will be contained in the Shareholder Circular.

6. CVA Proposal Document and Shareholder Circular

Copies of the CVA Proposal Document and the Shareholder Circular will be made available for inspection at the registered office of the Company at 440-450 Cob Drive, Swan Valley, Northampton, Northamptonshire NN4 9BB during normal business hours on any business day with effect from their publication and up to and including the conclusion of the CVA Meetings (in the case of the CVA Proposal Document) and the General Meeting (in the case of the Shareholder Circular). Copies will also be available for download from the Company's website (http://www.blacksleisure.co.uk) with effect from their publication.

Copies of the CVA Proposal Document and Shareholder Circular, when published, will also be available for inspection at the UK Listing Authority's Document Viewing Facility situated at the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

A further announcement will be made when these documents are published.

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

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