Circ re. pref share issue

R.E.A.Hldgs PLC
05 July 2004

Summary
-------
R.E.A. Holdings plc announces that it has despatched a circular (the 'circular')
to holders of ordinary shares, preference shares, warrants and convertible loan
stock providing information regarding two matters.

The first matter is a proposal that the arrears of dividend on the existing
preference shares, equivalent to 18p per share, should be cancelled and that, in
lieu thereof, the company should issue new preference shares, credited as fully
paid by way of capitalisation of share premium account, to the holders of
existing preference shares. Such capitalisation issue would be made on the basis
of 18p nominal of new preference share capital for each preference share held as
at the close of business on 30 June 2004. Holders of existing preference shares
who so elected would be able to sell back to the company, at £1 per share, up to
13 out of every 18 new preference shares allotted pursuant to the capitalisation
issue.

The second matter is a proposed placing by the company of up to 1,741,665 new
preference shares. This would involve the issue by the company of 1,000,000 new
preference shares fully paid for cash at par to placees procured by Canaccord
and, if further placees can be procured, the sale by the company of some or all
of any new preference shares bought back by the company pursuant to the cash
buy-back arrangement referred to above (being up to 741,665 new preference
shares) for cash also at £1 per share.

As implementation of the proposals will require certain approvals from the
holders of all listed securities of the company, notices are set out at the end
of the circular convening a meeting of warrant holders, a meeting of convertible
loan stock holders, a class meeting of holders of preference shares, a class
meeting of holders of ordinary shares and an extraordinary general meeting of
the company, all to be held on 29 July 2004, for the purposes of considering
and, if thought fit, passing the resolutions necessary to implement the
proposals.


Background
----------
As shareholders will be aware, in an effort to conserve cash resources during a
critical period in the development of the group's East Kalimantan operations,
the directors decided, in December 2001, that it was necessary to defer payment
of the fixed semi-annual dividend that fell due for payment on 31 December 2001
in respect of the existing preference shares. Again in each of June 2002,
December 2002 and June 2003, the directors concluded that the cash resources of
the company, in the then prevailing circumstances, did not permit the payment of
dividends in respect of the preference shares, in whole or in part. However, by
December 2003 the financial situation of the group was clearer. The payment of a
preference dividend was resumed on 31 December 2003 with the payment of a
dividend on that date equal to the fixed semi-annual dividend then falling due.
A further dividend in respect of the preference shares was paid on 30 June 2004,
again in an amount equal to the fixed semi-annual dividend then falling due for
payment.

The directors are confident that the results that the group is now achieving
would permit progressive reduction and eventual elimination of all preference
dividend arrears (that is £1,026,921 equivalent to 18p per existing preference
share). However, the directors also believe that it would improve the standing
of the company, and be to the benefit of all holders of securities issued by the
company, if the preference dividend arrears could be fully eliminated without
further delay. Against this, the directors have been concerned to ensure that
any action taken to effect such full elimination should not inhibit the group's
capacity to meet the continuing financial demands of the East Kalimantan
operations. The proposals have been formulated to meet this concern while
achieving the desired object of immediately expunging all existing arrears of
preference dividend.

No dividend in respect of the ordinary shares has been paid by the company since
31 January 2000, when an interim dividend in lieu of final was paid in respect
of the year ended 31 December 1998.


Capitalisation issue and cancellation of preference dividend arrears
--------------------------------------------------------------------
Upon and subject to the terms and conditions described below, it is proposed
that the undeclared £1,026,921 arrears of fixed cumulative dividend on the
existing preference shares (being equivalent to 18p per existing preference
share) be cancelled and that holders of existing preference shares on the
register of members at the close of business on 30 June 2004 be allotted up to
1,026,921 new preference shares, credited as fully paid up at par, by way of
capitalisation of share premium account on the following basis:

18 new preference shares for every 100 existing preference shares

held at the close of business on 30 June 2004 (and so in proportion for any
greater or lesser number of new preference shares held). Fractional entitlements
to new preference shares will not be allotted and entitlements to new preference
shares will be rounded down to the nearest whole number of new preference
shares.


