21.12.2006 – 10:32

Neschen AG

euro adhoc: Neschen AG
Capital measures
Neschen AG wins Bear Stearns International Limited for company recapitalisation

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.

21.12.2006

Neschen AG intends to place the majority of the authorised capital
(total EUR 4,375 Mio.) as an increase in capital on the German stock
market within the next few months. The shareholders will be able to
exercise their legal subscription rights. The exact details of the
planned transaction will be made public in the near future.

If not all the shares are subscribed, an investor group, comprising
of the US investment bank Bear Stearns together with associated
companies of Värde Partners, Inc. ("Värde"), will, as agree in the
recapitalisation agreement signed on 21.12.06,  purchase up to a
maximum of three million of the unsubscribed shares. In addition, it
has been agreed that the investor group will acquire the loans of
approx. EUR 65 Mio. from the German pool banks and replace this with
a loan to the company of EUR 50 Mio. A significant portion of this
loan difference will be assigned to Neschen as extraordinary income
leading to an increase in the company’s equity

The executive board of Neschen AG believe that the 2006 end of year
results will change significantly due to the debt waiver. The
refinancing and the improvement in equity will give the company the
foundation to ensure that it can direct all its attention and energy
to customers, products and markets. In 2006 the consolidated turnover
is expected to be approx. EUR 130 Mio. and the EBIT, excluding
restructuring costs and one-time-effects, is expected to be at least
EUR 5 Mio. This comes after an EBIT of EUR 4 Mio. in 2005 and of  EUR
-1.9 Mio. in 2004.

Bear Stearns is the fifth largest US investment bank, specialising in
financing companies that are being or have been restructured. Värde
is a leading Alternative Asset Management company in USA and Europe,
managing approx. USD 2.8 billion in assets.

Summing up, the board is pleased to announce that in addition to the
operational restructuring, the overall restructuring, including the
financial restructuring of the group, is completed. The executive
board underline that the strategic partnership on the basis of the
recapitalisation agreement with Bear Stearns and Värde, will ensure
that the organisation can direct more attention towards customers,
product innovation and markets. The board sees the improved financial
status, created through the involvement of the investment group, as a
foundation upon which the company can grow profitably in the coming
years.

end of announcement                               euro adhoc 21.12.2006 09:50:58

Further inquiry note:

Jan Marzinowski
Tel.: +49 (0)5722 207 153
E-Mail: j.marzinowski@neschen.de

Branche: Process Industries
ISIN: DE0005021307
WKN: 502130
Index: CDAX
Börsen: Börse Berlin-Bremen / free trade
Hamburger Wertpapierbörse / free trade
Baden-Württembergische Wertpapierbörse / free trade
Börse Düsseldorf / free trade
Frankfurter Wertpapierbörse / official dealing/general
standard
Niedersächsische Börse zu Hannover / official dealing