(PRA.L) Praesepe PLC Buy/Sell

As announced today, the Company is in advanced negotiations to acquire Project A for an estimated enterprise value of approximately £45.0 million. The Directors believe that Project A, if completed, could add significantly to the Company's earnings before interest, tax depreciation and amortisation. The current chairman of the target company relating to Project A is also expected to join the Board of Praesepe if Project A completes. In the event that Project A does not proceed, the Directors intend to use the net proceeds from the Placing to pursue other acquisition opportunities and to meet any associated working capital requirements resulting from such acquisitions.

4. Details of the Placing and Admission

The Company intends to raise £6 million, before expenses, through the issue of 80,000,000 Placing Shares at the Placing Price pursuant to the Placing. The Placing Shares will in total represent 26.7 per cent. of the Enlarged Share Capital.

As discussed below, MVI, which is currently interested in 84,681,819 Ordinary Shares, representing approximately 38.5 per cent. of the Company's issued share capital, will subscribe for 17,422,578 Placing Shares and will, immediately following Admission, be interested in 102,104,397 Ordinary Shares in the Company, representing approximately 34.0 per cent. of the Company's Enlarged Share Capital.

As discussed above, the acquisition of Project A would constitute a reverse takeover and, as such, trading in the Ordinary Shares on AIM was suspended pursuant to Rule 14 of the AIM Rules upon announcement of the Placing earlier today. Therefore, Admission will not occur until the Suspension ceases to be effective. It is expected that trading in the Ordinary Shares will recommence upon either: (i) the publication of the admission document to be prepared by the Company in connection with Project A in respect of the enlarged group; or (ii) the announcement by the Company that it no longer intends to proceed with Project A.

Accordingly, the Placing is conditional upon both the Resolution and the Rule 9 Waiver Resolution being passed, the Suspension being lifted and Admission having become effective by 8:00 a.m. on 31 March 2010.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM once the Suspension has been lifted.

If the Resolution and the Rule 9 Waiver Resolution are not passed at the General Meeting or the suspension is not lifted by 31 March 2010, the Placing will not be completed.

The Placing Shares will, following Admission, be issued credited as fully paid up and rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the issued Ordinary Shares of the Company after Admission.

The Company has entered into a placing agreement with Oriel Securities, pursuant to which Oriel Securities has agreed to conditionally procure subscribers for the Placing Shares. Under the Placing Agreement, the Company has given certain customary warranties, indemnities and undertakings to Oriel Securities in connection with the Placing and other matters relating to the Company and its affairs further details of which can be found in paragraph 7 of Part III of this document.

Further, pursuant to the Placing, a placee has agreed to subscribe for 35,666,666 Placing Shares representing 11.9 per cent. of the Enlarged Share Capital. In order to ensure that the placee's shareholding does not exceed the placee's internal restriction on a 10 per cent. shareholding for a period of over one month from Admission, the Company and MVI have agreed to ensure that the placee's shareholding is diluted to 10 per cent or less within one month following Admission either by (i) the Company issuing further shares in the Company pursuant to an acquisition or a subsequent fundraising or (ii) MVI exercising certain of its Conversion Rights. As such, the Company and MVI have agreed to amend the Loan Note Instruments in order to allow MVI to exercise its Conversion Rights immediately following satisfaction of the Conversion Conditions.

5. Background to, and Principal Terms of, the Loan Notes

As announced on 8 October 2009, the Company funded its acquisition of 13 gaming centres in South West England and South Wales, consisting of nine AGCs and four FECs for a consideration of £6.3 million through the issue of £6.5 million Loan Notes to the Group's largest shareholder, MVI on 19 October 2009.

Up to £4.0 million of the Loan Notes were subsequently available to be placed with other existing Praesepe shareholders on the same terms and, as announced on 30 November 2009, £30,000 of these Loan Notes were subscribed for during the offer period on the same terms as those issued to MVI. Matthew Proctor subscribed for all 30,000 of these Loan Notes and, as such, £30,000 of the Loan Notes issued to MVI were redeemed, such that the par value of the Loan Notes outstanding is £6.5 million, £6.47 million of which have been issued to MVI and are still outstanding.

Pursuant to the terms of the Loan Note Instruments, interest accrues on the Loan Notes at a rate of 11 per cent. per annum (compounding annually), settled through the issuance of additional notes. The Loan Notes have no voting rights, and mature on the later of three years from date the Loan Notes were issued (the "Issue Date") or 20 business days after Praesepe's senior debt facilities mature under their existing terms or under any terms post refinancing, with a long stop date of 9 October 2014 ("Maturity").

Prior to Conversion, the Loan Notes have no right to receive amounts in respect of or in lieu of any dividends or distributions on the Ordinary Shares. Holders of the Loan Notes are entitled to transfer their rights under the Loan Notes upon notifying such to the Company.

The Loan Notes are convertible into Ordinary Shares at 10 pence per share (the "Conversion Price") from 12 months from the Issue Date until 20 business days prior to Maturity, subject to the following conditions (the "Conversion Conditions"):

(a) an ordinary resolution to authorise, pursuant to section 551 of the Companies Act, the Directors to grant the Conversion Rights;
(b) a special resolution to authorise, pursuant to section 571 of the Companies Act, the Directors to grant the Conversion Rights as if section 561 of the Companies Act did not apply; and
(c) an ordinary resolution on a poll of the Independent Shareholders waiving any requirement for MVI or any person acting in concert with the MVI to make an offer to the Shareholders pursuant to Rule 9 of the Takeover Code as a result of any exercise of the Conversion Rights.

Accordingly, Shareholder approval is being sought in respect of (a) and (b) above to enable the Conversion to take place. In addition, approval is also being sought from Independent Shareholders in respect of (c) above.

If the Resolution is not approved by Shareholders and the Rule 9 Waiver Resolution is not approved by Independent Shareholders and the Conversion Conditions are not met within six months from the Issue Date, the Loan Notes will not be redeemable until Maturity, with the amount repayable being the higher of par plus accrued but unpaid interest or the value of the Loan Notes if they had been converted at the Conversion Price, calculated by reference to the mid-market closing share price of Praesepe on the business day immediately preceding Maturity.

Under the terms of the Loan Notes, the Conversion Price is adjusted if the Company issues shares at less than 8 pence per share, by applying a 25 per cent. premium to the price of such issue. Accordingly, as the Placing is being conducted at 7.5 pence per Placing Share, the adjusted Conversion Price will be 9.275 pence with the result that MVI will be entitled to subscribe for 116,321,845 new Ordinary Shares pursuant to the exercise of its Conversion Rights if the Loan Notes are held to maturity.

As described above, the Company and MVI have agreed to amend the Loan Note Instruments in order to allow MVI to exercise its Conversion Rights immediately following satisfaction of the Conversion Conditions and, accordingly, the terms of the Loan Note Instruments have been amended to enable Conversion at any time after the Conversion Conditions are satisfied.

In addition, if the Conversion Conditions are met, Praesepe can elect to convert the Loan Notes and any accrued interest if the volume weighted average price of the Ordinary Shares over three consecutive periods of 20 business days has exceeded 20 pence, and at least five per cent. of the Praesepe issued share capital is traded during each 20 business day period.

Upon a change of control in the Company, the holders of Loan Notes can seek redemption at a price per Loan Note equivalent to the price that would be payable had the Loan Notes been converted into Ordinary Shares. The Loan Notes will then cease to be convertible.

