RNS Number:0700L
Neil List & Mike Backs
14 May 2003



IN RELATION TO THE RECOMMENDED CASH OFFER FROM PHOENIX ACQUISITIONS LIMITED FOR
THE ENTIRE ISSUED AND TO BE ISSUED SHARE CAPITAL OF CHESTERTON INTERNATIONAL PLC


Further to an announcement dated 8 May 2003, Neil List and Mike Backs announce
that, as dissenting directors of Chesterton International plc, they are today
posting a letter to Shareholders of Chesterton International plc.   The letter
sets out in more detail the reasons why they do not feel able to join the
remaining members of the Board of Chesterton International plc in recommending
the Offer.



A full copy of the letter is set out below.








ENQUIRIES:

Numerica Capital Markets Limited                                                     Tel: 020 7467 4000
Shirin Gandhi
James Hannon

College Hill                                                                         Tel: 020 7457 2020
Gareth David
Matthew Gregorowski




THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.  If you are in
any doubt about the contents of this document and/or the action you should take,
you are recommended to seek your own independent financial advice immediately
from your stockbroker, bank manager, solicitor, accountant or other independent
financial adviser duly authorised under the Financial Services and Markets Act
2000.



If you have sold or otherwise transferred all of your Chesterton Shares
(otherwise than pursuant to the Offer), you should immediately send this
document to the purchaser or transferee, or to the stockbroker, bank or other
agent through whom the sale or transfer was effected for transmission to the
purchaser or transferee.  However, this document is not being mailed to and
should not be forwarded, distributed, sent or transmitted in or into the United
States, Canada, Australia or Japan.





   LETTER FROM NEIL LIST AND MIKE BACKS AS DISSENTING DIRECTORS OF CHESTERTON
                               INTERNATIONAL PLC





                                                                     14 May 2003



To Chesterton Shareholders and, for information only, to Chesterton Share Option
Holders



Recommended Cash Offer from Phoenix Acquisitions Limited for the entire issued
and to be issued share capital of Chesterton International plc (the "Company")



Dear Chesterton Shareholder,



You will have recently received the offer document in respect of the 12p per
Chesterton Share cash offer being made for your Company, which is being
recommended by members of the Chesterton Board, other than ourselves: Neil List,
your former Chief Executive, and Mike Backs, the former Group Chief Operating
Officer.  As anticipated in that document, we are writing to you now in order to
set out in more detail the reasons why we do not feel able to join the remaining
members of your Board in recommending this offer.



You may by now be aware that the Board of Chesterton announced on 7 May that
they had terminated our employment with the Company for "not observing a clear
and specific instruction concerning an announcement".  The announcement referred
to was released by us on 1 May 2003 to the effect that the Company had received
an additional third party approach unconnected to us which might or might not
lead to a further offer being made for the Company.



The Board, excluding ourselves, had decided not to disclose this approach to
you, as shareholders, and sought to prevent us doing so.  We believed at the
time, and continue to believe, that this approach was material for consideration
by Chesterton shareholders and, in the absence of a suitable announcement by the
Company, something that was our duty to inform Chesterton shareholders about as
quickly as possible.  The other Board members reacted by informing us that our
employment was terminated.



There is no doubt in our minds that we were absolutely correct in making the
announcement.  Now, although we continue to be directors of the Company they
have used their inbuilt Board majority to sideline us, with the result that your
Company is once again presided over by the same people who participated in the
collapse in your Company's fortunes.



We were appointed on 13 February 2003 and our initial review of your business
revealed a picture of ever increasing central costs, yet a lack of control over
spiralling overheads across the Group.  Taking two glaring examples, the
residential division of your Company is committed to paying rent totalling
almost #100,000 a year for extra office space in Little Venice, Chiswick and
Fulham that it does not occupy, whilst a prime office property in Birmingham,
costs your Company about #138,000 a year in rent alone, yet has lain empty since
July 1992, more than 10 years ago!



There is evidence of poor corporate governance, a lack of control over costs and
weak monitoring systems.  Although turnover (excluding recharges) has increased
in each of the last five years, Chesterton has fallen well behind the
performance of its peer group and management has failed even to deliver a profit
in the last financial year or in the first half of this.



Prior to our arrival, the Group's performance had caused its bankers to withdraw
a crucial part of the banking facilities. Since our appointment, after
discussions with the Group's bankers, we were able to achieve a reinstatement of
the facilities enabling us to implement our re-organisation programme.



Our short term goals were therefore to realise cash and move the Group from a
negative to a positive cash flow position.  At the same time, we were proposing
to introduce appropriate employee incentives to match the strategic objectives
of increasing turnover and profitability to deliver shareholder value.



