Acq'n & Placing & Open Offer

Kern River PLC
21 May 2001


PRESS RELEASE                                              21 May 2001
For immediate release

                                Kern River plc

 Acquisition of Impax Capital Corporation Limited and Placing and Open Offer


o       Acquisition of Impax Capital Corporation Limited, investment advisory   
        and corporate finance business specialising in environmental            
        infrastructure technology sector

o       Consideration of £2.2 million to be satisfied by the issue of 6,735,764 
        new Ordinary Shares of which 703,125 have been placed on behalf of      
        vendors

o       Acquisition is conditional on approval of shareholders of Kern River plc

o       Company name to be changed to Impax Group plc to reflect the            
        significance of the Acquisition

o       Placing and open offer of 5,750,000 new Ordinary Shares at 32 p per     
        share to raise £1.43 million net of expenses to provide funds for       
        development of Impax and working capital for the enlarged group.

Commenting, Stuart Bickerstaff, non executive chairman of Kern River, said:

'The acquisition of Impax represents a new and exciting phase in the Company's
development. Impax is a well-respected investment advisory and corporate
finance business in the EIT sector. We believe that current trends in
environmental regulation and market liberalisation offer opportunities for
substantial development of the business.

'We expect to launch a new Impax investment fund in the next year and intend
to position the corporate finance business as a leading adviser in the EIT
sector.'

Stuart Bickerstaff                                                
Non-executive chairman, Kern River plc
(via Marshall Securities Limited)                    020 7490 3788

Rob Luetchford/John Webb                                          
Marshall Securities Limited  (Nominated adviser)     020 7490 3788


                                Kern River plc

Acquisition of Impax Capital Corporation Limited and Placing and Open Offer

Kern River plc ('Kern River' or 'the Company') has today agreed to acquire
Impax Capital Corporation Limited ('Impax'), an investment advisory and
corporate finance business specialising in the environmental infrastructure
and technology sector. The Acquisition represents a significant expansion of
the Group's activities and is in line with the business development strategy
which was described last October.  In view of its size, the Acquisition is
conditional on approval by Shareholders.

The consideration of £2.2 million is to be satisfied by the issue of 6,735,764
new Ordinary Shares. The Company is also proposing to raise approximately £1.43
million, net of expenses, through a placing of 5,750,000 new Ordinary Shares
('Placing Shares') at 32p per share. The Placing, which is subject to the right
of qualifying shareholders to apply for the Placing Shares to which they are
entitled pursuant to the Open Offer, is to provide funds for the development of
Impax and working capital for the enlarged Group.

To reflect the significance of the Acquisition, it is intended to change the
name of the Company to Impax Group plc on completion of the Acquisition. It is
also intended to adopt two new share option schemes to provide incentives to
key personnel.

The Company also today announced its unaudited interim results for the six
months ended 31 March 2001.

A prospectus describing the Acquisition and the Placing and Open Offer is
being sent to Shareholders.

Background

Kern River was formed and floated on AIM in November 1996 when it acquired
CSV, the holding company for working interests in two oil fields, the Starks
Field in Calcasieu Parish, Louisiana, and the Nukern Field, near Bakersfield,
California.

In October 2000 the Group announced in a placing and open offer to raise £2.7m,
net of expenses, to fund a development programme at the Starks Field and
to repay outstanding loans. At that time the Directors stated that they also
intended to seek opportunities to build the Group through the acquisition of
additional businesses and assets, including energy related businesses and
other opportunities which present the potential for substantial growth of
shareholder value. The Directors are pleased to have reached agreement for the
acquisition of Impax which, in their view, represents such an opportunity.


Description of Impax

Impax is an investment advisory and corporate finance business based in London
specialising in the environmental infrastructure and technology ('EIT')
sector. Since its formation in 1994 Impax has developed expertise in the
commercial and financial issues arising in the following areas:

o        clean energy generation and energy efficiency

o        resource recovery

o        waste management

o        pollution control and

o        water supply and sewerage.

