Publication of Prospectus

RNS Number:0004S
Dobbies Garden Centres PLC
09 April 2008


Dobbies Garden Centres plc
9 April 2008

Dobbies Garden Centres plc - Publication of Prospectus

Publication of Prospectus

The following prospectus has been approved by the UK Listing Authority and is
being sent to Qualifying Shareholders on the register of members at the close of
business on 7 April 2008:


The Prospectus dated 9 April 2008 relating to Dobbies Garden Centres plc Open
Offer of up to 12,446,208 New Ordinary Shares at �12 per share

The full document may be viewed on the Company's website: www.dobbies.com

Enquiries:
James Barnes,                   Ben Woodford/Emma Kent                     Sandy Fraser
Chief Executive                 /Antonia Coad                              Brewin Dolphin Limited (Nomad)
Sharon Brown,                   Bell Pottinger Corporate & Financial       Tel:  0131 529 0310
Finance Director                Tel: 020 7861 3232
Dobbies Garden Centres plc
Tel: 0131 663 6778
Clive Black

Shore Capital (Joint Broker)

Tel: 0151 600 3701


THE FOLLOWING HAS BEEN EXTRACTED FROM THE PROSPECTUS.  ANY DECISION TO INVEST IN
NEW ORDINARY SHARES SHOULD BE BASED ON CONSIDERATION OF THE PROSPECTUS AS A
WHOLE.  TERMS DEFINED IN THE PROSPECTUS HAVE THE SAME MEANINGS IN THIS
ANNOUNCEMENT.



Introduction

Dobbies announced on 9 April 2008 that it intends to raise approximately �150
million (before expenses), subject to, inter alia, Shareholder approval, through
the issue of up to 12,446,208 new Ordinary Shares at a price of �12 per share by
means of the Open Offer.

Background to and reasons for the Open Offer and use of proceeds

2007 was a year of significant change for Dobbies, and was characterised by a
number of key events, including:


  *     The corporate activity leading to a change in control, with Tesco Holdings acquiring approximately
        65.5 per cent. of Dobbies' equity; and
  *     The biggest capital expenditure in the Company's history, and the opening of 150,000 square feet of
        additional retail space.





Following the offer by Tesco Holdings, the Company has a majority shareholder
which shares the executive management team's vision for the business. In the
view of the Board, this shared vision has created the opportunity to promote
further the growth of the business through an accelerated new store development
programme. In preparation for this ambitious and capital intensive growth phase,
the Board is seeking to secure additional equity capital to provide a more
balanced capital structure for the Company in the medium term. The Open Offer
will raise approximately �150 million (before expenses) for the Group. The
Directors believe that this is an appropriate sum to raise for, inter alia, the
following reasons:


  *     Net debt as a percentage of shareholders' funds at the end of the financial year ended 31 October
        2007 stood at approximately 204 per cent. and as at 24 February 2008 (the latest practicable date
        prior to the publication of the Prospectus) stood at approximately 221 per cent;
  *     The Board's vision is to significantly expand Dobbies' store network by a factor of approximately
        four times over the next 10 years. This expansion will be capital intensive as a result of Dobbies'
        strategy of investment in freehold property assets and as a result of the construction costs
        associated with new store developments;
  *     The Board believes that opportunities will arise in the future for Dobbies to make selective
        acquisitions and it would be advantageous to strengthen the Company's balance sheet in order to be
        in a position to take advantage of any such opportunities;
  *     Against the background of extremely volatile debt and equity markets around the globe and an
        uncertain outlook for consumer spending, the Board views the Open Offer as extremely attractive in
        terms of both quantum and issue price. The ability of the Company to raise funds in the future on
        similar terms to the Open Offer is also uncertain;
  *     The offer price represents a significant premium to the weighted average valuation at which small
        cap retailers currently trade on an EV/EBITDA basis;
  *     Tesco Holdings will not receive any fees or commission in connection with its undertaking to
        subscribe for New Ordinary Shares. As a result, the total costs of the Open Offer are significantly
        lower than market norms for a transaction of this nature;
  *     The funds raised will assist the Company to maintain its position as one of the UK's leading garden
        centre retailers.



