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Scottish Highland (SHH)

Scottish Highland

Recommended Cash Offer-PART 2
SCOTTISH HIGHLAND HOTELS PLC
18 August 1999

PART 2

ADDITIONAL INFORMATION

1.  Responsibility


(A) The    directors   of   Paramount   Hotels,   Paramount   Hotels
    Investments,  the directors of Alchemy Partners  (Guernsey)  and
    the  partners of Alchemy Partners, whose names are  set  out  in
    paragraphs  2(A),  2(B)  and  2(C)  respectively  below,  accept
    responsibility   for   the   information   contained   in   this
    announcement, other than that relating to the Scottish  Highland
    Group,  the directors of Scottish Highland and members of  their
    immediate families and related trusts and to the best  of  their
    knowledge  and  belief  (having taken  all  reasonable  care  to
    ensure  that such is the case), the information contained herein
    for  which they are responsible is in accordance with the  facts
    and  does not omit anything likely to affect the import of  such
    information.
    
(B) The  directors of Scottish Highland, whose names are set out  in
    paragraph  2(D) below, accept responsibility for the information
    contained   in  this  announcement  relating  to  the   Scottish
    Highland  Group, the directors of Scottish Highland and  members
    of  their immediate families and related trusts. To the best  of
    the  knowledge and belief of the directors of Scottish  Highland
    (who  have taken all reasonable care to ensure that such is  the
    case),  the  information contained herein  for  which  they  are
    responsible  is in accordance with the facts and does  not  omit
    anything likely to affect the import of such information.
    
2.  Directors
    
(A) The directors of Paramount Hotels and Paramount Hotels
    Investments are:
    
    Martin Keith Bolland
    Michael Edward Purtill
    Ian Don Goulding
 
(B) The  directors  of Alchemy Partners (Guernsey)  who  are  taking
    responsibility as set out in paragraph 1(A) above are:
    
    Katherine Dorey Thompson
    Laurence Shannon McNairn
 
(C) The  partners  of Alchemy Partners who are taking responsibility
    as set out in paragraph 1(A) above are:
    
    Martin Keith Bolland
    Robert Bruce Barnes

(D) The directors of Scottish Highland are:
    
    Hamish McLeod Grossart
    William Alasdair Cameron
    Paul Murray-Smith
    Franco Galgani
    Tudor Griffith Davies
    Brian Maxwell Simmers
    
    
    The registered office of Scottish Highland is Regent Court, 70
    West Regent Street, Glasgow G2 2QZ.

                                APPENDIX I                                  
                                 
             CONDITIONS AND FURTHER TERMS OF THE OFFER

The Offer is subject to the following conditions:

(A) valid  acceptances  being received (and  not,  where  permitted,
    withdrawn)  by  not later than 3.00 p.m. 8 September  1999,  (or
    such   later   time(s)  and/or  date(s)  as   Paramount   Hotels
    Investments may, subject to the rules of the City Code,  decide)
    in  respect  of  not  less  than 90 per  cent.  (or  such  lower
    percentage  as Paramount Hotels Investments may decide)  of  the
    Scottish  Highland  Shares to which the Offer relates,  provided
    that  this  condition  will  not be satisfied  unless  Paramount
    Hotels  Investments  shall have acquired or  agreed  to  acquire
    (whether  pursuant to the Offer or otherwise) Scottish  Highland
    Shares  carrying, in aggregate, more than 50 per  cent.  of  the
    voting  rights then normally exercisable at general meetings  of
    Scottish Highland. For the purpose of this condition:
    
    (a)  Scottish  Highland  Shares which have  been  unconditionally
         allotted  but  not issued before the Offer  becomes  or  is
         declared  unconditional as to acceptances shall  be  deemed
         to carry the voting rights they will carry upon issue; and
    