Impax is regulated by the Securities and Futures Authority Limited and its
activities are organised in two divisions: ICAM, the investment advisory
division and ICFA, the corporate finance business. Impax employs a total of 14
people including ten professional staff who work in the two divisions.

ICAM

ICAM provides advice to managers of funds specialising in the EIT sector.
Clients include both listed funds and a private equity facility.

ICAM has a contract to act as investment adviser to the Alm. Brand Invest
Environmental Technology Fund, a Danish open-ended investment fund. ICAM is
the exclusive investment adviser to Alm. Brand Invest, the fund manager,
providing analysis and portfolio recommendations. The fund was launched in
September 1999 with funds of Euro8 million and by 30 April 2001 the fund was
capitalised at Euro36.5 million. Over this period the growth in net asset
value per share was 60.2 per cent. ICAM designed and manages the Impax Capital
ET-50 Index, an index of the 50 largest pure play environmental technology
stocks from the top 200 such companies whose shares are publicly quoted. The
Index is available through Bloomberg, Primark Datastream, Ecowin and on
Impax's website www.impax.co.uk. It is also published monthly in the Financial
Times Renewable Energy Report and Environmental Finance magazine.

ICAM has been appointed as investment advisor to the manager of a listed fund
due to be launched in the Netherlands in July 2001.

The private equity work relates to a ten year contract with the International
Finance Corporation ('IFC'), the private sector lending arm of the World Bank,
to manage a US$25 million facility to invest in companies in India, Kenya and
Morocco generating solar electricity. ICAM is responsible for identifying
potential investee companies, carrying out due diligence and negotiating
investments on behalf of the IFC and managing the investments. The contract
continues until 2008. Approximately US$15.3 million has been approved or
recommended for approval for investment by the fund.

ICAM receives advisory fees and performance fees for its work. The division
employs three professionals, led by Ian Simm, who worked as a project manager
for McKinsey & Co. in the Netherlands before he joined Impax in 1996.

ICFA

ICFA provides project finance advisory, corporate finance advisory and
consultancy services relating to EIT projects for a variety of clients. In its
early years ICFA's work included project finance services for developers of
electricity generation from non fossil fuel sources, for instance under the UK
government's non-fossil fuel obligation (NFFO) programme. These included the
arrangement and structuring of debt and equity for alternative energy projects
such as £69 million raised for a 38.5 megawatt poultry litter fired power
station in the UK and £32.4 million project for a waste recycling and energy
from waste facility in Neath Port Talbot to handle 135,000 tonnes per annum.
ICFA corporate finance services have included structuring and raising several
rounds of equity finance for a US technology company. ICFA also provides
consultancy services to government agencies and larger corporate and financial
companies. These have included a number of assignments for the European
Commission's Altener and Thermie 'B' programmes, such as the development and
implementation of a Bioenergy Fund and consultancy work for the UK Department
of Trade and Industry/ETSU. ICFA also advises small and medium sized
enterprises and multi-national companies.

ICFA employs seven professionals with backgrounds ranging through project
finance, civil engineering, energy projects, waste management and waste to
energy projects. The team is led by Melville Haggard who worked for Bank
Tokyo-Mitsubishi in London as Head of Special Finance for ten years prior to
joining Impax in 1999.

ICFA's income comprises fees for assignments on both a time and a success
basis together with retainers. In certain cases ICFA also receives an equity
interest in the entity being created or funded. Most of ICFA's work is
undertaken within the United Kingdom and the rest of Europe.

Financial record of Impax

In the eight months ended 28 February 2001 Impax recorded a loss before tax of
£363,000 from turnover of £609,000. In the year ended 30 June 2000 a loss
before tax of £414,000 was recorded on turnover of £1,716,000. At 28 February
2001 Impax's net assets were £148,000.

