Tradepoint Refinancing Arrangements

Tradepoint, the UK order-driven stock exchange, has previously indicated its need for additional finance and today announces a long-term financing package that greatly enhances its future prospects. The refinancing takes the form of a subscription for 70 million new Ordinary Shares at 20p per share by a consortium led by Instinet, a wholly-owned subsidiary of Reuters Group PLC. This represents 54.4% of the enlarged equity. The Consortium consists of Instinet, American Century, Archipelago (25% owned by Goldman Sachs and 25% owned by E*Trade), JP Morgan and Morgan Stanley. The Consortium will be granted two series of new warrants to subscribe for 13,228,476 shares at 45p and 16,262,406 shares at 60p which would take its ownership to approximately 62.9%. Instinet itself has been granted warrants to subscribe for a further 6 million shares at 45p. Exercise of those warrants would take the combined ownership to approximately 64.3%. The agreement governing the existing Loan Stock contains significant redemption and conversion rights as well as restrictions on actions by the Company. As a condition of the Subscription, the Loan Stock is to be converted to remove the effect of these restrictions. In order to gain the agreement of the Loan Stockholders to convert, it is proposed that their conversion price is reduced from 40p to 28.363636p per share. Instinet has agreed to provide interim financing pending the completion of the Subscription. The Board believes the combination of the finance and the nature of the Consortium members represents a major opportunity to further develop the Company's business, as a low-cost, efficient, for-profit exchange. Significant potential for co-operation between Tradepoint and the Consortium members should improve liquidity and Tradepoint's future prospects for profitability. These include a planned electronic link between Instinet and Tradepoint and the opportunity to broaden the range of securities traded on the Tradepoint Stock Exchange. The global presence and market strength of the members of the Consortium and their focus on reducing transaction costs should greatly assist Tradepoint's participation in the evolution of a global exchange model. On completion of the Subscription the Consortium will have the right to appoint a majority of the Board of Directors. Peter Stevens will continue as Chairman. Nic Stuchfield, the current Chief Executive, will, after a suitable handover period, resign and be succeeded by Richard Kilsby of Instinet. The transaction is conditional upon the Takeover Panel waiving the requirement for a general offer to shareholders, conversion of the Loan Stock, shareholders' approval and regulatory consents. Trading in the Ordinary Shares, which is currently suspended, will recommence on AIM with effect from 9.00am, 7 May 1999 and on the Vancouver Stock Exchange from 6.30am (local time) May 7 1999. Commenting on the announcement, Peter Stevens, Chairman of Tradepoint, said: "Today's announcement provides a springboard for the future development of Tradepoint as the evident opportunities for co-operation between Tradepoint and the members of the Consortium will help us to grow our innovative exchange structure rapidly. This is also a great endorsement of the Tradepoint exchange concept, its progress to date and future potential. With the strength of Instinet and the Consortium, Tradepoint can continue to pursue its goal of evolving into a truly global exchange. We look forward to the future with great confidence and excitement."