St clly vate 3r Confidenhal To beo enedb a 10'" June 2009 Dear Re: Gibbs Conneciion "lite Business" -- Bank Facilities I refer to our recent meeting and would like to thank you for taking time to explain the background to the businesses and titeir operations, especially the issues around the working capital cycle and cashflow pressure. It was encouraging to observe your positive attitude and commitment to trying to find a way to remedy the current situation to the benefit ofall parties. I write to advise that the relationship management responsibility for your various accounts is to he passed to the Bank's Global Restructuring Group. As explained, the aim ofBusiness Restructuring Group (one), part of the afore mentioned department, is to work constructively you to attempt to develop a framework that addresses the Bank's concerns and return the business to a cash positive position. My primary role. as far as practicable, is to support business turnaround and prevent unnecessary commercial failure with the objective orreturning the relationship management ofyour account back to the local Commercial Banking Centre at the earliest opponunity. it is essential we work closely together, with the ready provision of any information to enable tne to fully understand and constder the ongoing support oryour business. i thank you in advance for the provision of the cashtlow forecast. sale purchase lodgers, they are a necessity for the Bank's ongoing support. Your co-operation in [he use of independent cunsulranls, accountants or other professionals to assist in the turnaround process will also be ofgrear assistance in my role. BRG has become involved with your business primarily due to the exhibited high loan to values, indicating a security shortfall against aank debt, and potential concerns over the future viability ofthe business. As a result of these issues, the current debt structure is inappropriate and it is our aim to agree a strategy with you to address the problems. Primarily the Bank provides funding on the ability ofcustomers to service debt, with the written down value ofseourtty being an important secondary consideration. The bank would typically look to lend 70% LTV with the retnaining 30% capital injected as equity. Additionally, in terms ofserviceability, the Bank would look Io ensure net rental income covers interest costs /capital repayments on normal senior debt terms. In respecl to funding outside these parameters the issue orrnezzanine and equity risk would normally arise. The current professional valuation, kindly provided, aids a better understanding as to the risk profile, forecast rental income and dovelopmenteosts. Where a business is undercaprtalised, particularly in this context, it is always our preferred option to allow existing stakeholders the opportunity to in. awe Earth a soared viz Ronni-red in some No 503i: searer Billet: as strum snuee or Rmuhiln . fresh equity capital. If this is not achievable it might be possible to structure additional support for the business where Ihe Bank's return is enhanced (commensurate with the increased risk profile) through fees or property participation: (fees linked to the value of property), However, the Bank (like other creditors) does on occasions have to protect its position ihrough formal insolvency procedures. especially where the business does not seem able to achieve viability. The following options are available to the company to address the commercial and strategic issues it Is facing: . Increased Funding Requirement Security shortfall: Reduce the level ofEank debt Pledge additional tangible secu 'ty Refinance cunent Banking facl ties Additional equity injection . from third party investor or existing shareholders Lending at more reflective mezzanine equity rates a More radical options would include site 0nt] or pan crtbe business and (or assets Protection oran insolvency procedure 1 have asked one of our in house property consultants to review the recent valuation. so he can comment on the current asset valuation, the development project, local market and the suitability oithe property as security for the Bank, Please also note, it will also be necessary to conduct a review orthe security that you have granted to the Bank. This helps me to understand what the Bank's overall position is in respect ofihe Business and what, iranything, the Bank must do to preserve its security, There will be a cost for the security review and, pursuant to standard clauses in the facility and security documents that you have signed; this cost will be passed onto you, The security review is, however, a valuable exercise and the Bank has an arrangement with its lawyers to keep the cost of security reviews down. Whilst we progress our discussions, 1 leave you to ensure limits are respected and borrowings remain subject to the terms set out in the facility documentation, and bcnowing is repayable on demand. would reiterate that, although i have taken over responsibility for all credit aspects to your relationship with the Bank, all operational issues should now be directed to your new dedicated Customer Service Team. Please find enclosed an information sheei detailing the relevant contact details for the team. Finally, I would like to thank you for the constructive way you have approached the challenges the Business is facing and BRG's involvement, and kink forward to working with you in the future. lfyou have any queries regarding the contents ofthis letter, please do not hesitate to contact me. Yours sincerely,