Open Letter to Young & Co

Guinness Peat Group PLC 18 June 2001 GUINNESS PEAT GROUP plc LETTER TO THE CHAIRMAN OF YOUNG & CO'S BREWERY PLC Blake Nixon, UK Executive Director of Guinness Peat Group plc ('GPG') has written to Mr John Young, Chairman of Young & Co's Brewery PLC ('Young'), proposing the privatisation of the non-family shareholdings. GPG currently holds 25.2% of Young's 'A' ordinary share capital. The full text of the letter and the associated resolution proposed for the forthcoming Young AGM are attached. TEXT OF LETTER FROM BLAKE NIXON TO JOHN YOUNG, CHAIRMAN OF YOUNG & CO'S BREWERY PLC. Dear Mr Young 'We cannot continue to operate the company and act as if Queen Victoria was on the throne' Morrells Brewery* July 1998 *Morrells operated as a family owned brewery and pub estate in Oxford since 1570 and is now extinct as a consequence of value erosion in the 1990's. Over the past four years Guinness Peat Group ('GPG') and Young & Co.'s Brewery ('Young') have been engaged in debate on three principal issues: (1) Young's inadequate return on capital; (2) the Board's lack of public accountability for performance; and (3) the Board's failure to acknowledge any responsibility for the delivery of shareholder value in a timely manner. It is generally accepted that Young's inadequate return on capital is a consequence of the Brewery's excessive production costs per barrel. This means it operates at a loss and that the Pub Estate fails to obtain the usual profit margin on its beer purchases. GPG has previously proposed a number of strategic initiatives to address this inadequate return, principally the purchase of, or joint venture with, another brewery, or the acquisition of another 70 or 80 pubs. Either of these actions would increase the barrelage through the Brewery sufficiently to improve its economics to an acceptable level. Not only has the Board failed to make any significant moves in this regard, it has not even condescended to state clearly a credible strategy to rectify the return on brewing assets. The voting structure of Young's share capital, which precludes a majority from removing directors, has shielded the Board from public accountability for the Group's chronic underperformance. The Board has repeatedly failed to acknowledge any responsibility for the delivery of shareholder value in a timely manner. Indeed, it has given no indication over the past five years that it is in the least concerned that Young's shares have consistently sold at a substantial discount to the undeniable value of the Group's assets. GPG's proposals at the last three AGM's for a simplification of the Company's share capital, were put forward with the aim of the Board becoming accountable to all shareholders and, as importantly, reversing this serious under valuation. Despite overwhelming support for these proposals from the non- family shareholders, the Board has refused to take any action in this direction. This enforced inaction by the Board places the independent directors in a rather invidious position. Young's performance can only be remedied by either taking vigourous steps to correct the economics of its brewing operations or, in extremis, closing the Brewery. It is plain the Young family is impeding the Board from pursuing either of these courses, whilst hiding behind the great heritage of the Company as their rationale. The propriety of this can only be described as questionable. Whilst having the power to appoint the entire Board, the 'B' shareholders only own 33.7% of the share capital and therefore are exposed to only 33.7% of the estimated £4m-£5m underperformance caused by the Brewery's poor economics. We fail to see how, when they are prevented from adopting a timely and effective strategy to eliminate the problem, the independent directors feel they can adequately represent the public shareholders, who are forced to bear 66.3% of this shortfall. Against this background, the clearest acceptable solution to the current predicament is a privatisation of the non- family shareholdings. GPG therefore proposes that the Board develop a scheme of arrangement under which the 'B' shares (other than those held by Young family Board members and the Ram Brewery Trust) and the 'A' shares are cancelled with holders repaid £10 per share, and the non- voting shares are cancelled with the holders repaid £7.50 per share. These prices are the minimum at which GPG believes the shares would trade if the Brewery were managed competently and, furthermore, represent a significant premium to share prices in recent times. Securitisation of the outstanding Young's pub portfolio, a now well-established method of financing, would enable the Group to raise sufficient finance for such a scheme, including the redemption of debentures and any other debt finance. The scheme would allow the Ram Brewery Trust and those of the Young's family who are Board members to continue to operate the Brewery as they saw fit without the majority shareholders being forced to fund its losses. We believe our scheme represents an attractive resolution of the present totally unacceptable state of affairs. As such, I strongly commend the scheme to all shareholders. Yours faithfully, Blake Nixon UK EXECUTIVE DIRECTOR WORDING OF RESOLUTION PROPOSED FOR THE YOUNG & CO'S BREWERY PLC ANNUAL GENERAL MEETING Young & Co's Brewery PLC (the 'Company') Ordinary Resolution THAT this meeting requests and recommends that: the Board of Directors formulate proposals for the Company to be transferred to the sole ownership of the Young family and connected persons by means of cancelling and extinguishing: (a) all the issued 'A' ordinary shares of 50p each (the 'A Shares') and repaying to the holders thereof the sum of £10 per A Share; (b) all the issued 'B' ordinary shares of 50p each held by persons other that the trustees of the Ram Brewery Trust and those directors of the Company who are members of the Young family (the 'Relevant B Shares') and repaying to the holders thereof the sum of £10 per relevant B Share; and (c) all the issued non-voting ordinary shares of 50p each (the 'Non-Voting Shares') and repaying to the holders thereof the sum of £7.50 per Non-Voting Share by means of a scheme of arrangement under section 425 of the Companies Act 1985 of the Company (the 'Scheme') and that the Scheme and the resolutions required to give effect to the Scheme be submitted to the requisite class meetings, general meetings and court meetings, such meetings to be convened as soon as practicable following the passing of this Resolution. Enquiries: Guinness Peat Group plc 020 7236 0336 Blake Nixon, UK Executive Director Square Mile BSMG Worldwide 020 7601 1000 Kevin Smith/Becky Jewers


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