Cash buy-back arrangement
-------------------------
So as to provide holders of existing preference shares with an immediate
opportunity to realise a proportion of the new preference shares proposed to be
allotted to them pursuant to the capitalisation issue, the company invites each
such holder to offer to sell back to the company, at a price of £1 per share
payable in cash and otherwise upon the terms and subject to the conditions
described below, such number of the new preference shares allotted to such
holder pursuant to the capitalisation issue as that holder may elect to sell but
subject to a maximum of:

13 new preference shares for every 18 new preference shares allotted

(and so in proportion for any greater or lesser number of new preference shares
allotted).

All purchases of new preference shares by the company pursuant to the cash
buy-back arrangement will be made out of distributable reserves. Rather than
cancelling the new preferences shares bought back (if any), the company proposes
to take advantage of recent legislation regarding treasury shares. Any new
preference shares bought back by the company will be retained as treasury
shares, to be resold by the company pursuant to the placing if and to the extent
that Canaccord succeeds in obtaining placees to purchase the same or otherwise
to be available to be resold by the company in the future should suitable
opportunities arise. On any resale (whether pursuant to the placing or in the
future), the sale proceeds will be recredited to the distributable reserves of
the company. Since the new preference shares do not constitute equity share
capital, on any such sale, the company will not first offer the new preference
shares to be sold to existing shareholders. The cash proceeds of any resale will
be used to augment the group's working capital resources.

The company is only inviting holders of existing preference shares to sell back
to the company up to 13 out of every 18 new preference shares allotted pursuant
to the capitalisation issue, rather than all of the new preference shares so
allotted, due to the restrictions imposed on the number of new preference shares
which the company is permitted by law to retain as treasury shares; the
directors do not think it prudent to use the company's cash resources or
distributable reserves to buy back new preference shares for cancellation. The
maximum number of shares which the company may purchase pursuant to the cash
buy-back arrangement is 741,665.

Elections to sell new preference shares to the company pursuant to the cash
buy-back arrangement will be irrevocable and may only be made pursuant to the
cash election forms which are personal to the holders of existing preference
shares named therein and may not be assigned, transferred or split.


Placing
-------
When first considering the capitalisation issue, the directors contemplated
making an arrangement pursuant to which third party placees would be procured to
purchase the new preference shares allotted pursuant to the issue from those
holders of existing preference shares who wished to avail themselves of the
opportunity to realise all or any of the shares allotted to them for cash at £1
per share. However, it became clear that potential purchasers of new preference
shares would want reasonable certainty as to the number of new preference shares
that they would be required to purchase pursuant to any such arrangement.

As the directors had no way of knowing how many, if any, of the new preference
shares allotted pursuant to the capitalisation issue the allottees of such
shares would wish to sell immediately for cash at £1 per share, the directors
decided that the company should itself offer to purchase a proportion of the new
preference shares allotted pursuant to the capitalisation issue (the proportion
being determined, as stated above, by reference to the limitation on the number
of preference shares that the company would be permitted to hold as treasury
shares) and should fund such purchase, and take advantage of the opportunity
that the situation afforded of providing the company with useful additional
liquidity, by arranging a firm placing of further new preference shares for
cash. The directors thus decided that the company should issue 1,000,000 new
preference shares at £1 per share by way of a cash placing on the basis that the
excess cash raised after funding the proposed buy-back, combined with the shares
bought back (which being held as treasury shares would be available for resale
should a suitable opportunity arise), would provide the desired additional
liquidity.

The proposals involving the cash buy-back arrangement and the placing are the
result of this decision. The cash buy-back arrangement has been explained under
'Cash buy-back arrangement' above. To effect the placing, the company has
entered into the placing agreement with Canaccord. Pursuant to that agreement
Canaccord has agreed to procure firm placees to subscribe 1,000,000 new
preference shares and to use its reasonable endeavours to procure placees to
purchase any new preference shares acquired by the company pursuant to the cash
buy-back arrangement (being up to a further 741,665 new preference shares), in
each case for cash at a price of £1 per share and otherwise upon the terms and
subject to conditions described below.

The proceeds of the issue of new preference shares pursuant to the placing (net
of expenses) are estimated to amount to some £850,000. Such proceeds will be
utilised first in providing the cash required to fund the cash buy-back
arrangement which, if all holders of existing preference shares were to elect to
sell back to the company 13 out of every 18 new preference shares allotted to
them pursuant to the capitalisation issue, would amount to some £742,000. The
balance, together with the proceeds of resale of any new preference shares
bought back pursuant to the cash buy-back arrangement and sold pursuant to the
placing, will be applied in augmenting the group's working capital resources.