    (b)  the  expression  'Scottish  Highland  Shares  to  which  the
         Offer  relates' means (i) ordinary shares  of  5p  each  in
         Scottish Highland unconditionally allotted or issued on  or
         before  the date the Offer is made and (ii) ordinary shares
         of  5p  each in Scottish Highland unconditionally  allotted
         or  issued after that date but before the time at which the
         Offer  ceases  to be open for acceptance (or  such  earlier
         time,  not  being earlier than the date on which the  Offer
         becomes  unconditional as to acceptances or,  if  later,  8
         September  1999,  as  Paramount  Hotels  Investments   may,
         subject  to  the  City  Code,  decide)  but  excluding  any
         Scottish  Highland Shares which, on the date the  Offer  is
         made,  are  already held within the meaning of section  428
         of  the Companies Act 1985) by Paramount Hotels Investments
         and/or  its associates (within the meaning of section  430E
         of the Act);
    
(B) no government, or governmental, quasi-governmental, supranational,
    statutory, regulatory or investigative  body  or authority 
    including any anti-trust or merger control authority) or court,
    trade agency, association, institution or professional or
    environmental body or any other person  or  body in any jurisdiction
    (each a 'Relevant Authority') having taken, instituted, implemented
    or threatened (or having decided upon the same) any action,
    proceedings, suit, investigation, enquiry or reference (and not
    having withdrawn the same), or made, proposed or enacted, any statute,
    regulation, order or decision,  or  having taken or refrained from
    having taken any other step which would or is reasonably likely to:

    
    (i)  make  the  Offer,  or its implementation,  or  the  proposed
         acquisition  of any Scottish Highland Shares  by  Paramount
         Hotels  Investments, or the acquisition by Paramount Hotels
         Investments  of control or management of Scottish  Highland
         or  any member of the Scottish Highland Group void, illegal
         or   unenforceable   under  the  laws   of   any   relevant
         jurisdiction   or   otherwise,  directly   or   indirectly,
         restrain  or prohibit, or in any material respect  restrict
         or  delay  the  Offer, its implementation or such  proposed
         acquisition  by  Paramount  Hotels  Investments  or  impose
         additional conditions or obligations with respect  thereto,
         or  otherwise  challenge  or  interfere  with  any  of  the
         foregoing;
    
    (ii) result  in  a  material  delay  in  the  ability   of
         Paramount  Hotels  Investments, or render Paramount  Hotels
         Investments  unable, to acquire all or some of  the  shares
         or  securities in Scottish Highland or require, prevent  or
         delay a divestiture by Paramount Hotels Investments of  any
         such shares or securities;
    
    (iii)require the divestiture by the Wider Paramount  Hotels
         Investments  Group or by the Wider Scottish Highland  Group
         of  all  or  any  portion  of their respective  businesses,
         assets or properties or impose any limitation which  is  or
         might reasonably be material on the ability of any of  them
         to   conduct   all  or  any  portion  of  their  respective
         businesses  or  own all or any portion of their  respective
         assets or properties;
    
    (iv) impose any limitation on the ability of any member  of
         the  Wider Paramount Hotels Investments Group or the  Wider
         Scottish  Highland Group to acquire, or to hold or exercise
         effectively,   directly  or  indirectly,  any   rights   of
         ownership  of Shares or other securities in any  member  of
         the   Wider   Scottish  Highland  Group  or   to   exercise
         management  control  over Scottish Highland  or  any  other
         member of the Wider Scottish Highland Group;
    
    (v)  require   any   member   of  the  Wider   Paramount   Hotels
         Investments Group or the Wider Scottish Highland  Group  to
         acquire  or offer to acquire any shares or other securities
         (or  the  equivalent) in any member of the  Wider  Scottish
         Highland Group owned by any third party, or to dispose  of,
         or  to  offer to dispose of, any shares or other securities
         (or  the  equivalent) in any member of the Wider  Paramount
         Hotels  Investments  Group or the Wider  Scottish  Highland
         Group;
    
    (vi) result  in  any member of the Wider Scottish  Highland
         Group  ceasing  to be able to carry on business  under  any
         name  under  which  it  currently does  so  which  name  is
         material to its business and the goodwill thereof; or
    
    