6. Related Party Transactions
(a) The Placing

As at 11 February 2010 (the latest practicable date prior to the publication of this document), MVI holds 84,681,819 Ordinary Shares, representing approximately 38.5 per cent. of the Company's existing issued share capital and is, as such, a "substantial shareholder" in the Company.

MVI has conditionally subscribed for 17,422,578 Placing Shares pursuant to the Placing and, immediately following Admission, will hold a total of 102,104,397 Ordinary Shares, representing approximately 34.0 per cent. of the Enlarged Share Capital. By virtue of MVI being a "substantial shareholder" of the Company, this subscription will constitute a "related party transaction" for the purposes of AIM Rule 13. The Independent Directors, who have consulted with Oriel Securities in its capacity as Nominated Adviser to the Company, consider that the terms of MVI's participation in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.

(b) Amendment to the Loan Notes

MVI is a related party under the AIM Rules and the amendment to the Loan Notes (to enable Conversion to occur at any time after the Conversion Conditions are satisfied, as described in more detail in paragraph 5 above) is therefore a "related party transaction" for the purposes of the AIM Rules. Accordingly, the Independent Directors, having consulted Oriel Securities (in its capacity as the Company's Nominated Adviser under the AIM Rules), consider that the terms of the related party transaction are fair and reasonable insofar as the Company's shareholders are concerned.
7. Background to and Reasons for Recommending the Rule 9 Waiver

As discussed above, approval from Independent Shareholders is being sought to approve a waiver of any requirement for MVI or any person acting in concert with MVI to make an offer to the Shareholders pursuant to Rule 9 of the Takeover Code as a result of an exercise of the Conversion Rights by MVI.

MVI is currently interested in (in aggregate) 84,681,819 Ordinary Shares representing approximately 38.5% per cent. of the existing issued share capital of the Company.

Assuming that Admission does not occur, the Placing does not complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document), the maximum amount of Ordinary Shares that MVI would be interested in would be 200,973,299 Ordinary Shares representing approximately 59.7 per cent. of the Company's enlarged issued voting share capital.

Assuming that Admission does occur, the Placing does complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document) and the subscription by MVI for 17,422,578 Placing Shares pursuant to the Marwyn Placing Participation is therefore completed, the maximum amount of Ordinary Shares that MVI would be interested in would be 372,517,133 Ordinary Shares, representing approximately 46.8 per cent. of the Company's enlarged issued voting share capital. As discussed above in paragraph 5, the Marwyn Loan Notes have been amended so that the Loan Notes can only be converted at any time after the Conversion Conditions are satisfied.

As such, an ordinary resolution on a poll of the Independent Shareholders waiving any requirement for MVI or any person acting in concert with the MVI to make an offer to the Shareholders pursuant to Rule 9 of the Takeover Code as a result of Marwyn exercising its Conversion Rights will be required.

If the Rule 9 Waiver Resolution is not passed and the Conversion Conditions are not met within six months from the Issue Date, the Loan Notes will not be redeemable until Maturity, with the amount repayable being the higher of par plus accrued but unpaid interest or the value of the Loan Notes if they had been converted at the Conversion Price, calculated by reference to the mid-market closing share price of Praesepe on the business day immediately preceding Maturity.

8. The Takeover Code Requirements

Under Rule 9 of the Takeover Code, any person who acquires an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer. Assuming that Admission does not occur, the Placing does not complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document), the maximum amount of Ordinary Shares that MVI would be interested in would be 200,973,299 Ordinary Shares representing approximately 59.7 per cent. of the Company's enlarged issued voting share capital. Assuming that Admission does occur, the Placing does complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document) and the subscription by MVI for 17,422,578 Placing Shares pursuant to the Marwyn Placing P The Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise as a result of the exercise by MVI of its Conversion Rights, subject to the approval of Independent Shareholders. Accordingly, the Rule 9 Waiver Resolution is being proposed at the General Meeting, and will be taken on a poll of Independent Shareholders. MVI will not be entitled to vote on the Rule 9 Waiver Resolution.

The waiver granted by the Panel relates only to any increase in the percentage of Ordinary Shares held by MVI as a result of it exercising its Conversion Rights and is conditional on the passing of the Rule 9 Waiver Resolution by Independent Shareholders of the Company on a poll.

Following the exercise by MVI of its Conversion Rights, in the event that either (i) the Placing completes and Admission does occur or (ii) the Placing does not complete and Admission does not occur, MVI will be interested in shares which carry more than 50 per cent. of the Company's voting share capital and any further increase in the number of shares in which it is interested will not be subject to the provisions of Rule 9 of the Takeover Code.

Further details concerning MVI and their respective interests in the Company are set out in paragraph 9 of Part I and Part III of this document.

9. Information about MVI

MVI was registered in the Cayman Islands as -an exempted limited partnership on 23 November 2005 with registration number MC-16543 and was registered as a regulated mutual fund with the Cayman Islands Monetary Authority with registration number 10560 on 29 December 2005. Marwyn General Partner Limited is the general partner of MVI. David Williams is a director of Marwyn General Partner Limited. The other directors are Paul Cookson and Michael Price. MVI's registered address is PO Box 309 GT, Ugland House, South Church St, Grand Cayman, Cayman Islands MVI does not have a website.

Marwyn Capital Management Limited, a Cayman Islands exempted company, is the manager of MVI, and has appointed Marwyn Investment Management LLP, an English limited liability partnership, as investment manager to MVI. Marwyn Capital Management Limited and Marwyn Investment Management LLP are wholly-owned and funded by their management (including David Williams, Mark Watts and Benjamin Shaw, all Directors of the Company) and are supported by 30 staff based in London and Jersey. More information on the Marwyn group can be found at www.marwyn.com.

The investment objective of MVI is to maximise its total returns. Marwyn Investment Management LLP combines best practice private equity disciplines within the context of the public markets with the goal of delivering measurable investment returns with greater visibility and liquidity.

Since March 2006, MVI has subscribed for shares in nine companies which together have raised over £650 million in equity and convertible debt financing and have completed approximately 39 acquisitions. All of these companies have been admitted to trading on AIM and the average share price appreciation of the AIM quoted companies, in which MVI is currently invested, since their respective initial public offerings was 48.5 per cent. as at 31 January 2010 (the latest practicable date prior to the publication of this document).

MVI had net assets of £107,079,968 as of 30 June 2009. MVI's investment in the Company represents 6.6 per cent. of MVI's assets as at 31 January 2010 (the latest practicable date prior to the publication of this document).

MVI is a substantial shareholder in the Company. MVI currently holds 84,681,819 Existing Ordinary Shares via its nominee, Vidacos Nominees Limited, representing 38.5% of the Existing Ordinary Shares of the Company. Three Directors (David Williams, Mark Watts and Benjamin Shaw) are also members of various Marwyn group companies, including Marwyn Capital LLP. During the year ended 31 December 2009, the Company paid Marwyn Capital LLP £538,248 in fees relating to corporate finance advisory services and Directors' fees and Marwyn Partners Limited £50,857 for office and infrastructure expenses.

Pursuant to the Marwyn Placing Participation, MVI will subscribe for 17,422,578 Placing Shares, and following Admission will hold 102,104,397 Ordinary Shares representing a total of 34.0 per cent. of the Enlarged Share Capital.

