Acquisition and Placing

TEG Environmental Plc
26 April 2006

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failure to comply with this restriction may constitute a violation of United
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Japanese securities laws.

26 April 2006

                 TEG Environmental plc ('TEG' or the 'Company')

                   Proposed site acquisition and development

                   Placing of 10,730,000 New Ordinary Shares

          Offer for Subscription of up to 770,000 New Ordinary Shares


1.             Introduction

The Company today announces that it is intending to raise up to approximately £8
million before expenses by way of a Placing of 10,730,000 New Ordinary Shares
and Offer for Subscription of up to 770,000 New Ordinary Shares at a placing
price of 70 pence per New Ordinary Share. The Company also announces its
proposed acquisition of the Todmorden site near Manchester, which it intends to
develop as a Build Own and Operate project using the Company's Silo Cage
composting system.

The Company has convened an EGM at which shareholder approval will be sought for
authority to issues shares in order to enable the Placing and Offer for
Subscription to take place. The completion of the proposed acquisition of the
Todmorden site is conditional upon the Placing and Offer for Subscription
becoming unconditional in all respects.

2.            Background

TEG was incorporated in 1995 and its ordinary share capital was admitted to
trading on AIM in July 2004. The Company's principal activity is the design and
production of specialised plant and equipment for the composting of organic
wastes for sale to third party customers and in-house projects. The TEG Silo
Cage composting system is the result of over ten years of design and testing and
the TEG plant has been operating successfully since first launched in 2000.

Legislation governing the treatment and disposal of organic waste is
increasingly stringent and drives the market for the TEG Silo Cage system and
the services that its process provides. In 2005, new legislation became
effective relating to the disposal of animal by-products and the use of
landfills increasing the Company's market in the organic waste recycling sector
in the UK.

As announced on 15 March 2006, the Company has reported a significant increase
in its turnover from £21,572 (2004) to £555,250 (2005) and has secured the
following:

(i)         the Company's first sale to the public sector with a sale to The
City and County of Swansea, after obtaining planning permission in December
2005;

(ii)                    a contract with Schwan's Consumer Brands UK Ltd, part of
the pizza and global food processing business, which is a part of the commercial
development of the plant at Sherdley Farm, Preston;

(iii)       a contract with HJ Heinz Company Limited;

(iv)        a collaboration agreement with Glendale Managed Services Ltd.

In addition, the Company has:

(i)            acquired Binns Skips composting business in Perth, Scotland, one
of the largest animal by-products composting businesses in the UK; and

(ii)        sold a plant to Banham Poultry Limited - whilst this sale remains
secure, a change in location for the plant has been proposed and is, as such,
subject to planning approval.

The Directors believe that the recent success of the Company has been driven by
the TEG System offering an attractive, efficient and cost-effective alternative
to landfill.  It is also an attractive alternative to other forms of ABP
disposal, namely rendering, incineration and anaerobic digestion.

3.         The TEG System

The TEG Silo Cage system is a large-scale continuous-flow thermophilic
composting plant that converts organic wastes into a natural organic fertiliser.
The system uses selected materials which, when mixed with the target waste
streams in the correct ratio, will create conditions for rapid thermophilic
composting activity. The design of the Silo-Cage System provides an environment
for vigorous composting. When the mixed waste is introduced to the Silo Cage,
the micro-organisms already present in the mix quickly multiply, generate high
temperatures and rapidly degrade the waste.

The composting process, which is a continuous-flow and dry operation requiring
no mechanical turning, takes 12 to 14 days, during which time the temperature of
the process is continuously monitored by multiple probes. The insulated walls
maintain the temperature within the cages, which each have a nominal capacity of
600 tonnes per annum.

The TEG Silo Cage consists of a bank of between 8 and 32 steel-framed cages with
insulated walls. Multiple banks of Silo Cages can be supplied for large
contracts. Each bank of Silo Cages is suspended in a rigid steel frame and is
supplied via a biochopper mixer into a conveyor loading mechanism, which evenly
supplies the calculated amount of compost mix to each silo on a daily basis.
Composted product is removed from the base of the Silo Cage by an unloading
mechanism.

