NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR THE UNITED STATES

4 June 2008

Wagon plc

Proposed re-financing initiatives

Wagon plc ("Wagon", "the Group", "the Company"), the European automotive components group, today announces proposed re-financing initiatives to realise growth opportunities and to place the Group in a stronger financial position to continue pursuing its strategy.

In considering the need to refinance the Existing Debt Facilities, the Board reviewed the options available to the Company in accessing appropriate borrowing facilities at the current time. The Board concluded that an injection of new equity, via the Rights Issue, was necessary to achieve such a refinancing on satisfactory terms in the current financial markets.

Jürgen von Heyden, recently appointed Chief Executive of Wagon, said:

"These refinancing proposals are a key part of our strategy for the continued development of the Group and will put Wagon in a much stronger financial position from which to secure the benefits of the recent contract wins. 

Wagon continues to pursue its strategy to become a key strategic supplier to the automotive industry. We have made significant progress over the past year in improving operational and financial performance and this focus will continue. We will also continue to seek out opportunities for growth, both organic and by acquisition.  

Today's refinancing measures give us confidence that we will be able to capitalise on growth opportunities as they occur."

Further details of all these proposals are set out below, and therefore this summary should be read in conjunction with the full text of this announcement.

For further information:

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any Nil Paid Rights, Fully Paid Rights or Rights Issue Shares referred to in this announcement except on the basis of information in the Prospectus which is expected to be published by Wagon shortly in connection with the Rights Issue. Copies of the Prospectus will, following publication, be available from the Company's registered office. This announcement does not constitute, or form part of an offer to sell, or the solicitation of an offer to subscribe for or buy, any Rights Issue Shares. Any decision to invest in the Rights Issue Shares should only be made on the basis of information in the Prospectus which contains further details relating to Wagon in general as well as a summary of the risk factors to which an investment in the Rights Issue Shares is subject. The Prospectus and Provisional Allotment Letters relating to the Rights Issue are expected to be issued shortly.

This announcement is not an offer of securities for sale in the United States. The Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares and the Provisional Allotment Letters will not be offered or sold in the United States or to or for the account or benefit of a person located in the United States unless registered under the Securities Act or pursuant to an exemption from such registration. The Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares and the Provisional Allotment Letters have not been and will not be registered under the Securities Act and no public offering of the Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares or the Provisional Allotment Letters will be made in the United States.

This announcement does not constitute an offer of Nil Paid Rights, Fully Paid Rights, Rights Issue Shares or Provisional Allotment Letters to any person with a registered address in, or who is resident in, Australia, Canada, Japan or South Africa. None of the Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares or the Provisional Allotment Letters has been or will be registered under the relevant laws of any state, province or territory of Australia, Canada, Japan or South Africa. The Prospectus does not constitute an offer to sell or a solicitation of an offer to buy Rights Issue Shares or to take up entitlements to Nil Paid Rights in any jurisdiction in which such offer or solicitation is unlawful. Subject to certain limited exceptions, neither the Prospectus, the Provisional Allotment Letter nor this announcement will be distributed in or into Australia, Canada, Japan or South Africa.

Hoare Govett Limited, which is regulated and authorised in the United Kingdom by the Financial Services Authority, is acting exclusively as financial adviser, sponsor and broker to Wagon and for no-one else in connection with the Rights Issue, the Rule 9 Waiver, the Capital Reorganisation and the Property Disposal and will not be responsible to anyone other than Wagon for providing the protections afforded to clients of Hoare Govett or for providing advice in relation to the Rights Issue, the Rule 9 Waiver, the Capital Reorganisation and the Property Disposal, the contents of this announcement and the accompanying documents or any matters or arrangements referred to herein or therein.

Hoare Govett may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares and/or related instruments for their own account. Except as required by applicable law or regulation, Hoare Govett does not propose to make any public disclosure in relation to such transactions. 

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions. 

Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

The statements contained in this announcement that are not historical facts may be "forward-looking'' statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Wagon's control and all of which are based on Wagon's current beliefs and expectations about future events. Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes'', "expects'', "may'', "will'', "could'', "should'', "intends'', "estimates'', "plans'', "assumes'' or "anticipates'' or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In addition, from time to time, Wagon or its representatives have made or may make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of Wagon. These forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing Wagon and its subsidiaries. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. The forward-looking statements contained in this announcement speak only as of the date of this announcement and neither Wagon nor the Sponsor undertakes no duty to, and will not necessarily, update any of them in light of new information or future events, except to the extent required by applicable law, the Prospectus Rules, the Listing Rules and the Disclosure Rules and Transparency Rules.

Without limitation, the contents of the websites of the Group do not form part of this announcement.  PROPOSED RIGHTS ISSUE, RULE 9 WAIVER, CAPITAL REORGANISATION AND PROPERTY DISPOSAL

Introduction

The Company announces today that it has entered into the Revised Debt Facilities of €155 million to replace the Existing Debt Facilities of €166 million which are due to expire on 31 December 2008. The revised structure of the Company's debt position is expected to result in a reduction in interest costs of approximately £2 million in the year ending 31 March 2009 (£3 million in a full year) (this statement is not intended to constitute a profit forecast for the financial year ending 31 March 2009 or for any other period). The Revised Debt Facilities, which are conditional on the receipt of the Rights Issue Proceeds, are required to provide working capital to the Group going forward.

In considering the need to refinance the Existing Debt Facilities, which expire on 31 December 2008, the Board has reviewed the options available to the Company in accessing appropriate borrowing facilities at the current time. The Board has concluded that an injection of new equity is necessary to achieve such a refinancing on satisfactory terms in the current financial markets and so the Company intends, subject amongst other things to the passing of certain resolutions by Ordinary Shareholders, to raise approximately £49 million (before expenses) by way of a fully underwritten Rights Issue. The proceeds of the Rights Issue will be used (a) to fund capital expenditure for recently awarded contracts and further contract opportunities over the next three years, (b) to prepay a portion of the Existing Debt Facilities, and (c) to provide working capital for the Group.

The Existing Debt Facilities will be refinanced in part by €11 million (£9 million) of the net proceeds of the Rights Issue and in part by the Revised Debt Facilities (as to €155 million).

Before proceeding with the Rights Issue, the Company's Ordinary Share capital will be reorganised by means of the Capital Reorganisation which will involve: (i) the subdivision and reclassification of each issued Ordinary Share into one New Ordinary Share of 1 penny and one Deferred Share of 24 pence; and (ii) the subdivision of each authorised but unissued Ordinary Share into 25 New Ordinary Shares of 1 penny each. On completion of the Capital Reorganisation, each Ordinary Shareholder will hold one New Ordinary Share and one Deferred Share for each Ordinary Share currently held.

The Rights Issue, which is conditional on, amongst other things, the Resolutions (other than the resolution relating to the Property Disposal) being approved by Ordinary Shareholders, is being made on the basis of 10 Rights Issue Shares for each New Ordinary Share in issue (and also for each New Ordinary Share that would have been in issue if the Preference Shareholders' conversion rights had been exercisable and had been exercised in full on the Record Date) after the Capital Reorganisation, and is expected to result in the issue of up to 1,218,668,810 Rights Issue Shares, representing approximately 1,050 per cent. of the New Ordinary Share Capital of the Company immediately after the Capital Reorganisation and approximately 91.3 per cent. of the Enlarged New Ordinary Share Capital following completion of the Rights Issue.

The Rights Issue has been underwritten in full by WLR Fund III, WLR Fund IV and WLR Fund IV ESC. The Underwriters are presumed to be acting in concert with an Ordinary Shareholder (being WLR Fund II) for the purposes of the Takeover Code and it is a condition of the Underwriting Agreement and a requirement of the Takeover Code that the Independent Ordinary Shareholders approve the waiver of any requirement for any member of the Concert Party to make a mandatory offer to Ordinary Shareholders and Preference Shareholders in accordance with Rule 9 of the Takeover Code in the event that, as a result of subscribing for Rights Issue Shares being issued pursuant to the Rights Issue and/or under the terms of the Underwriting Agreement, the Concert Party comes to hold, in aggregate, 30 per cent. or more of the voting rights in the Enlarged New Ordinary Share Capital.

