Miscellaneous

Issue of C Shares


IMPAX ENVIRONMENTAL MARKETS PLC - ISSUE OF C SHARES


Introduction
On 12 September 2005  the Company announced  that the Directors  were
considering proposals for  a further  issue of  Ordinary Shares  with
Warrants. Proposals have been announced today for a Placing and Offer
for Subscription of C Shares which will convert into Ordinary  Shares
to raise up to £80 million  before expenses. Warrants will be  issued
on the basis of one Warrant for every five Ordinary Shares  resulting
from Conversion. Holders of existing Ordinary Shares on the  Register
at the close of business on the business day prior to the  Conversion
Date will also be issued, at no cost, with one Warrant for every five
existing Ordinary  Shares then  held. The  Placing and  Offer is  not
being underwritten  and will  not  proceed unless  subscriptions  are
received in aggregate for at least £25 million.

The Proposals  also  involve changes  to  the Company's  articles  of
association in  relation  to the  continuation  of the  Company.  The
Company has convened an Extraordinary General Meeting, to be held  on
14 November 2005, at which  Shareholders' approval for the  Proposals
will be sought.

Background
The Company  is  an  investment  trust  whose  Ordinary  Shares  were
admitted to  the Official  List on  22 February  2002. The  Company's
objective is to enable investors to benefit from rapid and  sustained
growth in the markets for cleaner or more efficient delivery of basic
services  of   energy,  water   and  waste.   Investments  are   made
predominantly in quoted companies  which provide, utilise,  implement
or advise  upon technology-based  systems,  products or  services  in
Environmental Markets, particularly those  of alternative energy  and
energy efficiency, water treatment  and pollution control, and  waste
technology and resource management. The Company's investment  manager
is Impax Asset Management Limited.

As at 18 October 2005, the Company had unaudited net assets of  £44.4
million.  The  Company's  Net  Asset  Value  per  Share   (unaudited)
performance over various  periods to 18  October 2005, compared  with
those of the FTSE All-Share and MSCI World indices, was as follows:


                       % return    % return    % return    % return
                         since       since       since       since
                      31 December 31 December 31 December 22 February
                         2002        2003        2004        2002*

NAV     per     Share    63.2        33.9        15.7        (9.7)
(unaudited)

FTSE All-Share Index     33.6        17.6         9.3         4.2

MSCI   World    Index    36.3        15.8        10.1         1.3
(sterling adjusted)


* The Company was listed on 22 February 2002
Source: Thomson Datastream

As at 18 October 2005, the Ordinary Shares were trading at a 3.6  per
cent. premium to NAV per  Share (unaudited). The average discount  on
the Ordinary Shares to  NAV per Ordinary  Share (unaudited) over  the
twelve months to that date was 3.2 per cent.

The Proposals
The Board  believes that  there is  significant demand  for  Ordinary
Shares from investors who are unable to purchase sufficient shares in
the  secondary  market.  Consequently,   the  Board  is  taking   the
opportunity provided by this demand, the Company's strong performance
since March  2003 and  the premium  to  NAV per  Share at  which  the
Ordinary Shares are trading to expand the Company by making C  Shares
available to Qualifying Shareholders and new investors.

The Proposals involve:

-           a Placing and Offer for Subscription of C Shares to raise
up to £80 million before expenses;

-           an issue of Warrants on the Conversion Date to holders of
C Shares on the basis of  one Warrant for every five Ordinary  Shares
arising on Conversion;

-             an  issue of Warrants to  holders of existing  Ordinary
Shares on the Register at the  close of business on the business  day
prior to the Conversion Date  (other than certain Overseas  Investors
who are prevented by legal or regulatory requirements from  receiving
Warrants) on  the  basis  of  one Warrant  for  every  five  existing
Ordinary Shares then held; and

-              adoption of new  Articles to provide  for the C  Share
rights and restrictions attaching to the C Shares and changes to  the
continuation provisions of the Company.

Placing and Offer for Subscription
The Company is seeking to raise  up to £80 million, before  expenses,
through the  Placing and  Offer  for Subscription  of C  Shares.  The
Placing and Offer are not being  underwritten and, as a result,  will
not  proceed  unless  aggregate  subscriptions  are  received   which
represent a minimum  of £25 million.  Dresdner Kleinwort  Wasserstein
has agreed, as agent for the Company, to use reasonable endeavours to
procure placees for up  to 70 million  C Shares in  the Placing at  a
price of 100p per share. A further 10 million C Shares are being made
available to  Shareholders  and  new investors  (other  than  certain
Overseas Investors) through the Offer for Subscription at a price  of
100p per share.  In the event  that applications under  the Offer  in
excess of this  amount are  received, subscriptions  under the  Offer
will be scaled back, with  existing Shareholders (other than  certain
Overseas Investors) being  allocated C  Shares in  preference to  new
investors under the Offer. To the extent that less than 70 million  C
Shares are subscribed for in the Placing the surplus C Shares will be
available under  the Offer.  If less  than 10  million C  Shares  are
validly applied  for under  the Offer  the surplus  C Shares  may  be
placed pursuant to the Placing.

