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» 24/10/2008

Offer to bond holders

Offer to bond holders

£112,000,000 3.625 per cent. Convertible Bonds due 2014 (“the Bonds”) (ISIN XS0298922617)

During the past few weeks, a number of holders of the Bonds (the “Bondholders”) have contacted the Company to enquire whether it could assist them enhance the liquidity of their investment in the Bonds.

Accordingly, Grainger today announces that it will make, and hereby offers to each Bondholder, a cash payment equal to £35,000 per £100,000 in principal amount of the Bonds (the “Cash Amount”) in respect of which a valid Conversion Notice is received by the Principal Paying and Conversion Agent by 5.00 pm (London time) on 4 November 2008 (the “Submission Deadline”).

Upon conversion of their Bonds, Bondholders who have exercised their Conversion Rights will receive approximately 11,574 ordinary shares per £100,000 principal of Bonds in discharge of all obligations as set forth under such Bonds.

The Cash Amount will only be paid for Bonds in respect of which a valid Conversion Notice has been received by the Principal Paying and Conversion Agent during the period from, and including, the date of this notice to, and including the Submission Deadline (the “Offer Period”) (the holders of such Bonds being “Eligible Bondholders”). Holders of Bonds in respect of which (i) Conversion Notices are received by the Principal Paying and Conversion Agent after the Submission Deadline or (ii) invalid Conversion Notices are received by the Principal Paying and Conversion Agent by the Submission Deadline or (iii) Conversion Notices were received by any Paying and Conversion Agent prior to the commencement of the Offer Period will not be eligible to receive the Cash Amount. This offer does not affect Bondholders’ Conversion Rights under the Bonds or the Trust Deed constituting the Bonds and does not affect or alter any terms and conditions of the Bonds. The Company will pay, or procure payment of, the Cash Amount to Eligible Bondholders’ on or around 6 November 2008. The Cash Amount shall be paid to such Eligible Bondholders’ cash accounts held through Euroclear Bank S.A./N.V. as operator of the Euroclear system and/or Clearstream, Banking, société anonyme, as the case may be.

For Grainger, the effect of this would be, if the whole issue were converted in this matter, to reduce reported debt by £52m and improve net assets (on a pre tax basis) by the same amount, albeit with a modest dilution to net asset value per share. The Group’s loan to value ratio for the purposes of covenant testing would fall by approximately 2.5%. The cash payment will be met out of existing committed resources.

A further announcement will be made in due course, after the amount of conversions is known.

Deutsche Trustee Company Limited, as trustee of the Bonds, expresses no opinion on the merits of, and makes no representation or recommendation whatsoever regarding, the content of this notice.

Capitalised terms used but not defined in this notice shall have the meanings given to them in the terms and conditions of the Bonds.

For further information:

Grainger plc:
Rupert Dickinson
Tel: +44 (0) 20 7795 4700
Andrew Cunningham
Tel: +44 (0) 191 261 1819

Financial Dynamics:
Stephanie Highett
Tel: +44 (0) 20 7831 3113
Jamie Robertson
Tel: +44 (0) 20 7831 3113

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Grainger plc registered in England. Company registration number: 125575. Registered office: Citygate, St James' Boulevard, Newcastle upon Tyne, NE1 4JE.