Further terms
-------------
The new preference shares to be issued pursuant to the capitalisation issue and
the placing will upon issue rank pari passu in all respects with the existing
preference shares (as regards which the dividend arrears of 18p per share will
by then have been cancelled). The existing preference shares are already
admitted to trading on the London Stock Exchange's market for listed securities.

No expenses of or incidental to the capitalisation issue or the placing will be
charged to allottees of new preference shares and the new preference shares will
be registered by the company in the names of the allottees thereof free of stamp
duty and stamp duty reserve tax. The company will bear the stamp duty payable in
connection with the cash buy-back arrangement and the resale pursuant to the
placing agreement of new preference shares bought back. No premium will be
payable upon issue of any of the new preference shares.

Holders of existing preference shares who have, prior to the date on which the
existing preference shares are marked 'ex' the entitlement to the capitalisation
issue, sold or transferred all or part of their registered holding(s) of
existing preference shares are advised to consult their stockbroker or other
professional adviser regulated by the Financial Services Authority as soon as
possible as the right to receive new preference shares pursuant to the
capitalisation issue and/or to elect to sell new preference shares pursuant to
the cash buy-back arrangement may represent a benefit that can be claimed from
them by buyers or transferees under the rules of the London Stock Exchange.


Conditions
----------
The placing agreement is conditional upon, inter alia, admission of the new
preference shares to the Official List and to trading on the London Stock
Exchange's market for listed securities by no later than 31 August 2004. The
placing agreement contains provisions for its termination by Canaccord under
certain circumstances being principally circumstances involving a material
adverse change likely to cause a substantial deterioration in the price or value
of the new preference shares or to prejudice successful implementation of the
proposals. It is a condition of the proposals that the placing agreement becomes
unconditional and is not terminated in accordance with its terms.

The proposals are also conditional upon:

• the passing of the resolutions set out in the notices of the meeting of 
  warrant holders, of the meeting of convertible loan stock holders, of the
  class meeting of holders of preference shares and of the class meeting of
  holders of ordinary shares, all convened for 29 July 2004
• the passing of the first and second resolutions set out in the notice of the
  extraordinary general meeting of the company convened for 29 July 2004
• admission of the new preference shares to the Official List and to trading on 
  the London Stock Exchange's market for listed securities.


Financial considerations
------------------------
Implementation of the proposals would, in effect, result in the elimination of
the 18p per share of dividend arrears on the existing preference shares and the
replacement of those arrears with 18p nominal of new preference share capital
for each existing preference share. Holders of existing preference shares who so
wish would be able to realise immediately a significant proportion of their new
preference shares for cash by electing to take advantage of the cash buy-back
arrangement. As such, the directors believe that the proposals should be
attractive to holders of preference shares in providing a mechanism for securing
immediate value for entitlements to arrears of dividend.

The tax consequences of the proposals, both for UK resident holders of existing
preference shares who elect to sell, pursuant to the cash buy-back arrangement,
a proportion of the new preference shares allotted to them and thus realise a
sum equivalent to the dividend arrears foregone and for UK resident holders of
existing preference shares who retain the new preference shares allotted to
them, are described in the circular.

Absent unforeseen circumstances, the directors intend that, in the event of the
proposals becoming effective, future dividends accruing on the existing and new
preference shares will be declared for payment on the normal dividend payment
dates of 30 June and 31 December in each year.

The directors hope that elimination of arrears of dividend and the resumption of
normal dividend payments on the preference shares will improve the financial
standing of the preference shares and of the company generally and as such will
be of benefit both to holders of preference shares and to the company and its
shareholders as a whole.


Business current trading, and prospects
---------------------------------------
The entire business of the group is represented by oil palm operations in East
Kalimantan, Indonesia. A detailed description of the business is provided in the
circular.

With the East Kalimantan operations having received good rainfall during 2003,
the directors are optimistic that 2004 will see yields returning to levels
normal for the maturity profile of the productive areas. On that basis, the FFB
crop for 2004 has been estimated at 298,000 tonnes, some 34 per cent higher than
the crop achieved in 2003. Production achieved during 2004 to-date has been in
line with budget.

