Tender Offer and Proposal

Derwent Valley Holdings PLC
17 October 2006

Company      Derwent Valley Holdings plc
Headline:    Cash tender offer and proposal for its £35m 101/8% First Mortgage 
             Debenture Stock 2019



NOT FOR DISTRIBUTION TO ANY PERSON RESIDENT AND/OR LOCATED IN THE UNITED STATES
OR ITALY (SEE OFFER AND DISTRIBUTION RESTRICTIONS BELOW)

Derwent Valley Holdings plc (the "Company") has today announced an offer to
repurchase for cash any and all of its £35,000,000 101/8 per cent. First
Mortgage Debenture Stock 2019 (ISIN: GB0002653151) (the "Stock") (subject to
offer restrictions - see below and as more fully described in the Tender Offer
Memorandum dated 17 October 2006 prepared by the Company (the "Tender Offer
Memorandum")).

The Stock was issued in 1994 at an early stage in the development of the Derwent
Valley Group (the "Group") and represented the majority of the Group's
borrowings at that time. The Group has grown significantly since then and now
relies predominantly upon bank debt to finance its property business.

As a result, the Stock now represents a small proportion of the Group's
borrowings. It also has a coupon out of line with current market levels.
Accordingly, the Board of the Company believes it appropriate to redeem the
Stock early by way of the Offer and the Proposal, and to replace it with bank
debt in order to simplify the Group's liability structure and improve its
flexibility.

The price payable for the Stock (the "Repurchase Price") is expected to be
determined at or around 2.00 p.m., London time, (the "Pricing Time") on Friday,
10 November 2006 (the "Pricing Date") in the manner described in the Tender
Offer Memorandum by reference to the sum (such sum, the "Repurchase Yield") of
the repurchase spread of +50 basis points ("bps") (the "Repurchase Spread") and
a mid-market rate for the 4.75 per cent. UK Treasury Gilt due March 2020 (the "
Mid-Market Benchmark Security Rate"). The Company will also pay accrued
interest.

Each Stockholder who validly tenders its Stock by 12.00 noon, London time, on
Thursday, 2 November 2006 (the "Early Tender Deadline") will receive a further
cash payment (the "Early Tender Premium") in addition to the Repurchase Price
and accrued interest, and as additional consideration for its tender of the
relevant Stock accepted for repurchase by the Company pursuant to the Offer. The
amount of the Early Tender Premium for such Stockholder will be equal to the
difference between the amount payable by the Company for the relevant Stock at
the Repurchase Price and that which would be payable for such Stock at an
effective repurchase price (the "Effective Early Tender Price") determined in
the same manner as for the Repurchase Price but by reference to the sum (such
sum, the "Effective Early Tender Yield") of an effective repurchase spread of
+40 bps (the "Effective Early Tender Spread") and the Mid-Market Benchmark
Security Rate.

The Offer begins today and expires at 12.00 noon, London time, on Tuesday, 7
November 2006 (the "Expiration Deadline"), unless the period for the Offer is
extended or re-opened or the Offer is terminated.  In order to be eligible to
receive the Repurchase Price, Stockholders must validly tender their Stock
before the Expiration Deadline, by delivering, or arranging to have delivered on
their behalf, a valid Tender Instruction that is received by the Registrar by
the Expiration Deadline.

The Company will also be inviting all Stockholders to approve a proposal (the "
Proposal") to amend the terms and conditions of the Stock to provide for the
Company to have the option to redeem the Stock early on the terms and subject to
the conditions contained in the Tender Offer Memorandum. The Proposal will be
considered at a meeting (the "Meeting") of the Stockholders to be held at the
offices of Slaughter and May, One Bunhill Row, London EC1Y 8YY on Thursday, 9
November 2006 at 12.00 noon, London time. Notice of the Meeting (the "Notice")
will be posted today to each Stockholder at such Stockholder's registered
address in the United Kingdom or such other address supplied by such Stockholder
to the Company for the giving or serving of notice.

At the Meeting, Stockholders will be invited to consider and, if thought fit,
pass an extraordinary resolution in respect of the Stock, as set out in the
Notice (the "Extraordinary Resolution"). The Extraordinary Resolution provides
for the terms and conditions of the Stock to be amended by the insertion of a
new provision pursuant to which the Company may redeem all (and not some only)
of the Stock outstanding at any time (the "Issuer Call"), on the Company giving
not less than three and not more than 30 Business Days' notice.

The redemption amount (the "Early Redemption Amount") at which the Stock will be
redeemed on such early redemption together with accrued interest will be
determined in a similar manner to that described in the Tender Offer Memorandum
for the determination of the amounts payable for the repurchase of the Stock at
the Repurchase Price pursuant to the Offer and by reference to the sum of a
redemption spread of an identical +50 bps and the Mid-Market Benchmark Security
Rate. Stockholders should refer to the draft Sixth Supplemental Trust Deed for
full details of the manner in which the Early Redemption Amount will be
determined.

Stockholders who are ineligible for the Offer or who do not wish to tender Stock
in the Offer may also be eligible to receive an identical amount to the Early
Tender Premium, which will be paid in the circumstances described in the Tender
Offer Memorandum subject to the Extraordinary Resolution being passed, by
delivering, or arranging to have delivered on their behalf, a valid Voting Only
Instruction that is received by the Registrar by the Early Tender Deadline (and
not revoked).

If the Extraordinary Resolution is passed at the first Meeting and the Company,
in its sole discretion, chooses to exercise the Issuer Call immediately, the
amounts payable by the Company for Stock redeemed pursuant to the Issuer Call
will be the same as the amounts payable by the Company for equal nominal amounts
of Stock repurchased at the Repurchase Price pursuant to the Offer (including in
each case the amounts payable in respect of accrued interest).