The Placing and Offer are conditional, inter alia, on the Placing and
Offer Agreement  becoming unconditional,  and not  being  terminated,
Admission of the C  Shares and the passing  of the resolutions to  be
put forward at the Extraordinary General Meeting.

The result of the Placing and Offer will be announced on the date  of
the Extraordinary General Meeting.

The Directors intend to apply the Net Proceeds in making  investments
in accordance with  the Company's investment  objective as  described
above and  subject  to applicable  investment  restrictions.  Pending
investment, the Net  Proceeds will  be invested  in short-term  money
market instruments (including gilts and treasury bills) and cash with
institutions (or wholly owned subsidiaries of institutions) which are
rated A1 (or  above) by  Standard &  Poor's or  an equivalent  rating
agency.


C Shares
The Placing and Offer will be of a new class of shares, C Shares,  at
an issue price of 100p per share. An issue of C Shares is designed to
overcome the potential disadvantages for existing Shareholders  which
could arise  out  of a  conventional  fixed price  issue  of  further
Ordinary Shares for cash. In particular:

-            the assets representing the Net Proceeds from the  issue
of the C Shares will be accounted for and managed as a distinct  pool
of assets  until  the Conversion  Date.  By accounting  for  the  Net
Proceeds separately, holders of existing Ordinary Shares will not  be
exposed to a portfolio containing a substantial amount of  uninvested
cash before the Calculation Date;

-           the Net Asset Value of the existing Ordinary Shares  will
not be diluted by  the expenses associated  with the Proposals  which
will be borne by the subscribers for C Shares; and

-              the basis upon  which the C  Shares will convert  into
Ordinary Shares is such that the  number of Ordinary Shares to  which
holders of C Shares  will become entitled  will reflect the  relative
investment  performance  and  value  of  the  pool  of  new   capital
attributable to the C Shares raised pursuant to the Placing and Offer
up to the Calculation Date as compared to the assets attributable  to
the Ordinary Shares in issue at that time. As a result, the Net Asset
Value attributable to the Ordinary Shares  then in issue will not  be
adversely affected by Conversion.

The Net Proceeds and the investments made with them will be accounted
for and managed as a separate pool of assets until the date on  which
at least  90 per  cent. of  the Net  Proceeds have  been invested  or
committed  to  be  invested  or,  if  earlier,  31  March  2006.  The
Conversion Ratio will then  be calculated and the  C Shares in  issue
will convert into a number of Ordinary Shares calculated by reference
to the net assets then attributable  to C Shares compared to the  net
assets at  the same  time  attributable to  Ordinary Shares  then  in
issue. Entitlements to Ordinary Shares arising on Conversion will  be
rounded down to the nearest whole number.

The Ordinary Shares arising on Conversion  of the C Shares will  rank
pari passu with the Ordinary Shares  then in issue and will have  the
rights set out in the Company's new Articles of Association.

Example of Conversion mechanism
The following example illustrates  the basis on  which the number  of
Ordinary Shares arising on Conversion will be calculated. The example
is not,  and is  not intended  to be,  a forecast  of the  number  of
Ordinary  Shares  which  will   arise  on  Conversion.  The   example
illustrates the number of  Ordinary Shares which  would arise on  the
Conversion of  1,000 C  Shares  held at  the Conversion  Date,  using
assumed Net Asset Values  attributable to the  C Shares and  Ordinary
Shares in issue at the Calculation Date. The assumed Net Asset  Value
attributable to an Ordinary Share is that at the close of business on
18 October 2005. The assumed Net  Asset Value attributable to each  C
Share is on the basis that there  are no returns on the Net  Proceeds
to the Calculation Date.

Example:

Number of C Shares subscribed  1000
Amount subscribed £1,000
Net Asset Value attributable to a C Share at the Calculation Date
£0.9825
Net Asset Value attributable to an Ordinary Share at the Calculation
Date £0.8876
Conversion Ratio 1.1069
Number of Ordinary Shares arising on Conversion 1,106

In this example,  221 Warrants  would also be  issued on  Conversion.
Fractions of Ordinary Shares arising on Conversion and Warrants  will
be aggregated and sold for the benefit of the Company.

