Capital Reorganisation - Details

Scottish Media Group PLC
10 April 2000


Recommended proposal to establish SMG plc as the holding company of
Scottish Media Group plc 


Introduction

Scottish Media Group plc ('Scottish Media') today announces its intention to
recommend to shareholders a proposal to introduce a new holding company for
the Group, SMG plc ('SMG'), by way of a court-sanctioned scheme of
arrangement.

Background

On 13 January 2000, the Board of Scottish Media announced, in conjunction with
the proposed acquisition of Ginger Media Group Limited ('Ginger Media'), its
intention to recommend to shareholders a proposal to introduce a new holding
company for the Group, SMG plc, by way of a court-sanctioned scheme of
arrangement ('the Scheme'). On 14 March 2000, with the Radio Authority's
confirmation that the transaction could not be expected to act against the
public interest, the final condition relating to the acquisition of Ginger
Media was met and the acquisition was completed. The directors of Scottish
Media have accordingly now decided to proceed with the Scheme.

As a result of the Scheme, all Scottish Media shares will be held by or on
behalf of SMG, which will in turn issue new shares in itself to the former
Scottish Media shareholders. Accordingly, Scottish Media shareholders will
cease to have Scottish Media shares and will have new shares instead. Their
new shares will be held in the same proportions as their former Scottish Media
shares and will carry the same economic and voting rights in SMG as their
former Scottish Media shares carried in Scottish Media, save that the new
shares will have a par value of 2.5p each, whilst the Scottish Media shares
have a par value of 10p. Accordingly, each holder of Scottish Media shares
will receive four new shares for each Scottish Media share held.

Holders of the existing Scottish Media CULS will be cancelled and new CULS
will be issued by SMG to the former CULS holders. Accordingly, CULS holders
will cease to have CULS and will have new CULS instead. Their new CULS will be
held in the same proportions as their former CULS, will carry the same rights
to principal and interest as their former CULS and will be convertible into
new shares instead of into Scottish Media shares. The conversion rate will be
adjusted to take account of the fact that there will be four new shares
allotted for each Scottish Media share held.

The Scheme will not be implemented unless certain clearances and approvals are
obtained, including the sanction of the Court and the approval of Scottish
Media shareholders and CULS holders, for which purpose Scottish Media
Shareholder and CULS Holder meetings have been convened for 5 May 2000
following the AGM.

Reasons for the Scheme

The directors of Scottish Media believe that there are a number of tangible
benefits to such a proposal including, inter alia:

To create a clearer demarcation between each of the Group's four main business
activities

In recent years, Scottish Media has significantly developed its operations,
expanding from an established base as the leading television broadcaster in
Scotland to encompass other well-branded and complementary media assets both
in Scotland and throughout the UK. As a result, Scottish Media now operates
across four divisions, Television, Publishing, Out of Home and Radio.

The directors of Scottish Media believe that there should be a clearer
demarcation between the Group's four main business activities. In particular,
all four divisions have brands which are well established within their
respective sectors of operation and which in their day-to-day trading are not
dependent on the strength of Scottish Media's own corporate brand. The
directors of Scottish Media believe that the internal reorganisation will
facilitate a clearer demarcation and support the ongoing development of the
Group's main operating activities.

To create a new corporate identity for the Group

As noted above, Scottish Media has developed significantly in recent years,
growing from its base as the leading media company in Scotland to attain a
national presence throughout the UK. As a result of this expansion, including
the recent acquisition of Ginger Media, Scottish Media is now becoming a
leading player in UK media and the directors of Scottish Media believe that it
is no longer appropriate for the Group to be identified primarily as a
Scottish-based multi media group, although the directors of Scottish Media
remain proud of the Company's strong Scottish heritage. Accordingly, the
directors of Scottish Media believe that the Scheme provides a suitable
opportunity to re-brand the Group's corporate identity as a means of
recognising the increasing diversity of its operations.

To facilitate an effective share split

The Scheme also affords the opportunity to implement an effective four for one
share split which the directors of Scottish Media believe will improve the
marketability and liquidity of a new share when compared with an existing
Scottish Media share, the closing price of which on 5 April 2000 was 1285
pence.

The Board of Scottish Media considers the Scheme to be the most appropriate
means of simultaneously achieving all the above objectives.

7th April, 2000
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Press Enquiries

SMG                                                     0141 300 3300
Gary Hughes, Group Finance Director       
Callum Spreng, Corporate Affairs Director

Schroders                                               0171 658 6000
David Wormsley
Simon Gluckstein

J. Henry Schroder & Co. Limited ('Schroders'), which is regulated in the
United Kingdom by The Securities and Futures Authority Limited, is acting for
Scottish Media and for SMG and no one else in connection with the Scheme and
will not be responsible to anyone other than Scottish Media or SMG for
providing the protections afforded to customers of Schroders or for providing
advice in relation to the Scheme or any element thereof.

The contents of this document, for which Scheme is responsible, have been
approved by Schroders for the purposes of Section 57 of the Financial Services
Act 1986.