As Shareholders will be aware, a full scale waste composting plant has been
developed by the Company at Sherdley Farm near Preston which has been
operational since 2000.  In November last year, the plant was validated to
process Category III ABP to the highest UK and EU standard. The ABP approval
represents the highest classification possible in the organic waste treatment
market and it allowed the Company to commercialise the Sherdley Farm facility,
install new larger plants and generate revenues, whilst also creating the
opportunity to open up larger markets for the Company.

The Company has a pipeline of possible opportunities, including the sale of
plant, and several BOO projects.

4.            Todmorden BOO

TEG has conditionally acquired a freehold site in Todmorden, West Yorkshire for
a total cost of £2,000,000. The site has full planning permission for a TEG
In-Vessel plant with a capacity of 50,000 tonnes per annum of waste feed. The
Directors understand that this is the only site in development with such
planning permission within its Local Authority area (Calderdale) and
neighbouring Local Authorities (Greater Manchester, Metropolitan District of
Bradford, Blackburn and Darwen)

Market demand is extremely encouraging at this stage and to date:

(i)            Discussions have commenced with Calderdale Council in relation to
diversion of waste to the site;

(ii)        Tenders have been submitted to Blackburn and Darwen and Bradford
Councils for a total of 25,000-50,000 tonnes per annum of waste;

(iii)       The majority of the bidders for the Greater Manchester PFI have
expressed interest in sending up to 30,000-50,000 tonnes per annum if they are
successful in the bid.  Letters of intent have already been agreed with some of
the bidders; and

(iv)            approximately 180 food manufacturers are sited within a 20-mile
radius.

TEG has also secured a new bank facility for this project for the provision of a
loan of up to £2,000,000.

The Company aims to complete the project in accordance with the following
outline timetable:

(i)         Agree planning pre-conditions by May 2006;

(ii)        Complete demolition by August 2006;
            
(iii)       Approve new building plans by August 2006;

(iv)        Commence construction by September 2006;

(v)         Completion of buildings (for TEG construction) by March 2007; and

(vi)        Completion of construction by May 2007.

5.          Recent Developments

Perth Plant, Scotland

As reported last year, the Company secured an 11 year contract to acquire the
rights to take over and develop a composting operation at a waste management
site in Perthshire, Scotland. The contract initially required the installation
of two 28 cage lines but due to increased demand, two 32 cage lines are now
being constructed with a joint capacity of 38,000 tonnes per annum. The first
line came on stream in March and the Company expects the second line to be on
stream this month. The site's principal customers are Sita UK Ltd (Local
Authority service with Perth & Kinross Council), Binns Skips (collections from
food manufacturers), Scottish Water, Anglo Beef Processors and Grampian Foods

Sherdley Farm Plant, Preston

Further to receiving validation to process Category III ABP to the highest UK
and EU standard, the Company has upgraded the site and the first line was
installed and filled in February 2006 with a capacity of 6,000 tonnes per annum.
  The Company has also completed the new maturation building and upgraded the
infrastructure on the plant.  By securing contracts with Schwan's and H.J.
Heinz, the Company has confirmed demand for its waste disposal service and with
the first line effectively full, the Company is now planning to build a second
line with a capacity of 7,000 tonnes per annum and anticipates this line being
completed by the third quarter of 2006.

Kildare Plant, Ireland

As reported last year, planning permission was granted in November 2005 and
confirmed in February 2006. The Company is planning to upgrade the plant to ABP
standard to attract higher value waste with a capacity of 15,000 tonnes per
annum.  The Company will be installing new panels, upgrading material handling
and improving the building to meet the planning conditions for ABP waste streams
at an estimated cost of £550,000. The Irish Biowaste Strategy, issued this
month, sets targets for increased recycling of organics and targeted support for
composting. With this in mind, it is intended that the Company will operate the
plant in partnership with an Irish waste management business. It is the
Company's intention to have the plant operational by the final quarter in 2006.

Swansea

As reported in December last year, the Company received planning permission for
the £925,000 plant to be constructed under its contract with the City & County
of Swansea for the provision of the TEG silo cage in-vessel composting system.
Plant installation commenced this month to be completed by September 2006 with a
final handover due in September 2007 and a final retainer (5%) being due in
March 2008.

Banham

The Company reported in July last year that Banham Compost Limited had placed an
order to purchase 56 of TEG's silo cages for approximately £2 million.  Since
reporting this, Banham have requested a change in location for a plant and have
withdrawn their planning application for an in-vessel composting facility at the
original site in order to pursue other activities at that site.  Banham has,
however, opted to install a 48 cage in-vessel composting plant at another of its
sites in Norfolk for which it already has planning permission for in-vessel
composting and it has already requested permission for a change of technology to
the TEG system at that site.  It is anticipated that the plant will be installed
by November 2006 with a final handover in May 2007.

