Merchant House Group plc : Update – Pritchard Stockbrokers and Merchant Capital Structured Products

Recent Press Update - Pritchard Stockbrokers and Merchant Capital Structured Products

21 March 12

The FSA took action on 10 February 2012 against Pritchard Stockbrokers Limited now in administration (Pritchard) and as a result, client cash and client assets were frozen. Merchant Capital Limited (Merchant) took immediate action to make new custody arrangements and to appoint Reyker Securities plc (Reyker) as its custodian and administrator. On 9 March 2012 the transfer of client assets to Reyker was completed, some £350 milllion of structured product investments belonging to Merchant's clients, and Reyker are now checking and reconciling these assets.

Client cash remains frozen, but Merchant is working with the joint administrators, Timothy Ball, Roderick Weston and Alistair Wood of Mazars LLP to expedite the release of client monies relating to Merchant's structured product clients. We are unable at this time to know when these funds, controlled by the joint administrators of Pritchard, will be released.

Amounts received for the following plans which did not proceed are frozen at Pritchard pending their release by the joint administrators:

Merchant Capital Kick Out Plan: FTSE Issue 6
Merchant Capital Deposit Plan: FTSE Bull & Bear Issue 1
Merchant Capital Growth Plan: FTSE Bull & Bear Issue 2

All income due and receivable on or after 9 March 2012 will be received on clients' behalf by Reyker and will be paid out as soon as Reyker have completed account opening formalities for Merchant's clients. You will shortly receive a letter in this regard.

Income due on certain plans managed by Merchant was received by Pritchard in the period after 10 February, but before the plans could be transferred to Reyker. Income on these plans will be passed to the joint administrators to process. As a result, payment of this income will be subject to delay pending the completion of the investigation process now being undertaken by the joint administrators. We are not at present able to advise you how long this delay will last. However, we can assure you that we will be making every effort to help the joint administrators complete the process as quickly as possible.

Clients invested in the following plans will be affected and their income will be delayed. We intend to write to these clients directly to confirm further details.

Arc Fixed Income Plan 12 (Monthly 0.65%)
Arc Fixed Income Plan 12 (Monthly 0.60%)
Fixed Income Plan 10 (Monthly 0.65%)
Arc Fixed Income Plan 10 (Monthly 0.57%)
Merchant Capital Income Plan: Capital & Income Lock-in (Issue 2)
Fixed Income Plan 15 (Monthly 0.50%)
Arc Fixed Income Plan 4 (Monthly 0.73%)
Arc Fixed Income Plan 4 (Monthly 0.61%)
Arc Fixed Income Plan 3 (Monthly 0.73%)
Arc Fixed Income Plan 3 (Monthly 0.61%)
Merchant Capital Income Plan: FTSE Issue 2
Arc Fixed Income Plan 5 (Monthly 0.60%)
Arc Fixed Income Plan 5 (Monthly 0.73%)
Arc Fixed Income Plan 8 (Monthly 0.69%)
Arc Fixed Income Plan 8 (Monthly 0.60%)
Quantum UK Protected Income Portfolio
Merchant Capital Income Plan: Capital & Income Lock-in (Issue 1)
Merchant Capital Income Plan: FTSE S&P Issue 1
Arc Fixed Income Plan 1 (Monthly)
IDAD UK Income Plan (Monthly)
Arc Fixed Income Plan 9 (Monthly 0.69%)
Arc Fixed Income Plan 9 (Monthly 0.60%)
Arc Fixed Income Plan 2 (Monthly)
Arc Fixed Income Plan 14 (Monthly Cautious)
Arc Fixed Income Plan 14 (Monthly High)
Keydata Extra Income Plan 15 (Quarterly)
London & Capital UK Regular Income Plan (Annual)
Arc Fixed Income Plan 11 (Monthly 0.71%)
Arc Fixed Income Plan 11 (Monthly 0.63%)
Arc Fixed Income Plan 11 (Monthly 0.63%)
Merchant Capital Income Plan (Option 1)
Merchant Capital Income Plan (Option 2)
Arc Accelerated Income Plan 9
Merchant Capital Income Plan: FTSE Bespoke