RNS Number:1863L
Chesterton International PLC
16 May 2003


16 May 2003

                          Chesterton International PLC



LETTER FROM THE CHAIRMAN OF CHESTERTON ON BEHALF OF THE MAJORITY OF THE BOARD IN
RESPONSE TO THE LETTER BY MR LIST AND MR BACKS TO CHESTERTON SHAREHOLDERS DATED
14 MAY 2003


The following is the text of a letter from the Chairman of Chesterton on behalf
of the majority of the Board of Chesterton, in response to the letter by Neil
List and Mike Backs to Chesterton shareholders dated 14 May 2003, which sets out
the reasons why the majority of the Board of Chesterton continues to recommend
Chesterton shareholders to accept the offer by Phoenix Acquisitions Limited.
This letter will be posted to Chesterton shareholders later today.



"Dear Chesterton Shareholder


On Wednesday 14 May 2003, Mr List and Mr Backs issued a formal letter to
Chesterton Shareholders setting out their dissenting views in relation to the
offer from Phoenix Acquisitions Limited. In the opinion of the majority of the
Board (comprising myself, Alan Davis, Ian Fleming and Gavin Black), their letter
contains no material new information since the announcement of their views on 17
April 2003.


One change since that announcement is that Mr List and Mr Backs have been
dismissed as employees of the Group. They chose to ignore a clear and specific
instruction not to make an announcement regarding a possible third party
interest. We and our advisers considered that an announcement at that time would
be premature and unhelpful. This has proved to be the case as the Company has
been informed by the third party that it does not wish to take matters further.


The fact is that, today, there is only one offer available for Chesterton
Shareholders. We remain firmly of the view that the Offer is fair and reasonable
and strongly recommend shareholders to accept it now.





The key issue for shareholders is whether the Offer represents fair value for
the Company. We consider that it is not in the interests of the Company to
conduct a detailed public debate on matters other than those directly related to
value. We are clear that nothing raised by Mr List and Mr Backs changes our view
that the Offer represents fair value to shareholders.


Third party approach: The third party referred to in the announcement made by Mr
List and Mr Backs on 1 May 2003, which was interested in exploring the
possibility of making an offer for Chesterton, has confirmed to the Company that
it is no longer proceeding with its interest and has formally withdrawn.


Since Spring 2002, the Board has received a large number of approaches from
parties interested in exploring the possibility of making an offer for the
Company. PAL's approach is the only one to result in a formal offer which we
have been able to recommend to shareholders.


Bank facilities: Bank facilities are not in place through to 2004. The Company's
bankers are currently supportive, although continuation of facilities for the
Company remains conditional on a number of factors including current trading
continuing in line with previously agreed forecasts. There is therefore no
guarantee that facilities will continue to be available.


Cost saving measures: The plan to deliver annualised cost savings of #3.5
million has not yet been fully implemented. The benefits remain in the future
and they have an up-front cost. Of the extra #4.0 million of annualised cost
savings referred to by Mr List and Mr Backs, approximately #1.0 million relate
to potential property savings to be achieved over time. The remainder have not
been substantiated and, in our opinion, should not be relied on.


Potential sale of the Company's facilities management operations: A third party
made an indicative expression of interest in the Group's facilities management
operations. From its letter it was not clear which part of the operations that
party might wish to acquire. The interest was preliminary and subject to due
diligence. Even assuming that it was deliverable, as far as we could ascertain,
the effect of a sale as suggested would be that, although the Group's net asset
position would be improved, cash proceeds, if any, were likely to be minimal and
the Group would lose a significant profit stream. That is why we were not
satisfied that such a sale would create additional value for Chesterton
Shareholders.


Costs: Stripping out increases in insurance costs which the Company has had to
bear in common with other professional services businesses, the Company's
central and support costs have remained broadly flat over the last three years
whilst revenues have increased.





Conclusion and recommendation


Uncertainty regarding the Company's revenue outlook was a key consideration when
we decided to recommend the Offer. Mr List and Mr Backs acknowledge that there
is considerable uncertainty in both the commercial and residential property
markets. We believe that the market conditions and outlook remain as uncertain
today as they were when the Offer was first announced.


We have referred on a number of occasions to the damage caused to the business
by the prolonged uncertainty of the last 12 months. The renewed uncertainty is
again causing problems and we think it is very much in the interests of the
business and Chesterton Shareholders that the damage is limited by bringing an
end to that uncertainty as rapidly as possible.


There is only one offer available for shareholders. We remain firmly of the view
that the Offer is fair and reasonable and strongly recommend shareholders to
accept it now.



Yours sincerely



Peter Brooks

Chairman"


Enquiries:

Chesterton International                     Tel: 020 7499 0404
Peter Brooks, Chairman

Close Brothers                               Tel: 020 7655 3100
Peter Alcaraz

Gavin Anderson & Company                     Tel: 020 7554 1400
Howard Lee
Lindsey Harrison


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


Close Brothers Corporate Finance Limited which is regulated by The Securities
and Futures Authority Limited in the United Kingdom, is acting for Chesterton
and no-one else in connection with the Offer and will not be responsible to
anyone other than Chesterton for providing the protections afforded to customers
of Close Brothers Corporate Finance Limited nor for providing advice in relation
to the Offer.


The definitions used in the offer document issued by Phoenix Acquisitions
Limited on 1 May 2003 in connection with its offer for Chesterton International
PLC apply also in this announcement unless the context requires otherwise.







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

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