From Regulatory News Service: 19Oct2001 UK: Newcastle United PLC Re Agreement. Newcastle United PLC 19 October 2001

PRESS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

19 October 2001

NEWCASTLE UNITED PLC ("NEWCASTLE UNITED" OR THE "COMPANY")

PROPOSED JOINT VENTURE WITH PREMIUM TV LIMITED ("PTV")

Newcastle United and NTL Incorporated ("NTL"), through its wholly owned subsidiary PTV, have today entered into a new joint venture agreement, together with a new sponsorship agreement and other agreements with PTV to replace the existing media rights arrangements between Newcastle United and PTV.

Summary

Highlights of the new agreements:

* Creation of a 50:50 joint venture company with PTV, which will be

granted, inter alia, the following rights:

- the right to create a Club TV channel;

- rights to all non-live TV and live audio rights;

- exclusive licence over transmission rights, including internet rights; and

- the joint venture company will act as agent for the Club in relation to any live TV rights (except for centrally negotiated deals) for an initial period of 10 years.

* In return for granting these rights the Company will receive £100,000 per year, for an initial 10 year period, from the joint venture company. The granting of these rights does not affect existing media contracts to which Newcastle United is a party, or centrally negotiated TV and radio deals.

* In return for a total consideration of £5 million, PTV has acquired

the right to be the Club's official sponsor for the period to the end of the 2004-2005 season; of this consideration, £3 million relates to the existing sponsorship period and £2 million relates to the 2003-2004 and 2004-2005 seasons; £2 million is payable in cash and £3 million will be satisfied by PTV releasing the Company from the liability to repay £3 million of the loan under the convertible loan agreement (see below).

* Under the terms of the original media rights arrangements (entered

into in December 1999), PTV provided Newcastle United with a £25 million convertible loan, repayable after five years by conversion into ordinary shares of the Company.

* The terms of the convertible loan agreement with PTV have been

amended so that:

- £21 million is to be converted into a new class of unlisted deferred shares in the Company; these rank behind the Company's ordinary shares, thereby eliminating potential dilution for the Company's shareholders;

- £3 million will be satisfied by the Company releasing PTV from this amount owed under the new sponsorship agreement for the existing sponsorship period; and

- the remaining £1 million is repayable by the Company.

* After 10 years, the Company has the option to buy out the remaining

shares in the joint venture company that it does not own at a minimum price of £45 million and a maximum price of 30 times the joint venture company's profits before tax, when they are more than £5 million. The exercise of the option would be subject to the approval of the Company's shareholders, if required by the listing rules then in force.

* The proposed joint venture, sponsorship and other agreements are

subject to shareholder approval in an extraordinary general meeting. A circular containing further details of the proposed joint venture with PTV and a notice convening an extraordinary general meeting of the Company, to be held at 2.00 pm on 12 November 2001, will be dispatched to shareholders shortly.

* The joint venture company will be managed by PTV and be jointly

funded by both parties, up to £5 million each, and PTV will be entitled to the first £10 million of the joint venture company's distributable profits. John Fender, Chairman of Newcastle United, said:

"The formation of a joint venture company will benefit both Newcastle United and PTV by creating a more appropriate structure for the Club's media rights. We have enjoyed a good relationship with NTL and PTV over the past two years, and look forward to working together to create new opportunities for the future."

Geoffrey Hamilton-Fairley, Chief Executive of PTV, said:

"This joint venture company is an ideal partnership for achieving the most value from the Club's media rights. We're delighted to be entering into this

exciting new era with Newcastle United."

Enquiries

Brunswick Group Limited (PR adviser to Newcastle United) 020 7404 5959

Jonathan Glass

Simon Sporborg

Premium TV Limited 020 8484 0800

Will Robson

The Directors of Newcastle United PLC accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of Newcastle United PLC (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

PRESS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

19 October 2001

NEWCASTLE UNITED PLC ("NEWCASTLE UNITED" OR THE "COMPANY") PROPOSED JOINT VENTURE WITH PREMIUM TV LIMITED ("PTV")

Further to the statement in Newcastle United's preliminary results announcement on 2 October 2001 that the Company was discussing with PTV, a wholly owned subsidiary of NTL Incorporated ("NTL"), a restructuring of the arrangements between the two companies, the Board of Newcastle United announces that, conditional on shareholder approval at an extraordinary general meeting, the Company has today entered into a new joint venture agreement, a new sponsorship agreement and other agreements with PTV to replace the existing media rights arrangements between the Company and PTV.