Warrants
Investors who subscribe for C Shares will be issued with one  Warrant
for every five Ordinary Shares arising on Conversion at no additional
cost. In  addition,  holders  of  existing  Ordinary  Shares  on  the
Register at the close  of business on the  business day prior to  the
Conversion Date,  other  than  certain  Overseas  Investors  who  are
prevented  by  legal  or   regulatory  requirements  from   receiving
Warrants, will be issued,  at no cost, Warrants  on the basis of  one
Warrant for every five existing Ordinary Shares then held.

The Warrants will be exercisable on 15 June in each of the years 2006
to 2010 inclusive. The  exercise price of a  Warrant will be 105  per
cent. of the NAV per Ordinary Share (as certified by the auditors) on
the Calculation Date.

Benefits of the Proposals
The Directors believe that the Proposals have the following principal
benefits:

-           Shareholders will be able to subscribe for further shares
in the Company;

-            the  market capitalisation of the Company will  increase
significantly following the Placing and Offer and it is expected that
the liquidity of the Ordinary Shares will be enhanced through a wider
shareholder base;

-              the Placing and  Offer will increase  the size of  the
Company and enable it to spread  its fixed operating expenses over  a
larger number of Ordinary Shares;

-           the increased size of the Company will provide the  Board
with the opportunity to  utilise the share buyback  powers on a  more
proactive basis; and

-               the issue  of Warrants will  represent a  potentially
attractive option to  subscribe in  the future  for further  Ordinary
Shares.

Extraordinary General Meeting
An EGM of the Company  has been convened for  10 a.m. on 14  November
2005 in order to obtain Shareholders' approval for implementation  of
the Proposals.

Continuation of the Company
The existing  Articles  require  the Board  to  propose  an  ordinary
resolution at the Annual General Meeting of the Company to be held in
2007, and  at  every third  annual  general meeting  of  the  Company
convened thereafter, that the Company should continue in existence as
an investment trust  for a further  three year period.  In the  event
that the continuation resolution is not passed the Board is required,
within three months,  to put forward  proposals for consideration  by
Shareholders for the reorganisation, winding-up or reconstruction  of
the Company. In order to provide a reasonable investment horizon  for
those considering  investing in  the Company  under the  Placing  and
Offer, a special  resolution will  be proposed  at the  Extraordinary
General Meeting  to  adopt  new  Articles  in  substitution  for  the
existing Articles to  provide that continuation  resolutions will  be
proposed at the Annual General Meeting  of the Company to be held  in
2010 and every three years  thereafter. If this resolution is  passed
no continuation resolution  will be  proposed at  the Annual  General
Meeting of the Company to be held in 2007.

Increase in Share Capital, Authority  to Allot and Disapplication  of
Pre-emption Rights
The Company  proposes  to  increase the  Company's  authorised  share
capital by the creation of 80 million C Shares and to seek  authority
under section 80 of  the Companies Act  to allot relevant  securities
with  an  aggregate  nominal  amount  of  up  to  £97  million  which
represents 1,940 per cent. of the Company's ordinary share capital in
issue as at  20 October  2005. This authority  will only  be used  to
allot C Shares  and Warrants  in accordance with  the Proposals.  Any
unutilised part of this authority will lapse on 31 March 2006.

The Company will also seek  to disapply statutory pre-emption  rights
otherwise applicable  to the  C Shares  and Warrants  intended to  be
issued under the  Proposals. The  number of  C Shares  to which  this
disapplication will  apply is  80 million.  This disapplication  will
also lapse  in respect  of  any unutilised  part  of the  section  80
authority referred to above on 31 March 2006.

Authority to Repurchase Ordinary Shares
The Company  also proposes  to update  the authority  to make  market
purchases of the Company's Ordinary  Shares which was granted at  the
Annual General Meeting of the  Company on 4 May  2005. By means of  a
special resolution  the Company  will seek  Shareholder approval  for
repurchases of up to  19,487,000 Ordinary Shares,  or, if less,  such
number of Ordinary Shares as represents approximately 14.99 per cent.
of the Company's issued ordinary share capital immediately  following
Conversion. Any repurchase  made pursuant  to the  authority will  be
made at a price that is not  less than 10p per Ordinary Share  (being
the par value of each Ordinary Share) and not more than 105 per cent.
of the average of the middle market price per Ordinary Share as taken
from the Daily  Official List of  the London Stock  Exchange for  the
five business days preceding the day of purchase. The authority being
sought will last until  the date of the  next Annual General  Meeting
or, if  less, a  period  of twelve  months.  Any Ordinary  Shares  so
purchased will be cancelled.

