Acquisition

Stanelco PLC
06 June 2005

6 June 2005




               Stanelco plc acquire BIOTEC Group For $25 million



Stanelco plc ('Stanelco'), the RF (radio frequency) applications group, is
pleased to announce that it has entered into an agreement, subject to
shareholder approval, for the acquisition of the entire issued share capital of
Biotec Holding GMBH and subsidiaries (the 'Biotec Group' or 'Biotec') from EKI
(E. Khashoggi Industries LLC) for a total of US$25 million payable over a 24
month period.



Of the total consideration, US$1.23 million has already been paid in cash to EKI
as a non-refundable deposit. A further US$11.27 million is due to be paid on
completion of the acquisition which will be satisfied in cash.  A further
US$6.25 million in cash is due to be paid in 12 months and a final payment of
US$6.25 million in cash is due 12 months thereafter. The deferred elements are
not subject to performance criteria.  Stanelco is currently considering a number
of options for funding the acquisition, which may include the entering into
arrangements for debt facilities and/or a placing of ordinary shares for cash.



Biotec is one of the world's leading exponents of starch technology and has a
considerable intellectual property portfolio, including many patents, extending
to uses in pharmaceutical and edible applications. It also has ranges of
products that are ready for commercialisation within the food and beverage
industries.



Biotec's proprietary pharmaceutical grade film is suited for applications where
it replaces conventional polymers such as gelatine. Depending upon the
specification the film has a cost base of between US$5 to US$8 per kilogramme,
offering customers significant cost savings when compared to gelatine and other
materials which it may replace. In addition, being a mono material, waste
generated during manufacture can often be immediately re-used.



The starch products from Biotec are currently used by Stanelco in the following
projects: Starpol starch blend films used in CradleWrap packaging; sheet for
making food trays; starch film for air pillows; starch pellets for food trays;
and starch film for edible packaging. Biotec will also be a supplier of film to
the InGel capsule project.



Natural starch is one of the lowest cost biodegradable, compostable,
replenishable materials and Biotec has a unique portfolio of products including
Thermoplastic starch ('TPS'), which enables the use of environmentally
responsible material in place of petro-plastics. TPS is also free from
genetically modified starch. Stanelco's RF Sealing and Welding technology can be
used to process starch polymers without the degradation or cross-linking caused
by other methods such as thermal processing which can render the material
unsuitable for food and pharmaceutical applications.



Biotec's managing director Harald Schmidt, who is one of the world's leading
experts on starch polymers, will be taking a three year service contract with
Stanelco and will remain as managing director of Biotec. His experience and
skill base will add significantly to the Stanelco businesses.



At the last accounting reference date 31 December 2004 Biotec's Net Assets were
EUR 6.1m and in the last financial year ended 31 December 2004 Biotec made a net
loss of EUR1.3m. This loss was before charging interest of EUR 1m on loans from
Biotec's parent which will no longer be a relevant item after the acquisition.



A circular will be posted to shareholders in due course seeking, inter alia,
approval for the transaction. The Age of Reason Foundation, representing 24.55%
of the issued share capital has agreed to give irrevocable undertakings in
support of the transaction.



Ian Balchin, CEO of Stanelco said:

'This exciting acquisition is the next piece in the jigsaw that will enable
Stanelco to become one of the world's leading exponents of viable, alternative,
environmentally responsible packaging methods. It has become apparent that with
the rise in oil prices, the cost of petroleum based packaging materials is
inevitably increasing faster than our alternatives - making them increasingly
attractive. In particular APET/PE sheet for making food trays is currently in
the order of £1.70 per kilo and the target price of the Biotec material will be
in the region of £1.80 per kilo. There are also a large number of environmental
benefits that are driving the shift from petro-plastics to sustainable
alternatives. I believe the acquisition positions the Stanelco Group to take
advantage of this rapidly expanding market place and specifically it will enable
Stanelco to offer its product ranges that contain starch product at up to 20%
less than is currently available. This acquisition also creates a further
barrier to entry for potential competition in the GREENSEAL project as we will
be able to provide a turnkey, ecologically, environmentally responsible solution
to MAP food packaging requirements.



Scott Houston of EKI said:

'We are extremely impressed with the speed and the professionalism in which
Stanelco and their advisors worked during the week to close the transaction.
Stanelco had previously performed their due diligence and an offer to purchase
was submitted only on Monday.



We are delighted with the outcome and as Biotec will remain a key supplier to
its former sister company, Earthshell Inc, we wish both parties enormous success
in the future in this enormously exciting, emerging market.'



Ian Balchin continued, 'Biotec dovetails with our RF technology, our
water-soluble and biodegradable technology at Adept Polymers and the packaging
design and development skills of Aquasol, all subsidiaries of Stanelco, and
gives greater access to world markets for the whole Group. We are particularly
relishing the prospect of unlocking Biotec's potential in conjunction with
leading supermarkets to supply mass-markets.



I am also pleased to report that the second trial for GREENSEAL with ASDA has
moved into the retail phase, having passed the stability (shelf-life) test with
flying colours. The third and final trial is commencing this week. As announced
on 23 May, Stanelco has taken its first formal commercial order from a dedicated
ASDA supplier and is preparing itself for negotiations for further orders.'





                                      Ends



For further information please contact:

Ian Balchin, Chief Executive

Stanelco PLC

Tel: [phone]



Jonathon Brill/Billy Clegg

Financial Dynamics

Tel: [phone]



Notes to Editors:





About Stanelco plc



The Stanelco Group of companies (the Group) has brought together expertise in
radio frequency (RF) technology, RF applications and biodegradable material
sciences to create a revolutionary range of packaging technologies.



Stanelco's philosophy is that new products and processes must offer solutions
and applications which:



  • give higher added value,
  • are greener, more environmentally sustainable than those they replace
  • and have protectable intellectual property rights.



Stanelco will develop the products and processes to a demonstration stage and
then work with partners in order to reach the markets; and under these
circumstances Stanelco will usually seek to license its technology. Stanelco
invests considerable time and resources in ensuring its technologies are
protected via layers of patents wherever possible.



In this way Stanelco believes it can minimise commercial risk and preserve the
highest value for shareholders.



The products offering the prospect of near term revenue generation are being
given priority over the Group's resources.



Stanelco was founded in 1953 and is a world leader in the development of radio
frequency technologies for processing polymers for edible and packaging
applications and the design and manufacture of optical fibre technology,
induction heating and dielectric welding equipment.  Stanelco's Current
developments include GREENSEAL Food tray lidding technology, STARPOL (starch /
pva blended material), FrogPack high impact low cost packaging format,
CradleWrap range of  biodegradable air cushion packaging, SolutapeTM 100%
watersoluble films and adhesives, Biodegradable Airbag (void fill) packaging,
water-soluble detergent capsules, edible sachets and waste packing.


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