Acquisitions & Notice of EGM

RNS Number:9389P
Creative Education Corp Plc
10 August 2005



                     THE CREATIVE EDUCATION CORPORATION PLC

                        Notice of Extraordinary Meeting



The Creative Education Corporation Plc ("CEC" or the "Company") is pleased to
announce that it has entered into an agreement to acquire the entire issued
share capital of Conduit Square Limited ("Conduit") and the freehold interest in
the Primary Steps Nursery at Upper Richmond Road, East Sheen from Iron Founders
and Allied Trade Nominees Limited ("IFAT"), together ("the Acquisitions").

A circular providing details of the Acquisitions and to convene an EGM to take
place on 7 September 2005 at which the requisite resolution will be put to the
Company's shareholders to approve the acquisition of Conduit pursuant to the
requirements of S320 of the Companies Act 1985 is today being sent to
shareholders.

Background

On 28 February 2005, shareholder consent was obtained for the acquisition of
Conduit but on slightly different terms than those now proposed.  Conduit is a
company wholly owned by Laurence Davis, John Baker and Frank Mountain (the "
Vendors") who are shareholders in CEC. Laurence Davis is also deputy chairman of
CEC.  IFAT is a company wholly owned by John Baker.  As such the acquisitions of
Conduit and IFAT are related party transactions (as defined) under the AIM
Rules.  Laurence Davis, John Baker and Frank Mountain are also deemed to be
acting in concert, and may be deemed to be acting in concert with others, for
the purposes of the City Code on Takeovers and Mergers.

In order for the Vendors to avoid any requirement for them to make a bid for the
entire issued share capital of the company under the rules of the City Code on
Takeovers and Mergers, the consideration for Conduit and IFAT is now to be
satisfied by the issue to the Vendors of loan notes ("Loan Notes").

Information on Conduit

Conduit owns the following eight freehold premises which are currently leased by
the Company.

Nursery                                Premises

Primary Steps Squirrels                6 Lindon Road, Bedford, Bedfordshire MK40 2DA
Primary Steps Clarence House           41 Clarence Avenue, Ilford, Essex IG2 6JH
Primary Steps Gosford Babies           200 Beehive Lane, Ilford, Essex IG4 5EE
Primary Steps Gosford House            229-231 Beehive Lane, Ilford, Essex IG4 5EB
Primary Steps Montessori               Foster Road, Boxmoor, Hemel Hempstead,  Herts HP1 1EL


Primary Steps Milton Keynes            Baron Close, Bletchley, Milton Keynes, Bucks MK2 2UP


Happy House Reading                    22 Fartherson Road, Reading RG1 4PL
Happy House Crowthorne                 59-61 Dukes Ride, Crowthorne RG45 6NS



The amount payable by the Company for the Conduit shares shall be #2,936,472
payable in Loan Notes, subject to downwards only adjustment as below, of which
#2,536,609 is in respect of the properties with the balance being #181,500 in
respect of Conduit's holding of the Company's shares plus the debt due to
Conduit from the Company as more particularly detailed below. The quantum of the
consideration for Conduit is partly based on the valuations prepared by Dunlop
Heywood Lorenz on (a) 18 March 2005 in respect of the six Primary Steps
properties and (b) 24 May 2005 in respect of the two Happy House properties,
which show that the aggregate value of all the properties owned by Conduit to be
#8,575,000. The amount of debt owed by Conduit to the Nationwide Building
Society in respect of the Conduit properties is currently #6,038,391 and this
debt will be refinanced by the Company on completion of the transaction.  The
consideration payable by the Company for Conduit will not be increased in any
event, but if the amount of the debts owed by Conduit to the Nationwide Building
Society (including break costs) are in excess of #6,038,391 at completion the
consideration will be reduced on a pound for pound basis accordingly.

