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Danka to Relocate into new Headquarters and Extend Senior Credit Facility

Press release from the issuing company

ST. PETERSBURG, Fla.--Oct. 1, 2002-- Danka Business Systems PLC today announced that it will relocate from its current corporate campus into a new, state of the art Corporate Headquarters to be completed by next summer. The business transaction involves three properties in St. Petersburg, Florida, including an unfinished 157,000 square foot building located at 11101 Roosevelt Boulevard, which will become Danka's new Corporate Headquarters under an agreement with the buyer to lease the property. The buildings were previously owned by a tax retention operating lease (TROL) facility, a financing vehicle under which Danka was the lessee of these previously underutilized properties. Under the terms of the transaction, the Corporate Headquarters, Danka National Supply Center, and a third support facility have been acquired for the sum of $31.4 Million by Corporate Property Associates 15 Incorporated, a publicly held, non-traded real estate investment trust (REIT) managed by W. P. Carey & Co. LLC and a member of the $4 Billion W.P. Carey Group. Danka has entered into long-term leases to occupy the buildings. Danka's pre-existing obligations on the buildings, which included payment of financing and other operating costs, have been terminated and the net sum of $21.2 Million was paid to the TROL lenders in full satisfaction of the obligations relating to such properties under the TROL. Approximately $7.7 Million of the purchase price will be used to complete construction and tenant improvements in the Corporate Headquarters and support facility. Danka Chairman and Chief Executive Officer, Lang Lowrey, commented: "We are very excited about moving into this new facility. By consolidating our corporate operations we will significantly reduce our overall tenancy costs and at the same time increase our efficiency. Uniting the vast majority of our St. Petersburg employees under the same roof will improve interaction among our corporate staffand accelerate our responsiveness to customers and our colleagues in the field. At the same time, this initiative will enable us to further reduce our real estate exposure." Danka announced that it has also entered into a contract with respect to the sale by the TROL of the remaining three buildings on its current corporate campus in St. Petersburg which it will be vacating. The proceeds from this sale will permit Danka to terminate the TROL arrangements in full. "With the closing of this sale, the TROL lenders will have been repaid $34.4 Million over the past five quarters and we will have effectively eliminated our exposure to the risk of real estate ownership," commented Lowrey. Danka also announced that it has exercised its option to extend its credit facility with its senior bank lenders for an additional two years, through March 31, 2006. "We are pleased to have extended our senior credit facility through the end of our 2006 fiscal year," commented Lowrey. "This extension allows us to continue our debt reduction initiatives and the opportunity to seek long-term financing under more favorable capital market conditions." Mark Wolfinger, Danka's Chief Financial Officer, added "We believe that our senior leaders have further validated the success of our efforts over the past six quarters by granting this extension in a very difficult lending environment and in a fashion which gives us flexibility to address other elements of our capital structure." Danka's interest rate under the extended facility will be fixed at LIBOR plus 7.5%, provided that the facility has a Moody's credit rating of at least B2. The extended facility consists of a term loan commitment of $121 Million, a revolver commitment of $70 Million and a letter of credit commitment of $30 Million. As previously disclosed, Danka will be required to make term loan repayments of $4 Million quarterly through March 31, 2003, and $8 Million quarterly thereafter. Danka has paid an exercise fee of $2.76 Million for the extension and, if the facility is not earlier refinanced, will be required to pay commitment fees equal to 1% of the total commitments under the facility at December 31, 2002, March 31, 2003, December 31, 2003, March 31, 2004, December 31, 2004 and June 30, 2005 and commitment fees equal to 2% of the total commitments under the facility at June 30, 2003 and June 30, 2004. Danka's outstanding balance under the facility as of June 30, 2002 were $140.5 Million, down from $240.0 Million at June 30, 2001. There would be no prepayment penalty in the event that Danka were to refinance the facility before its stated maturity.

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