CLS : Tender Offer and Notice of General Meeting - August 2022

PRESS RELEASE

Release date:

15 August 2022

CLS Holdings plc

("CLS" or the "Company")

Proposed purchase of 1 in every 40 Ordinary Shares of 2.5 pence each

in the Company ("Ordinary Shares") at 250 pence per share

by way of a tender offer (the "Tender Offer") and Notice of General Meeting

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

LEI: 213800A357TKB2TD9U78

On 10 August 2022, the Board of CLS announced in its half yearly results for the period ended 30 June 2022 its intention to purchase 1 in every 40 Ordinary Shares by way of a tender offer at 250 pence per Ordinary Share.

Today CLS has posted a circular to shareholders in relation to the Tender Offer (the "Circular") on the terms set out above. If the maximum number of 10,184,984 Ordinary Shares is acquired under the Tender Offer, this will result in approximately £25.5 million being paid by the Company to participating shareholders. Capitalised terms used but not defined in this announcement shall have the meaning given to them in the Circular.

The Tender Offer is open to all Qualifying Shareholders on the Company's register at 6.00pm on 9 September 2022, who may participate by tendering all or a proportion of their holdings of Ordinary Shares at the above price. No Ordinary Shares will be purchased in relation to the Tender Offer unless the relevant special resolution to be proposed at the general meeting of the Company to be held on 9 September 2022 at 11.00am is passed. The Tender Offer will be void if less than 0.1 per cent. of the issued ordinary share capital of the Company (excluding treasury shares) in aggregate is tendered. The Ordinary Shares purchased under the Tender Offer will be held as treasury shares.

Background to and reasons for the Tender Offer

During the first six months of the current financial year, the Board completed two property disposals, realising an aggregate of £10.1 million at prices that were in line with their valuations as at 31 December 2021.

Furthermore, on 3 August 2022, CLS announced that it had completed on the sale of two UK properties, Great West House, Brentford and 62 London Road, Staines and one French property, 96 Rue Nationale, Lille for a total of £39.8 million. The three properties sold for an average of 3.7% above the 31 December 2021 valuations.

The share price of an Ordinary Share has continued to trade at a significant discount to the net tangible assets ("NTA") value of an Ordinary Share (last reported NTA per Ordinary Share of 352.8 pence per Ordinary Share,

Registered in England No. 2714781. Registered Office as above.

PRESS RELEASE

stated as at 30 June 2022). The Board believes the share price discount to its NTA is unjustified and it is in the best interests of all Shareholders to implement the Tender Offer to reduce this discount.

The Board has determined that the Tender Offer should be made at an appropriate premium to the price per Ordinary Share and that this would be the most suitable way of returning capital to Shareholders in a quick and efficient manner, taking account of the relative costs, complexity and timeframes of the possible methods, as well as treating all Shareholders equally.

The Board of Directors of the Company considers the Tender Offer to be beneficial to the Shareholders as a whole, including, among other reasons, that:

• the Tender Offer is available to all Qualifying Shareholders regardless of the size of their holding;
• the Tender Price represents a premium over the price of Ordinary Shares, as follows:

1. a premium of 22.5% to the average of the Company's Ordinary Shares closing price of 204.0 pence for the 30 Business Days to the Latest Practicable Date; and

1. a premium of 18.8% to the Company's Ordinary Shares closing price of 210.5 pence on the
   Latest Practicable Date.

• 1. a premium of 20.2% to the Company's Ordinary Shares closing price of 208.0 pence on 9 August 2022 (the day prior to the release of the Company's half-year results).
• the Tender Offer provides Qualifying Shareholders who wish to reduce their holdings of Ordinary Shares with an opportunity to do so at a market-driven price with a premium;
• the Tender Offer permits Shareholders who wish to retain their current investment in the Company and their Ordinary Shares to do so, as no Shareholder is required to participate in the Tender Offer, and thus providing Shareholders with flexibility; and
• the Tender Offer will reduce the number of Ordinary Shares in issue, and so should, assuming earnings and net asset values of the Group's properties stay the same, have a positive impact on the Group's earnings per share and net asset value per share.

The size of the Tender Offer has been determined to be appropriate to ensure that the Group's loan-to-value ratio and liquidity remain within an acceptable level, being below 40% within a suitable timeframe, and with cash and liquid resources and available facilities being over £100 million, providing the Group with the flexibility to focus its portfolio on attractive growth prospects and continue to invest to improve the quality of its existing portfolio.

2022 Interim Dividend

As the record date for the Tender Offer is the same as the record date for the 2022 Interim Dividend, Shareholders who participate in the Tender Offer will continue to receive the 2022 Interim Dividend, being 2.60 pence per Ordinary Share, in respect of any Ordinary Shares tendered.

Substantial Shareholders

The Sten and Karin Mortstedt Family & Charity Trust which, through wholly owned subsidiaries of Creative Value Investment Group, holds 51.46 per cent of the issued Ordinary Share Capital in the Company, and Bengt Mortstedt, who holds 6.52 per cent of the issued Ordinary Share Capital in the Company, have indicated to the Board that they intend to take up their pro rata entitlement under the Tender Offer.

Registered in England No. 2714781. Registered Office as above.

	PRESS RELEASE
Expected Timetable of Events
Latest time and date for receipt of proxy appointments	11.00 a.m. on 7 September 2022
Ex Dividend Date for 2022 Interim Dividend	8 September 2022
Record Date for 2022 Interim Dividend	9 September 2022
General Meeting	11.00 a.m. on 9 September 2022
Latest time and date for receipt of Tender Forms and TTE	3.00 p.m. on 9 September 2022
instructions from CREST Shareholders
Tender Offer closes	3.00 p.m. on 9 September 2022
Record Date for the Tender Offer	6.00 p.m. on 9 September 2022
Outcome of Tender Offer announced	On 12 September 2022
Cheques despatched for certificated Ordinary Shares	By 16 September 2022
purchased pursuant to the Tender Offer and payment through
CREST for uncertificated Ordinary Shares purchased
pursuant to the Tender Offer
CREST accounts credited with uncertificated Ordinary Shares	By 16 September 2022
unsuccessfully tendered and despatch of balance share
certificates for unsold certificated Ordinary Shares and share
certificates for unsuccessful tenders of certificated Ordinary
Shares
2022 Interim Dividend payment date	3 October 2022

Details of the action to be taken to participate in the Tender Offer and how to vote at the General Meeting are set out in the Circular. A summary of the taxation consequences of the Tender Offer for UK resident Shareholders is also set out in the Circular. However, Shareholders are advised to consult their own professional advisers regarding their own tax position.

Copies of the Circular, form of proxy and Tender Form have been submitted to the FCA's National Storage Mechanism and are available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The Circular will also shortly be available on the CLS website at www.clsholdings.com, in the Investor Relations section under Shareholder Documents. Copies of the documents may also be obtained from the Company Secretary.

-ends-

Registered in England No. 2714781. Registered Office as above.

PRESS RELEASE

For further information, please contact:

CLS Holdings plc

(LEI: 213800A357TKB2TD9U78) www.clsholdings.com

David Fuller, Chief Operating Officer [phone]

Liberum Capital Limited

Richard Crawley

Jamie Richards

[phone]

Liberum Capital Limited, which is authorised and regulated in the United Kingdom by the FCA, is advising CLS in relation to the Tender Offer and no one else and will not be responsible to anyone other than CLS for providing the protections afforded to the customers of Liberum Capital Limited nor for providing any advice in relation to the Tender Offer, the contents of this announcement or any transaction, arrangement or other matter referred to in this announcement.

Registered in England No. 2714781. Registered Office as above.