Thistle announces that it has today reached agreement with Gamma Four Limited (the “Acquirer”), a wholly-owned subsidiary of Euro & UK Property Limited (a private venture capital company and the ultimate parent of the Orb group), regarding the terms of the proposed disposal of a group of subsidiary companies of Thistle which together own 37 Regional and London hotel businesses (the “Disposal”).

The principal features of the transaction are:

—- Total payment to Thistle of £600.4 million, comprising £1 to be paid in cash on completion by the Acquirer to Thistle for the shares in three companies (the “Sale Companies”) that own the hotels and carry on the Hotel Businesses, the repayment on completion by certain of the Sale Companies and certain subsidiaries of the Sale Companies of approximately £555.4 million in settlement of outstanding inter-company indebtedness due to Thistle and £45 million payable no later than 1 January 2005 pursuant to a loan note issued to Thistle by one of the companies to be sold to the Acquirer.

—- Upon completion of the Disposal, Thistle Hotels (Management) Limited, a wholly-owned subsidiary of Thistle, will enter into agreements under which it will undertake the ongoing management of each of the hotels for a period of 30 years from completion of the Disposal.

—- A relationship agreement will be entered into between Thistle and the Orb group which will contain, among other provisions, a guarantee by Thistle in relation to the level of earnings before interest, tax, depreciation and amortisation (“EBITDA”) derived from the Hotel Businesses.

—- The cash proceeds of the Disposal will amount to approximately £555.4 million, before transaction costs, a working capital adjustment and the repayment to Thistle of the loan note. No significant tax liability is expected to arise for Thistle on the Disposal of the Hotel Businesses. £174.0 million of the net cash proceeds will be applied in the first instance to repay Thistle`s bank loans and the balance of the proceeds will increase the Company`s cash position by approximately £381.2 million (before transaction costs), thereby providing Thistle with greater resources to pursue potential strategic acquisition opportunities for further growth and development.

—- The 37 Hotel Businesses being disposed of comprise Thistle`s Regional hotels, excluding Thistle Heathrow and Thistle Edinburgh, and six London hotels.

—- For the year ended 30 December 2001, the Hotel Businesses had turnover of £140.8 million and operating profit of £42.1 million, after charging depreciation and amortisation of £13.4 million (giving EBITDA of £55.5 million).

—- Due to its size, completion of the Disposal requires the approval of Thistle`s shareholders. Irrevocable undertakings to approve the Disposal have been given by shareholders representing approximately 59 per cent. of the issued ordinary share capital of Thistle.

Commenting on the Disposal, David Newbigging, Chairman of Thistle, said:

“This disposal represents a further significant step in the re-positioning of the Company and both improves and rebalances Thistle`s hotel portfolio. By concentrating on delivering growth through our core hotel management business, with a reduced emphasis on the capital intensive ownership of hotel properties, we expect to benefit from increased operating flexibility. This transaction significantly strengthens our balance sheet and leaves us well placed to pursue potential strategic acquisition opportunities for further growth and development, with the objective of delivering value to our shareholders and improving the return on shareholders` equity.”

Ian Burke, Thistle`s Chief Executive Officer, added:

“The Board believes there will be opportunities for the continuing Thistle group to develop its hotel business. Over the course of the current financial year the Board`s focus will continue to be on managing the business efficiently, improving operational cash flow generation and seeking opportunities to improve the return on shareholders` equity.”

The Chairman of Orb Estates Plc, Samuel Nolan, commented:

“We are particularly pleased to have become involved with Thistle Hotels and to have been part of such an innovative restructuring process.”

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