MVI has confirmed to the Board that it is not presently proposing any changes to the Board or changes to the employment rights of employees of the Company and that its intention, following any increase in its shareholding as a result of the Conversion and the Marwyn Placing Participation, is to allow the Company's management to continue pursuing the Company's corporate strategy. MVI has no present intention to move the Company's place of business, redeploy the Company's fixed assets or vary the existing employment contracts of the Company's employees.

MVI has been an investor in the Company since its listing on AIM in April 2006 and, in line with its investment strategy, has a long-term commercial interest in the Company. Prior to investing in the Loan Notes, MVI subscribed for approximately 90% of the share capital of the Company when it listed on AIM and has participated in two of the Company's subsequent placings which were used to fund acquisitions. MVI purchased the Loan Notes to enable the Company to complete the acquisition of the 13 AGCs and FECs announced in October 2009 which expanded the geographic coverage of Praesepe's AGC estate and add its first FEC venues. MVI continues to take a long-term commercial interest in the Company and is supportive of its stated strategy, as illustrated by its participation in the Placing.

10. Capital Reorganisation

The Placing Price represents a discount to the current 10 pence nominal value of an Existing Ordinary Share. However, company law prohibits the issue of shares at a price below their nominal value and, accordingly, a share capital reorganisation will be necessary in order to undertake the Placing. It is therefore proposed to reorganise the share capital of the Company by sub-dividing each issued Existing Ordinary Share of 10 pence into one new Ordinary Share of 1 pence and one Deferred Share of 9 pence.

The new Ordinary Shares will have the same rights (including voting and dividend rights) as each Existing Ordinary Share has at present. No new certificates will be issued in respect of the new Ordinary Shares arising as a result of the capital reorganisation and existing share certificates in respect of Existing Ordinary Shares will be valid and will continue to be accepted as evidence of title for the new Ordinary Shares arising as a result of the Sub-Division.

In order to effect the Reorganisation, the Articles will need to be amended to include the rights of the Deferred Shares, which will be minimal, thereby rendering them effectively valueless. The rights attaching to the Deferred Shares can be summarised as follows:

No application will be made for the Deferred Shares to be admitted to trading on AIM or any other stock exchange. No share certificates will be issued for any of the Deferred Shares. There are no immediate plans to purchase or to cancel the Deferred Shares, although the Directors propose to keep the situation under review.

11. Current Trading

In the period since Praesepe Chief Executive Officer Nicholas Harding came on board in November 2007, Praesepe has successfully completed four strategic acquisitions to build an estate currently comprising of 54 AGCs and FECs across the UK operating over 2,000 gaming machines including bingo machines. Praesepe is today considered to be the UK's fastest growing LSHV gaming operator in relation to the number of estates and has become the fourth largest AGC operator in the UK.

In 2009, Praesepe was an active consolidator within the European LSHV sector. One of the acquisitions completed in 2009 is the iconic Crystal Rooms AGC, a flagship gaming centre located in Leicester Square, London on one of the busiest pedestrian thoroughfares in Europe. In the four months of Praesepe ownership, the Crystal Rooms saw an improvement in average weekly sales of 23.5%, from c.£29,300 (average of the four weeks immediately prior to this acquisition) to c.£36,200 (average of the last four weeks in December 2009).

Trading for the Company to date has proved resilient to the current economic environment, aided by the 'low stake' nature of the AGC and FEC proposition. Looking ahead, the Directors believe the trading outlook for 2010 is positive driven by a number of factors:

· regulatory changes including the increase in Category C stakes and prizes, the new Class II bingo machines, as well as further regulatory changes expected following the general election later this year;

· opportunity to deliver significant financial upside from the sites acquired during 2009 and future site acquisitions;

· growing contribution from the opened greenfield sites as they reach maturity and further greenfield openings planned; and

· establishment of an estate of High Street "micro" bingo clubs playing nationally for significant pari-mutuel prizes.

12. General Meeting

Set out at the end of this document is the Notice convening the General Meeting to be held at the offices of Jones Day, 21 Tudor Street, London, EC4Y 0DJ on 1 March 2010 at 10.00 a.m. at which the following resolutions will be proposed:

1. an ordinary resolution to approve the Rule 9 Waiver (as required by the Panel, those shareholders who are not Independent Shareholders will abstain from exercising their voting rights in relation to this resolution at the General Meeting in respect of their holdings of Ordinary Shares which amount in aggregate to approximately 38.5 per cent. of the Ordinary Shares); and

2. a special resolution to:

(i) revoke any provision of the Company's Articles of Association setting the maximum amount of shares that may be allotted by the Company pursuant to paragraph 42(2)(b) of Schedule 2 of the Companies Act 2006 (Commencement No. 8, Transitional Provisions and Savings) Order 2008;

(ii) approve the sub-division of each of the issued Existing Ordinary Shares into one new Ordinary Share and one Deferred Share;

(iii) approve the amendment of the Articles to include provisions in relation to the rights attaching to the Deferred Shares and the Reorganisation;

(iv) generally authorise the Directors of the Company to allot shares (as defined in section 551 of the Act) up to an aggregate nominal value of £1,962,914.80, representing 196,291,480 new Ordinary Shares and

(vi) empower the Directors of the Company pursuant to section 571 of the Act, to allot equity securities for cash on a non-pre-emptive basis in respect of the Placing and the Conversion.

An ordinary resolution requires the approval of a simple majority of shareholders who vote and a special resolution requires the approval of at least 75 per cent. of shareholders who vote. MVI has irrevocably undertaken to vote in favour of the Resolution and not to vote on the Rule 9 Waiver Resolution.

Action to Be Taken

Shareholders will find enclosed with this document a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the General Meeting (and any adjournment thereof) you are requested to complete, sign and return the Form of Proxy in accordance with the instructions printed on it so as to be received by the Company's registrars, Capita Registrars (Proxies), The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible but in any event not later than 10:00 a.m. on 25 February, 2010. The completion and return of the Form of Proxy will not preclude you from attending and voting at the meeting, should you so wish.

Further Information

Your attention is drawn to the financial information referred to in Part II and to the additional information contained in Part III of this document which contains certain additional information in respect of the Company and the Directors' interests. Shareholders are advised to read the whole of this document and not to rely solely on the summary information set out in this letter.

Recommendation and Voting Intentions The Directors believe that the Proposals are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolution.

In addition, the Independent Directors, who have been so advised by Oriel Securities, consider the Rule 9 Waiver, the Marwyn Proposal and the Proposals to be fair and reasonable insofar as Independent Shareholders are concerned and, in particular, recommend that you vote in favour of the Rule 9 Waiver Resolution and the Resolution to be proposed at the General Meeting, as they and Shareholders connected with them intend to do in respect of their aggregate beneficial holdings of 1,449,090 Ordinary Shares representing approximately 0.7 per cent. of the existing issued ordinary share capital of the Company. In providing advice to the Independent Directors in relation to the Rule 9 Waiver, the Marwyn Proposal and the Proposals, Oriel Securities has taken into account the commercial assessments of the Independent Directors.

If the Resolution and the Rule 9 Waiver Resolution are not passed at the General Meeting the conditions of the Placing Agreement will not be satisfied. Consequently, in these circumstances, the Placing will not occur. In addition, if the Rule 9 Waiver Resolution is not passed at the General Meeting, the Conversion Rights of the Loan Note Instruments will not be approved.

