Hawthorn Leisure is acquiring a portfolio of 275 tenanted and leased public houses from Greene King. Hawthorn Leisure is backed by Avenue Capital Group, May Capital LLP and management. PRESS RELEASE Hawthorn Leisure, an innovative new pub company established to acquire, invest in and support pubs across the UK, today announces that it has exchanged contracts for the acquisition of a portfolio of 275 tenanted and leased public houses from Greene King. The transaction is scheduled to complete by early June 2014. Hawthorn Leisure’s strategy is to work in close partnership with its tenants, providing management support and capital investment to help them drive growth and maximise the potential of their pubs. Hawthorn Leisure will also seek to grow through additional acquisitions. Hawthorn Leisure is backed by Avenue Capital Group, May Capital LLP and management. The majority of the capital for the acquisition is being provided by Avenue Capital Group, a global investment firm. Gerry Carroll, Chief Executive of Hawthorn Leisure, commented: “There is a fantastic opportunity to work hand in hand with tenants, who we see as our genuine partners, backing them with management support, advice and investment. With strong financial backing, an efficient business model and a high calibre team dedicated to helping our partners to maximise the success of their pubs, Hawthorn Leisure is in a unique position to support and invest in these pubs and to help them fulfill their potential.“ Richard Furst, CIO of Avenue Capital Group and Senior Portfolio Manager of the Avenue Europe Strategy, commented: “We are delighted to announce this acquisition. We believe the UK tenanted pub sector provides significant opportunities for further acquisitions, both from larger pub companies and from financial institutions who, in many situations, have become owners following financial restructurings, and may not therefore be natural investors in this sector. Hawthorn Leisure is an attractive business to manage and invest in these pubs and to pursue further acquisition opportunities as they arise.” Noah Bulkin, founder of May Capital, commented: “This is an important and exciting acquisition which firmly establishes Hawthorn Leisure with immediate scale and we are delighted to have a financing partner in Avenue Capital with both the financial strength and sector expertise to allow Hawthorn to continue to pursue additional acquisitions. The operational and financial capabilities are now in place to build a business which can support current tenants and enhance the value of these pubs through further investment.“ Highlights • The portfolio of 275 tenanted pubs is 98 percent. freehold, predominantly on tied tenancy arrangements • Approximately 192 pubs are in the Southeast, Midlands, East and West of England, 66 pubs are in Scotland, and 17 pubs are in other parts of England • Hawthorn Leisure has entered into a three year supply agreement with Greene King for the continued supply of Greene King’s leading cask and premium ales to these pubs • Hawthorn Leisure’s management team is led by its Chief Executive Gerry Carroll. Gerry was most recently a managing director at Enterprise Inns with responsibility for approximately 4,000 pubs, and has had a successful career in leisure and hospitality, holding a number of senior management positions, since joining Whitbread in 1985 • Hawthorn Leisure has partnered with Matthew Clark, a leading national drinks wholesaler, to provide beer, wine, spirits and minerals supply and distribution services and with County Estate Pubs to provide back office support • CBRE Ltd provided Hawthorn Leisure with transaction advice. Legal advisers to Hawthorn Leisure included King & Wood Mallesons SJ Berwin, CMS Cameron Mckenna and W Legal. Transaction services, tax and accounting advice was provided by Deloitte LLP. Avenue Capital received legal advice from Ropes & Gray Enquiries: Tulchan Communications LLP +44 (0)20 7353 4200 Jonathan Sibun Will Smith The information in this announcement, which does not purport to be comprehensive, has been provided by Hawthorn Leisure and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is made and no responsibility or liability is accepted by Hawthorn Leisure, Avenue Capital Group, May Capital LLP or any of their respective officers, employees or agents in relation to the accuracy or completeness of this information or any other written or oral information made available in connection therewith and any such liability is expressly disclaimed. NOTE TO EDITORS About Avenue Capital Group Avenue Capital Group is a global investment firm focused on private and public debt, equity and real estate markets in the U.S., Europe and Asia. The firm, which was founded in 1995 by Marc Lasry and Sonia Gardner and draws on the skills and experience of approximately 200 employees worldwide, is headquartered in New York, with offices in London, Luxembourg and Munich, and offices throughout Asia. As of March 31, 