1. Introduction

In December 1999, Newcastle United entered into a media partnership and certain other arrangements with PTV covering television, radio and e-commerce rights, including the appointment of PTV's subsidiary, Premium TV (Ventures) Limited, as Newcastle United Football Company Limited's exclusive agent for the sale of media, sponsorship, advertising, publishing and certain other commercial rights. Newcastle United also appointed PTV as its main sponsor for an initial period of five years from the start of the 2000-2001 football season. In addition, Newcastle United entered into a convertible loan agreement (the "Convertible Loan Agreement") with PTV for a loan to Newcastle United of up to £25 million. This loan carried a zero coupon (save in certain specified circumstances) and after five years, or earlier in certain circumstances, became repayable by the issue of new ordinary shares in the Company to PTV (at an effective issue price of 155 pence per share) representing a maximum of 9.999 per cent. of Newcastle United's enlarged issued share capital following such issue.

Newcastle United and PTV have now, subject to Newcastle United's shareholders' approval in an extraordinary general meeting, agreed a restructuring of the media partnership between the two companies. It is proposed that the existing rights agreement and sponsorship agreement, which embody the terms referred to above, be replaced by new joint venture arrangements between the two companies. These new arrangements will be embodied in a joint venture agreement (the "Joint Venture Agreement"), together with a new rights agreement (the "New Rights Agreement"), a management agreement (the "Management Agreement") and a new sponsorship agreement (the "New Sponsorship Agreement").

Under the New Rights Agreement, Newcastle United will grant to the new 50:50 joint venture company ("JVCo") certain rights including, inter alia, the exclusive licence of electronic transmission rights including internet and associated rights, the Club channel, all non-live television and live audio rights for an initial 10 year period, for a consideration of £100,000 per annum, all of which is payable in advance. The licence is renewable for a further 10 year period after payment of a further one-off fee of £50,000. This grant of rights will not affect the other current media contracts to which Newcastle United is party, nor will it affect the current central deals for TV and radio rights which are negotiated centrally on behalf of all football clubs participating in relevant competitions. JVCo and PTV will also enter into the Management Agreement whereby PTV will manage the day-to-day business of JVCo. The joint venture will be funded by PTV and the Company as to £5 million each. The Company will be entitled to restrict its funding of JVCo to £1 million per annum. The first £10 million of distributable profits generated by the joint venture will be paid to PTV by way of a preferential dividend.

Newcastle United and PTV will also enter into a termination agreement (the "Termination Agreement") whereby £21 million of the convertible loan made by PTV since 1999 under the Convertible Loan Agreement will become convertible into a new class of unlisted deferred shares (rather than ordinary shares of the Company as currently provided for under the Convertible Loan Agreement). It is intended that the sum of £1 million receivable by the Company from JVCo, in consideration of the grant of the rights set out above, will be used to repay part of the loan outstanding to PTV while the remaining balance of £3 million will be satisfied by the Company releasing PTV from an amount owed to the Company for the existing sponsorship period of £3 million. The issue of the new unlisted deferred shares will require certain changes to the Company's Articles of Association and other authorisations for which the approval of shareholders is required. This approval will be sought by the proposing of a special resolution at an extraordinary general meeting of the Company to be held at 2.00 pm on 12 November 2001.

Further details of the Joint Venture Agreement and other agreements will be

set out in a circular to be dispatched to shareholders shortly.

2. Background to and reasons for the joint venture

Newcastle United has had a successful relationship with PTV since December 1999 and the £25 million received under the Convertible Loan Agreement has significantly enhanced the financial position of the Company over the past two years.

The existing media partnership covered television, radio and some e-commerce rights, and included the appointment of PTV's subsidiary, Premium TV (Ventures) Limited, as exclusive agent for the sale of media, sponsorship, advertising, publishing and certain other commercial rights. However, since December 1999 the evolution of the football and media businesses has led both Newcastle United and PTV to conclude that the existing arrangements between the Company and PTV could be restructured to greater mutual benefit. In particular, a number of football clubs have formed joint ventures with their media partners so as to join forces in the exploitation of existing and future rights.

As a consequence of these developments, both Newcastle United and PTV feel that the media rights agreements between the two companies are more appropriately structured as a joint venture, and that the Convertible Loan Agreement should be amended so that NTL participates in the Company through a

new class of unlisted deferred shares rather than ordinary shares.

3. Advantages for Newcastle United of the joint venture

The Joint Venture Agreement and other agreements offer Newcastle United the following key advantages:

- a more appropriate structure for its media rights arrangements with PTV;

- a 50 per cent. shareholding in JVCo;

- the benefit of the terms of the New Sponsorship Agreement; and

- conversion of £21 million of the loan under the Convertible Loan Agreement into unlisted deferred shares.

Shareholders will benefit from the conversion of the amounts due under the Convertible Loan Agreement into deferred shares, through the elimination of the potential for dilution of shareholders' holdings of ordinary shares. The new deferred shares rank behind the ordinary shares and on a return of capital or a winding-up of the Company, the assets of the Company would be applied first in paying to the holders of ordinary shares a sum equal to the amount paid up on each ordinary share (ie 5 pence) together with £10 per ordinary share, thereafter any remaining assets would be distributed among the holders of deferred shares and ordinary shares pari passu. The deferred shares do not carry any dividend rights.