CPO prices have recently fallen back from a peak of over $550 per tonne (spot
CIF Rotterdam) and as the group's revenue is directly related to the price of
CPO, this fall, if not reversed, will have a negative impact on the
profitability and cashflow of the group. However, at current price levels, the
margins achievable by the group are still highly remunerative. At current
conditions and prices, the directors foresee the next year to be a very good
year for the group.

The continued pursuit by the MEZ group of unfounded claims against the group
(details of which are provided in the circular) still poses risks for the group
but the recent completion of the restructuring of the group's Indonesian
indebtedness has strengthened the group's financial position. It has also
resulted in the discharge of the only liabilities to the MEZ group that the
group acknowledged to be immediately due and payable and has thereby reduced the
materiality of the MEZ claims.

Whilst the directors acknowledge that the group is engaged in operations that
have the inherent risks of a cyclical market for CPO, unpredictability of
climatic factors and an asset base located entirely in Indonesia, they consider
that such risks are significantly offset by the substantial and efficient
operating base that the group has now established and by the group's expansion
programme that should ensure increasing crops for many years to come. The
directors believe that the group has an exceptional opportunity in East
Kalimantan to establish a world class oil palm operation and they feel that in
the past two years significant progress has been made towards realisation of
that opportunity.


Working capital
---------------
The directors are of the opinion that, whether or not the proposals are
implemented, the group has sufficient working capital for its present
requirements, that is for at least twelve months following the date of the
circular.


Meetings
--------
As already noted, the following meetings have been convened for 29 July 2004,
all of which are to be held at the London office of the company's solicitors,
Ashurst, at Broadwalk House, 5 Appold Street, London EC2A 2HA:

   • a meeting of warrant holders to be held at 10.15 am
   • a meeting of convertible loan stock holders to be held at 10.20 am (or so 
     soon thereafter as the meeting of warrant holders has been concluded or
     adjourned)
   • a class meeting of holders of preference shares to be held at 10.25 am (or
     so soon thereafter as the meeting of convertible loan stock holders has
     been concluded or adjourned)
   • a class meeting of holders of ordinary shares to be held at 10.30 am (or
     so soon thereafter as the class meeting of holders of preference shares has
     been concluded or adjourned)
   • an extraordinary general meeting of the company to be held at 10.35 am (or
     so soon thereafter as the class meeting of holders of ordinary shares
     has been concluded or adjourned)

The rights attaching to, respectively, the warrants and the convertible loan
stock include provision that, save with the consent of an extraordinary
resolution of the warrant holders and the convertible loan stock holders
respectively, the company must not (other than in certain limited circumstances)
distribute capital profits or reserves or otherwise capitalise profits or
reserves, buy back its own shares or modify the rights attaching to the ordinary
shares. Accordingly, the resolution set out in each of the notice of the meeting
of warrant holders and the notice of the meeting of the convertible loan stock
holders (which will, in each case, be proposed as an extraordinary resolution)
provides for, respectively, the warrant holders and the convertible loan stock
holders to sanction the capitalisation issue, the cash buy-back arrangement and
the modification of the rights attaching to the ordinary shares that the passing
of the first resolution set out in the notice of extraordinary general meeting
would effect.

The resolution set out in each of the notice of the class meeting of holders of
preference shares and the notice of the class meeting of holders of ordinary
shares (which will, in each case, be proposed as an extraordinary resolution)
provides for, respectively, holders of preference shares and holders of ordinary
shares to sanction the modification of class rights attaching to, respectively,
the preference shares and ordinary shares that the passing of the first
resolution set out in the notice of extraordinary general meeting would effect.
In addition, the resolution set out in the notice of the class meeting of
holders of preference shares provides for holders of preference shares to
sanction the purchase by the company of new preference shares pursuant to the
cash buy-back arrangement.

Four resolutions are set out in the notice of extraordinary general meeting of
the company. Of these, the first, second and fourth resolutions will be proposed
as special resolutions and the third resolution as an ordinary resolution.

