Donegal Investment : Announcement of Return of Capital 28/07/20

Donegal Investment Group plc

('Donegal' or the 'Company')

Announcement of Return of Capital

The Board of Donegal announces today that it is proposing a return of capital to shareholders of up to €10 million by the conversion of ordinary shares into redeemable ordinary shares and subsequent redemption of the redeemable ordinary shares on a basis similar to the return of capital, also effected by a conversion and redemption of ordinary shares, in May 2018.

Details of the proposed return of capital will be set out in the Circular to be posted to shareholders on Friday 31 July 2020, including the required resolutions to be voted on by shareholders at an EGM to be held immediately following the Group's AGM on Wednesday 26 August 2020.

Under the Board's proposals, if the EGM resolutions are approved and the Board effects a conversion and subsequent redemption, approximately 22.25% of each shareholder's total ordinary shares held on the conversion record date of Thursday 27 August 2020 (6.00pm) will be redeemed on the redemption date of Friday 28 August 2020 (12:01am) with each shareholder receiving:

• Cash of €12.50 per ordinary share converted into redeemable ordinary shares and subsequently redeemed; or
• A deferred share for each ordinary share, which would otherwise have been converted and redeemed had such shareholder not notified the Company in accordance with section 83(4) of the Companies Act 2014 before the conversion record date of their unwillingness to have the pro rata portion of their ordinary shares at the conversion record date converted into redeemable ordinary shares.

The Board believes that a return of up to €10 million of surplus capital from the cash proceeds generated from the disposal of assets represents the most effective use of Company funds and that the continued strength of the Group's balance sheet and its cash-flows after the return of capital will be sufficient to pursue the Group's ongoing strategy.

If the return of capital is implemented in full, this is expected to result in the redemption of approximately 800,000 Ordinary Shares, (or approximately 22.25% of the ordinary shares outstanding), which contrasts with the current modest levels of liquidity in the Company's shares.

If shareholders approve the required EGM resolutions the conversion and redemption required to implement the return of capital will be effected on Friday 28 August 2020 with shareholders receiving their redemption proceeds of €12.50 per share within fourteen days of the proposed redemption date of Friday 28 August 2020.

The Board would also like to draw shareholders' attention to the Statement of Arrangements which will be included with the AGM and EGM circulars all of which will be sent to shareholders at the same time.

Enquiries:

Donegal Investment Group plc
Padraic Lenehan, Finance Director	Tel: [phone]
Investec Bank plc (Irish Branch)
Jonathan Simmons, Director	Tel: [phone]