The Takeover Panel has agreed to waive any obligation on any member of the Concert Party to make a mandatory offer, subject to the approval of the Independent Ordinary Shareholders on a poll at the General Meeting.

Finally, Wagon is also pleased to announce that it has entered into the Property Disposal Agreement with WGN (Ger) LLC to sell and lease back two freehold properties located at Waldaschaff and Nagold in Germany. The consideration for the Property Disposal is approximately €34.5 million (before expenses). Given its size, the Property Disposal constitutes a Class 1 transaction under the Listing Rules and so requires the approval of Ordinary Shareholders at the General Meeting. The Directors intend to use the net proceeds of the Property Disposal to reduce the Revised Debt Facilities to approximately €125 million. 

Under the terms of the Property Disposal Agreement, Wagon has agreed to a cost reimbursement arrangement, under which it would bear various costs and expenses (including those of the Property Purchaser) incurred in connection with the Property Purchase Agreement in certain circumstances. Given that this proposed reimbursement arrangement is not, in all circumstances, subject to a limit on the amount of costs and expenses that may need to be reimbursed, it constitutes a Class 1 transaction under the Listing Rules and so requires the approval of Ordinary Shareholders at the General Meeting. 

The Directors believe that successful completion of the Rights Issue, the Revised Debt Facilities and the Property Disposal will ensure the Company is in a stronger financial position to continue pursuing its corporate strategy.

Accordingly, the Directors will convene a General Meeting at which the Resolutions will be proposed.

Background to and reasons for the Rights Issue, the Rule 9 Waiver, the Capital Reorganisation and the Property Disposal

Overview of the Wagon Group, its objectives and corporate strategy

The Wagon Group is a leading European automotive group, operating predominantly in Europe, which is focused on the design, engineering and manufacture of products for the automotive industry, both at the OEM and Tier 1 supplier level. Wagon is principally focused on automotive structures with particular expertise in roll-forming, stretch-bending, medium and large-sized stampings, welding, coating, fine blanking and assembly and also has product expertise in glazing and shading systems and cargo management.

The Wagon Group is focused on offering collaborative engineering and manufacturing expertise for structural assemblies, closures, closure mechanisms and comfort systems. 

Wagon's strategy is centred on operational excellence, technology and innovation, and increasing value-added content to the customer. This strategy is facilitated by Wagon increasing its involvement in the manufacturing and development processes of its OEM customers, moving Wagon from the position of component manufacturer to module and assembled structures supplier. In addition, the Wagon Group has sought to leverage its presence in the main European vehicle manufacturing countries. 

Since the acquisition of Oxford in April 2006, Wagon has opened new manufacturing plants in China (Shanghai), Spain (Orense) and Romania (Pogoanele) in order to service its existing customers better and to broaden its customer base. The strategy has generated recent success for Wagon when it secured significant contracts with Iveco and Honeywell and its first contract for Porsche in a number of years. Wagon is looking to extend further its low-cost manufacturing operations in the future.

The Group has recently secured attractive new contracts which require investment in engineering and capital expenditure, the benefits of which will bring enhanced revenue and earnings from financial year 2009/10 (this statement is not intended to constitute a profit forecast for the financial years ending 31 March 2009 and 31 March 2010, or for any other period). However, notwithstanding its achievements, the Company's net debt has grown partly due to the high cost of the restructuring which followed the acquisition of Oxford and due to the sales volumes weakness immediately following that acquisition. The Company's net debt has also been impacted by a material exceptional transaction cost relating to an aborted acquisition as announced on 28 March 2008 and by exchange rate fluctuations, as a result of being exposed to largely Euro-denominated debt.

As a result, the Board has considered the need to refinance the Existing Debt Facilities, which expire on 31 December 2008, and has reviewed the options available to the Company in accessing appropriate borrowing facilities at the current time. The Board has concluded that an injection of new equity is necessary in order to achieve such a refinancing on satisfactory terms in the current financial markets and therefore the Company has entered into the Revised Debt Facilities which are dependent on the receipt of the Rights Issue Proceeds. The Board recommends unanimously that Ordinary Shareholders vote in favour of the Resolutions proposed at the General Meeting.