Conduit currently owns 5,000,000 of the Company's shares which, based on a mid
market share price of 3.63p, as at 30 June 2005 being the date of approval by
the independent directors, are valued at #181,500. Conduit also has the benefit
of a debt of #218,363 owed by the Company to Conduit. Thus on the purchase of
Conduit such debt will become an inter-company liability and effectively be
eliminated from the Company's consolidated balance sheet. The Vendors will
warrant that save for loans from the Nationwide Building Society, Conduit will
have no liabilities on completion and the Company will retain #120,000 of
consideration to cover any liabilities.  Loans to the Vendors from Conduit
amounting to #51,050 will be novated by Conduit to the Company on completion and
will be deemed repaid and offset against the consideration.

After completion of the Acquisition it is proposed that Conduit will dispose of
its shareholding in the Company in the market place in due course or redeem such
shares in accordance with the provisions of the Companies Act 1985.

Information on IFAT

In addition to the acquisition of Conduit the Company also intends to purchase
the freehold interest in the Primary Steps Nursery at Upper Richmond Road, East
Sheen ("Nursery") which is currently leased to the Company by IFAT. John Baker,
a substantial shareholder and ex-director of the Company, is the sole director
and shareholder of IFAT. Shareholder approval for the acquisition of the
property was obtained on 3 March 2004 but is no longer required under the
Companies Act 1985 as John Baker is no longer a director of the Company.

The Company will refinance borrowings of #583,546 in connection with the
acquisition of the property. The consideration payable is based on a valuation
prepared by Dunlop Heywood Lorenz on 24 May 2005 for the Nationwide Building
Society which values the Nursery at #800,000. Additional expenditure on fixtures
and fittings of approximately #35,000 (plus VAT) has been carried out on the
Nursery since the date of the valuation. The consideration will therefore be not
more than #257,579 to be reduced on a pound for pound basis by which the secured
debt owed to the Nationwide Building Society (including any break costs) exceeds
#583,546 at completion payable in Loan Notes The consideration payable by the
company for the property will not be increased in any event.

The Loan Notes

Interest will accrue on the Loan Notes at 5 per cent. per annum but will not be
payable until redemption. The loan notes will be repayable in 3 years after the
date of their issue or earlier if there is an event of default (i.e. or
insolvency event of company). The Company may prepay the Loan Notes at any time
but only with the consent of 75 per cent of the loan note holders. The Loan
Notes will be unsecured and freely transferable.

Certain of the Company's shareholders, as set out below, who may be deemed to be
acting in Concert are currently interested in an aggregate 93,791,698 ordinary
shares in the Company, representing approximately 30.1 per cent. of the
Company's issue share capital.  Due to their interests in the Company, they have
all undertaken not to vote on the resolution and to procure that their
associated companies, including Conduit, will not vote on the resolution.

Shareholder                                   Number of ordinary shares in the   Percentage of issued
                                              Company                            ordinary share capital


Laurence Davis                                32,241,468                         10.3%
John Baker                                    32,150,230                         10.3%
Frank Mountain                                3,000,000                          1.0%
David Alexander                               14,000,000                         4.5%
James Sterling                                4,200,000                          1.3%
Ronald Sterling                               3,500,000                          1.1%
Ray Harris                                    2,600,000                          0.8%
Tony Lynch                                    2,100,000                          0.7%

Recommendation

The Acquisitions constitute related party transactions for the purposes of the
AIM rules. The directors of the Company, with the exception of Laurence Davis
who is interested in Conduit as shareholder and director and David Alexander,
who may be acting in concert with him, having consulted with Corporate Synergy
Plc, the Company's nominated adviser, consider that the terms of the
Acquisitions are fair and reasonable insofar as the Company's shareholders are
concerned.

The Directors, other than Laurence Davis and David Alexander, who may be acting
in concert with him, therefore recommend shareholders to vote in favour of the
resolution and intend to do so themselves in respect of 580,000 ordinary shares,
representing approximately 0.2 per cent. of the Company's issued share capital.

Copies of the circular will be available free of charge to public at the offices
of Corporate Synergy Plc at 30 Old Broad Street, London EC2N 1HT, for a period
of one month from the date of this announcement.

Enquiries:

Chris Phillips - Chairman

020 7487 1960

Olly Cairns - Corporate Synergy Plc

020 7748 4400








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