The first resolution set out in the notice of extraordinary general meeting
makes provision for implementation of the capitalisation issue and the placing
by providing for:

   • the authorised share capital of the company to be increased by £2,250,000 
     to £17,500,000 by the creation of an additional 2,250,000 preference
     shares, ranking pari passu in all respects with the existing preference
     shares (representing 33.3 per cent of the existing authorised preference 
     share capital of the company)
   • the cancellation of all arrears of fixed cumulative dividend on the
     preference shares
   • the articles of association of the company to be amended (a) to reflect
     the new authorised share capital of the company and (b) to permit
     capitalisation issues to be made to holders of preference shares by
     allotment to such holders of unissued preference shares credited as fully
     paid by capitalisation of reserves
   • the directors to be authorised to make the capitalisation issue and to
     allot up to 1,026,921 new preference shares (representing 18.0 per cent of
     the issued preference share capital at the date of the circular) pursuant 
     to such issue, such authorisation to expire on 31 August 2004
   • the directors to be authorised to allot up to 1,000,000 new preference
     shares (representing 17.5 per cent of the issued preference share capital 
     at the date of the circular) pursuant to the placing, such authorisation to
     expire on 31 August 2004

The full text of the proposed amendments to the articles of association of the
company referred to above is set out in paragraph (c) of the first resolution
set out in the notice of extraordinary general meeting.

The second resolution set out in the notice of extraordinary general meeting
provides for approval of the purchase by the company of up to 741,665 new
preference shares pursuant to the cash buy-back arrangement and authorises the
company to enter into contracts to effect such purchase, such authorisation to
expire on 31 August 2004.

The third resolution set out in the notice of extraordinary general meeting
provides for the general authority pursuant to section 80 of the Companies Act
1985 that will be given to the directors to allot relevant securities by a
resolution to be proposed at the annual general meeting of the company convened
for 7 July 2004 if passed (or, if such resolution is not passed, given to the
directors to allot relevant securities by a resolution passed at the annual
general meeting held on 26 June 2003) to be replaced by a new general authority
reflecting the increase of capital proposed to be effected by the first
resolution set out in the notice of the extraordinary general meeting. Such new
general authority will be valid until 28 July 2009 and will be limited to 
£2,657,476 nominal of share capital representing 25.1 per cent of the total
capital in issue at the date of the circular and will be split to provide
authority for the allotment of (i) ordinary shares up to an aggregate nominal
amount of £1,389,519 representing 5,558,076 ordinary shares or representing
28.4 per cent of the issued ordinary share capital at the date of the circular
and (ii) preference shares up to an aggregate nominal amount of £1,267,957 
representing 1,267,957 preference shares or representing 22.2 per cent of the
issued preference share capital at the date of the circular and 16.4 per cent 
of the issued preference share capital as proposed to be enlarged by the 
capitalisation issue and the placing. The directors have no present intention
of exercising this authority.

The fourth resolution set out in the notice of extraordinary general meeting
provides a new general power to the directors to allot equity securities since
any existing such power will become void upon the replacement general authority
to allot equity securities proposed to be provided by the third resolution set
out in the notice of the meeting becoming effective. Pursuant to such new power,
the directors will be empowered to make a rights issue or open offer to holders
of ordinary shares, warrant holders and / or convertible loan stock holders
without being obliged to comply with certain technical requirements of the
Companies Act 1985, which create problems with regard to fractions and overseas
shareholders. In addition, the directors will be empowered to make issues of
ordinary shares for cash other than by way of a rights issue or open offer up to
a maximum nominal amount of £397,000 representing 1,588,000 ordinary shares or
representing 4.8 per cent of the aggregate of the existing issued ordinary share
capital of the company and the ordinary share capital that would be issued upon 
exercise in full of the subscription and conversion rights attaching to the 
warrants and the convertible loan stock. The new general power will terminate on
the date of the annual general meeting to be held in 2005, which will be no
later than 15 months from 7 July 2004.

In view of the fact that the fixed cumulative dividend on the existing
preference shares is currently in arrears by more than six months, holders of
existing preference shares will be entitled to vote at the extraordinary general
meeting.


Recommendation
--------------
The directors consider that implementation of the proposals is in the best
interests of the company, convertible loan stock holders, warrant holders,
holders of preference shares and holders of ordinary shares as separate classes
and shareholders as a whole. Accordingly, the directors recommend all warrant
holders, convertible loan stock holders, holders of preference shares and
holders of ordinary shares to vote in favour of, respectively, the resolutions
set out in the notices of the meeting of warrant holders, the meeting of
convertible loan stock holders, the class meeting of holders of preference
shares and the class meeting of holders of ordinary shares, all convened for 29
July 2004 as the directors (and persons connected with them within the meaning
of section 346 of the Companies Act 1985) intend to do as regards all such
meetings in respect of their own beneficial holdings. The directors also
recommend all shareholders to vote in favour of the first two resolutions set
out in the notice of extraordinary general meeting of the company also convened
for 29 July 2004 as the directors (and persons connected with them within the
meaning of section 346 of the Companies Act 1985) intend to do in respect of
their own beneficial holdings.