The net proceeds of the Rights Issue are being raised in order to support the Revised Debt Facilities. The net proceeds will be used for the following purposes:

• approximately €34 million (£27 million) to fund capital expenditure for recently awarded contracts and other contract opportunities over the next three years;

• approximately €11 million (£9 million) to prepay a portion of the Existing Debt Facilities; and

• approximately €10 million (£8 million) to provide working capital for the Group.

The Board intends to use the net proceeds of the Property Disposal to reduce the Revised Debt Facilities to approximately €125 million.

The Rights Issue

Reasons for the Rights Issue

The Existing Debt Facilities, which consist of bank debt and private placement notes, are due to expire on 31 December 2008. The Company has been seeking alternative financing packages and has entered into the Revised Debt Facilities of €155 million to refinance the Existing Debt Facilities of €166 million. In considering the need to refinance the Existing Debt Facilities, the Board has reviewed the options available to the Company in accessing appropriate borrowing facilities at the current time. The Board has concluded that an injection of new equity is necessary to achieve such a refinancing on satisfactory terms in the current financial markets. The revised structure of the Company's debt position is expected to result in a reduction in interest costs of approximately £2 million in the year ending 31 March 2009 (£3 million in a full year) (this statement is not intended to constitute a profit forecast for the financial year ending 31 March 2009 or for any other period).  

The Revised Debt Facilities, which are conditional on, amongst other things, receipt of the Rights Issue Proceeds, are required to provide working capital to the Group going forward.

As a result, Wagon is seeking to raise approximately £49 million (before expenses) by way of a fully underwritten Rights Issue, the net proceeds of which will be used partly to provide capital expenditure funding to support the Company's recent contract successes and future contract opportunities, partly to prepay the Existing Debt Facilities and partly to provide working capital for the Group. WL Ross, which through the WLR Wagon Shareholders, is interested in approximately 15.06 per cent. of the Company's existing issued Ordinary Share capital, has arranged for WLR Fund III and WLR Fund IV, each being a fund managed by WL Ross, and WLR Fund IV ESC, a fund managed by Invesco WLR IV Associates, LLC, a member of the WL Ross funds' structure, to underwrite the Rights Issue in full. The Board believes this commitment demonstrates WL Ross' strong support for the Company's corporate strategy. 

The Directors believe that the successful completion of the Rights Issue and the Revised Debt Facilities will ensure the Company is in a stronger financial position to continue pursuing its strategy.

In order to enable the Company to undertake the Rights Issue, the Rights Issue is conditional on, amongst other things, the approval by Ordinary Shareholders of the Capital Reorganisation, the disapplication of statutory pre-emption rights and the approval of the Independent Ordinary Shareholders of the Rule 9 Waiver at the General Meeting.

Information about the Rights Issue

The Company is proposing to raise gross proceeds of approximately £49 million by way of an underwritten Rights Issue of up to 1,218,668,810 New Ordinary Shares. Subject to the fulfilment of, amongst others, the conditions described in the sub-paragraph entitled 'Principal terms and conditions of the Rights Issue' below, the Rights Issue Shares will be offered by way of rights to Qualifying Shareholders at 4 pence per Rights Issue Share, payable in full on acceptance. The Rights Issue will be on the basis of:

10 Rights Issue Shares for each Ordinary Share

held by and registered in the names of Ordinary Shareholders on the Record Date (and, in the case of Preference Shareholders, for each Ordinary Share that would have been held on the Record Date if the conversion rights attaching to the relevant number of Preference Shares had been exercisable and had been exercised in full on the Record Date), and so in proportion for any other number of Ordinary Shares then held (and that would have then been held if the conversion rights attaching to the Preference Shares had been exercisable and had been exercised in full on the Record Date). The Capital Reorganisation does not affect the number of Rights Issue Shares to which a Qualifying Shareholder is entitled under the Rights Issue. 

Any fractions of Rights Issue Shares will not be allotted to Qualifying Shareholders and, where necessary, fractional entitlements will be rounded down to the nearest whole number of Rights Issue Shares. Such fractions will be aggregated and, if possible, sold in the market for the benefit of the Company as soon as practicable after the commencement of dealings in the Rights Issue Shares, nil paid.