2014, Avenue oversees approximately $13.6 billion of assets, on behalf of a sophisticated global base of institutional investors, the majority of which is pension funds, and also includes family offices, foundations, insurance companies and sovereign wealth funds. As of March 31, 2013, the firm’s assets under management allocated to the Avenue Europe Strategy were estimated to be approximately $4.9 billion. About May Capital LLP Based in Mayfair, London, May Capital LLP is a private equity firm established in 2013 by Noah Bulkin. Noah previously worked in mergers & acquisitions for approximately 15 years, holding senior positions at Merrill Lynch and Lazard. Amongst other sectors, Noah provided advice on transactions in the pub sector with an aggregate value in excess of £8.5 billion. Hugh Briggs, a partner at May Capital, is the Chief Financial Officer of Hawthorn Leisure. Hugh was a senior member of the financing team at CVC Capital Partners for five years and previously held senior positions at DB Capital Partners / Mid Ocean Partners and worked in leveraged finance at Salomon Brothers / Citibank and Credit Suisse. About Greene King Greene King was founded in 1799 and is headquartered in Bury St. Edmunds, Suffolk. It currently employs 23,000 people across its main trading divisions: Retail, Pub Partners and Brewing & Brands. It operates c. 2,200 pubs, restaurants and hotels across England, Wales and Scotland, of which c. 1,000 are retail pubs, restaurants and hotels. Its leading retail brands are Hungry Horse, Old English Inns and Loch Fyne Restaurants. Greene King is also the UK’s leading cask ale brewer and premium ale brewer. Its core ale brands are Greene King IPA, Old Speckled Hen, the no.1 premium ale in the UK, Abbot Ale, the no.1 premium cask ale in the UK and Belhaven Best, the no.1 ale brand in Scotland. —————————————————– PRESS RELEASE 01 May 2014 GREENE KING PLC DISPOSAL OF 275 NON-CORE ASSETS Greene King plc announces that it has agreed the sale of 275 non-core tenanted and leased pubs to Hawthorn Leisure Limited, backed by Avenue Capital Group and May Capital LLP, for a total consideration of £75.6m. These pubs, located across the UK, generated EBITDA in the last year of £12.4m, implying a disposal multiple of 6.1x. The book value of these pubs was £93.8m and we expect to complete the deal by early June. Greene King and Hawthorn Leisure have also agreed a three-year beer supply deal for these pubs, securing continued and valuable nationwide distribution for our industry-leading ale brand portfolio. This transaction is consistent with our stated strategic direction and delivers three important benefits: - 1. Increases the company’s exposure to the faster-growing Retail sector; 2. Further improves the quality and outlook of Pub Partners’ earnings; 3. Further strengthens the balance sheet providing an opportunity to selectively accelerate retail investment and expansion Rooney Anand, Greene King chief executive officer, comments: “We are pleased to have agreed this transaction with Hawthorn Leisure. Our strategic plan, announced in July 2010, was to reduce our tenanted and leased estate to 1,200 sites. We believe that a smaller estate than originally envisaged is now more appropriate going forward as we move increasingly to higher growth areas in our markets and to improve the customer offer. “The retained Pub Partners estate represents a high quality, cash generative business, although it is likely to become smaller still as we transfer some sites back to retail and seek to dispose of additional sites in the estate to improve both yield and returns. We now expect to reduce the estate to around 750 sites. “It is a sign of the strength of the business and our balance sheet that we have several options for the funds raised through this sale. Depending on site availability and attractive valuations, our first priority will be to seek to further accelerate our retail expansion plans. In the absence of increased investment opportunities, we would also retain the option of using the funds to reduce our overall longer-term gearing position.” FOR FURTHER INFORMATION: Greene King plc Rooney Anand, chief executive officer Tel: 01284 763222 RLM Finsbury Steffan Williams Philip Walters Tel: 0207 251 3801 NOTES TO EDITORS: • Greene King was founded in 1799 and is headquartered in Bury St. Edmunds, Suffolk. It currently employs 23,000 people across its main trading divisions: Retail, Pub Partners and Brewing & Brands. • It operates c. 2,200 pubs, restaurants and hotels across England, Wales and Scotland, of which c. 1,000 are retail pubs, restaurants and hotels. Its leading retail brands are Hungry Horse, Old English Inns and Loch Fyne Restaurants. • Greene King is also the UK’s leading cask ale brewer and premium ale brewer. Its core ale brands are Greene King IPA, Old Speckled Hen, the no.1 premium ale in the UK, Abbot Ale, the no.1 premium cask ale in the UK and Belhaven Best, the no.1 ale brand in Scotland.