Yours faithfully,

Nicholas Harding

Chief Executive Officer on behalf of the Independent Directors

DEFINITIONS

"Act" the Companies Act 2006
"Admission" the admission of the New Ordinary Shares to trading on AIM and
such admission becoming effective in accordance with the AIM
Rules
"AIM" the AIM market operated by the London Stock Exchange
"AIM Rules" the "AIM Rules for Companies" published by the London Stock
Exchange governing admission to, and the operation of, AIM

"Articles" or the "Articles of the articles of association of the Company Association"
"CIC" Co-Investment Capital LLP
"Circular" the circular in the approved terms to be issued by the Company
to Shareholders in relation to the Placing and comprising the
notice of General Meeting
"Company" or "Praesepe" Praesepe plc
"Conversion" the conversion of the outstanding Loan Notes into Ordinary
Shares
"Conversion Conditions" the conditions to Conversion as set out in paragraph 5 of Part
I of the Circular
"Conversion Price" currently 10 pence per Ordinary Share or, following the
Placing, as adjusted pursuant to the terms of the Loan Note
Instruments, 9.375 pence per Ordinary Share
"Conversion Rights" the right to convert the Loan Notes and/or interest accrued
but unpaid thereon into Ordinary Shares in accordance with the
Loan Note Instruments
"Conversion Shares" the 116,321,845 Ordinary Shares that may be issued at the
Conversion Price upon Conversion to holders of the Loan Notes
if held to maturity
"Deferred Shares" deferred shares of 9 pence each in the capital of the Company,
arising pursuant to the Sub-Division
"this document" this document
"Directors" or the "Board" the directors of Praesepe whose names are set out on page 24
of the Circular
"Enlarged Share Capital" the Existing Ordinary Shares and the Placing Shares
"Existing Ordinary Shares" the 220,113,638 Ordinary Shares in issue at the date of the
Circular
"Form of Proxy" the form of proxy enclosed with this document for use by the
Shareholders in connection with the General Meeting
"FSA" the UK Financial Services Authority
"General Meeting" the general meeting of the Company convened for 10 a.m. on 1
March 2010, notice of which is set out at the end of the
Circular
"Group" the Company and its subsidiaries and subsidiary undertakings
at the date of the Circular
"Independent Directors" Nicholas Simon Harding, Matthew Frederick Proctor and Charles
Blair Ritchie Sinton

"Independent Shareholders" Shareholders other than MVI
"Loan Note Instruments" the Marwyn Loan Note Instrument and the Proctor Loan Note
Instrument
"Loan Notes " the Marwyn Loan Notes and the Proctor Loan Notes
"London Stock Exchange" London Stock Exchange plc
"Marwyn" Marwyn Investments Group Limited
"Marwyn Capital" Marwyn Capital LLP
"Marwyn Conversion Rights" the right of MVI to exercise Conversion Rights
"Marwyn GP Directors" David Jeffreys Williams, Paul Cookson and Michael Price

"Marwyn Loan Note Instrument" the instrument dated 19 October 2009 constituting £6,500,000
unsecured subordinated convertible loan notes of £1 each of
the Company
"Marwyn Loan Notes" the £6,470,000 loan notes still outstanding held by MVI
constituted by the Marwyn Loan Note Instrument

"Marwyn Placing Participation" the subscription by MVI for 17,422,578 Placing Shares pursuant
to the Placing
"Marwyn Proposal" the approval of the Marwyn Conversion Rights
"MVI" Marwyn Value Investors L.P. (formerly Marwyn Neptune Fund
L.P.)
"New Ordinary Shares" new ordinary shares of 1 pence each in the capital of the
Company, to be issued pursuant to the Placing and arising
pursuant to the Sub-Division
"Notice of General Meeting" the notice convening the General Meeting, which is set out at
the end of the Circular
"Ordinary Shares" ordinary shares of 10 pence each in the share capital of the
Company and following the Sub-Division, the ordinary shares of
1 pence each in the share capital of the Company
"Oriel Securities " Oriel Securities Limited
"Panel" the Panel on Takeover and Mergers
"Placing" the proposed conditional placing of the Placing Shares at the
Placing Price pursuant to the Placing Agreement
"Placing Agreement" the conditional agreement dated 12 February 2010 between the
Company and Oriel Securities relating to the Placing, further
details of which are set out in paragraph 4 of Part I and
paragraph 7.A.8 of Part III of the Circular
"Placing Letter" the letters despatched by Oriel Securities to prospective
placees in connection with the Placing
"Placing Price" 7.5 pence per Placing Share
"Placing Shares" the 80,000,000 new ordinary shares of 1 pence each in the
capital of the Company to be issued to investors pursuant to
the Placing

"Proctor Loan Note Instrument" the instrument dated 27 November 2009 constituting £30,000
unsecured subordinated convertible loan notes of £1 each of
the Company
"Proctor Loan Notes" the £30,000 loan notes held by Matthew Proctor constituted by
the Proctor Loan Note Instrument
"Proposals" the Placing, the Reorganisation, the amendment to the
authorities to be granted under sections 551 and 571 of the
Act to allow the Conversion Rights to be exercised (subject to
passing of the Rule 9 Waiver Resolution) and Admission
"Prospectus Rules" the Prospectus Rules published by the FSA
"Reorganisation" the proposed reorganisation of the share capital of the
Company as described in the letter from the Chairman and
pursuant to the Resolution set out in the Notice of General
Meeting
"Resolution" the resolution voted on by Shareholders at the General Meeting
in relation to the Proposals
"Rule 9 Waiver" the waiver granted by the Panel (further details of which are
set out on page 16 of the Circular) of the obligations of MVI
to make a general offer under Rule 9 of the Takeover Code
which may otherwise arise as a consequence of the issue of new
Ordinary Shares following the Conversion
"Rule 9 Waiver Resolution" the resolution to be voted on by Independent Shareholders in
connection with the Rule 9 Waiver
"Shareholders" holders of Ordinary Shares
"Sub-Division" the proposed sub-division of each of the issued Existing
Ordinary Shares into one Ordinary Share of 1 pence and one
Deferred Share of 9 pence
"Suspension" the suspension of the Company's share capital on AIM,
announced today
"Takeover Code" or "Code" the City Code on Takeover and Mergers issued by the Panel
"UK" the United Kingdom of England, Scotland, Wales and Northern
Ireland

GLOSSARY

AGC means Adult Gaming Centre as defined in the Gambling Act. Under the
Gambling Act, AGCs are defined as premises in respect of which an
adult gaming centre premises licence has effect
BACTA means British Amusement Caterers Trade Association
Category B3 machines or B3 refers to the types of gaming machines licenced by the Gambling Act
machines with a maximum stake of £1 and a maximum prize value of £500
Category C machines refers to the type of gaming machine licenced by the Gambling Act with
a maximum stake of £1 and a maximum prize value of £70
FEC Family Entertainment Centre
Gambling Act refers to the Gambling Act 2005
LSHV means Low Stake High Volume gaming offers

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

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As announced today, the Company is in advanced negotiations to acquire Project A for an estimated enterprise value of approximately £45.0 million. The Directors believe that Project A, if completed, could add significantly to the Company's earnings before interest, tax depreciation and amortisation. The current chairman of the target company relating to Project A is also expected to join the Board of Praesepe if Project A completes. In the event that Project A does not proceed, the Directors intend to use the net proceeds from the Placing to pursue other acquisition opportunities and to meet any associated working capital requirements resulting from such acquisitions.

