SAGA Plc (SAGA.L) Statement re equity raise and strategic investment

Saga plc (“Saga” or the “Company”) notes recent media speculation and today announces that it is at the advanced stage of a prospective £150 million equity capital raise (the “Proposed Equity Raise”).

In order to strengthen its balance sheet, improve liquidity and support the execution of its reinvigorated strategy under its strengthened management team. As such, the Company confirms the Proposed Equity Raise, which would be subject to shareholder approval, would comprise:

· Prospective £150m equity raise intended to be launched on or around 10 September with the Company’s interim results announcement, structured as a firm placing and a placing and open offer.

· Sir Roger De Haan intends to invest, subject to final documentation, up to £100m in the Proposed Equity Raise. It is expected that Sir Roger will make his investment through:

o a firm placing of 224m new ordinary shares representing 20% of the current issued share capital of the Company, to be issued at 27p per share, a 98% premium to the 13.61p closing price of Saga shares on 28 August 2020, reflecting his belief in the underlying strength of the Saga brand and business and his confidence in the new strategy under the strengthened management team. This would contribute £60.6m of the proposed £150m capital raise;

o a further firm placing, raising £14.9m on the same pricing and terms as will apply to Saga shareholders subject to a maximum issue price of 15p per share; and

o participating as a conditional placee for shares representing £24.5m of the placing and open offer (expected to raise total proceeds of £74.5m), also subject to a maximum issue price of 15p per share, subject to clawback by Saga shareholders in the open offer.

· Alongside his investment, Sir Roger would join the Board and become Non-Executive Chairman, taking over from Patrick O’Sullivan upon completion of the Proposed Equity Raise. Sir Roger would serve for an expected term of three years, subject to annual re-election by shareholders.

· Sir Roger (alongside affiliated family trusts) owned Saga prior to the sale of the Company to private equity group Charterhouse in 2004. He was Chief Executive and Chairman of Saga for 20 years, prior to the sale, a period of significant growth for the business, establishing it as a leading brand for older consumers. As such, he has significant expertise in the Insurance and Travel sectors and serving Saga’s distinct customer segment.

· Sir Roger’s proposed investment in the Company has received regulatory approval from the UK’s Financial Conduct Authority, the Gibraltar Financial Services Commission and the Jersey Financial Services Commission.

· The launch of the Prospective Equity Raise is subject to approval of the Prospectus by the FCA, which is at an advanced stage.

The Board unanimously considers that the Proposed Equity Raise will support the execution of its reinvigorated strategy under its strengthened management team, which it believes will return Saga to sustainable growth and lead to the restoration of significant shareholder value. Saga has continued to make good progress against the plan launched last year and has taken a series of actions in the last six months to protect the business from the significant disruption that has resulted from COVID-19, especially in relation to the Group’s travel operations. In the last six months the Group has:

· Strengthened its financial position by completing key non-core disposals, ensuring sufficient available liquidity to fund the travel business through a period of severe disruption and further implementing initiatives to reduce future run rate costs by £20m per annum;

· Agreed amendments to its corporate and ship debt facilities;

· Taken decisive actions to react to the COVID-19 outbreak to ensure the Company maintained its operations throughout by rapidly shifting to a full remote working model and minimising the burn costs within its Travel business, completing the sale of the Saga Sapphire cruise ship, successfully repatriating all Saga customers, colleagues and crew and docking Saga’s Spirit of Discovery cruise ship in Tilbury;

· Made continued progress in Insurance, supported by the success of the three-year fixed-price product and the offer to customers of one of the first inclusive, stand-alone travel policies to offer some cover for COVID-19;

· Continued the transformation of the Cruise business, which will be completed with delivery of Spirit of Adventure, expected at the end of September 2020;

· Taken actions to reshape the strategy of Tours business; and

· Completed an in-depth strategy review, with conclusions and reshaped plans to be published alongside the interim results and launch of the Proposed Equity Raise on or around 10 September:

o The management team has reviewed every facet of Saga’s strategy

o The revised strategy will be based on management’s belief that Saga is a strong brand with significant potential and that it is successful where it offers truly differentiated products and services

o Plans will be set out to correct the under-investment in brand, data and digital and to continue to drive efficiencies and organisational and cultural change designed to make Saga more customer focused

· Recent trading has been in line with expectations and consistent with the commentary in the AGM trading statement, published on 22 June 2020.

The Board is encouraged by the progress made since the start of the year and by the resilience of the business through a time of unprecedented challenge and change and believes the current COVID-19 crisis highlights the strength of the Saga brand, its diversified business model and its direct relationship with its customers.

The Proposed Equity Raise is intended to strengthen the Company’s financial position against the backdrop of the COVID-19 outbreak and the ongoing suspension of Travel and to better position Saga for longer-term recovery and growth.

In determining to proceed with this capital raising and place the Company on a stronger financial footing, the Board considered a number of options and also recently evaluated and rejected an unsolicited and highly conditional 33p indicative approach for the Company from a consortium of two US financial investors. This 33p offer followed several earlier indicative approaches from the consortium which commenced at a significantly lower valuation. The investors have since confirmed that they are no longer considering an offer for the Company. This is not a statement to which Rule 2.8 of the City Code on Takeovers and Mergers applies.

While preparations to finalise the Proposed Equity Raise are well-advanced, there can be no certainty that the Proposed Equity Raise will go ahead and the Board will keep shareholders updated as appropriate.

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