Issue of Equity

Brooke Industrial Holdings PLC
8 August 2000



BROOKE INDUSTRIAL HOLDINGS PLC

PROPOSED OPEN OFFER OF UP TO 2,541,502 NEW ORDINARY SHARES 
AT 54 PENCE PER SHARE 

Summary of key points

- 1 for 3 Open Offer to Qualifying shareholders, 
partially underwritten by Jourdan plc, at a price of 
54 pence per share.
- The Underwriter's commitment to be limited so that 
Jourdan's plc's resultant shareholding is less than 30 
per cent. of the Company's issued share capital 
following Admission.
- The Open Offer to raise between £0.6 million and £1.2 
million for the Group, net of expenses of the issue.
- The net proceeds of the issue to be applied to 
reducing the Group's gearing and increasing its 
working capital.
- David Abell, the executive chairman of Jourdan plc, to 
join the Brooke Board as a non-executive Director 
following Admission.

Chairman, John Dashper, said today:-

'The Board welcome the support of Jourdan plc for the next 
step in Brooke's strategy of developing worldwide 
distribution of both its manufactured and factored 
consumable tools and components.  We are also delighted to 
welcome David Abell to the Board and look forward to 
benefiting from his considerable knowledge and support.'

Introduction

The Company announces an Open Offer to Qualifying 
Shareholders to raise between £761,671 and £1,372,411 
before expenses for the Group to broaden its capital base 
and support the increased level of trading by the Group 
following the recent acquisition of Somta Tools. A circular 
to Shareholders comprising a prospectus of the Company is 
expected to be posted to Shareholders today ('the 
Document'). The principal purpose of the Document is to 
explain the background to and terms of the Open Offer and 
to seek the approval of Shareholders to the creation and 
issue of the New Ordinary Shares to be issued under the 
terms of the Open Offer.

The Company also announced on 16 June 2000 the unaudited, 
consolidated results of the Group for the six months ended 
31 March 2000.  The full text of this announcement is being 
circulated to Shareholders by means of the Document.
Background to the Open Offer.

For the past two years the Board has been pursuing a number 
of acquisition, investment and reorganisation initiatives, 
with the objective of enhancing shareholder value in the 
medium term. These initiatives have been undertaken against 
a background of continuing strength of Sterling against 
other currencies.

In June 1999 the Group acquired Somta Tools and commenced 
the planned restructuring of both distribution and 
manufacturing capacity within a cutting tools division 
which now represents approximately 51 per cent of Group 
activity.  Closure of two UK production units and 
relocation to our low cost manufacturing base in South 
Africa facilitated the consolidation of the UK cutting tool 
production onto two existing sites focusing on higher added 
value product.  Combining distribution has established a 
worldwide network operating from purpose designed units in 
Rotherham, Chicago and Johannesburg.

For the period ended 31 March 2000, the first complete six-
month period during which Somta Tools has been a member of 
the Brooke Group, sales have increased by approximately 37 
per cent. over turnover for the corresponding period of 
1998/99, as shown by the Group's unaudited statement of 
interim results set out in Part 2 of the Document.

On 21 April 1999, the Group received an opportunistic 
hostile bid from Howle Holdings Plc who offered 
Shareholders 3 ordinary shares in Howle Holdings Plc for 
each Ordinary Share in the Company. This offer, increased 
on 27 May 1999 to 7 ordinary shares in Howle Holdings Plc 
for every 2 Ordinary Shares in the Company, was rejected by 
Shareholders.  Defending this unsolicited bid resulted in 
£343,000 of unforeseen costs being incurred by the Group.

During the same period, on 14 May 1999, the Group exercised 
its option to acquire a freehold property, occupied by 
Associated Perforators and Weavers Limited, at Warrington.  
This acquisition was funded by a bank loan.  The exercise 
price of the option had been in dispute and the final 
determination by an independent expert resulted in a higher 
cost to the Group than had been anticipated.

The Group's carbide division has seen extensive 
reorganisation and capital investment and the metal parts 
division has undergone restructuring of its distribution 
channels and the launch of its Perfast 'one stop shop' for 
fasteners and specialist products to the construction 
subcontracting industry.

Inevitably, the extensive rationalisation and restructuring 
of the Group both before and following the acquisition of 
Somta Tools has resulted in one-off costs being incurred in 
order to unlock operational synergies and potential cost-
savings.

All of these factors have led to a higher Group working 
capital requirement, which has been financed by debt to 
date, and an increased level of gearing.  The Board has 
reduced this gearing level recently by a programme of asset 
sales, including the disposal of properties in Sheffield 
and London, and is looking to continue this programme with 
the proposed sale of a property in Bradford.