4. Details of the Placing and Admission

The Company intends to raise £6 million, before expenses, through the issue of 80,000,000 Placing Shares at the Placing Price pursuant to the Placing. The Placing Shares will in total represent 26.7 per cent. of the Enlarged Share Capital.

As discussed below, MVI, which is currently interested in 84,681,819 Ordinary Shares, representing approximately 38.5 per cent. of the Company's issued share capital, will subscribe for 17,422,578 Placing Shares and will, immediately following Admission, be interested in 102,104,397 Ordinary Shares in the Company, representing approximately 34.0 per cent. of the Company's Enlarged Share Capital.

As discussed above, the acquisition of Project A would constitute a reverse takeover and, as such, trading in the Ordinary Shares on AIM was suspended pursuant to Rule 14 of the AIM Rules upon announcement of the Placing earlier today. Therefore, Admission will not occur until the Suspension ceases to be effective. It is expected that trading in the Ordinary Shares will recommence upon either: (i) the publication of the admission document to be prepared by the Company in connection with Project A in respect of the enlarged group; or (ii) the announcement by the Company that it no longer intends to proceed with Project A.

Accordingly, the Placing is conditional upon both the Resolution and the Rule 9 Waiver Resolution being passed, the Suspension being lifted and Admission having become effective by 8:00 a.m. on 31 March 2010.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM once the Suspension has been lifted.

If the Resolution and the Rule 9 Waiver Resolution are not passed at the General Meeting or the suspension is not lifted by 31 March 2010, the Placing will not be completed.

The Placing Shares will, following Admission, be issued credited as fully paid up and rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the issued Ordinary Shares of the Company after Admission.

The Company has entered into a placing agreement with Oriel Securities, pursuant to which Oriel Securities has agreed to conditionally procure subscribers for the Placing Shares. Under the Placing Agreement, the Company has given certain customary warranties, indemnities and undertakings to Oriel Securities in connection with the Placing and other matters relating to the Company and its affairs further details of which can be found in paragraph 7 of Part III of this document.

Further, pursuant to the Placing, a placee has agreed to subscribe for 35,666,666 Placing Shares representing 11.9 per cent. of the Enlarged Share Capital. In order to ensure that the placee's shareholding does not exceed the placee's internal restriction on a 10 per cent. shareholding for a period of over one month from Admission, the Company and MVI have agreed to ensure that the placee's shareholding is diluted to 10 per cent or less within one month following Admission either by (i) the Company issuing further shares in the Company pursuant to an acquisition or a subsequent fundraising or (ii) MVI exercising certain of its Conversion Rights. As such, the Company and MVI have agreed to amend the Loan Note Instruments in order to allow MVI to exercise its Conversion Rights immediately following satisfaction of the Conversion Conditions.

5. Background to, and Principal Terms of, the Loan Notes

As announced on 8 October 2009, the Company funded its acquisition of 13 gaming centres in South West England and South Wales, consisting of nine AGCs and four FECs for a consideration of £6.3 million through the issue of £6.5 million Loan Notes to the Group's largest shareholder, MVI on 19 October 2009.

Up to £4.0 million of the Loan Notes were subsequently available to be placed with other existing Praesepe shareholders on the same terms and, as announced on 30 November 2009, £30,000 of these Loan Notes were subscribed for during the offer period on the same terms as those issued to MVI. Matthew Proctor subscribed for all 30,000 of these Loan Notes and, as such, £30,000 of the Loan Notes issued to MVI were redeemed, such that the par value of the Loan Notes outstanding is £6.5 million, £6.47 million of which have been issued to MVI and are still outstanding.

Pursuant to the terms of the Loan Note Instruments, interest accrues on the Loan Notes at a rate of 11 per cent. per annum (compounding annually), settled through the issuance of additional notes. The Loan Notes have no voting rights, and mature on the later of three years from date the Loan Notes were issued (the "Issue Date") or 20 business days after Praesepe's senior debt facilities mature under their existing terms or under any terms post refinancing, with a long stop date of 9 October 2014 ("Maturity").

Prior to Conversion, the Loan Notes have no right to receive amounts in respect of or in lieu of any dividends or distributions on the Ordinary Shares. Holders of the Loan Notes are entitled to transfer their rights under the Loan Notes upon notifying such to the Company.

The Loan Notes are convertible into Ordinary Shares at 10 pence per share (the "Conversion Price") from 12 months from the Issue Date until 20 business days prior to Maturity, subject to the following conditions (the "Conversion Conditions"):

(a) an ordinary resolution to authorise, pursuant to section 551 of the Companies Act, the Directors to grant the Conversion Rights;
(b) a special resolution to authorise, pursuant to section 571 of the Companies Act, the Directors to grant the Conversion Rights as if section 561 of the Companies Act did not apply; and
(c) an ordinary resolution on a poll of the Independent Shareholders waiving any requirement for MVI or any person acting in concert with the MVI to make an offer to the Shareholders pursuant to Rule 9 of the Takeover Code as a result of any exercise of the Conversion Rights.

Accordingly, Shareholder approval is being sought in respect of (a) and (b) above to enable the Conversion to take place. In addition, approval is also being sought from Independent Shareholders in respect of (c) above.

If the Resolution is not approved by Shareholders and the Rule 9 Waiver Resolution is not approved by Independent Shareholders and the Conversion Conditions are not met within six months from the Issue Date, the Loan Notes will not be redeemable until Maturity, with the amount repayable being the higher of par plus accrued but unpaid interest or the value of the Loan Notes if they had been converted at the Conversion Price, calculated by reference to the mid-market closing share price of Praesepe on the business day immediately preceding Maturity.

Under the terms of the Loan Notes, the Conversion Price is adjusted if the Company issues shares at less than 8 pence per share, by applying a 25 per cent. premium to the price of such issue. Accordingly, as the Placing is being conducted at 7.5 pence per Placing Share, the adjusted Conversion Price will be 9.275 pence with the result that MVI will be entitled to subscribe for 116,321,845 new Ordinary Shares pursuant to the exercise of its Conversion Rights if the Loan Notes are held to maturity.

As described above, the Company and MVI have agreed to amend the Loan Note Instruments in order to allow MVI to exercise its Conversion Rights immediately following satisfaction of the Conversion Conditions and, accordingly, the terms of the Loan Note Instruments have been amended to enable Conversion at any time after the Conversion Conditions are satisfied.

In addition, if the Conversion Conditions are met, Praesepe can elect to convert the Loan Notes and any accrued interest if the volume weighted average price of the Ordinary Shares over three consecutive periods of 20 business days has exceeded 20 pence, and at least five per cent. of the Praesepe issued share capital is traded during each 20 business day period.

Upon a change of control in the Company, the holders of Loan Notes can seek redemption at a price per Loan Note equivalent to the price that would be payable had the Loan Notes been converted into Ordinary Shares. The Loan Notes will then cease to be convertible.

6. Related Party Transactions
(a) The Placing

As at 11 February 2010 (the latest practicable date prior to the publication of this document), MVI holds 84,681,819 Ordinary Shares, representing approximately 38.5 per cent. of the Company's existing issued share capital and is, as such, a "substantial shareholder" in the Company.