Reasons for the Acquisition

At the time of the fund raising last October the board indicated its intention
to consider acquisitions to create growth in shareholder value. In the seven
years since its establishment Impax has become a well-respected business in
the EIT sector, although it has not been able to achieve consistent
profitability in its current form. The Board considers that Impax offers a
good platform for development of a significant fund management and corporate
finance business with a reputation as a leading expert in the EIT sector.

The Board believes that increases in conventional energy prices and increased
regulation to mitigate environmental problems are creating new and significant
business opportunities. At the same time the international trend towards
government liberalisation of markets is passing the initiative in the EIT
sector from governmental institutions to commercial companies.

The Board consider that these factors create a favourable background for the
development of Impax's businesses. ICFA is well placed to win mandates arising
from the significant activity which is anticipated as a result of renewable
energy requirements in both the United Kingdom and the rest of Europe and from
merger and acquisition activity in the EIT sector. Large corporates, including
oil companies, are already entering this market accelerating the consolidation
already underway involving listed and unlisted companies. ICAM has established
its reputation and position in both the private equity and listed markets and
the increasing trend towards environmental funds and socially responsible
investment ('SRI') funds provides a good platform for growth.

Strategy

Following Completion the board intends to apply for IMRO regulation of ICAM as
a separate subsidiary which will take on the existing investment advisory
business in order to develop that activity into a substantial fund management
business specialising in the EIT sector. The Board expects to launch at least
one new investment fund managed by ICAM in the first twelve months following
Completion. The Board intends to develop the ICFA business to become a premium
supplier of corporate and financial advisory services to the EIT sector These
initiatives should substantially increase Impax's revenues with only modest
increases in the fixed cost base.

Given the significant potential of Impax's business and the opportunity to
create shareholder value the Company intends to utilise the value arising from
its oil assets to develop the new activity. Accordingly, one or more of the
oil properties may be sold in due course.

Terms of the Acquisition

Under the terms of the acquisition agreement the Company has agreed to acquire
all of the issued share capital of Impax for the issue of 6,735,764 new
Ordinary Shares in Kern River.

Based on the mid market price of an Ordinary Share at the close of business on
18 May 2001 (the latest practicable date prior to the printing of this
document) of 32p the Acquisition values Impax at £2.2 million. The
consideration shares will represent 19 per cent. of the share capital of the
Company following completion. The acquisition agreement is conditional, inter
alia, on approval by shareholders of the Acquisition and completion of the
Placing and Open Offer.

Marshall Securities Limited ('Marshall') has conditionally agreed to place
703,125 of the consideration shares at 32p per share.

Board changes

Melville Haggard and Ian Simm, respectively head of the corporate finance
division and head of the investment advisory division at Impax will join the
Board on completion of the Acquisition, reporting directly to me. In addition,
Geirr Frostmann, a non-executive director of Impax, has agreed to join the
Board as a non-executive director on completion. Geirr Frostmann will serve on
the remuneration committee.

Current trading and prospects

The Company has today announced its interim results for the six months ended
31 March 2001. The development programme for the Starks Field is progressing
and the Group is undertaking the first stage of a project to exploit the
recently identified natural gas at the field. The board is seeking ways to
exploit the potential of the Group's interests at Nukern.

Since 28 February 2001 Impax has continued to develop its market position. The
trading results have resulted in a requirement for working capital which has
been funded by a loan from Kern River of £175,000 and loans from Impax
shareholders of £150,000. The loan from Kern River is repayable within 14 days
of Completion or, if earlier, on 1 July 2001. Part of the proceeds of the
Placing and Open Offer will be applied to repay the shareholder loans. In
addition, Kern River intends to provide further capital to Impax after
completion to ensure that it meets its regulatory requirements for adequate
capital. ICAM was recently appointed to as investment adviser to a listed fund
in the Netherlands which is due to launch in July 2001 and a number of other
projects are being developed. ICFA has recently advised a large multi-national
on a major renewable energy initiative which is expected to lead to further
projects.

