PROPOSED ACQUISITION OF THE TRAFFORD CENTRE GROUP AND PLACING OF UP TO 62.3 MILLION NEW ORDINARY SHARES

Capital Shopping Centres Group PLC (the “Company” or “CSC”) today announces that it has reached an agreement withTokenhouse Holdings (IoM) Limited (the “Seller”), one of the holding companies of the Peel Group, under which it will acquire The Trafford Centre Group together with approximately £77million* in cash from Peel (the “Acquisition”) in exchange for up to 167.3 million* new ordinary shares in CSC (the “Consideration Shares”) and an aggregate nominal amount ofup to £209.0 million* 4.076 per cent. convertible bonds to be issued by CSC (the“Convertible Bonds”) to Peel.

CSC also announces that it is placing up to 62.3 million new ordinary shares (the “Placing Shares”), representing up to 9.9 per cent. of the Company’s Existing Shares immediately prior to the placing, with institutional and certain other investors through an accelerated
Bookbuild process to be carried out by Merrill Lynch International and UBS Limited (the “Placing”) at a price to be determined at the close of the Bookbuild (the “Placing Price”). The book will open with immediate effect.

Key transaction highlights:
The Trafford Centre, located near Manchester, is one of the UK’s most successful retail and leisure destinations attracting 35 million customer visits annually, with 1.9 million sq.ft. of retail, catering and leisure space, including approximately 0.2 million sq. ft. at Barton Square, a major homeware and leisure extension.

The Acquisition involves an equity purchase price of £747.6 million for The Trafford Centre and a further amount of approximately £77 million* in respect of a cash contribution by Peel, in return for the issue of Consideration Shares and Convertible Bonds by CSC to Peel. On the basis of CSC's 30 June 2010 Net Asset Value per share of 368 pence, the Acquisition implies a price for The Trafford Centre of approximately £1.60 billion, taking into account The Trafford Centre Group’s net debt of £798 million, which mostly comprises long-dated amortising CMBS notes, and other net liabilities of
£54 million at 30 June 2010. This represents a 3 per cent. discount to the 1 November 2010 external valuation of £1.65 billion.

Specifically, the Acquisition of 1000 per cent. of The Trafford Centre will:
strengthen CSC’s position as the leading operator of pre-eminent UK regional  shopping centres. Post the Acquisition, CSC will own fourteen UK shopping centres,including ten of the top 25 and four of the top six out-of-town shopping centres; significantly increase CSC’s presence in the key North West regional market, alongside Manchester Arndale;

strengthen retailer relationships, add The Trafford Centre’s successful leisure and catering offerings and provide an opportunity to combine best practices across CSC and The Trafford Centre;

provide significant asset management opportunities to grow ERV at The Trafford Centre; and further enhance the overall financial position of the Enlarged Group with the addition of The Trafford Centre’s high-quality income stream and long-dated CMBS debt. The Acquisition will result in Peel holding approximately 19.9 per cent.** of CSC’s Enlarged Issued Share Capital (and approximately 24.9 per cent.** assuming conversion of the Convertible Bonds); John Whittaker, Chairman of Peel and a highly regarded real estate investor, will join the Board of CSC as a Non-Executive Director and Deputy Chairman.

The Placing strengthens the overall financial position of the Group, reducing the loan to value ratio from 53 per cent. to approximately 47 per cent.*, and increases the Group’s flexibility to invest further in its existing key assets. Following the Acquisition and the Placing, after funding certain items arising as a result of the Acquisition, the Enlarged Group is expected to have headroom in terms of cash and committed facilities of approximately £360 million*.

CSC intends to publish a combined prospectus and circular containing further details relating to the Acquisition as soon as practicable. The Acquisition is subject to the approval of CSC’s Shareholders at an Extraordinary General Meeting which is expected to be held on 20 December 2010.

Commenting on the transaction, Patrick Burgess MBE, Chairman of CSC, said:
“We are delighted to announce this significant transaction which represents an outstanding opportunity for shareholders. We are looking forward to welcoming Peel as a major shareholder and to benefiting from John Whittaker’s expertise on the board of Capital Shopping Centres Group PLC. The Trafford Centre is an exceptional asset which will be an important component of the Group’s long term future prospects. In addition, the Placing will substantially strengthen the Group’s financial position to the benefit of all shareholders.”

Commenting on the transaction, David Fischel, Chief Executive of CSC, said:
“The transaction fits well with the strategy of establishing CSC as the leading developer, owner and manager of pre-eminent UK regional shopping centre destinations and the Placing improves the Group’s financial flexibility to pursue the range of active management projects under consideration. We look forward to working with John Whittaker and The Trafford Centre team and to strongly driving forward the Group’s overall performance.”

Commenting on the transaction, John Whittaker, Chairman of Peel, said:
“The prospect of blending The Trafford Centre with the Capital Shopping Centres portfolio is very exciting. Capital Shopping Centres is widely regarded as the leading owner and operator of pre-eminent UK regional shopping centres and through Peel’s investment of equity, assets and expertise we hope to assist in taking the Company forward to new heights. I am relishing the prospect of joining CSC’s highly professional and experienced Board and working with the CSC team to further the success of the Company.”

Merrill Lynch International is acting as Sponsor in connection with the Placing. Merrill Lynch International and UBS Limited are acting as Joint Bookrunners in connection with the Placing.

RBS Hoare Govett is acting as Lead Manager in connection with the Placing. Merrill Lynch International is acting as Sponsor and financial adviser to CSC in connection with the Acquisition. UBS Limited is also providing financial advice to the Company in connection with the Acquisition.

This article was originally posted on South Africa Business Communities

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