Re Market Update

RNS Number:2068H
Inveresk PLC
10 February 2003


                                  INVERESK PLC

                                 MARKET UPDATE


Inveresk Plc ("the Company") is pleased to announce that its plans for
recapitalisation and refinancing are progressing satisfactorily:-

1.   External Bank Debt
     
On 31st October 2002 the Company sold the business assets of its loss making
graphic paper mill at Caldwells, Inverkeithing to Klippan of Sweden.  Debts due
to the Royal Bank of Scotland plc at that date amounted to a little over #21
million.  During the three month period to 31st January 2003 bank debt has
reduced to #8.9 million.  The reasons for the reduction can be summarised as
follows:-

1.1  Klippan paid #2 million for inventories, work in progress and raw materials 
     at Caldwells.

1.2  The land and buildings at the Westfield site were sold for #825,000 less 
     associated costs.

1.3  The accounts receivable relating to the Caldwells business but retained in 
     the books of the Company at the transfer date have been collected and the 
     resultant release to cash has reduced bank borrowings by #4.7 million.

1.4  Strict working capital controls imposed on the Company's businesses, allied 
     to a standstill agreement with the Company's major suppliers during the 
     period of restructuring has assisted the Company to trade forward and to      
     reduce bank debt.

1.5  The proceeds of the first phase of the recapitalisation exercise amounted 
     to #4.2 million before professional costs.

2.   Current Trading

2.1  The Company's activities now comprise the two profitable mills at 
     Carrongrove in Denny, Stirlingshire and St Cuthberts in Wells, Somerset.  
     Both  mills are trading according to plan with order books significantly 
     ahead of this time last year.  The head office has been closed with costs 
     either decentralised to each of the mills or eliminated.  Thanks to the 
     loyalty of the Company's valued customers and the invaluable support of its 
     major suppliers, the integrity of both production and distribution has been 
     maintained throughout this challenging period of restructuring.  The short 
     to medium term prospects for both mills remain positive.

2.2  Following breaches of the banking covenants with the Royal Bank of Scotland 
     in the summer of 2002, the company has been obliged to embark on a recovery 
     plan as a result of which significant provisions and asset write downs have 
     had to be made in relation to the closure of the Westfield and Kilbagie
     mills and the sale of the business assets at Caldwells. All provisions will 
     be included in the audited financial report and accounts for the 13 month 
     period to 31 December 2002.

2.3  The actions taken are designed to revitalise the company's balance sheet, 
     improve liquidity, consign the past losses to history and create a platform 
     in 2003 for future growth, tightly controlled by the new management team 
     which has recently been put in place.

3.   New Bank Facilities

3.1  The Company is pleased to announce that it has received confirmation that 
     Credit Committee approval has been received from a major international
     banking institution to provide both working capital and term loan 
     facilities (8 years) which the Board of Directors considers to be 
     sufficient to allow the Company to trade forward and fulfil its obligations 
     to all parties and provide funds for future capital expenditure.  These new 
     facilities are subject only to the final stages of due diligence and the 
     successful completion of the second phase of the recapitalisation exercise 
     which is scheduled to take place during March 2003 via a placing and open 
     offer of new ordinary shares. As previously stated this issue will be on 
     similar terms to the placing of shares announced in December 2002.

3.2  The recapitalisation and refinancing of the Company is expected to be
     completed during the early part of April 2003, following the issue of a
     shareholder circular followed by an Extraordinary General Meeting to 
     approve the measures taken.

4.   Conversion of Unsecured Loan

4.1  On 20 January, Inveresk announced that it had raised #2.2 million by way of 
     an unsecured loan. The loan was provided by the following individuals:


     Holder                                        Amount of unsecured loan
                                              
     Klippan AB                                                    #652,227
     Stefan Lersten                                                #641,600
     Jan Bernander                                                 #706,173
     Alan Walker                                                   #200,000
                                                                 #2,200,000

4.2  In order to reduce the Group's level of indebtedness, Inveresk announces 
     that it intends to amend the terms of this unsecured loan, in order to
     allow Klippan AB and Stefan Lersten to convert the loan into new ordinary 
     shares in Inveresk at a price of 10p per share.

4.3  It is intended that after the announcement of the Company's preliminary 
     results for the year ended 31 December 2002, the loans made by Jan
     Bernander and Alan Walker will become convertible into new ordinary shares 
     in Inveresk Plc on the same basis.

4.4  On the basis that Klippan AB, Stefan Lersten and connected persons are 
     interested in approximately 18% of Inveresk's ordinary share capital, the
     attachment of conversion rights to the loan is deemed to be a related party
     transaction under the AIM rules.

4.5  The Board of Inveresk (excluding Jan Bernander, who is a director of 
     Klippan, and Alan Walker) considers that, having consulted with KBC Peel 
     Hunt Ltd, the terms of the conversion of the unsecured loan into ordinary 
     shares at a price of 10 pence per share is fair and reasonable insofar as 
     its shareholders are concerned.

Inveresk plc

Contact:                Alan Walker (CEO)              Jan Bernander (Chairman)
Office:                 020 7240 1234                  Mobile: [phone]
Mobile:                 07710 620260


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END
TSTUUUGUPUPWGGM