Earlier this year, the Board entered into discussions with 
Jourdan plc, already a substantial Shareholder, on a 
proposal to accelerate the de-gearing programme and expand 
the Group's working capital by means of an equity fund-
raising.  The Board considered that in the current economic 
climate there might be opportunities to further increase 
the Group's market share by targeted capital or marketing 
programmes or by means of bolt-on acquisitions.  The 
outcome of these discussions was an agreement to make the 
Open Offer, with the support of Jourdan plc.

Details of the Open Offer

The Open Offer provides Qualifying Shareholders with the 
opportunity to apply for New Ordinary Shares at the Issue 
Price and on the basis described below.  

Qualifying Shareholders may apply for New Ordinary Shares 
on the following basis:

1 New Ordinary Share for every 3 Existing Ordinary Shares

registered in their names at the Record Date and so in 
proportion for any greater number of shares so registered.  
Entitlements to apply for New Ordinary Shares will be 
rounded down to the nearest whole number.  Fractions of New 
Ordinary Shares will be disregarded in the calculation of 
the Qualifying Shareholders' entitlements and will not be 
allotted.   Applications, together with payment in full, 
must be received by 3.00 p.m. 1 September 2000.

The Open Offer is conditional, inter alia, upon the passing 
of the Resolution to be proposed at the Extraordinary 
General Meeting set out at the end of this document and 
upon Admission becoming effective by not later than 6 
September, 2000 (or such later date, not later than 13 
September 2000, as the Underwriter and Stream may agree).  
The New Ordinary Shares to be issued in connection with the 
Open Offer will, when issued, rank pari passu in all 
respects with the Existing Ordinary Shares and rank for all 
future dividends declared on the Ordinary Shares.

The Open Offer has been underwritten by Jourdan plc only to 
the extent that the Underwriter's resultant shareholding 
following Admission is less than 30 per cent. of the issued 
share capital of the Company.  If the Underwriter were to 
acquire a shareholding above this level it would be 
required under the City Code on Take-overs and Mergers to 
make a mandatory offer for the issued share capital of the 
Company which it did not already own.  The Underwriter has 
previously stated that its shareholding in Stream is as an 
investment only and that it has no current intention of 
making a bid for the Company.  Commission of 1.5 per cent. 
is payable to the Underwriter in respect of the maximum 
number of New Ordinary Shares, other than the Underwriter's 
pro rata entitlement of 433,333 New Ordinary Shares, it is 
required to subscribe for as a result of its underwriting 
commitment.  The Underwriter has irrevocably undertaken to 
vote in favour of the Resolution to be proposed at the EGM.

The Open Offer will raise net proceeds of between 
approximately £611,671 and £1,222,411, after expenses, half 
of the minimum net proceeds and three-quarters of any 
excess proceeds will be applied to the part repayment of 
one of the Group's bank loans and the balance will serve to 
increase the working capital available to the Group.  An 
increase in the Group's working capital will enable it to 
support an increased level of trading, following the recent 
acquisition of Somta Tools, to develop new areas of 
business and to finance the one-off costs of the 
rationalisation programme that have already been incurred.  
The net proceeds of the Open Offer will also serve to 
immediately reduce the Group's overall level of gearing.

Set out in Part 4 of this document is a pro forma statement 
of the net assets of the Group which has been drawn up to 
show the impact of the Open Offer as if it had occurred on 
31 March 2000.  The pro forma statement of net assets has 
been prepared for illustrative purposes only and because of 
its nature may not give a true picture of the Group's 
financial position following the Open Offer.  Following 
completion of the Open Offer and assuming that the maximum 
amount is raised, the Group's financial position will be 
improved with pro forma gearing of approximately 130 per 
cent. compared with gearing at 31 March 2000 of 
approximately 180 per cent.

Full details of the Open Offer are contained in Part 3 of 
the Document and on the enclosed Application Form which is 
being posted with it.

Current Trading and Prospects

The unaudited results of the Group for the six months ended 
31 March 2000 were announced on 16 June 2000 and show a 
loss before taxation of £320,000  (1999: £583,000 loss) on 
turnover of £16,660,000  (1999: £12,162,000).  As 
anticipated in the Annual Report last year, the Group is 
now beginning to realise the benefits of two years of 
continuous reorganisation, substantial investment in new 
plant and the acquisition of Somta Tools.  It is pleasing 
to report that the hard work of management and staff is now 
translating into improved trading performance, confirming 
the confidence of Shareholders, and the Group's bankers and 
advisers.  The Group is now positioned to take advantage of 
identified opportunities in world markets, and a programme 
of disposal of surplus assets is under way.