The directors also consider it to be in the best interests of the company and
its shareholders as a whole that the directors be granted the authorities and
powers referred to in the pre-penultimate and penultimate paragraphs under
'Meetings' above. Accordingly, the directors also recommend all shareholders to
vote in favour of the third and fourth resolutions set out in the notice of
extraordinary general meeting of the company convened for 29 July 2004 as the
directors (and persons connected with them within the meaning of section 346 of
the Companies Act 1985) intend to do in respect of their own beneficial
holdings.

The beneficial holdings of the directors (and persons connected with them within
the meaning of section 346 of the Companies Act 1985) amount in aggregate to
150,648 warrants (representing 9.3 per cent of the warrants in issue), £105,125
nominal of convertible loan stock (representing 3.2 per cent of the convertible
loan stock in issue), 70,783 preference shares (representing 1.2 per cent of the
preference shares in issue), 824,529 ordinary shares (representing 4.2 per cent
of the ordinary shares in issue) and 895,312 shares (representing 3.5 per cent
of the shares in issue).


Further information
-------------------
Copies of the circular will be available for inspection at the Document Viewing
Facility of the UK Listing Authority up to and including the date of the
extraordinary general meeting convened for 29 July 2004 and may be obtained free
of charge from the company at its registered office, Third Floor, 40-42
Osnaburgh Street, London NW1 3ND. A copy of the circular is also being placed on
the company's website at www.rea.co.uk.


Expected Timetable
------------------
Record date for the capitalisation issue                            30 June 2004

Latest time and date for receipt of proxies for use
in connection with the meeting of warrant holders       10.15 am on 27 July 2004

Latest time and date for receipt of proxies for 
use in connection with the meeting of
convertible loan stock holders                          10.20 am on 27 July 2004

Latest time and date for receipt of proxies for
use in connection with the class meeting of
holders of preference shares                            10.25 am on 27 July 2004

Latest time and date for receipt of proxies for
use in connection with the class meeting of
holders of ordinary shares                              10.30 am on 27 July 2004

Latest time and date for receipt of proxies for use
in connection with the extraordinary general meeting    10.35 am on 27 July 2004

Latest time and date for receipt of cash election forms  3.00 pm on 28 July 2004

Meeting of warrant holders                              10.15 am on 29 July 2004

Meeting of convertible loan stock holders               10.20 am on 29 July 2004

Class meeting of holders of preference shares           10.25 am on 29 July 2004

Class meeting of holders of ordinary shares             10.30 am on 29 July 2004

Extraordinary general meeting                           10.35 am on 29 July 2004

Proposals unconditional, listing effective and
commencement of dealings in new preference shares                   30 July 2004

CREST accounts credited in respect of
new preference shares issued pursuant to
the capitalisation issue                                           4 August 2004

Definitive share certificates despatched in
respect of new preference shares issued
pursuant to the capitalisation issue                              13 August 2004

Cheques representing proceeds of new preference
shares sold pursuant to the 
cash buy-back arrangement despatched                              13 August 2004


Enquiries:
----------
Toby Hayward
Canaccord Capital (Europe) Limited 020 7518 2777

John Oakley
R.E.A. Holdings plc 020 7419 0100


Definitions
-----------
Unless the context otherwise requires, the following definitions apply
throughout this announcement

'board' or         the directors of the company
'directors'        

'Canaccord'        Canaccord Capital (Europe) Limited

'capitalisation    the proposed capitalisation issue of up to 1,026,921 new
issue'             preference shares to be allotted to holders of existing
                   preference shares, credited as fully paid, by way of
                   capitalisation of share premium account on the proportionate
                   basis of 18 new preference shares for every 100 existing
                   preference shares held in lieu of payment of arrears of the
                   preference dividend accrued on such shares