Details of the Placing and Open Offer

Marshall, as agent for the Company, has conditionally placed 5,750,000 new
Ordinary Shares ('the Placing Shares') at 32p per share subject to the right
of shareholders other than certain overseas shareholders to apply for the
Placing Shares pursuant to the Open Offer.

Qualifying shareholders are being invited to apply under the Open Offer for
Placing Shares at 32p per share (payable in full on application and free of
all expenses) on the following basis:

        1 Placing Share for every 4 Existing Ordinary Shares

held at the close of business on 9 May 2001 and so in proportion for any other
number of Existing Ordinary Shares then held. Fractional entitlements to
Placing Shares have been rounded down to the nearest whole number and are not
being offered to qualifying shareholders but have been aggregated and are
being placed pursuant to the Placing for the benefit of the Company.
Qualifying shareholders may apply for any number of Placing Shares up to their
maximum entitlement as set out in their application form. The application form
is personal to the Shareholder named therein and cannot be traded, split,
assigned or transferred except to satisfy bona fide market claims.

Certain shareholders of the Company, namely Swan Corporation Limited, The AIM
Trust plc and certain Directors (Colin Weaver, Neville Brown and myself) have
given irrevocable undertakings to take up in full our respective entitlements
under the Open Offer, amounting to 2,344,701 Placing Shares in aggregate.
Certain other shareholders, namely Ultrasis plc, Caspen Oil, Inc. and Anthony
Carroll, a Director of the Company, have given irrevocable undertakings not to
apply for the Placing Shares to which they would otherwise be entitled under
the Open Offer, amounting in aggregate to 1,227,499 Placing Shares. Under the
Placing Marshall has conditionally placed firm the 3,572,200 Placing Shares
which are the subject of these irrevocable undertakings. Shares taken up under
the Open Offer in accordance with such undertakings will be set against any
obligations and entitlements of those giving the undertakings to take up Firm
Placed Shares under the Placing. In addition to agreeing to take up their
entitlements under the Open Offer, Colin Weaver, Neville Brown and Stuart
Bickerstaff, together with Garry Butterfield, Melville Haggard and Ian Simm
have agreed to acquire up to 1,306,251 Placing Shares in the Placing.

The Placing and Open Offer are conditional on the Placing and Open Offer
Agreement becoming unconditional in all respects and not having been
terminated and on Admission occurring on 19 June 2001 or by such later date,
not being later than 30 June 2001, as the Company and Marshall may agree.

It is expected that dealings in the New Ordinary Shares on AIM will commence
on 19 June 2001. The New Ordinary Shares will, when issued and fully paid,
rank pari passu with the Existing Ordinary Shares and will rank for all
dividends and other distributions declared, made or paid after the date of
issue of the New Ordinary Shares.

Extraordinary General Meeting

An Extraordinary General Meeting of the Company is being convened for 18 June
2001 at which resolutions will be proposed to approve the Acquisition, to
change the name of the Company, to increase the authorised share capital of
the Company and give the Directors authorities necessary to implement the
Acquisition and the Placing and Open Offer, to disapply pre-emption rights in
accordance with normal practice, to amend the Articles of Association and to
approve the adoption of new share option schemes.

Expected timetable

Record date                                                          9 May 2001

Latest time and date for splitting            3.00 p.m.             8 June 2001
(to satisfy bona fide market claims only)

Latest time and date for acceptance and       3.00 p.m.            12 June 2001
payment in full

Extraordinary General Meeting                10.30 a.m.            18 June 2001

Dealings in new Ordinary Shares commence on 
AIM                                                                19 June 2001

Completion of the Acquisition                                      19 June 2001


Further details of the Acquisition and the Placing and Open Offer, including
the procedures for application and payment will be set out in a letter from
Marshall contained in a prospectus which is being sent to Shareholders and in
the Application Form which will accompany the prospectus.

Copies of the prospectus are available free of charge from the offices of
Hobson Audley, 7 Pilgrim Street, London EC4V 6LB until 19 July 2001.