At the end of the tenth year of the joint venture, the Company will have the option, exercisable at the Company's sole discretion, to acquire all the shares of JVCo not held by it, conditional, if required by the listing rules then in force, upon approval at the time by the Company's shareholders in general meeting, at a price between a minimum of £45 million and a maximum sum equating to 30 times JVCo's profits before tax when these exceed £5 million.

4. The New Sponsorship Agreement

In return for a total consideration of £5 million, PTV has acquired the right to be Newcastle United's official club sponsor for the period to the end of the 2004-2005 football season. Of the total consideration, £3 million is attributable to the existing sponsorship period and will be satisfied by PTV releasing the Company from the liability to repay £3 million of its convertible loan. The balance of £2 million is payable in relation to each of the seasons 2003-2004 and 2004-2005. PTV has the opportunity to sub-licence to a third party acceptable to Newcastle United its sponsorship rights for these two seasons. If the revenue paid by such sub-licensee exceeds £4 million, PTV is obliged to pay Newcastle United 50 per cent. of the amount by which such revenue exceeds £4 million.

PTV will have the right to have NTL's logo displayed on the team strip and other branded clothing as well as on club literature and publications. A hospitality and advertising package is also included within the rights PTV has

bought.

5. Extraordinary General Meeting

In order to implement the proposed Joint Venture Agreement, the New Sponsorship Agreement and other agreements, the Board will be seeking the authority to create a new class of deferred shares in the capital of the Company required to be issued under the terms of the Termination Agreement, to authorise the directors of the Company to allot the deferred shares and to disapply the pre-emption rights of existing shareholders in respect of the issue of these deferred shares. This requires an extraordinary general meeting of the Company to be convened at which the Board will propose a special resolution implementing the above, thereby enabling the Company to enter into the agreements.

A circular containing further details of the proposed joint venture with PTV and a notice convening an extraordinary general meeting of the Company to be held at 2.00 pm on 12 November 2001 will be dispatched to shareholders shortly.

Enquiries

Brunswick Group Limited (PR adviser to Newcastle United) 020 7404 5959

Jonathan Glass

Simon Sporborg

Premium TV Limited 020 8484 0800

Will Robson

The Directors of Newcastle United PLC accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of Newcastle United PLC (who have taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

END

'AGRDKCKKABDDNKD.

Source: REGULATORY NEWS SERVICE 19/10/2001

-- Anonymous, October 20, 2001

Answers

Too much to take in !!!!

I think though we've managed to squeeze out of the £25m repayment hanging over our heads. The rest of the monies seem small but that bit is enormous and was always a concern.

The amount being paid for the sponsorship seems small but when taken with the £21m makes it more reasonable.

I'm not sure what's in it for Premium/ntl

-- Anonymous, October 20, 2001

As Macbeth suggests, a lot to take in - especially given my natural suspicions regarding our major shareholders.

I don't think the Convertible Loan was ever that much of a real concern for NUFC - except to say that dougal believes it would become repayable if we were relegated - which could create an even bigger disaster than the act of relegation itself.

However, the conversion arrangements in the current Agreement raise potentially major problems for NTL. The price for the conversion (£1.55 per share) is highly punitive to NTL, and would substantially diminish the current value of their loan - and it would be pointless for them to retain a small equity stake in NUFC plc.

The creation of a new subordinated class of shares seems to "park" this issue without really solving it, although presumably under the new Agreement the conversion will be carried out at the "current market price". This avoids NTL suffering the immediate reduction in the "book value" of their loan that is embodied in the current Agreement, and also avoids the NUFC shareholders suffering dilution from the conversion. In that respect it appears to represent a neat solution to the problems created by the current Agreement for both parties.

The Joint Venture is designed to ensure both parties are fully incentivised to maximise the value from the Club's media rights, including sponsorship. At first sight it looks a sensible and practical arrangement.

Despite my inherent suspicions, these appear to be sensible and prudent measures, and in the best interests of the Club and it's shareholders - although, of course, I reserve the right to change my mind when I finally figure out what the devious bar-stewards are really up to! ;o{)

-- Anonymous, October 20, 2001

RE: The £2m figure for two seasons of shirt sponsorship

I know we aren't as big as Man Utd, but we still sell a hell of a lot of shirts, and I bet Manure are getting much more than £1m a year from Vodaphone.

How much did we get from Newcastle Brewries?

-- Anonymous, October 20, 2001

what does this mean with the thought that the majority shareholders were thinking of going back to a private ownership because of the share price?

-- Anonymous, October 20, 2001

That's a very good question sparxx.

Off the top of my head, I suspect that 'parking' the convertible loan issue by allowing them to convert the loan to a new class of shares that are subordinated (ie. lower ranking, or priority, than Ordinary shares), but at the current market price, would make a buy-back of Ordinary shares more straightforward than it otherwise would have been, and would enable NTL to then become a full equity partner in 'Newco'.

In that regard, this Agreement probably facilitates any potential move to take the Company private again.

-- Anonymous, October 21, 2001