Since our appointment we have been impressed by the dedication of staff
throughout the Company, and by their willingness to embrace the necessary
changes that we had proposed to restore the Group to sound financial health.
During the short time we were Executive Directors, we took a number of crucial
steps towards stabilising the Group:



*      Commencing the implementation of cost saving measures - without the loss
of any fee earners - to produce annualised cost savings of #3.5 million.



*      Identification of further substantial cost savings, totalling in excess
of #4 million on an annualised basis, including a rationalisation of the Group's
IT, surplus property portfolio and support services.



*      Securing the support of the Group's bankers through to 2004 and
increasing the banking facilities available to the Group.



*      Establishing a streamlined management structure and "partnership" culture
within the commercial division, with a view to giving greater autonomy to the
individual offices.

*      Reaching the final stages for the acquisition of a North London-based
agency practice, which we believe would considerably strengthen the residential
division.  It would have brought to the Group an experienced management team
with strong fee earning potential.



In addition, we negotiated an attractive indicative offer subject to certain
conditions for a substantial part of the facilities management division that
would considerably strengthen the Group's balance sheet.  The potential
purchaser has indicated a minimum price of #10 million for the goodwill of this
business.  If completed on the above terms, excluding costs this transaction
alone would add at least #10 million to the Group's net asset value, equivalent
to 11.8p per share.1



It is regrettable that, according to the Offer Document, "it was not clear to
the majority of the Board that such a sale would create additional value for the
Chesterton Shareholders". We strongly disagree with that view.



Within the facilities management division, the Group owns valuable PFI contracts
and their attendant financial instruments, which were excluded from the above
proposed sale.  We intended to sell these assets separately and believe that
they would realise a substantial premium over book value.



We joined the Board of Chesterton because we believed that we could make a real
contribution towards restoring your Company to its rightful position as a
leading supplier of property services.  We rapidly identified cost saving
measures which are being implemented.  We also proposed methods of incentivising
staff and identified ways of releasing inherent value in the Company.  The
points listed above demonstrate how we have approached this task throughout
every division and every aspect of the Group's activities.  There is no mystery
about the speed with which we have identified and begun to tackle these problems
- we had studied the Company for over a year before our appointment.  We believe
much more can be achieved relatively quickly.



There is no doubt that we have been working against a backdrop of considerable
uncertainty in both the commercial and the residential property markets.
However, property has historically been a cyclical business and we feel strongly
that this is not the time for the Group to be succumbing to an opportunist
takeover.  We each purchased 100,000 Chesterton Shares on 17 April 2003 at
12.25p (above the price of the Offer) because we continue to have faith that the
Group can be restored to sound financial health and fervently believe that the
offer currently being proposed does not represent the full value of your
Company's shares.



Chesterton Shareholders should also note that the Offer team is being led by an
individual whose financing arrangements include a #12.9 million loan at an
annual equivalent interest rate that appears from the Offer Document to be a
minimum of 16%.  Most of this loan is repayable within one year and all within
two years.  These onerous terms suggest that the bidder is confident of making a
substantial profit quickly and at your expense.





As referred to above, it was announced on 1 May 2003 that your Board had
received an approach from a third party requesting the opportunity to carry out
due diligence with a view to establishing whether such party might wish to make
an offer for your Company.  Although such due diligence has commenced, this
expression of interest is at a preliminary stage and there is no guarantee that
such approach will lead to a further offer being made for the Company.  This
third party interest however reinforces our view of the potential value of your
Company.



We had hoped to be able to continue with our programme to deliver value to
shareholders.  However, we have now been sidelined and the Company deprived of
our executive skills.  Chesterton has a history dating back almost 200 years to
its foundation in 1805. The Group has a strong brand and a heritage to be proud
of, not one to be discarded lightly to an opportunist bid.



Shareholders should note that the Offer is not scheduled to close until 30 June
and should therefore wait until close to that date before taking any action.  We
have no intention of accepting the Offer in respect of our own shareholdings and
will endeavour during this time to secure a more acceptable outcome for
shareholders.





Yours sincerely,









NEIL LIST                              MIKE BACKS









Numerica Capital Markets Limited, which is regulated in the UK by the Financial
Services Authority, is acting exclusively for Neil List and Mike Backs, as
dissenting directors of the Company, and no one else in connection with the
Offer and will not be responsible to anyone other than Neil List and Mike Backs
for providing the protections afforded to customers of Numerica Capital Markets
Limited or for providing advice in relation to the Offer or any other matter
referred to in this document.



Neil List and Mike Backs accept responsibility for the information contained in
this document.  To the best of the knowledge and belief of Neil List and Mike
Backs (who have taken all reasonable care to ensure that such is the case) the
information contained in this document is in accordance with the facts and does
not omit anything likely to affect the import of such information.



The definitions used in the Offer Document from Phoenix Acquisitions Limited
addressed to shareholders in Chesterton International plc and dated 1 May 2003
apply also in this document unless the context requires otherwise.





--------------------------


1          Based on 84,598,000 issued ordinary shares.


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