    (vii)otherwise  materially adversely affect the  business,
         profits  or  prospects of any member of the Wider  Scottish
         Highland Group;
    
    and  all  applicable waiting or other time periods during  which
    any   Relevant  Authority  could  decide  to  take,   institute,
    implement  or  threaten  any  such  action,  proceeding,   suit,
    investigation,  enquiry or reference or otherwise  intervene  as
    aforesaid having expired, lapsed or been terminated;
    
(C) all  necessary  filings  in connection with  the  Offer  or  its
    implementation   having  been  made,  all  appropriate   waiting
    periods  (including extensions thereof) in respect of the  Offer
    under   any  applicable  legislation  or  regulations   of   any
    jurisdiction having expired, lapsed or been terminated  and  all
    authorisations,   orders,   recognitions,   grants,    consents,
    licences,  confirmations, clearances, permissions and  approvals
    necessary under the laws or rules of any jurisdiction for or  in
    respect  of the Offer or the proposed acquisition of any  Shares
    or  other securities in Scottish Highland or any member  of  the
    Wider  Scottish Highland Group or control or management  of  any
    member  of  the  Scottish  Highland Group  by  Paramount  Hotels
    Investments  or  any other member of the Wider Paramount  Hotels
    Investments Group, or which are necessary for any member of  the
    Wider  Scottish  Highland Group to carry  on  its  business  the
    absence  of which would or might reasonably be expected to  have
    a  material adverse effect on the Wider Scottish Highland Group,
    ('Authorisations') having been obtained in terms and in  a  form
    satisfactory   to   Paramount  Hotels   Investments   from   all
    appropriate  Relevant  Authorities or other  persons  or  bodies
    with  whom  any member of the Wider Paramount Hotels Investments
    Group  or of the Wider Scottish Highland Group has entered  into
    contractual  arrangements and all such Authorisations  remaining
    in  full force and effect at the time at which the Offer becomes
    otherwise  unconditional in all respects and  no  intimation  or
    notice  of an intention to revoke or not renew any of  the  same
    having  been received and all necessary statutory or  regulatory
    obligations  having  been complied with, in  any  such  case  in
    connection  with  the  Offer  or  any  proposed  acquisition  or
    acquisitions of any shares or other securities in any member  of
    the  Wider Scottish Highland Group, or control or management  of
    any  such  member of the Scottish Highland Group, by any  member
    of the Wider Paramount Hotels Investments Group;
    
(D) save  as  disclosed  in  writing by or  on  behalf  of  Scottish
    Highland  to  Paramount Hotels Investments or  its  professional
    advisers  prior  to 18 August 1999 there being no  provision  of
    any  arrangement,  agreement, licence, permit, franchise,  lease
    or  other  instrument to which any member of the Wider  Scottish
    Highland  Group is a party or by or to which any such member  or
    any  of  its  assets  is  or are or may be  bound,  entitled  or
    subject, and there being no other circumstance in any such  case
    which,  as  a  consequence of the making of  the  Offer  or  the
    acquisition or proposed acquisition by any member of  the  Wider
    Paramount  Hotels Investments Group of some or all of the  share
    capital  or other securities in Scottish Highland or because  of
    a  change  in  control  or management of  Scottish  Highland  or
    otherwise,  would,  could  or might reasonably  be  expected  to
    result in:
    
    (i)  any  monies  borrowed by, or any other indebtedness  (actual
         or  contingent)  of,  any  member  of  the  Wider  Scottish
         Highland  Group  which is not already repayable  on  demand
         being  or  becoming repayable immediately or being  capable
         of  being  declared repayable immediately or prior  to  its
         stated  maturity date or repayment date or the  ability  of
         any  such member to borrow monies or incur any indebtedness
         being withdrawn or inhibited;
    
    (ii) the   creation  of  any  mortgage,  charge  or  other
         security  interest over the whole or any material  part  of
         the  business,  property or assets of  any  member  of  the
         Wider   Scottish  Highland  Group  or  any  such   security
         (whenever arising or having arisen) becoming enforceable;
    