MVI has conditionally subscribed for 17,422,578 Placing Shares pursuant to the Placing and, immediately following Admission, will hold a total of 102,104,397 Ordinary Shares, representing approximately 34.0 per cent. of the Enlarged Share Capital. By virtue of MVI being a "substantial shareholder" of the Company, this subscription will constitute a "related party transaction" for the purposes of AIM Rule 13. The Independent Directors, who have consulted with Oriel Securities in its capacity as Nominated Adviser to the Company, consider that the terms of MVI's participation in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.

(b) Amendment to the Loan Notes

MVI is a related party under the AIM Rules and the amendment to the Loan Notes (to enable Conversion to occur at any time after the Conversion Conditions are satisfied, as described in more detail in paragraph 5 above) is therefore a "related party transaction" for the purposes of the AIM Rules. Accordingly, the Independent Directors, having consulted Oriel Securities (in its capacity as the Company's Nominated Adviser under the AIM Rules), consider that the terms of the related party transaction are fair and reasonable insofar as the Company's shareholders are concerned.
7. Background to and Reasons for Recommending the Rule 9 Waiver

As discussed above, approval from Independent Shareholders is being sought to approve a waiver of any requirement for MVI or any person acting in concert with MVI to make an offer to the Shareholders pursuant to Rule 9 of the Takeover Code as a result of an exercise of the Conversion Rights by MVI.

MVI is currently interested in (in aggregate) 84,681,819 Ordinary Shares representing approximately 38.5% per cent. of the existing issued share capital of the Company.

Assuming that Admission does not occur, the Placing does not complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document), the maximum amount of Ordinary Shares that MVI would be interested in would be 200,973,299 Ordinary Shares representing approximately 59.7 per cent. of the Company's enlarged issued voting share capital.

Assuming that Admission does occur, the Placing does complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document) and the subscription by MVI for 17,422,578 Placing Shares pursuant to the Marwyn Placing Participation is therefore completed, the maximum amount of Ordinary Shares that MVI would be interested in would be 372,517,133 Ordinary Shares, representing approximately 46.8 per cent. of the Company's enlarged issued voting share capital. As discussed above in paragraph 5, the Marwyn Loan Notes have been amended so that the Loan Notes can only be converted at any time after the Conversion Conditions are satisfied.

As such, an ordinary resolution on a poll of the Independent Shareholders waiving any requirement for MVI or any person acting in concert with the MVI to make an offer to the Shareholders pursuant to Rule 9 of the Takeover Code as a result of Marwyn exercising its Conversion Rights will be required.

If the Rule 9 Waiver Resolution is not passed and the Conversion Conditions are not met within six months from the Issue Date, the Loan Notes will not be redeemable until Maturity, with the amount repayable being the higher of par plus accrued but unpaid interest or the value of the Loan Notes if they had been converted at the Conversion Price, calculated by reference to the mid-market closing share price of Praesepe on the business day immediately preceding Maturity.

8. The Takeover Code Requirements

Under Rule 9 of the Takeover Code, any person who acquires an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer. Assuming that Admission does not occur, the Placing does not complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document), the maximum amount of Ordinary Shares that MVI would be interested in would be 200,973,299 Ordinary Shares representing approximately 59.7 per cent. of the Company's enlarged issued voting share capital. Assuming that Admission does occur, the Placing does complete and Conversion by MVI in full of the Loan Notes (and assuming that no other person converts any convertible securities or exercises any options or any other right to subscribe for shares in the company and that the Marwyn Loan Notes were converted on the date of the publication of this document) and the subscription by MVI for 17,422,578 Placing Shares pursuant to the Marwyn Placing Participation is therefore completed, the maximum amount of Ordinary Shares that MVI would be interested in would be 372,517,133 Ordinary Shares, representing approximately 46.8 per cent. of the Company's enlarged issued voting share capital. As discussed above in paragraph 5, the Marwyn Loan Notes have been amended so that the Loan Notes can only be converted at any time after the Conversion Conditions are satisfied. The Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise as a result of the exercise by MVI of its Conversion Rights, subject to the approval of Independent Shareholders. Accordingly, the Rule 9 Waiver Resolution is being proposed at the General Meeting, and will be taken on a poll of Independent Shareholders. MVI will not be entitled to vote on the Rule 9 Waiver Resolution.

The waiver granted by the Panel relates only to any increase in the percentage of Ordinary Shares held by MVI as a result of it exercising its Conversion Rights and is conditional on the passing of the Rule 9 Waiver Resolution by Independent Shareholders of the Company on a poll.

Following the exercise by MVI of its Conversion Rights, in the event that either (i) the Placing completes and Admission does occur or (ii) the Placing does not complete and Admission does not occur, MVI will be interested in shares which carry more than 50 per cent. of the Company's voting share capital and any further increase in the number of shares in which it is interested will not be subject to the provisions of Rule 9 of the Takeover Code.

Further details concerning MVI and their respective interests in the Company are set out in paragraph 9 of Part I and Part III of this document.

9. Information about MVI

MVI was registered in the Cayman Islands as -an exempted limited partnership on 23 November 2005 with registration number MC-16543 and was registered as a regulated mutual fund with the Cayman Islands Monetary Authority with registration number 10560 on 29 December 2005. Marwyn General Partner Limited is the general partner of MVI. David Williams is a director of Marwyn General Partner Limited. The other directors are Paul Cookson and Michael Price. MVI's registered address is PO Box 309 GT, Ugland House, South Church St, Grand Cayman, Cayman Islands MVI does not have a website.

Marwyn Capital Management Limited, a Cayman Islands exempted company, is the manager of MVI, and has appointed Marwyn Investment Management LLP, an English limited liability partnership, as investment manager to MVI. Marwyn Capital Management Limited and Marwyn Investment Management LLP are wholly-owned and funded by their management (including David Williams, Mark Watts and Benjamin Shaw, all Directors of the Company) and are supported by 30 staff based in London and Jersey. More information on the Marwyn group can be found at www.marwyn.com.

The investment objective of MVI is to maximise its total returns. Marwyn Investment Management LLP combines best practice private equity disciplines within the context of the public markets with the goal of delivering measurable investment returns with greater visibility and liquidity.

Since March 2006, MVI has subscribed for shares in nine companies which together have raised over £650 million in equity and convertible debt financing and have completed approximately 39 acquisitions. All of these companies have been admitted to trading on AIM and the average share price appreciation of the AIM quoted companies, in which MVI is currently invested, since their respective initial public offerings was 48.5 per cent. as at 31 January 2010 (the latest practicable date prior to the publication of this document).

MVI had net assets of £107,079,968 as of 30 June 2009. MVI's investment in the Company represents 6.6 per cent. of MVI's assets as at 31 January 2010 (the latest practicable date prior to the publication of this document).

MVI is a substantial shareholder in the Company. MVI currently holds 84,681,819 Existing Ordinary Shares via its nominee, Vidacos Nominees Limited, representing 38.5% of the Existing Ordinary Shares of the Company. Three Directors (David Williams, Mark Watts and Benjamin Shaw) are also members of various Marwyn group companies, including Marwyn Capital LLP. During the year ended 31 December 2009, the Company paid Marwyn Capital LLP £538,248 in fees relating to corporate finance advisory services and Directors' fees and Marwyn Partners Limited £50,857 for office and infrastructure expenses.