The Directors anticipate costs associated with the Open Offer of approximately
�0.5 million and propose to apply approximately �105 million of the net proceeds
to clear the Group's borrowings and to use the balance of approximately �44.5
million to finance the Group's new store development programme. The Directors
believe that the opportunity to degear the Company completely in the very short
term is attractive in the light of the Board's ambitious expansion strategy.
However the Board expects that the Company will continue to rely upon debt
facilities as a financing instrument in the medium and longer term, thus
maintaining a balanced capital structure.

The Directors expect that the Open Offer will be earnings enhancing in the short
term as a result of the reduction of interest payments on borrowings and the
prospect of interest receipts on surplus funds held on deposit.

For so long as Dobbies remains an independent company quoted on AIM (albeit
majority owned by Tesco Holdings), the Board believes that it should continue to
adopt an approach to the financing of new store developments that is appropriate
to a public quoted company, having regard to prevailing conditions in credit
markets and market norms on overall levels of indebtedness. UK tax law limits
the amount of interest that can be paid to Tesco and be fully deducted for tax
purposes. It is considered that if the Company's investment plans were to be
fully financed by further loans from Tesco, this would not be tax efficient for
Dobbies.

Principal terms of the Open Offer

The Company is proposing to raise approximately �150 million (before expenses),
subject, inter alia, to Shareholder approval, through the issue of the New
Ordinary Shares by means of the Open Offer. New Ordinary Shares are being
offered to Qualifying Shareholders in the Open Offer on the following basis:

        6 New Ordinary Shares for every 5 Existing Ordinary Shares held

The issue price for each New Ordinary Share is �12 and this represents a
discount of approximately 9 per cent. to the middle market quotation for the
Existing Ordinary Shares on 7 April 2008 (the latest practicable date prior to
the publication of this document).

The Company has received an irrevocable undertaking from Tesco Holdings in terms
of which it agrees to subscribe for all of the New Ordinary Shares to which it
is entitled under the Open Offer, being 8,154,774 New Ordinary Shares, and also
to subscribe for any New Ordinary Shares which are not the subject of valid
applications under the Open Offer by other Shareholders. In this manner, the
Open Offer is fully underwritten. Tesco Holdings will not receive any fees or
commission in connection with its subscription for New Ordinary Shares and will
not be reimbursed for any costs or expenses which it incurs in evaluating or
participating under the Open Offer.

The Open Offer is conditional upon Resolution 8 set out in the notice of AGM
being passed, upon the Tesco Holdings Undertaking not being terminated or
lapsing in accordance with its terms prior to Admission and upon Admission
becoming effective by not later than 8.00 a.m. on 22 May 2008 (or such later
time and/or date as Brewin Dolphin and the Company may agree, not being later
than 8.00 a.m. on 5 June 2008).

The latest time and date for receipt of completed Application Forms and payment
in full under the Open Offer or settlement of relevant CREST instruction (as
appropriate) is 11.00 a.m. on 20 May 2008.

Tesco Holdings has the right to terminate its obligation to subscribe for New
Ordinary Shares (including any New Ordinary Shares which are not the subject of
valid applications under the Open Offer by other Shareholders) under its
irrevocable undertaking in the event that, inter alia, there has been a material
adverse change in the financial or trading position or prospects of the Company
prior to Admission. Tesco Holdings' obligations under its undertaking will lapse
on 30 June 2008. In the event that Tesco Holdings' obligations under its
undertaking are terminated or lapse before Admission then the Open Offer will
not proceed and application monies will be returned to Applicants without
interest as soon as possible thereafter and any Open Offer Entitlements admitted
to CREST will be disabled.