    (iii)any  such  arrangement,  agreement,  licence,  permit,
         franchise,   lease   or   instrument,   or   the    rights,
         liabilities,  obligations or interests or business  of  any
         member of the Wider Scottish Highland Group under any  such
         arrangement,  agreement, licence, permit, franchise,  lease
         or   instrument,   being  terminated  or   materially   and
         adversely  modified or any material action being  taken  or
         any material obligation arising thereunder;
    
    (iv) any  assets  or interests of any member of  the  Wider
         Scottish Highland Group being or falling to be disposed  of
         other  than  in the ordinary course of business or  charged
         or  any  right  arising  under  which  any  such  asset  or
         interest could be required to be disposed of other than  in
         the ordinary course of business or charged;
    
    (v)  the  interest  or  business  of  any  member  of  the  Wider
         Scottish  Highland  Group  in or  with  any  person,  firm,
         company   or  body  (or  any  arrangement  or  arrangements
         relating   to   any   such  interest  or  business)   being
         terminated or materially adversely modified or affected;
    

    (vi) any  member  of  the  Wider  Scottish  Highland  Group
         ceasing  to  be  able to carry on business under  any  name
         under which it currently does so which name is material  in
         the  context of the Wider Scottish Highland Group  and  the
         goodwill thereof; or
    
    (vii)the financial or trading position or prospects of any
         member of the Wider Scottish Highland Group being
         prejudiced or adversely affected in a material way;
     
(E) no  member of the Wider Scottish Highland Group having since  31
    October  1998  (save  as  disclosed in  the  annual  report  and
    accounts of Scottish Highland for the year then ended or in  the
    interim accounts for Scottish Highland for the six months  ended
    30  April 1999 or save as publicly announced prior to 18  August
    1999  or  save  as  disclosed in writing  by  or  on  behalf  of
    Scottish  Highland  to  Paramount  Hotels  Investments  or   its
    professional advisers prior to 18 August 1999):
 
    (i)  (other   than   to  Scottish  Highland  or  a   wholly-owned
         subsidiary   of   Scottish   Highland)   issued,    agreed,
         authorised  or proposed the issue of additional  shares  of
         any  class,  or securities convertible into or exchangeable
         for,  or  rights, warrants or options to subscribe  for  or
         acquire,  any  such shares or securities  or  loan  capital
         (save  for  options granted, and for any Scottish  Highland
         Shares allotted upon exercise of options granted, prior  to
         10  August  1999 under the Scottish Highland  Share  Option
         Schemes);
    
    (ii) (other  than  to Scottish Highland or  a  wholly-owned
         subsidiary  of  Scottish  Highland) recommended,  declared,
         paid or made any bonus, dividend or other distribution;
    
    (iii)merged  with  any  body  corporate  or  acquired   or
         disposed  of,  or  transferred,  mortgaged  or  charged  or
         created any security interest over, any material assets  or
         any   right,  title  or  interest  in  any  material  asset
         (including  shares and trade investments),  or  authorised,
         proposed  or  announced any intention to authorise,  effect
         or   propose   any  such  merger,  demerger,   acquisition,
         disposal, transfer, mortgage, charge or security interest;
    
    (iv) other  than  to  Scottish Highland or a  wholly  owned
         subsidiary  of  Scottish  Highland  issued,  authorised  or
         proposed  the  issue  of  any  debentures  or  incurred  or
         increased any indebtedness or contingent liability in  each
         case  to an extent which is material in the context of  the
         Wider Scottish Highland Group;
    
    (v)  purchased,  redeemed,  reduced or repaid  or  announced  any
         proposal  to purchase, redeem, reduce or repay any  of  its
         own shares or other securities;
    

    (vi) entered  into, or varied, or authorised,  proposed  or
         announced  its  intention  to  enter  into  or   vary   any
         contract,  transaction, arrangement (whether in respect  of
         capital  expenditure or otherwise) which involves or  could
         involve  an obligation of a nature or magnitude  which,  in
         any  case, is material in the context of the Wider Scottish
         Highland Group;
    
    (vii)implemented or entered into, or authorised, proposed
         or announced its intention to implement or enter into any
         reconstruction, amalgamation, scheme or other analagous
         transaction or arrangement otherwise than in the ordinary
         course of business;
    