New appointment

As announced yesterday, Douglas William Benjafield, has been appointed to the
Board as a non-executive director with effect from May 1st 2006.

6.         The Market

Total waste in the UK is estimated at 360 million tonnes per annum, of which 118
million tonnes is controlled and 42 million tonnes is potentially suitable for
composting.  By the year 2020, the UK target is that 25 million tonnes per annum
of waste should have been diverted from landfill.  An additional 1.6 million
tonnes of ABP is forecast to be entering the organic treatment market due to
implementation of ABP legislation.  The Waste Resource Action Programme estimate
the need for 450 composting plants by 2020 for Local Authorities, with the
increase in ABP providing opportunities for over 100 plants.

Parallel to this increase in the requirement for facilities, it is estimated
that the potential market for compost product is 9 million tonnes, which the
Directors believe will support the development of 640 composting plants.

Furthermore, gate fees are rising sharply.  Published prices for ABP disposal
are up to £93 per tonne, up to £60 per tonne for catering waste, between £12 and
£26 per tonne for green waste, and on average of £39 per tonne for landfill
disposal.

7.             Legislative Change

Landfill Directive 1999

The Landfill Directive 1999 (1999/31/EC) came into effect on 16 July 2001
requiring significant reductions in the quantity of biodegradable municipal
waste disposed of by landfilling and prohibiting the disposal of hazardous and
non-hazardous wastes in the same landfill. As part of the drive to comply with
the Landfill Directive, the Government set mandatory recycling targets for local
authorities. Set against a 1995 baseline, the Landfill Directive requires a
reduction of 25 per cent. by 2010, 50 per cent. by 2013 and 65 per cent. by
2020. Failure to meet the Landfill Directive targets within the next decade will
result in the UK facing substantial fines from the EU. A penalty system was
imposed in April 2005 and the Directors believe that such financial sanctions
will most probably be passed on to Local Authorities and then collected through
Council Tax, and the threat of these sanctions will provide a further catalyst
for change.

Furthermore, there are now limits on the amounts of biodegradable waste that can
be landfilled. These changes are in addition to the landfill tax, which
increases at £3 per tonne per annum from April 2005, and is expected to rise
from £15 per tonne to £35 per tonne in 7 years.

Waste and Emissions Trading Act 2003

The Landfill Allowance Trading Scheme ('LATS') was implemented in April 2005
under the Waste and Emissions Trading Act 2003.  The purpose of LATS is to
encourage recycling by the trading of recycling credits whereby Local
Authorities that fail to achieve recycling and composting targets can buy excess
recycling capacity from those that have exceeded their targets.  The price for
recycling credits will be market driven and is expected to fall between the cost
of recycling and composting, and the cost of fines implemented under the
Landfill Directive, thus stimulating investment in additional recycling and
composting facilities.

Animal By-Products Regulations 2003

The EU Regulation concerning ABP became effective from 1 May 2003, and the
regulation came into force in England and Wales on 1 July 2003 introducing
higher standards of treatment and banning the use of certain traditional methods
for disposal. Given the outbreaks of human and animal disease which have focused
attention on the safety of the food chain, the need to protect against
pathogens, such as Salmonella, E Coli. 0157, and the need to protect against
animal diseases, such as Foot and Mouth and Swine Fever, has become imperative
in the Government's policy. It has become clear that traditional methods of
disposal are unsafe and that organic wastes should be treated to a high standard
so that they may safely be recycled to land. The EU Commission was therefore
charged with implementing further measures, including the approval of
alternative disposal methods. The Regulation bans the disposal of animal
by-products including most food wastes to landfill, although temporarily
catering waste continued to be landfilled during a transition period which, with
the exception of a further derogation for some supermarket-type waste, ended in
December 2005.

8.             Strategy

The Directors remain committed to developing the business in two main areas:

(i)         Build Own and Operate projects

BOOs provide sustainable, long-term revenues, and allow the Company to take
advantage of rising waste disposal prices. Gate fees of just under £40 per tonne
will enable the Company to secure favourable returns with estimated revenues of
at least £1.3m per annum for a plant with capacity of 35,000 tonnes. The Company
currently has five BOOs in development.