The settlement date for the Offer is expected to be Wednesday, 15 November 2006.
  If the Extraordinary Resolution is passed at the first Meeting and the
Company, in its sole discretion, chooses to exercise the Issuer Call
Immediately, this will also be the date on which the Company redeems all of the
outstanding Stock that has not been repurchased by it pursuant to the Offer.

The Offer and the Proposal are being made on the terms and subject to the
conditions contained in the Tender Offer Memorandum. Under the Offer and the
Proposal, all Tender Instructions and Voting Only Instructions delivered by the
Early Tender Deadline will be irrevocable except in certain limited
circumstances. By tendering Stock in the Offer, Stockholders will appoint the
Chairman of the Meeting as their proxy to vote in favour of the Extraordinary
Resolution at the Meeting.

Subject to applicable law and as provided in the Tender Offer Memorandum, the
Company may, in its sole discretion, extend, re-open, amend, waive any condition
of or terminate the Offer or the Proposal, as applicable, at any time.  Eligible
Stockholders are advised to read the Tender Offer Memorandum carefully for full
details of and information on the procedures for participating in the Offer.

Stockholders should contact the following for further information:

The Dealer Manager:

UBS Investment Bank at 1 Finsbury Avenue, London EC2M 2PP, Attention: Liability
Management Group, Tel: [phone].

The Registrar:

Lloyds TSB Registrars at The Causeway, Worthing, West Sussex BN99 6ZL, Tel: 0870
609 2158 (UK Stockholders only)/[phone] (overseas Stockholders only).

A copy of the Tender Offer Memorandum is available for inspection at the
Document Viewing Facility of the Financial Services Authority, 25 The North
Colonnade, London E14 5HS.

DISCLAIMER This announcement must be read in conjunction with the Tender Offer
Memorandum.  This announcement and the Tender Offer Memorandum contain important
information which should be read carefully before any decision is made with
respect to the Offer and/or the Proposal.  If you are in any doubt as to the
action you should take, you are recommended to seek your own financial advice,
including as to any tax consequences, from your stockbroker, bank manager,
solicitor, accountant or other independent financial adviser.  Any individual or
company whose Stock is held on its behalf by a broker, dealer, bank, custodian,
trust company or other nominee must contact such entity if it wishes to tender
Stock in the Offer or participate in the Proposal. None of the Company, UBS
Limited or Royal Exchange Trust Company Limited makes any recommendation whether
Stockholders should tender Stock in the Offer or participate in the Proposal.

OFFER AND DISTRIBUTION RESTRICTIONS

The distribution of this announcement and the Tender Offer Memorandum in certain
jurisdictions may be restricted by law.  Persons into whose possession this
announcement and/or the Tender Offer Memorandum comes are required by the
Company and the Dealer Manager to inform themselves about and to observe any
such restrictions. Neither this announcement nor the Tender Offer Memorandum
constitutes an offer to buy or a solicitation of an offer to sell the Stock, and
tenders of Stock in the Offer will not be accepted from Stockholders in any
jurisdiction in which such offer or solicitation is unlawful.  In those
jurisdictions where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer and the Dealer Manager is such a licensed
broker or dealer in such jurisdictions, the Offer shall be deemed to be made on
behalf of the Company by the Dealer Manager.

United States

The Offer is not being made and will not be made, directly or indirectly, in or
into, or by use of the mails of, or by any means or instrumentality (including,
without limitation, facsimile transmission, telex, telephone, email and other
forms of electronic transmission) of interstate or foreign commerce of, or any
facility of a national securities exchange of, the United States, and the Stock
may not be tendered in the Offer by any such use, means, instrumentality or
facility from or within the United States or by persons located or resident in
the United States.  Accordingly, copies of this announcement, the Tender Offer
Memorandum and any other documents or materials relating to the Offer are not
being, and must not be, directly or indirectly, mailed or otherwise transmitted,
distributed or forwarded in or into the United States or to persons located or
resident in the United States.  Any purported tender of Stock in the Offer
resulting directly or indirectly from a violation of these restrictions will be
invalid and tenders of Stock made by a person located in the United States or
any agent, fiduciary or other intermediary acting on a non-discretionary basis
for a principal giving instructions from within the United States will not be
accepted.  For the purposes of this paragraph, United States means the United
States of America, its territories and possessions, any state of the United
States of America and the District of Columbia.

Italy

The Offer is not being made in the Republic of Italy (Italy).  The Offer, this
announcement and the Tender Offer Memorandum have not been submitted to the
clearance procedure of the Commissione Nazionale per le Societa e la Borsa
(CONSOB) pursuant to Italian laws and regulations.  Accordingly, Stockholders
are notified that, to the extent Stockholders are resident and/or located in
Italy, the Offer is not available to them and they may not tender Stock in the
Offer and, as such, any Tender Instructions received from such persons shall be
ineffective and void, and none of this announcement, the Tender Offer Memorandum
or any other documents or materials relating to the Offer or the Stock may be
distributed or made available in Italy.

The Offer is not being made and this announcement and the Tender Offer
Memorandum are not being distributed to the public in the United Kingdom, France
or Belgium. In such jurisdictions, only the following persons may participate in
the Offer and receive this announcement and the Tender Offer Memorandum (as more
fully set out in the Tender Offer Memorandum):

United Kingdom (investment professionals and persons within Article 43(2) or
otherwise of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005) / France (certain qualified investors and providers of portfolio
management investment services) / Belgium (institutional investors).


                      This information is provided by RNS
            The company news service from the London Stock Exchange