Pursuant to the Marwyn Placing Participation, MVI will subscribe for 17,422,578 Placing Shares, and following Admission will hold 102,104,397 Ordinary Shares representing a total of 34.0 per cent. of the Enlarged Share Capital.

MVI has confirmed to the Board that it is not presently proposing any changes to the Board or changes to the employment rights of employees of the Company and that its intention, following any increase in its shareholding as a result of the Conversion and the Marwyn Placing Participation, is to allow the Company's management to continue pursuing the Company's corporate strategy. MVI has no present intention to move the Company's place of business, redeploy the Company's fixed assets or vary the existing employment contracts of the Company's employees.

MVI has been an investor in the Company since its listing on AIM in April 2006 and, in line with its investment strategy, has a long-term commercial interest in the Company. Prior to investing in the Loan Notes, MVI subscribed for approximately 90% of the share capital of the Company when it listed on AIM and has participated in two of the Company's subsequent placings which were used to fund acquisitions. MVI purchased the Loan Notes to enable the Company to complete the acquisition of the 13 AGCs and FECs announced in October 2009 which expanded the geographic coverage of Praesepe's AGC estate and add its first FEC venues. MVI continues to take a long-term commercial interest in the Company and is supportive of its stated strategy, as illustrated by its participation in the Placing.

10. Capital Reorganisation

The Placing Price represents a discount to the current 10 pence nominal value of an Existing Ordinary Share. However, company law prohibits the issue of shares at a price below their nominal value and, accordingly, a share capital reorganisation will be necessary in order to undertake the Placing. It is therefore proposed to reorganise the share capital of the Company by sub-dividing each issued Existing Ordinary Share of 10 pence into one new Ordinary Share of 1 pence and one Deferred Share of 9 pence.

The new Ordinary Shares will have the same rights (including voting and dividend rights) as each Existing Ordinary Share has at present. No new certificates will be issued in respect of the new Ordinary Shares arising as a result of the capital reorganisation and existing share certificates in respect of Existing Ordinary Shares will be valid and will continue to be accepted as evidence of title for the new Ordinary Shares arising as a result of the Sub-Division.

In order to effect the Reorganisation, the Articles will need to be amended to include the rights of the Deferred Shares, which will be minimal, thereby rendering them effectively valueless. The rights attaching to the Deferred Shares can be summarised as follows:

No application will be made for the Deferred Shares to be admitted to trading on AIM or any other stock exchange. No share certificates will be issued for any of the Deferred Shares. There are no immediate plans to purchase or to cancel the Deferred Shares, although the Directors propose to keep the situation under review.

11. Current Trading

In the period since Praesepe Chief Executive Officer Nicholas Harding came on board in November 2007, Praesepe has successfully completed four strategic acquisitions to build an estate currently comprising of 54 AGCs and FECs across the UK operating over 2,000 gaming machines including bingo machines. Praesepe is today considered to be the UK's fastest growing LSHV gaming operator in relation to the number of estates and has become the fourth largest AGC operator in the UK.

In 2009, Praesepe was an active consolidator within the European LSHV sector. One of the acquisitions completed in 2009 is the iconic Crystal Rooms AGC, a flagship gaming centre located in Leicester Square, London on one of the busiest pedestrian thoroughfares in Europe. In the four months of Praesepe ownership, the Crystal Rooms saw an improvement in average weekly sales of 23.5%, from c.£29,300 (average of the four weeks immediately prior to this acquisition) to c.£36,200 (average of the last four weeks in December 2009).

Trading for the Company to date has proved resilient to the current economic environment, aided by the 'low stake' nature of the AGC and FEC proposition. Looking ahead, the Directors believe the trading outlook for 2010 is positive driven by a number of factors:

· regulatory changes including the increase in Category C stakes and prizes, the new Class II bingo machines, as well as further regulatory changes expected following the general election later this year;

· opportunity to deliver significant financial upside from the sites acquired during 2009 and future site acquisitions;

· growing contribution from the opened greenfield sites as they reach maturity and further greenfield openings planned; and

· establishment of an estate of High Street "micro" bingo clubs playing nationally for significant pari-mutuel prizes.

12. General Meeting

Set out at the end of this document is the Notice convening the General Meeting to be held at the offices of Jones Day, 21 Tudor Street, London, EC4Y 0DJ on 1 March 2010 at 10.00 a.m. at which the following resolutions will be proposed:

1. an ordinary resolution to approve the Rule 9 Waiver (as required by the Panel, those shareholders who are not Independent Shareholders will abstain from exercising their voting rights in relation to this resolution at the General Meeting in respect of their holdings of Ordinary Shares which amount in aggregate to approximately 38.5 per cent. of the Ordinary Shares); and

2. a special resolution to:

(i) revoke any provision of the Company's Articles of Association setting the maximum amount of shares that may be allotted by the Company pursuant to paragraph 42(2)(b) of Schedule 2 of the Companies Act 2006 (Commencement No. 8, Transitional Provisions and Savings) Order 2008;

(ii) approve the sub-division of each of the issued Existing Ordinary Shares into one new Ordinary Share and one Deferred Share;

(iii) approve the amendment of the Articles to include provisions in relation to the rights attaching to the Deferred Shares and the Reorganisation;

(iv) generally authorise the Directors of the Company to allot shares (as defined in section 551 of the Act) up to an aggregate nominal value of £1,962,914.80, representing 196,291,480 new Ordinary Shares and

(vi) empower the Directors of the Company pursuant to section 571 of the Act, to allot equity securities for cash on a non-pre-emptive basis in respect of the Placing and the Conversion.

An ordinary resolution requires the approval of a simple majority of shareholders who vote and a special resolution requires the approval of at least 75 per cent. of shareholders who vote. MVI has irrevocably undertaken to vote in favour of the Resolution and not to vote on the Rule 9 Waiver Resolution.

Action to Be Taken

Shareholders will find enclosed with this document a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the General Meeting (and any adjournment thereof) you are requested to complete, sign and return the Form of Proxy in accordance with the instructions printed on it so as to be received by the Company's registrars, Capita Registrars (Proxies), The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible but in any event not later than 10:00 a.m. on 25 February, 2010. The completion and return of the Form of Proxy will not preclude you from attending and voting at the meeting, should you so wish.

Further Information

Your attention is drawn to the financial information referred to in Part II and to the additional information contained in Part III of this document which contains certain additional information in respect of the Company and the Directors' interests. Shareholders are advised to read the whole of this document and not to rely solely on the summary information set out in this letter.

Recommendation and Voting Intentions The Directors believe that the Proposals are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolution.

In addition, the Independent Directors, who have been so advised by Oriel Securities, consider the Rule 9 Waiver, the Marwyn Proposal and the Proposals to be fair and reasonable insofar as Independent Shareholders are concerned and, in particular, recommend that you vote in favour of the Rule 9 Waiver Resolution and the Resolution to be proposed at the General Meeting, as they and Shareholders connected with them intend to do in respect of their aggregate beneficial holdings of 1,449,090 Ordinary Shares representing approximately 0.7 per cent. of the existing issued ordinary share capital of the Company. In providing advice to the Independent Directors in relation to the Rule 9 Waiver, the Marwyn Proposal and the Proposals, Oriel Securities has taken into account the commercial assessments of the Independent Directors.