(ii)        Plant Sales

The Company sells plant to third parties who prefer to run their own waste
disposal operations. This area of the business provides large revenues to the
Company. A single bank of cages has a typical sale value of  approximately
£960,000, and the typical scale of each sale is one or two banks of 28 cages.
The main clients that might purchase a TEG plant are local authorities, waste
management companies, water companies and other utilities and a variety of
private sector businesses, including major food producers/processors and
farmers.

The Company is committed to continuing its investment in R&D whilst developing
the compost marketing business to support plant sales and BOOs. It also intends
to strengthen its commercial skills, such as sales, operations and project
delivery, through several key appointments.

9.         Future Developments

The Company has a substantial pipeline of future opportunities with a number of
BOOs in an advanced stage of development. The Company has several sales tenders
in progress across the UK and Europe and a potential collaboration project in
another sector. With increased gate fees, the potential development of a third
line in Perth and a second line in Sherdley Farm, the Directors believe both
sites have the potential to grow.

Clayland's Corner, Somerset

Planning permission has been granted by the Planning Inspectorate for
development of a TEG facility with capacity of 8,100 tonnes per annum. Market
demand in the UK is high for quality peat-free fertilisers such as EnVigroTM
and, as such, prices have remained consistently high. This project represents an
attractive business model in its own right and the Company hopes it will ensure
its position in the market is maintained. The Directors believe that it will
also allow the Company to develop a full range of products under the EnVigroTM
brand.

The Company has agreed a partnership with Halberton Poultry Ltd, the site owner,
pursuant to which Halberton will develop the site and infrastructure whilst the
Company will install and operate the plant. Future sales will be distributed
between the parties in proportion to their respective investment.

The Company aims to complete the project in accordance with the following
outline timetable:

(i)            Completion of agreement by May 2006;

(ii)           Approval of construction plans by June 2006;

(iii)          Commence construction by June 2006;

(iv)           Completion of buildings and infrastructure by August 2006;

(v)            Completion of TEG plant construction by November 2006;

(vi)           Completion of commissioning and testing by November 2006;

(vii)          Material commissioning and processing by November 2006;

(viii)         First batch of product available for sale by March 2007.

10.            Use of Proceeds of the Placing and Offer for Subscription

The proceeds will be used together with the proposed additional bank facility in
order to primarily fund the Todmorden BOO with the balance remaining allocated
to the Clayland's Corner BOO, the upgrade to the Kildare Plant and the Company's
working capital requirements during the development phase of these
opportunities.

11.            Working Capital

The Directors are of the opinion that, taking into account the net proceeds
receivable under the Placing and Offer for Subscription, the working capital
available to the Company is sufficient for its present requirements, that is,
for at least the next twelve months from the date of this announcement.

12.            Principal Terms of the Placing and Offer for Subscription

Canaccord have agreed to use their reasonable endeavours to procure placees for
10,730,000 New Ordinary Shares at the Placing Price and the Placing Shares, when
issued, will rank pari passu, with the Existing Ordinary Shares, including the
right to receive all dividends and other distributions, thereafter declared,
made or paid.

The Placing, which is not underwritten, will be conditional, inter alia, on
Admission taking place.

The Company has also today invited certain investors to subscribe for 770,000
New Ordinary Shares at the Placing Price and the Subscription Shares, when
issued, will rank pari passu, with the Existing Ordinary Shares, including the
right to receive all dividends and other distributions, thereafter declared,
made or paid.

13.            Extraordinary General Meeting

Notice of the Extraordinary General Meeting to be held at The Caledonian Club, 9
Halkin Street, London SW1X 7DR at 9:30 a.m. on 19 May 2006 has been sent to
Shareholders at which one ordinary resolution and one special resolution will be
proposed as follows:

ORDINARY RESOLUTION

1.                  to grant the Directors a general authority pursuant to
section 80 of the Act to allot relevant securities (within the meaning of
section 80(2) of the Act) of the Company up to an aggregate nominal amount equal
to £575,000, representing 43.6 per cent. of the Existing Ordinary Shares as at
25 April 2006 (being the last practicable date prior to the publication of this
announcement) all of which will be used for the Placing and the Offer for
Subscription (assuming full subscription of the Offer for Subscription).