The full text of the announcement of results for the six 
months to 31 March 2000, together with the Board's view of 
the current trading and prospects for the Group, is 
included in part 3 of the Document.

Proposed Director

It is proposed that following the completion of the Open 
Offer, David Abell, (aged 57) the Executive Chairman of the 
Underwriter, will be appointed to the Board.  Under the 
provisions of the Underwriting Agreement, Mr Abell has 
appointed Robert Ridley Morris, the Managing Director of 
the Underwriter to act as his alternate when he is absent.
Mr Abell has nearly 40 years' experience in manufacturing 
and engineering.  He spent 13 years at the British Leyland 
group, rising to the position of Chairman and Chief 
Executive Officer of Leyland Vehicle Limited, before 
building Suter plc into an international engineering and 
manufacturing group as Chairman and Chief Executive 
Officer.  In 1997 he became Executive Chairman of Jourdan 
plc.  Mr Abell also breeds and races horses and is a 
director of Leicester Football Club plc.

Extraordinary General Meeting

Set out at the end of the Document is a notice convening 
the Extraordinary General Meeting of Brooke to be held at 
10.30am on 4 September 2000 at the offices of DLA, Fountain 
Precinct, Balm Green, Sheffield, S1 1RZ at which the 
Resolution to approve the creation and allotment of New 
Ordinary Shares pursuant to the Open Offer will be 
proposed.

Action to be taken

Shareholders will find enclosed with the Document a Form of 
Proxy for use at the EGM.  Whether or not they intend to be 
present at the Extraordinary General Meeting, they are 
requested to complete and return the enclosed form of proxy 
in accordance with the instructions printed thereon so as 
to arrive at the Company's registrars, Capita IRG Plc, 
Balfour House, 390-398 High Road, llford, Essex IG1 1BR, as 
soon as possible and in any event not later than 10.30am on 
2 September 2000.

Completion and return of the Form of Proxy will not prevent 
Shareholders from attending the Extraordinary General 
Meeting and voting in person should they wish to do so.

Qualifying Shareholders wishing to apply for New Ordinary 
Shares under the Open Offer should complete the Application 
Form in accordance with the instructions set out therein 
and in Part 2 of the Document and return it with the 
appropriate remittance by post or by hand to Capita IRG Plc 
so as to arrive as soon as possible, but in any event so as 
to be received not later than 3.00 pm on 1 September 2000.

Qualifying Shareholders should note that if they do not 
apply for their entitlements to New Ordinary Shares under 
the Open Offer, those New Ordinary Shares will not be sold 
for their benefit but will be aggregated and taken up by 
the Underwriter for the benefit of the Company, subject to 
the limit referred to above.

All of the Directors, except the Chairman, intend to take 
up their pro rata entitlements under the Open Offer in 
full.  Mr Dashper intends to take up 18,518 New Ordinary 
Shares from his pro rata entitlement.

Overseas Shareholders

The attention of Overseas Shareholders is drawn to Part 2 
of the Document.

Taxation

The attention of Shareholders wishing to apply for New 
Ordinary Shares is drawn to the tax information given in 
Part 2 of this document.

Further information

Shareholders attention is drawn to the further information 
set out in Parts 2 to 5 of the Document.

Recommendation

The Directors, who have been so advised by Brewin Dolphin 
Securities, consider that the Open Offer is in the best 
interests of the Company and the Shareholders as a whole.  
Accordingly your Directors unanimously recommend you to 
vote in favour of the Resolution to be proposed at the 
Extraordinary General Meeting, as they have irrevocably 
undertaken to do in respect of their own beneficial 
holdings amounting to in aggregate 195,837 Existing 
Ordinary Shares representing approximately 2.6 per cent. of 
the current issued share capital of the Company.   In 
providing its financial advice to the Directors, Brewin 
Dolphin Securities has taken into account the Directors' 
commercial assessment of the Open Offer.

For further information contact:

John Dashper        Brooke Industrial Holdings plc 
(0114 249 4222)

Paul Gill              Brooke Industrial Holdings plc 
(0114 249 4222)

Richard Evans        Brewin Dolphin Securities Ltd
(0161 839 4222)

ISSUE STATISTICS

Number of New Ordinary Shares being issued:
  Minimum - 1,410,502
  Maximum - 2,541,502

Number of Ordinary Shares in issue following 
Admission:
  Minimum - 9,035,008
  Maximum - 10,166,008

Issue Price - 54p

Market capitalisation of the Group at the Issue 
price after Admission:
  Minimum - £4,878,904 
  Maximum - £5,489,644