    (viii)entered  into  or varied, or authorised,  proposed  or
         announced its intention to enter into or vary, or  made  an
         offer (which remains open for acceptance) to enter into  or
         vary  the  terms  of  any service agreement  or  any  other
         agreement,  contract  or  arrangement  with  any   of   its
         directors or senior executives or senior employees  or  any
         connected person of any of such person (within the  meaning
         of  section  346  of the Act) other than  in  the  ordinary
         course   of   business  or  an  increase  in   remuneration
         determined in accordance with the relevant agreement;
    
    (ix) waived  or  compromised any claim which  is  or  might
         reasonably  be  expected to be material in the  context  of
         the  Wider  Scottish  Highland  Group  other  than  in  the
         ordinary course of business;
    
    (x)  taken  or  authorised any corporate action or had any  legal
         proceedings  started  or  threatened  against  it  for  its
         winding  up,  dissolution  or re-organisation  or  for  the
         appointment  of  a receiver, administrator,  administrative
         receiver, trustee or similar officer of all or any  of  its
         assets  or  revenues  or any analogous proceedings  in  any
         jurisdiction or had any such person appointed;
    
    (xi) made  or  authorised  or  proposed  or  announced  an
         intention to propose any change in its loan capital  to  an
         extent  which  is  material in the  context  of  the  Wider
         Scottish Highland Group;
    
    (xii)entered into any contract, transaction or arrangement which will
         or might reasonably be expected to be restrictive in a material
         respect on the business of any member of the Wider Scottish
         Highland Group;

    (xiii)made any alteration to its Memorandum or Articles of Association
          or other incorporation or constitutional documents; or

    (xiv) entered into or made an offer (which remains open for acceptance)
          to enter into an agreement or commitment or passed any resolution
          or announced or authorised (conditionally or unconditionally) any
          of the transactions or events referred to in this paragraph (E);

 
    
(F) save  as disclosed in the annual report and accounts of Scottish
    Highland  for the year ended 31 October 1998 or in  the  interim
    accounts  for  Scottish Highland for the  six  months  ended  30
    April  1998  or save as publicly announced prior  to  18  August
    1999,  or  as  disclosed in writing by or on behalf of  Scottish
    Highland  to Paramount Hotels Investments or its advisers  prior
    to 18 August 1999, since 31 October 1998:
    
    (i) there  having been no material adverse change, and no  other
         circumstances having arisen which would or might be  likely
         to  result in any material adverse change, in the business,
         assets,  financial  or  trading  position  or  profits   or
         prospects  of  any  member of the Wider  Scottish  Highland
         Group;
    
    (ii)       there   not  having  been  instituted  or   remaining
         outstanding  any  litigation,  arbitration  prosecution  or
         other  legal proceedings to which any member of  the  Wider
         Scottish  Highland Group is a party (whether  as  plaintiff
         or  defendant or otherwise) and no such proceedings  having
         been   threatened   against  any   such   member   and   no
         investigation by or enquiry by, or complaint  or  reference
         to,   any   Relevant  Authority  having  been   threatened,
         announced  or  instituted  or  remaining  outstanding   by,
         against or in respect of any such member and the effect  of
         which is or is likely to be material in the context of  the
         Scottish Highland Group; or
    
    (iii)     no  contingent  or other liability  having  arisen  or
         been   incurred   which   might  reasonably   be   expected
         materially  to  affect  any member of  the  Wider  Scottish
         Highland Group; and
    
(G) Paramount Hotels Investments not having discovered that:
    
    (i) any  financial,  business  or other  information  concerning
         Scottish  Highland  or  the Wider Scottish  Highland  Group
         publicly announced by or on behalf of Scottish Highland  or
         otherwise  disclosed by or on behalf of  Scottish  Highland
         in  writing to Paramount Hotels Investments or its advisers
         at  any  time  is  materially  misleading  or  contains   a
         material  misrepresentation of fact or  omits  to  state  a
         fact  necessary  to make the information contained  therein
         not materially misleading; or
    