SPECIAL RESOLUTION

2.                  to disapply statutory pre-emption rights in relation to
shares with a nominal value of £575,000 representing 43.6 per cent. of the
Existing Ordinary Shares as at 25 April 2006 (being the last practicable date
prior to the publication of this announcement) and representing the allotments
contemplated by the Placing and the Offer for Subscription (assuming full
subscription of the Offer for Subscription).

14.            Further Information

For further information, please contact:

TEG Environmental Plc

Mick Fishwick, Chief Executive             01772 314100

Binns & Co PR Ltd

Peter Binns                                020 7786 9600

Tarquin Edwards                            020 7786 9600

Canaccord Adams Limited

Robert Finlay                              020 7518 2775

Chris Bowman                               020 7518 2791

Canaccord Adams Limited (which is authorised and regulated in the United Kingdom
by the Financial Services Authority) is acting solely for TEG Environmental plc
in connection with the Placing and is not acting for any person other than TEG
Environmental plc and will not be responsible for any person other than TEG
Environmental plc for providing the protections afforded to customers of
Canaccord Adams Limited or for providing advice to any person in connection with
the matters described in this announcement.

This announcement does not constitute, or form any part of, an offer or
solicitation of an offer to subscribe for the New Ordinary Shares.


14.             Definitions


'ABP'                                animal by-product;

'Act'                                the Companies Act 1985 (as amended);

'Admission'                          admission of the New Ordinary Shares to trading on AIM and such admission
                                     becoming effective in accordance with the AIM Rules;

'AIM'                                the market of that name operated by the London Stock Exchange;

'AIM Rules'                          the AIM Rules for Companies published by the London Stock Exchange as in
                                     force at the date of this document or, where the content requires, as
                                     amended or modified after the date of this document;

'Board' or 'Directors'               the board of directors of the Company;

'BOO'                                build, own and operate;

'Canaccord'                          Canaccord Adams Limited, the Company's nominated adviser and broker;

'Circular'                           the circular sent to Shareholders on the date of this announcement;

'Company' or 'Teg'                   Teg Environmental Plc;

'CREST'                              means the computer-based system established under the Uncertificated
                                     Securities Regulations 2001 which enables title to units of relevant
                                     securities (as defined in the Regulations) to be evidenced and
                                     transferred without a written instrument and in respect of which CRESTCo
                                     Limited is the Operator (as defined in the Regulations);

'Existing Ordinary Shares'           the 26,385,381 Ordinary Shares in issue at the date of this announcement;

'Extraordinary General Meeting' or   the extraordinary general meeting of the Company to be held at The

'EGM'                                Caledonian Club, 9 Halkin Street, London SW1X 7DR at 9:30 a.m. on 19 May
                                     2006, notice of which is set in the Circular;

'New Ordinary Shares'                the Ordinary Shares to be issued pursuant to the Placing and Offer for
                                     Subscription;

'Offer for Subscription'             the offer to certain shareholders from the Company to subscribe for up to
                                     770,000 New Ordinary Shares at the Placing Price on the terms of, and
                                     subject to the conditions contained in the Subscription Letter;

'Ordinary Shares'                    ordinary shares of 5p each in the capital of the Company;

'Placing'                            the conditional placing by Canaccord Adams of the New Ordinary Shares at
                                     the Placing Price;

'Placing Agreement'                  the agreement dated today, a summary of which is set out in section 12 of
                                     this announcement;

'Placing Price'                      the price at which the New Ordinary Shares will be issued pursuant to the
                                     Placing and Offer for Subscription, being 70p per New Ordinary Share;

'Placing Shares'                     the 10,730,000 New Ordinary Shares conditionally placed by Canaccord
                                     pursuant to the Placing;

'Proxy Form'                         the form of proxy accompanying this document for use by Shareholders at
                                     the Extraordinary General Meeting;

'Resolutions'                        the special resolution and the ordinary resolution  to be proposed at the
                                     EGM, as set out in the Circular;

'Shareholders'                       holders of Ordinary Shares;

'Subscription Letter'                the letter dated today sent to certain shareholders inviting them to
                                     subscribe for Subscription Shares pursuant to the Offer for Subscription;

'Subscription Shares'                the 770,000 New Ordinary Shares to be offered to certain Shareholders
                                     pursuant to the Offer for Subscription.




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