Assuming that the market price of a New Ordinary Share immediately after completion of the Capital Reorganisation remains the same as the market price of an existing Ordinary Share immediately prior to the Capital Reorganisation, the Rights Issue Price of 4 pence per Rights Issue Share represents a discount of approximately 72.4 per cent. to the theoretical Closing Price of a New Ordinary Share (by reference to the Closing Price of an Ordinary Share) of 14.5 pence on 3 June 2008 (being the last practicable date prior to the publication of this announcement).

The Rights Issue is expected to result in the issue of up to 1,218,668,810 Rights Issue Shares, representing approximately 1,050 per cent. of the New Ordinary Share Capital of the Company immediately after the Capital Reorganisation and approximately 91.3 per cent. of the Enlarged New Ordinary Share Capital following completion of the Rights Issue.

If a Qualifying Shareholder does not take up the offer of Rights Issue Shares, his/her proportionate shareholding will be diluted by approximately 91.3 per cent. 

Possible impact of Rights Issue on the number of New Ordinary Shares in public hands

If sufficient Qualifying Shareholders do not take up their pro rata entitlement to Rights Issue Shares, and the Underwriters are obliged to subscribe for such Rights Issue Shares under the terms of the Underwriting Agreement, it is possible that less than 25 per cent. of the Enlarged New Ordinary Share Capital would be held in public hands (for the purposes of Listing Rule 6.1.19R). 

In such circumstances, the Board intends to cancel the listing of the New Ordinary Shares on the Official List and immediately to seek the admission of the New Ordinary Shares to trading on AIM, where no such free float requirement applies.  As such, the approval of Ordinary Shareholders is sought by the Board in order to facilitate the cancellation of the listing of the New Ordinary Shares on the Official List and the admission of the Ordinary Shares to trading on AIM, but the Board only intends to exercise this authority in the event that less than 25 per cent. of the Enlarged New Ordinary Share Capital is held in public hands following the Rights Issue (for the purposes of Listing Rule 6.1.19R). 

Principal terms and conditions of the Rights Issue

The Rights Issue is conditional, amongst other things, upon:

The Rights Issue Shares will, when issued, rank pari passu in all respects with the New Ordinary Shares in issue immediately after the Capital Reorganisation, including the right to receive all dividends and other distributions hereafter declared, made or paid. 

Applications will be made to the UK Listing Authority and to the London Stock Exchange for the Rights Issue Shares to be admitted, nil paid and fully paid, to the Official List and to trading on the London Stock Exchange's main market for listed securities. 

The Rule 9 Waiver

The Rights Issue has been fully underwritten by the Underwriters. The Underwriters are presumed to be acting in concert with an Ordinary Shareholder (being WLR Fund II) for the purposes of the Takeover Code and it is a condition of the Underwriting Agreement and a requirement of the Takeover Code that the Independent Ordinary Shareholders approve the waiver of any requirement for any member of the Concert Party to make a mandatory offer to Ordinary Shareholders and Preference Shareholders in accordance with Rule 9 of the Takeover Code in the event that, as a result of subscribing for Rights Issue Shares being issued pursuant to the Rights Issue and/or under the terms of the Underwriting Agreement, the Concert Party becomes interested in shares carrying, in aggregate, 30 per cent. or more of the voting rights in the Enlarged New Ordinary Share Capital.

The Takeover Panel has agreed to waive any obligation on any member of the Concert Party to make a mandatory offer, subject to the approval of the Independent Ordinary Shareholders on a poll at the General Meeting.

The Capital Reorganisation

Reasons for the Capital Reorganisation

It is proposed that the Rights Issue will be undertaken at 4 pence per Rights Issue Share, which is below the current nominal value of an Ordinary Share. Under the 1985 Act, it is not permissable to issue shares at a discount to their nominal value. Therefore, the Rights Issue is conditional on, amongst other things, the completion of the Capital Reorganisation, for which the approval of Ordinary Shareholders is being sought, which will result in the nominal value of each New Ordinary Share being reduced to 1 penny.