Application will be made to the London Stock Exchange for the New Ordinary
Shares to be admitted to trading on AIM. It is expected that Admission will
become effective on 22 May 2008 and that dealings for normal settlement in the
New Ordinary Shares will commence at 8.00 a.m. on 22 May 2008. The Open Offer is
not a ''rights issue''. Qualifying Shareholders' entitlements under the Open
Offer are not transferable unless to satisfy bona fide market claims and the
Application Form is not a negotiable document and cannot be traded. Qualifying
Shareholders should be aware that, unlike in the case of a rights issue, any New
Ordinary Shares not applied for under the Open Offer will not be sold in the
market or placed for the benefit of Qualifying Shareholders who do not apply
under the Open Offer, but will be taken up by Tesco Holdings with the net
proceeds being retained for the benefit of the Company.














Timetable
Record Date for entitlement under the Open Offer                   Close of business on 7 April 2008
Existing Ordinary Shares marked "ex" entitlement to Open Offer                         10 April 2008
Open Offer Entitlements credited to Stock Accounts in CREST of                         10 April 2008
Qualifying CREST Shareholders
Recommended latest time for requesting withdrawal of Open Offer             4.30 p.m. on 14 May 2008
Entitlements from CREST
Latest time for depositing Open Offer Entitlements into CREST               3.00 p.m. on 15 May 2008
Latest time for splitting of Application Forms (to satisfy bona             3.00 p.m. on 16 May 2008
fide market claims)
Latest time and date for receipt of Forms of Proxy                         10.00 a.m. on 19 May 2008
Latest time and date for receipt of completed Application Forms            11.00 a.m. on 20 May 2008
and payment in full under the Open Offer or settlement of relevant
CREST instruction (as appropriate)
Annual General Meeting                                                     10.00 a.m. on 21 May 2008
Admission and commencement of dealings in New Ordinary Shares               8.00 a.m. on 22 May 2008
Expected date for crediting of New Ordinary Shares to CREST Stock                        22 May 2008
Accounts in uncertificated form
Despatch of definitive share certificates for New Ordinary Shares                     by 30 May 2008
in certificated form (where applicable)



GENERAL INFORMATION

Brewin Dolphin Limited, which is authorised and regulated by the Financial
Services Authority in the United Kingdom, is acting as Nominated Adviser to
Dobbies and no one else in relation to the transaction and will not be
responsible to anyone other than Dobbies for providing the protections afforded
to clients of Brewin Dolphin Limited nor for providing advice in relation to the
proposed transaction.

This announcement does not constitute an offer to sell or the solicitation of an
offer to acquire or subscribe for New Ordinary Shares and/or to take up any
entitlements.  The offer to acquire New Ordinary Shares pursuant to the proposed
Open Offer will be made solely on the basis of the information contained in the
Prospectus.

The information contained in this announcement is not for release, publication
or distribution to persons in the United States, Canada, Australia, New Zealand,
Japan or the Republic of South Africa or in any jurisdiction where to do so
would breach any applicable law. This announcement is not an offer of securities
for sale in, into or from the United States, Canada, Australia, New Zealand,
Japan or the Republic of South Africa. The New Ordinary Shares have not been and
will not be registered under the US Securities Act of 1933 (as amended) or under
any relevant securities laws of any state or other jurisdiction of the United
States, and will not qualify for distribution under any of the relevant
securities laws of Canada, Australia, New Zealand, Japan or the Republic of
South Africa.  Accordingly, the New Ordinary Shares may not be offered, sold,
taken up, exercised, resold, renounced, transferred or delivered, directly or
indirectly, within the United States (absent registration or an applicable
exemption from registration) or within Canada, Australia, New Zealand, Japan or
the Republic of South Africa.

The availability of the Open Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions in which they
are located.  Persons who are not resident in the United Kingdom should inform
themselves of, and observe, any applicable requirements.




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

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