TIMETABLE

Record Date for the Open Offer
  1 August 2000

Latest time and date for splitting 
Application Forms
  3.00pm on 30 August 2000

Latest time and date for receipt of 
completed Application Forms and payment 
in full under the Open Offer
  3.00pm on 1 September 2000

Latest time and date for receipt of 
Forms of Proxy
  10.30am on 2 September 2000

Extraordinary General Meeting
  10.30am on 4 September 2000

Dealings expected to commence in New 
Ordinary Shares
  8.00am on 6 September 2000

CREST accounts credited with New 
Ordinary Shares
  8.00am on 6 September 2000

Despatch of share certificates for New 
Ordinary Shares by no later than
  13 September 2000

Application Forms are personalised to Shareholders and may not be 
transferred except to satisfy bona fide market claims.

DEFINITIONS

The following definitions apply throughout the Document, 
unless the context requires otherwise:

'Act'
the Companies Act 1985 (as amended)

'Admission'
admission of the New Ordinary Shares to 
the Official List of the UK Listing 
Authority and to trading on the London 
Stock Exchange's market for listed 
securities

'Application Form'
the application form enclosed with this 
document in connection with the Open 
Offer

'Board' or 'Directors'
the directors of Brooke at the date of 
this document whose names are set out 
on page 3 of the Document

'Brewin Dolphin Securities'
Brewin Dolphin Securities Ltd

'Brooke' or 'Company'
Brooke Industrial Holdings plc

'Brooke Group' or 'Group'
Brooke and its subsidiary undertakings 
as at the date of this document or any 
of them as the context requires

'Disclosure Date'
as at the close of business on 7 August 
2000, the last dealing day and latest 
practicable date prior to the 
publication of this document

'Existing Ordinary Shares'
the 7,624,506 existing Ordinary Shares 
of 50p each in the issued share capital 
of Stream at the date of this document 
which have already been admitted to the 
Official List and to trading on the 
London Stock Exchange's market for 
listed securities

'Extraordinary General Meeting' or 'EGM'
the extraordinary general meeting of 
the Company convened for 10.30am on 4 
September 2000, notice of which is set 
out at the end of the Document, or any 
adjournment of such meeting

'Form of Proxy'
the form of proxy for use by 
Shareholders in connection with the EGM

'Issue Price'
54 pence per New Ordinary Share, 
representing a premium of 4pence per 
Ordinary Share over nominal value

'London Stock Exchange'
London Stock Exchange  plc

'New Ordinary Shares'
up to 2,541,502 new Ordinary Shares to 
be made available to Qualifying 
Shareholders in the Open Offer

'Official List'
The Official List of the UK Listing 
Authority

'Open Offer'
the conditional invitation by the 
Company to Qualifying Shareholders to 
apply for the New Ordinary Shares on 
the terms and conditions set out in 
this document and on the Application 
Form

'Ordinary Shares'
Ordinary Shares of 50p each in the 
Company

'Overseas Shareholders'
Shareholders who have registered 
addresses outside the UK

'Proposed Director'
John David Abell, the Chairman of the 
Underwriter

'Qualifying Shareholders'
Shareholders on the register of members 
of the Company on the Record Date, 
other than certain Overseas 
Shareholders

'Record Date'
the record date for the Open Offer, 
being the close of business on 1 August 
2000

'Resolution'
the special resolution to be proposed 
at the EGM

'Shareholders'
holders of Existing Ordinary Shares

'Share Option Schemes'
the Brooke Industrial Holdings plc 1997 
Share Option Scheme, the Brooke 
Industrial Holdings plc 1997 Savings-
Related Share Option Scheme and the 
Brooke Tool Engineering (Holdings) plc 
1986 Executive Share Option Scheme

'Somta Tools'
Somta Tools Pty Limited

'UK' or 'United Kingdom'
United Kingdom of Great Britain and 
Northern Ireland

'UK Listing Authority'
The Financial Services Authority acting 
in its capacity as the competent 
authority for the purposes of Part VI 
of the Financial Services Act 1986 
including, where the context so 
permits, any committee, employee, 
officer or servant to whom any function 
of the UK Listing Authority may for the 
time being be delegated

'Underwriter'
Jourdan plc, whose registered office is 
at North Way, Walworth Estate, Andover, 
Hampshire, SP10 5LX

'Underwriting Agreement'
the conditional agreement dated 8 
August 2000 between (1) the Underwriter 
(2) the Company and (3) the Proposed 
Director relating to the Open Offer 
(details of which are set out in 
paragraph 8 of Part 5 of the Document)

'United States'
the United States of America, its 
territories and possessions and any 
state of the United Sates of America 
and the District of Columbia  and all 
other areas subject to its jurisdiction