ARK Fund to retire NAB debt through $20.4m rights issue

South Perth-based agricultural investment company the ARK Fund Ltd will retire debt owed to the National Australia Bank through a $20.4 million placement, the company has announced.

The full text of a company announcement is pasted below

The Board of the ARK Fund Limited (ARK or the Company) is pleased to announce that ARK will seek to issue 17,000,000 fully paid ordinary New Shares in ARK at an issue price of $1.20 per New Share for the purpose of raising $20,400,000 (Placement). The proceeds of the Placement will be used to retire debt that ARK has already borrowed from the NAB. The Placement is fully underwritten by Tolhurst Limited and is being supported by Rewards Group Limited (Rewards), ARK s largest shareholder.

This Placement will significantly enlarge ARK's capital base and balance sheet. The Directors believe this will significantly improve ARK s financial position and its ability to continue to grow its asset base through the acquisition of properties that will continue to drive returns to its shareholders. Subject to and conditional on completion of the Placement, the Company has also agreed to vary its management arrangements with ARK Capital, to reduce management fees to 7.5% of EBIT.

The Company is also pleased to declare a dividend for the December quarter of 3 cents per share, unfranked. The record date for this dividend will be 18 December 2007.

Dividend Policy

Given the nature of the proposed change in ARK s capital structure the Directors also wish to give guidance as to the Company's dividend policy for the balance of the financial year (assuming the Placement successfully completes). The Company's policy is to pay dividends on a quarterly basis when possible, and intends to continue this practice into the future. New shareholders arising from the Placement will participate in quarterly dividends from 1 January 2008 onwards.

The Company also expects that after completion of the Placement it will commence payment of income tax, and therefore anticipates that it will be in a position to pay franked dividends in the future.

Subject to the assumptions set out below, the Board considers that it is reasonable that the Company will make the following level of dividend payments for the balance of the financial year:

• Dividend Period Dividend (cents per share)
• 3 Month period 1 January 2008 31 March 2008 2.1 cents fully franked
• 3 Month period 1 April 2008 30 June 2008 2.1 cents fully franked

There are certain general risks and certain specific risks, which relate directly to the Company's business and are largely beyond the control of the Company and the Directors and can impact on the financial performance of the Company and its ability to pay the dividends. The anticipated dividends are given by the Directors as guidance only and will be subject to the Company's actual financial performance at the time. The anticipated dividends are based on the Company s budget which makes certain assumptions. These assumptions are set out in the Prospectus which is attached.

Record dates shall be set for these dividend payments closer to the time.

Variation of Management Agreement

ARK is managed under a management agreement by ARK Capital Pty Ltd, a company controlled by Dr Andrew Radomiljac, Mr Craig Anderson and Mr John Kenny, who also control and manage Rewards Group Limited. ARK is pleased to announce that it has agreed with ARK Capital to vary the management agreement so that ARK Capital s management fees are reduced from their current level of 15% of EBIT, to 7.5% of EBIT. The variation is subject to and conditional upon successful completion of the Placement. The changes under the variation will take effect from 20 November 2007, but on the proviso that the Placement completes as planned.

Further Details of A$20 Million Share Issue

The funds raised, after deducting the expenses of the issue, will be applied to the payment of $19,650,000 to the National Australia Bank for the purpose of retiring debt that the Company has already incurred as a consequence of the Company's 14 agricultural property acquisitions between 12 March 2007 and today's date, all of which have been previously announced to the ASX.

The 17 million New Shares will be placed (subject to shareholder approval) pursuant to the Prospectus which is attached. All New Shares issued will rank pari passu with existing ordinary shares. The Prospectus also provides for the capacity for ARK to accept oversubscriptions to the extent of 4,000,000 New Shares for the purpose of raising an additional $4,800,000 (before expenses).

ARK's notice of annual general meeting, which shall include a resolution to approve the Placement, will be dispatched to shareholders on 21 November 2007.

Rewards, the largest shareholder of ARK, has agreed to subscribe for $3,120,000 of the Placement by way of subscribing for 2,600,000 New Shares under the Prospectus.