If the Resolution and the Rule 9 Waiver Resolution are not passed at the General Meeting the conditions of the Placing Agreement will not be satisfied. Consequently, in these circumstances, the Placing will not occur. In addition, if the Rule 9 Waiver Resolution is not passed at the General Meeting, the Conversion Rights of the Loan Note Instruments will not be approved.

Yours faithfully,

Nicholas Harding

Chief Executive Officer on behalf of the Independent Directors

DEFINITIONS

"Act" the Companies Act 2006
"Admission" the admission of the New Ordinary Shares to trading on AIM and
such admission becoming effective in accordance with the AIM
Rules
"AIM" the AIM market operated by the London Stock Exchange
"AIM Rules" the "AIM Rules for Companies" published by the London Stock
Exchange governing admission to, and the operation of, AIM

"Articles" or the "Articles of the articles of association of the Company Association"
"CIC" Co-Investment Capital LLP
"Circular" the circular in the approved terms to be issued by the Company
to Shareholders in relation to the Placing and comprising the
notice of General Meeting
"Company" or "Praesepe" Praesepe plc
"Conversion" the conversion of the outstanding Loan Notes into Ordinary
Shares
"Conversion Conditions" the conditions to Conversion as set out in paragraph 5 of Part
I of the Circular
"Conversion Price" currently 10 pence per Ordinary Share or, following the
Placing, as adjusted pursuant to the terms of the Loan Note
Instruments, 9.375 pence per Ordinary Share
"Conversion Rights" the right to convert the Loan Notes and/or interest accrued
but unpaid thereon into Ordinary Shares in accordance with the
Loan Note Instruments
"Conversion Shares" the 116,321,845 Ordinary Shares that may be issued at the
Conversion Price upon Conversion to holders of the Loan Notes
if held to maturity
"Deferred Shares" deferred shares of 9 pence each in the capital of the Company,
arising pursuant to the Sub-Division
"this document" this document
"Directors" or the "Board" the directors of Praesepe whose names are set out on page 24
of the Circular
"Enlarged Share Capital" the Existing Ordinary Shares and the Placing Shares
"Existing Ordinary Shares" the 220,113,638 Ordinary Shares in issue at the date of the
Circular
"Form of Proxy" the form of proxy enclosed with this document for use by the
Shareholders in connection with the General Meeting
"FSA" the UK Financial Services Authority
"General Meeting" the general meeting of the Company convened for 10 a.m. on 1
March 2010, notice of which is set out at the end of the
Circular
"Group" the Company and its subsidiaries and subsidiary undertakings
at the date of the Circular
"Independent Directors" Nicholas Simon Harding, Matthew Frederick Proctor and Charles
Blair Ritchie Sinton

"Independent Shareholders" Shareholders other than MVI
"Loan Note Instruments" the Marwyn Loan Note Instrument and the Proctor Loan Note
Instrument
"Loan Notes " the Marwyn Loan Notes and the Proctor Loan Notes
"London Stock Exchange" London Stock Exchange plc
"Marwyn" Marwyn Investments Group Limited
"Marwyn Capital" Marwyn Capital LLP
"Marwyn Conversion Rights" the right of MVI to exercise Conversion Rights
"Marwyn GP Directors" David Jeffreys Williams, Paul Cookson and Michael Price

"Marwyn Loan Note Instrument" the instrument dated 19 October 2009 constituting £6,500,000
unsecured subordinated convertible loan notes of £1 each of
the Company
"Marwyn Loan Notes" the £6,470,000 loan notes still outstanding held by MVI
constituted by the Marwyn Loan Note Instrument

"Marwyn Placing Participation" the subscription by MVI for 17,422,578 Placing Shares pursuant
to the Placing
"Marwyn Proposal" the approval of the Marwyn Conversion Rights
"MVI" Marwyn Value Investors L.P. (formerly Marwyn Neptune Fund
L.P.)
"New Ordinary Shares" new ordinary shares of 1 pence each in the capital of the
Company, to be issued pursuant to the Placing and arising
pursuant to the Sub-Division
"Notice of General Meeting" the notice convening the General Meeting, which is set out at
the end of the Circular
"Ordinary Shares" ordinary shares of 10 pence each in the share capital of the
Company and following the Sub-Division, the ordinary shares of
1 pence each in the share capital of the Company
"Oriel Securities " Oriel Securities Limited
"Panel" the Panel on Takeover and Mergers
"Placing" the proposed conditional placing of the Placing Shares at the
Placing Price pursuant to the Placing Agreement
"Placing Agreement" the conditional agreement dated 12 February 2010 between the
Company and Oriel Securities relating to the Placing, further
details of which are set out in paragraph 4 of Part I and
paragraph 7.A.8 of Part III of the Circular
"Placing Letter" the letters despatched by Oriel Securities to prospective
placees in connection with the Placing
"Placing Price" 7.5 pence per Placing Share
"Placing Shares" the 80,000,000 new ordinary shares of 1 pence each in the
capital of the Company to be issued to investors pursuant to
the Placing

"Proctor Loan Note Instrument" the instrument dated 27 November 2009 constituting £30,000
unsecured subordinated convertible loan notes of £1 each of
the Company
"Proctor Loan Notes" the £30,000 loan notes held by Matthew Proctor constituted by
the Proctor Loan Note Instrument
"Proposals" the Placing, the Reorganisation, the amendment to the
authorities to be granted under sections 551 and 571 of the
Act to allow the Conversion Rights to be exercised (subject to
passing of the Rule 9 Waiver Resolution) and Admission
"Prospectus Rules" the Prospectus Rules published by the FSA
"Reorganisation" the proposed reorganisation of the share capital of the
Company as described in the letter from the Chairman and
pursuant to the Resolution set out in the Notice of General
Meeting
"Resolution" the resolution voted on by Shareholders at the General Meeting
in relation to the Proposals
"Rule 9 Waiver" the waiver granted by the Panel (further details of which are
set out on page 16 of the Circular) of the obligations of MVI
to make a general offer under Rule 9 of the Takeover Code
which may otherwise arise as a consequence of the issue of new
Ordinary Shares following the Conversion
"Rule 9 Waiver Resolution" the resolution to be voted on by Independent Shareholders in
connection with the Rule 9 Waiver
"Shareholders" holders of Ordinary Shares
"Sub-Division" the proposed sub-division of each of the issued Existing
Ordinary Shares into one Ordinary Share of 1 pence and one
Deferred Share of 9 pence
"Suspension" the suspension of the Company's share capital on AIM,
announced today
"Takeover Code" or "Code" the City Code on Takeover and Mergers issued by the Panel
"UK" the United Kingdom of England, Scotland, Wales and Northern
Ireland

GLOSSARY

AGC means Adult Gaming Centre as defined in the Gambling Act. Under the
Gambling Act, AGCs are defined as premises in respect of which an
adult gaming centre premises licence has effect
BACTA means British Amusement Caterers Trade Association
Category B3 machines or B3 refers to the types of gaming machines licenced by the Gambling Act
machines with a maximum stake of £1 and a maximum prize value of £500
Category C machines refers to the type of gaming machine licenced by the Gambling Act with
a maximum stake of £1 and a maximum prize value of £70
FEC Family Entertainment Centre
Gambling Act refers to the Gambling Act 2005
LSHV means Low Stake High Volume gaming offers

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

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