    (ii)      any  member  of the Wider Scottish Highland  Group  is
         subject   to   any  liability,  contingent  or   otherwise,
         existing at 31 October 1998, which is not disclosed in  the
         audited  accounts  of Scottish Highland for  the  financial
         year ended on that date; or
    
    (iii)     in  relation  to  any release, omission,  disposal  or
         other  fact  or  circumstance which causes or  might  cause
         pollution  of the environment or harm to human health,  any
         past  or  present  member  of the Wider  Scottish  Highland
         Group  has,  in any manner, to an extent which is  material
         in  the  context of the Wider Scottish Highland  Group  (i)
         committed  any violation of any laws, statutes, ordinances,
         regulations   or   other  requirements  of   any   Relevant
         Authority;  and/or  (ii)  incurred any  liability  (whether
         actual or contingent) with respect thereto; or
    
    
    (iv)     any member of the Wider Scottish Highland Group will,
         or is reasonably likely to, be affected materially and
         adversely by any failure of any computer hardware,
         software or embedded chip technology of any member of the
         Wider Scottish Highland Group to be Year 2000 compliant or
         by the cost and/or disruption to normal activities caused
         by work carried out or to be carried out to ensure such
         computer hardware, software or embedded chip technology is
         Year 2000 Compliant.
    
    Paramount  Hotels Investments reserves the right  to  waive,  in
    whole  or  in  part,  all  or  any  of  conditions  (B)  to  (G)
    inclusive.   Conditions  (B) to (G)  inclusive,  if  not,  where
    applicable,  waived,  must be fulfilled or satisfied  within  21
    days  after  the  later of  8  September 1999 and  the  date  on
    which  condition  (A) is satisfied (or in each case  such  later
    date  as  the  Panel  may agree) failing which  the  Offer  will
    lapse.  If  the  Offer so lapses, the Offer  will  cease  to  be
    capable   of   further   acceptances   and   Paramount    Hotels
    Investments,  and  holders of Scottish  Highland  Shares,  shall
    thereupon  cease  to  be bound by prior acceptances.   Paramount
    Hotels  Investments  shall be under no obligation  to  waive  or
    treat  as  fulfilled or satisfied any of conditions (B)  to  (G)
    inclusive  by  a  date  earlier than the latest  date  specified
    above  for  the  satisfaction thereof notwithstanding  that  the
    other  conditions  of the Offer may at such  earlier  date  have
    been  waived  or  fulfilled and that there are at  such  earlier
    date  no  circumstances indicating that any such conditions  may
    not be capable of fulfilment.
    
    If  Paramount  Hotels Investments is required by  the  Panel  to
    make  an offer for Scottish Highland Shares under the provisions
    of  Rule  9  of the City Code, Paramount Hotels Investments  may
    make   such  alterations  to  the  above  conditions,  including
    condition  (A),  as are necessary to comply with the  provisions
    of that Rule.
    
    The  Offer will lapse if, in respect of the proposed acquisition
    of  Scottish Highland by Paramount Hotels Investments, there  is
    a  reference to the Competition Commission before 3.00 p.m. on 8
    September  1999  or the date on which the Offer  becomes  or  is
    declared  unconditional  as  to acceptances,  whichever  is  the
    later  and  if the Offer so lapses the Offer will  cease  to  be
    capable  of  further acceptance and accepting Scottish  Highland
    Shareholders and Paramount Hotels Investments will cease  to  be
    bound by prior acceptance.
    
    For the purposes of these conditions:-
    
    (a) 'Year  2000  Compliant' means complying with the  Year  2000
         conformity   requirements  promulgated   by   the   British
         Standard Institute whose definition is as follows:
    
        'Year  2000  conformity shall mean that neither  performance
         nor  functionality is affected by dates  prior  to,  during
         and after the year 2000.
    