The Closing Price of an Ordinary Share was 14.5 pence on 3 June 2008, being the last practicable date prior to the publication of this announcement. As such, the current market price for an Ordinary Share is below the nominal value of an Ordinary Share of 25 pence. Without the Capital Reorganisation, the Company is effectively prevented from raising any further new equity capital since, in order to comply with the 1985 Act, any further shares would have to be issued at a price at or above nominal value, which is currently at a significant premium to the current market price. In order to enable the Company to undertake the Rights Issue, and to assist the Company with its ongoing and future activities, the nominal value of the existing Ordinary Shares must be reduced from 25 pence per share to an amount below the proposed Issue Price.

Information about the Capital Reorganisation

It is proposed that:

(ii)               each authorised but unissued Ordinary Share is subdivided into 25 New Ordinary Shares of 1 penny each.

No new share certificates will be issued in respect of the New Ordinary Shares and existing share certificates for Ordinary Shares will remain valid for the New Ordinary Shares arising after the subdivision. 

The Deferred Shares created on the Capital Reorganisation becoming effective will have no voting or dividend rights and, on a return of capital, will have the right to receive the amount paid up thereon only after the holders of the Preference Shares have received all amounts to which they are entitled in priority to the payment of the holders of any other class of shares in the Company (in accordance with the rights attaching to the Preference Shares as set out in the Articles) and, in addition, the holders of the New Ordinary Shares have received, in aggregate, the amount paid up thereon plus £10,000,000 per New Ordinary Share.

No share certificates will be issued in respect of the Deferred Shares, nor will CREST accounts of Shareholders be credited in respect of any entitlement to Deferred Shares, nor will they be listed on the Official List or admitted to trading on the London Stock Exchange or any other investment exchange. It is the Board's intention, at the appropriate time, to effect a repurchase of the Deferred Shares or to make an application to the High Court for the Deferred Shares to be cancelled.

The effect of the Capital Reorganisation will mean that each New Ordinary Share will have a nominal value of 1 penny and the number of ordinary shares of the Company listed on the Official List and admitted to trading on the London Stock Exchange's main market for listed securities shall remain the same. Consequently, the market price of a New Ordinary Share immediately after completion of the Capital Reorganisation should, theoretically, be the same as the market price of an existing Ordinary Share immediately prior to the Capital Reorganisation.

The Property Disposal

Reasons for the Property Disposal

On 28 March 2008, the Board announced that it was pursuing several options to improve the Company's debt position and the Board has today announced that these options include the disposal of certain properties. Given its size, the Property Disposal constitutes a Class 1 transaction under the Listing Rules and so requires the approval of Ordinary Shareholders at the General Meeting. The Board intends to use approximately €30 million of the net cash proceeds from the Property Disposal (after taking into account Wagon's own expenses and any tax liability, estimated to be €0.9 million, prepaid rent (and VAT) of €0.7 million and a three month security deposit (including VAT) of €1.0 million) to reduce the Revised Debt Facilities to approximately €125 million. Other than in limited exceptional circumstances (for example, landlord's insolvency or tenant's breach of lease), the Leases to be entered into in connection with the Property Disposal will allow the Disposal Properties to remain available for use by the Wagon Group and therefore the Board does not expect the Property Disposal to affect the Group's operations and trading.

Information about the Property Disposal

The Property Disposal is the proposed sale and leaseback of two freehold property assets located at Waldaschaff and Nagold in Germany and used as part of the Wagon Group's manufacturing operations. Each of the Disposal Properties will be leased back to the current respective freeholders, being indirect German subsidiaries of Wagon, for their continued use under the terms of and subject to the conditions of each Lease.

A valuation of the Disposal Properties has been carried out by Savills and will be included in the Prospectus. 

The consideration for the Property Disposal is approximately €34.5 million (before expenses). The Leases provide for the payment of rent calculated with reference to an annual yield of 9.25 per cent. applied to the consideration amount (plus capitalised  Property Purchaser expenses and transaction costs), increasing or decreasing each year by the annual change in the German consumer price index. The initial aggregate annual rent on the Leases is approximately €3.4 million for the first 12 months of occupation, and thereafter will increase or decrease with reference to the German Consumer Price Index.