7 New Agricultural Property Acquisitions

The Company is pleased to announce that it has entered into agreements under which the Company will acquire the following additional 7 agricultural property assets between today's date and 31 December 2007:

• 1. Property Asset No. 16 to be known as Horticultural Property No. 4

Horticultural Property No. 4 comprises of a single surveyed Lot with a fence to fence area of 141.2Ha being located approximately 35km west of Mareeba QLD. It has been extensively developed as a Mango Farm with approximately
6,060 mango trees all of which are in full production. ARK has the right to purchase the lot for $2,050,000 and will be initially leased for $234,520 per annum plus GST at an 11% yield on cost.

Horticultural Property No. 4 is currently owned by Rewards Group Limited.

Grant Thornton has issued an independent expert s report noting that the property has been independently valued at $2,050,000, and this report concludes that the transaction is fair and reasonable to the non-associated shareholders of ARK. The agreement to buy Horticultural Property No. 4 is subject to, and conditional upon, the approval of ARK s shareholders in general meeting for all purposes under the Corporations Act and the ASX's Listing Rules (in particular Listing Rule 10.1).

• 2. Property Asset No. 17 to be known as Teak Property No. 11

Teak Property No. 11 is situated in the Innisfail area with a fence to fence area of 123.58Ha. There are no structural improvements on Teak Property No. 11. ARK has the right to purchase the lot for $980,000, subject to and conditional upon satisfaction of a number of standard commercial conditions precedent and expects to do so on or about 20 December. The initial lease will be for $112,112 per annum plus GST at an 11% yield on cost.

• 3. Property Asset No. 18 to be known as Teak Property No. 12

Teak Property No. 12 is situated in the Ingham area with a fence to fence area of 156.86Ha. There are no structural improvements on Teak Property No. 12. ARK has the right to purchase the lot for $1,350,000, subject to and conditional upon satisfaction of a number of standard commercial conditions precedent and expects to do so on or about 20 December. The initial lease will be for $154,440 per annum plus GST at an 11% yield on cost.

• 4. Property Asset No. 19 to be known as Teak Property No. 13

Teak Property No. 13 is situated in the Ingham area with a fence to fence area of 43.82Ha. There are no structural improvements on Teak Property No. 13. ARK has the right to purchase the lot for $396,000, subject to and conditional upon satisfaction of a number of standard commercial conditions precedent and expects to do so on or about 20 December. The initial lease will be for $45,302 per annum plus GST at an 11% yield on cost.

• 5. Property Asset No. 20 to be known as Horticultural Property No. 5

Horticultural Property No. 5 is a substantial industrial quality fruit packing shed with associated packing plant and coldrooms to be located in Kununurra, Western Australia. ARK expects to expend approximately $5,400,000 on Horticultural Property No. 5. ARK expects to lease Horticultural Property No. 5 for an initial amount of $594,000 per annum plus GST at an 11% yield on cost.

• 6. Property Asset No. 21 to be known as Teak Property No. 14

Teak Property No. 14 is situated in the Ingham area with a fence to fence area of 20.446Ha. There are no structural improvements on Teak Property No. 14. ARK has the right to purchase the lot for $185,000, subject to and conditional upon satisfaction of a number of standard commercial conditions precedent and expects to do so on or about 20 December. The initial lease will be for $21,164 per annum plus GST at an 11% yield on cost.

• 7. Property Asset No. 22 to be known as Teak Property No. 15

Teak Property No. 15 is situated in the Tully area with a fence to fence area of 83.88Ha. There are no structural improvements on Teak Property No. 15. ARK has the right to purchase the lot for $375,300, subject to and conditional upon satisfaction of a number of standard commercial conditions precedent and expects to do so on or about 20 December. The initial lease will be for $42,934 per annum plus GST at an 11% yield on cost.

Timetable

The indicative timetable* for completion of the transactions described above is as follows:

• Prospectus Lodged at ASIC and ASX Tuesday 20 November 2007
• Offer Opens Tuesday 20 November 2007
• Closing Date of the Offer Wednesday 12 December 2007
• Annual General Meeting of ARK s Shareholders Thursday 20 December 2007
• Allotment of New Shares Friday 21 December 2007

* Dates are indicative and subject to change