         In particular:
    
         Rule 1    no value for current date will cause any
                   interruption in operation;
    
         Rule 2    date-based    functionality    must    behave
                   consistently  for dates before, during and  after  the
                   year 2000;
    
         Rule 3    in  all interfaces and data storage, the century
                   in  any  date  is  specified either explicitly  or  by
                   unambiguous algorithms or inferencing rules; and
    
         Rule 4    the year 2000 must be recognised as a leap
                   year.';
    
    (b) 'undertaking',     'subsidiary     undertaking'      'parent
         undertaking'   and  'associated  undertaking'   shall   be
         construed   in  accordance  with  the  Act,  but   ignoring
         paragraph 20(1)(b) of Schedule 4A to the Act;
    
    (c) 'publicly  announced'  means publicly announced  by  release
         of  an announcement to the Company Announcements Office  of
         the London Stock Exchange;
    
    (d) 'Wider  Scottish  Highland  Group' means  Scottish  Highland
         and  its  subsidiary undertakings, associated  undertakings
         and  any  other undertaking in which Scottish Highland  and
         such undertakings have a significant interest;
    
    (e) 'Wider  Paramount Investments Group' means Paramount  Hotels
         Investments  and  its  subsidiary undertakings,  associated
         undertakings  and any other undertaking in which  Paramount
         Hotels   Investments   and   such   undertakings   have   a
         significant interest; and
    
    (f) 'significant  interest' means a direct or indirect  interest
         in  20  per  cent.  or  more of the equity  capital  of  an
         undertaking.

                                 APPENDIX II                                  

                            DEFINITIONS

The following definitions apply throughout this announcement, unless
the context requires otherwise;

'Act'                   the Companies Act 1985, as amended
                        
'Alchemy Partners'      Alchemy Partners, Alchemy Partners Nominees,
                        Alchemy
                        Partners   (Guernsey)  and/or  the   Alchemy
                        Investment Plan as the
                        context may require
                        
'Alchemy Investment     the  discretionary funds managed by  Alchemy
Plan'                   Partners (Guernsey)
                        with advice from Alchemy Partners
                        
'Alchemy Partners       Alchemy  Partners  (Guernsey)  Limited,  the
(Guernsey)'             manager of the
                        Alchemy Investment Plan
                        
'Alchemy Partners       Alchemy Partners Nominees Limited, a nominee
Nominees'               company
                        through   which  investors  in  the  Alchemy
                        Investment Plan make
                        investments
                        
'Apax Partners'         Apax Partners & Co. Capital Limited
                        
'Australia'             Australia,  its possessions and  territories
                        and all areas subject to its
                        jurisdictions and any political sub-division
                        thereof
                        
'Barclays'              Barclays Bank plc
                        
'Bell Lawrie'           Bell Lawrie Wise Speke, a division of Brewin
                        Dolphin Securities
                        Limited
                        
'Canada'                Canada, its possessions and territories  and
                        all  areas  subject to its jurisdiction  and
                        any political sub-division thereof
                        
'certificated' or       not in uncertificated form (that is, not  in
'in certificated form'  CREST)

'City Code'             The City Code on Takeovers and Mergers
                        
'Closing Price'         the  closing  middle market quotation  of  a
                        relevant  share  as derived from  the  Daily
                        Official List of the London Stock Exchange
                        
'CREST'                 the  relevant  system  (as  defined  in  the
                        Regulations) in respect of which CRESTCo  is
                        the Operator (as defined in the Regulations)
                        
'CRESTCo'               CRESTCo Limited
                        
'CREST member'          a person who has been admitted by CRESTCo as
                        a   system-member   (as   defined   in   the
                        Regulations)


'CREST participant'     a  person  who is, in relation to  CREST,  a
                        system-participant (as
                        defined in the Regulations)
                        
'CREST sponsor'         a  CREST participant admitted to CREST as  a
                        CREST sponsor
                        
'CREST sponsored        a  CREST  member  admitted  to  CREST  as  a
member'                 sponsored member
                        
'Directors'             the directors of Scottish Highland
                        
'DNIB'                  De Nationale Investeringsbank NV
                        
'Escrow Agent'          Lloyds  TSB  Registrars in its  capacity  as
                        escrow  agent,  as described  in  the  CREST
                        manual, for the purposes of the Offer
                        
'Form of Acceptance'    the   form   of  acceptance  and   authority
                        relating to the Offer
                        