Following the Placing and  Offer, the increased  size of the  Company
will provide  the Board  with the  opportunity to  utilise the  share
buyback powers on a more proactive basis.

Admission and Dealings
Applications have been made to the UK Listing Authority for up to  80
million C  Shares to  be admitted  to the  Official List  and to  the
London Stock Exchange for the same number of C Shares to be  admitted
to  trading  on  the  London  Stock  Exchange's  market  for   listed
securities. It is expected that Admission will become effective,  and
that dealings in the C Shares will commence, on 15 November 2005.

Applications will  be  made  to  the UK  Listing  Authority  for  the
Ordinary Shares arising on Conversion  and the Warrants to be  issued
on the Conversion Date  to be admitted to  the Official List, and  to
the London Stock Exchange for the Ordinary Shares and Warrants to  be
admitted to trading on the London Stock Exchange's market for  listed
securities. Admission of  the Ordinary Shares  arising on  Conversion
and the  Warrants will  become effective  and dealings  in them  will
commence on the London Stock Exchange by no later than 31 March 2006.

Certificates and CREST
The C  Shares, the  Ordinary  Shares arising  on Conversion  and  the
Warrants will  be  issued in  registered  form  and may  be  held  in
certificated or uncertificated form.

Temporary documents of title will not be issued pending the  despatch
of definitive certificates for C  Shares and Warrants. Dealings in  C
Shares in advance of the crediting of the relevant CREST accounts  or
the issue of share  certificates will be at  the risk of the  persons
concerned.

Costs and Expenses
The costs of the Placing and Offer will be borne out of the  proceeds
of the Placing and Offer and, accordingly, will effectively be  borne
by those subscribing for C Shares. The total costs of the Placing and
Offer (including any commissions) will be 1.75 per cent. of the gross
proceeds of the Placing and Offer.

Directors' Intentions in relation to the Offer
Directors intend  to  make  subscriptions  under  the  Offer  in  the
aggregate amount of £22,500.

Recommendation to Shareholders
The Board considers that the Proposals  are in the best interests  of
Shareholders as a whole. The Board has received advice from  Dresdner
Kleinwort Wasserstein and, in giving that advice, Dresdner  Kleinwort
Wasserstein  has   placed   reliance  on   the   Board's   commercial
assessments.  Accordingly,  the  Board  unanimously  recommends  that
Shareholders vote in favour of the Resolutions to be proposed at  the
EGM.

The Board intends to vote in favour of the Resolutions in respect  of
its own  beneficial  holdings  of Ordinary  Shares  which  amount  in
aggregate to 30,000 Ordinary Shares.

Expected Timetable


Record Date  for  Priority  Application  Forms   5 p.m. on 19 October
under the Offer                                                  2005

Latest time and date  for receipt of  Priority   3 p.m. on 7 November
Application Forms  and Application  Forms  and                   2005
payment under the Offer

Latest time and date  for receipt of Forms  of 10 a.m. on 12 November
Proxy                                                            2005

Extraordinary General Meeting                  10 a.m. on 14 November
                                                                 2005
C Shares  issued; Admission  of C  Shares  and  8 a.m. on 15 November
dealings in C Shares commence; CREST  accounts                   2005
credited in  respect  of C  Shares  issued  in
uncertificated form

Certificates   for   C   Shares   issued    in     Week commencing 21
certificated form despatched                            November 2005

Latest date for Conversion                              31 March 2006



Admission of the  Ordinary Shares  arising on Conversion  and of  the
Warrants to the  Official List and  to dealings on  the London  Stock
Exchange's market for listed securities will occur on the  Conversion
Date.

On the Conversion Date,  holders of existing  Ordinary Shares on  the
Register at the close  of business on the  business day prior to  the
Conversion Date will be issued with  one Warrant in respect of  every
five existing Ordinary Shares then held.


Contacts


Impax Environmental Markets plc                  Tel: [phone]

Ian Simm

Bruce Jenkyn-Jones





Dresdner Kleinwort Wasserstein                    Tel: [phone]

Dominic Waters

David Yovichic



Dresdner Kleinwort Wasserstein Securities Limited (which is
authorised and regulated by the Financial Services Authority) is
acting exclusively for the Company in connection with the proposals
described in this announcement, and will not regard any other person
(whether or not a recipient of this announcement or other
information) as its customer in relation to such proposals and will
not be responsible to any other person for providing the protections
afforded to its customers or for providing any advice in connection
with the proposals and/or the contents of this announcement. Persons
requiring advice should consult an independent financial adviser.






20 October 2005




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