The aggregate net book value of the Disposal Properties as at 31 March 2008 was approximately £25.7 million and the gross asset value of the Disposal Properties was approximately £43.3 million as at 31 March 2008.

Financial effects of the Property Disposal

At present, the Disposal Properties do not generate any income for the Wagon Group. Following the completion of the Property Disposal, the Directors expect that the rental charges payable under the terms of the Leases will not be significantly different from the interest saved on the reduction in borrowings as a consequence of the receipt of the net proceeds of the Property Disposal and the reduction in depreciation charged on the Disposal Properties. Accordingly, the Directors do not expect the effect of the Property Disposal on Wagon's continuing profit to be material and expect that there will be a broadly neutral effect on continuing earnings per share. The Directors expect that the consideration received will result in a small aggregate exceptional loss for the year ending 31 March 2009 (these statements are not intended to constitute a profit forecast for the financial year ending 31 March 2009 or for any other period).

Principal terms and conditions of the Property Disposal and Leases

It is proposed that the current freeholders, being indirect German subsidiaries of Wagon, will dispose of their existing interests in the Disposal Properties by selling their title in them to the Property Purchaser. The consideration for the Property Disposal is approximately €34.5 million (before expenses) and will be payable in cash to Wagon at completion. Completion of the Property Disposal is conditional, amongst other things, on the Revised Debt Facilities completing.

Each of the Disposal Properties will, subject to completion of the relevant transfer, be leased back on identical terms (save as to rent and the provisions for certain capital availability by the Property Purchaser for the expansion of the site at Nagold) to the respective Wagon Group seller. Each Lease will expire on its fifteenth anniversary and has two additional five year term renewal options. 

Both Leases will be guaranteed by Wagon for the whole Lease term (including any extension periods) unless the relevant Wagon Group tenant assigns the Lease to a third Party.

In addition, the Cost Reimbursement Provision is conditional on the approval of the Ordinary Shareholders at the General Meeting.

Financial impact of the Rights Issue and the Property Disposal

A pro forma statement of net assets illustrating the effect of the Rights Issue and Property Disposal on the Company's unaudited net assets as at 31 March 2008, as if they had been undertaken at that date, shows that net proceeds from the Rights Issue of approximately £44 million and the net disposal proceeds of approximately £25 million would have led to a positive movement in pro forma net assets of approximately £44 million.

The Rights Issue and the Property Disposal, had they taken place on 31 March 2007, would have had a dilutive effect to the Company's earnings for the year ended 31 March 2008.

The Revised Debt Facilities

The Company announced today that it has entered into Revised Debt Facilities of €155 million to refinance the Existing Debt Facilities of €166 million which are due to expire on 31 December 2008.

The Revised Debt Facilities, covered below, are required to refinance certain existing indebtedness of the Group and to provide working capital to the Wagon Group going forward.

The Revised Debt Facilities comprise two types of facility: 

• the first type of facilities are €125 million three year multicurrency credit facilities to be used to refinance the existing indebtedness of the Wagon Group and for general corporate purposes. The applicable rate of interest is EURIBOR or LIBOR (as applicable) plus 2.50 per cent. per annum as at today's date and is subject to a margin ratchet pursuant to which the margin may vary between 2.00 per cent. and 4.00 per cent. per annum depending on the Consolidated EBITDA of the Wagon Group. The final maturity date of these facilities is 4 June 2011; and

• the second type of facility is a €30 million multicurrency 364 day revolving loan facility to bridge the receipt of proceeds under the Property Disposal. The applicable rate of interest is EURIBOR or LIBOR (as applicable) plus 2.50 per cent. per annum as at today's date and is subject to (i) a margin ratchet pursuant to which the margin may vary between 2.00 per cent. and 4.00 per cent. per annum depending on the Consolidated EBITDA of the Wagon Group and (ii) an increase in the margin of 0.50 per cent. per annum in the event that the 364 day revolving loan facility is not cancelled on or before 1 October 2008. The final maturity date for this facility is 3 June 2009.

The Revised Debt Facilities are conditional on, amongst other things, receipt of the Rights Issue Proceeds.