'cash buy-back     the arrangement whereby holders of existing preference shares
arrangement'       may elect to sell to the company, at a price of £1 per share
                   payable in cash, up to 13 out of every 18 new preference
                   shares allotted to them pursuant to the capitalisation issue
                   pursuant to a contract, a written memorandum as to the terms
                   of which is endorsed on the cash election form, to be made by
                   way of a written offer by those holders of existing
                   preference shares who wish to take advantage of the
                   arrangement (by way of completion and return of the cash
                   election form in accordance with the instructions printed
                   thereon) and oral acceptance by the company

'cash election     the form upon which a holder of existing preference shares
form'              may elect to sell for cash, pursuant to the cash buy-back
                   arrangement, up to 13 out of every 18 new preference shares
                   allotted to such holder pursuant to the capitalisation
                   issue

'Commerzbank'      Commerzbank (South East Asia) Limited

'Commerzbank       a loan of $11 million made by Commerzbank to REA Kaltim
loan'              comprising two tranches of $5.5 million each, which loan has
                   now been repaid

'Commerzbank       tranche A of the Commerzbank loan, which was originally
tranche A loan'    guaranteed by a member of the MEZ group

'company' or       R.E.A. Holdings plc
'REA'

'convertible loan  the £3,330,313 nominal of 4 per cent convertible loan stock
stock'             2012 of the company currently in issue

'CPO'              crude palm oil

'CREST'            the relevant system (as defined in the Uncertificated
                   Securities Regulations 2001) in respect of which CRESTCo
                   Limited is the operator

'Emba'             Emba Holdings Limited

'existing          the existing issued preference shares
preference
shares'

'FFB'              oil palm fresh fruit bunches

'group'            the company and its subsidiaries

'Listing Rules'    the Listing Rules of the UK Listing Authority

'London Stock      London Stock Exchange plc
Exchange'

'Makassar'         Makassar Investments Limited, a member of the group

'MEZ claims'       the claims made by the MEZ group pursuant to a complaint
                   dated 16 November 2001 and filed with the United States
                   District Court of the Southern District of New York, details
                   of which are set out in the first paragraph under
                   'Information relevant to the MEZ claims' in the circular

'MEZ group'        Mr M E Zukerman and entities associated (or understood to be
                   associated) with him, including Bodley Investment Company, M.
                   E. Zukerman & Co. Incorporated, M. E. Zukerman Investments
                   Limited and the Zukerman family trust, or, where the context
                   so requires, any one or several of such individual and
                   entities

'MEZ loan'         a loan of $8.175 million made by the MEZ group to REA Kaltim,
                   which loan has now been repaid

'MP'               Makassar Participation plc, a member of the group

'new preference    the new preference shares proposed to be issued pursuant to
shares'            the capitalisation issue and placing

'Official List'    the Official List maintained by the UK Listing Authority

'ordinary          ordinary shares of 25p each in the capital of the company
shares'

'placing'          the proposed subscription by placees of 1,000,000 new
                   preference shares and/or (as the context may require) the
                   proposed acquisition from the company by placees of some or
                   all of any new preference shares acquired by the company
                   pursuant to the cash buy-back arrangement (being up to a
                   further 741,665 new preference shares) in each case for cash
                   at £1 per share, details of which placing are set out in the
                   circular

'placing           the contract summarised in the circular whereby, subject to
agreement'         the proposals becoming unconditional, Canaccord has (i)
                   placed 1,000,000 new preference shares and (ii) agreed to use
                   its reasonable endeavours to place any new preference shares
                   acquired by the company pursuant to the cash buy-back
                   arrangement (being up to a further 741,665 new preference
                   shares), in each case for cash at £1 per share

'preference        9 per cent cumulative preference shares of £1 each in the
shares'            capital of the company

'proposals'        the proposals details of which are set out in the circular
                   for (i) the cancellation of dividend arrears on the existing
                   preference shares equivalent to 18p per share, (ii) the
                   capitalisation issue and cash buy-back arrangement, and (iii)
                   the placing

'REA Kaltim'       P.T. REA Kaltim Plantations, a member of the group

'shareholders'     holders of ordinary shares and/or preference shares

'treasury          issued shares in the capital of the company held by the
shares'            company itself as permitted by the provisions of sections
                   162A to 162G of the Companies Act 1985

'warrants'         the 1,616,907 warrants of the company each entitling the
                   holder to subscribe for one ordinary share at a price of
                   73.5p either in cash or by surrender of 0.735 preference
                   shares





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