CPC City Pub Group Plc (the)

RNS Number:1693A
Capcon Holdings PLC
22 March 2006

Capcon Holdings PLC
22 March 2006

                              Capcon Holdings plc

                 ("Capcon" or the "Company" or the "Group")

                              Board recommendation

Further to the announcement issued by the Company on 3 March 2006 concerning the
posting of a circular to Shareholders in relation to the convening of an
Extraordinary General Meeting of the Company ("EGM") to be held on 29 March 2006
to consider proposals for:

1.            the constitution of #800,000 (nominal) 10% Convertible Redeemable
Guaranteed Secured Loan Stock 2006 (the "Convertible Loan Stock");  or failing
approval thereof by Shareholders

2.            the sale (the "Disposal") of the business, assets and certain
liabilities of the Audit and Stocktaking and the Commercial Investigations
Divisions of the Capcon group (the "Audit and Investigations Businesses") to a
company in which the executive directors of the Company are interested

the Company has received an alternative offer to acquire the Audit and
Investigations Businesses for #1 million from a competitor of the Audit and
Stocktaking  division (the "Alternative Proposal").

The Directors reiterate their recommendation that shareholders vote in favour of
Resolutions 1, 2, and 4 to be proposed at the EGM to enable the constitution and
issue of the Convertible Loan Stock and the subscription for the Convertible
Loan Stock (the "Subscription") by the Directors, certain shareholders of the
Company and third parties.

As set out in the announcement of 3 March, after considering several alternative
means of raising urgently needed cash the Board has concluded that the
Subscription is the most efficient and certain route to raising the urgently
required funds in a short timescale, whilst minimising disruption to the Capcon
group businesses overall. The purpose of the EGM is to seek shareholder approval
for the arrangements that will facilitate the Subscription which will provide
the Company with up to #800,000 of working capital without reducing the value
and substance of the existing enterprise. The Board does not believe that it is
in Shareholders' interest to break up the Company's businesses.

However, should the constitution and issue of the Convertible Loan Stock not be
approved by Shareholders at the EGM, it is intended that Resolution 5, to
approve the Disposal, will be put to Shareholders as an alternative in order to
enable the Group to meet its financial obligations. The Disposal has been
structured so as to ensure that the existing opportunities for cross-
fertilisation between the various parts of the Group's businesses can still be
captured through mutual referral arrangements. This will provide the Company
with a vital lifeline while the remaining business can be developed and
alternative strategies implemented by the Board.   The Alternative Proposal does
not provide the Company with certainty that funds will be received or received
in the required time, nor does it assure the Company of the continued benefit
following the Disposal of the current level of business provided to the Group
through referrals made to the rest of its businesses by the Audit and
Investigations Businesses. Accordingly, the Board cannot recommend that the
Alternative Proposal be considered as a viable alternative to the Disposal.

Capcon Holdings plc

Paul Jackson

Tel: 0870 067 5050

Insinger de Beaufort

Louis Castro

Tel: 020 7190 7000


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

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