Dividend policy

Given the Rights Issue, the Board has decided not to propose a final dividend as Shareholders are being invited to inject new capital into business. Going forward, the Board's intention is to have any future target dividend per New Ordinary Share covered twice by available earnings per New Ordinary Share.

Unaudited preliminary results for financial year 2008, current trading and future prospects

The Company announced today its unaudited preliminary results for the year ended 31 March 2008. 

For the year ended 31 March 2008, Wagon reported ongoing turnover of £714.7 million (2007: £658.7 million), underlying operating profit of £26.0 million (2007: £17.2 million), underlying profit before taxation of £12.7 million (2007: £4.2 million) and an underlying earnings per share of 8.0 pence (2007 earnings per share: 2.0 pence). The Group's lifetime revenue of the order intake in the year was £857.0 million as at 31 March 2008 (2007: £462.0 million).

In its unaudited preliminary results announcement, the Company made the following statements in relation to its financing initiatives and current trading and outlook:

Financing initiatives

"Having secured significant contracts during the year, and faced with many new quotation opportunities, the Group has announced today an equity rights issue to raise approximately £44 million after costs. This is fully underwritten by the WLR Funds, represented by Wilbur Ross on Wagon's Board. 

The Group has also announced today that it has entered into a €125 million senior revolving debt facility with five banks, including existing and new lenders, committed for three years to replace the existing facilities that expire on 31 December 2008. Completion of the facilities is dependent on the successful completion of the Rights Issue. In addition the Group has entered into a 364 day facility of €30 million, repayable in the event of successful completion of the proposed sale and lease back of German properties. If the rights issue and the revised debt facilities are not successfully completed then the existing facilities are not adequate to support the going concern assertion adopted in the unaudited preliminary results for the year ended 31 March 2008 due to their expiration at 31 December 2008. The unavailability of the revised debt facilities will require the Company either to seek an extension of the existing debt facilities beyond 31 December 2008 or to seek further sources of financing, both of which the Board has a reasonable expectation that it could obtain but which are likely only to be available on significantly worse terms, and at significantly higher costs, than the revised debt facilities.

The directors understand that had the auditors issued their report at the date of this preliminary announcement it would have been unqualified but would have included an emphasis of matter regarding the uncertainties concerning going concern described above. On the basis that the directors have a reasonable expectation that the uncertainties relating to these proposed re-financing initiatives will be successfully resolved (specifically, their approval by shareholders and there being no material adverse change between now and completion of the rights issue) the unaudited results announced today have been prepared on a going concern basis."

Current Trading and Outlook

"Current sales volumes are in line with the Board's expectations, though we expect them to be impacted in the current year due to OEM schedules, model changeovers and general market conditions, as announced on 28 March 2008. The Board remains alert to the potential for margin pressure from the steel price and general economic uncertainty affecting our markets. 

The Board expects that the recent organisational, management process and strategic changes, when combined with the successful completion of the proposed refinancing initiatives, will enable the Group to realise further operational performance improvements, and that the recent strong order intake will provide benefits from 2009/10."

Takeover Code

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 for all the remaining equity capital of the company.

In addition, 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 interest in shares, which increases the percentage of shares carrying such voting rights, is acquired by any such person.

An offer under Rule 9 of the Takeover Code must be made in cash, or must be accompanied by a full cash alternative, and must be 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 that company during the 12 months prior to the announcement of the offer.

WLR Fund IV and WLR Fund IV ESC are not currently interested in any Ordinary Shares but the WLR Wagon Shareholders (with whom WLR Fund IV and WLR Fund IV ESC are presumed to be acting in concert for the purposes of the Takeover Code) are currently interested in, in aggregate, approximately 15.06 per cent. of the existing issued Ordinary Share capital of the Company.

Assuming no Qualifying Shareholders take up their entitlement to Rights Issue Shares, Hoare Govett is unable to procure subscribers for the Rights Issue Shares and, accordingly, the Underwriters are required, pursuant to the terms of the Underwriting Agreement, to subscribe for all of the Rights Issue Shares, on completion of the Rights Issue the Concert Party would be interested in a max