'Japan'                 Japan,  its possessions and territories  and
                        all  areas subject to its jurisdictions  and
                        any political sub-division thereof
                        
'London Stock           London Stock Exchange Limited
Exchange'               
'member account ID'     the  identification code or number  attached
                        to any member account
                        in CREST
                        
'NatWest'               National Westminster Bank plc
                        
'Offer Document'        the  offer  document containing  the  Formal
                        Offer
                        
'Offer'                 the  recommended cash offer by Apax Partners
                        on behalf of Paramount Hotels Investments to
                        acquire all the Scottish Highland Shares  on
                        the  terms and subject to the conditions  to
                        be  set out in the Offer document and in the
                        Form  of  Acceptance and, where the  context
                        admits,  any subsequent revision, variation,
                        extension or renewal thereof
                        
'Offer Period'          the  period commencing on 22 June 1999 until
                        whichever  of the following dates  shall  be
                        the  latest:  (a) 3.00 p.m. on  8  September
                        1999;  (b)  the  time  at  which  the  Offer
                        becomes or is declared unconditional  as  to
                        acceptances
                        
'Overseas               holders of Scottish Highland Shares who  are
Shareholders'           resident  in,  or nationals or citizens  of,
                        jurisdictions outside the United Kingdom  or
                        who are nominees of, or custodians, trustees
                        or  guardians  for,  any  such  citizens  or
                        nationals
                        
'Panel'                 the Panel on Takeovers and Mergers
                        

'participant ID'        the identification code or membership number
                        used in CREST to identify a particular CREST
                        member or other CREST participant
                        
                        
'Paramount Holdings'    Paramount Hotels Holdings Limited
                        
 'Paramount Hotels'     Paramount  Hotels Group Limited, the  parent
                        company of the Paramount Hotels Group
                        
'Paramount Hotels       Paramount    Hotels   and   its   subsidiary
Group'                  undertakings, as that term is defined in the
                        Act
                        
'Paramount Hotels       Paramount  Hotels  Investments  Limited,   a
Investments'            direct  wholly-owned subsidiary of Paramount
                        Hotels
                        
'Regulations'           the  Uncertificated  Securities  Regulations
                        1995 (SI 1995 No. 95/3272)
                        
'Scottish Highland'     Scottish Highland Hotels plc
                        
'Scottish Highland      Scottish   Highland   and   its   subsidiary
Group' or 'Group'       undertakings, as that term is
                        defined in the Act
                        
'Scottish Highland      a holder of Scottish Highland Shares
Shareholder' or
'Shareholder'

'Scottish Highland      the Scottish Highland plc 1996 Company Share
Share Option Schemes'   Option Plan, the Scottish Highland plc  1996
                        Executive  Share  Option  Scheme   and   the
                        Scottish  Highland plc 1996 Savings  Related
                        Share Option Scheme
                        
'Scottish Highland      ordinary  shares  of  5p  each  in  Scottish
Shares' or 'Shares'     Highland currently in issue and any  further
                        such    shares   which   shall   have   been
                        unconditionally  allotted or  issued  before
                        the  Offer  closes (or before  such  earlier
                        time  as  Paramount Hotels Investments  may,
                        subject  to  the  City Code  determine,  not
                        being  earlier than the time  on  which  the
                        Offer    becomes   unconditional    as    to
                        acceptances  or, if later, 3.00  p.m.  on  8
                        September 1999)
                        
'TFE instruction'       a   transfer  from  escrow  instruction  (as
                        defined  by  the  CREST  Manual  issued   by
                        CRESTCo)
                        
'TTE instruction        a transfer to escrow instruction (as defined
                        by the CREST Manual issued by CRESTCo)
                        
'uncertificated' or     recorded  on  the relevant register  of  the
'in uncertificated      share or security concerned as being held in
form'                   uncertificated form in CREST  and  title  to
                        which, by virtue of the Regulations, may  be
                        transferred by means of CREST
                        
'United Kingdom' or     the  United  Kingdom of  Great  Britain  and
'UK'                    Northern Ireland



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