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Clyde Process Solutions PLC (CPSP)

  Print      Mail a friend       Annual reports

Friday 23 March, 2007

Clyde Process Solutions PLC

Acquisition and Placing

                          CLYDE PROCESS SOLUTIONS PLC                          


Key Points

● Acquisition of Pony Bidco Limited, owner of MAC Equipment, Inc., a leading
provider of Pneumatic Conveying systems in North America and a producer of Air
Filtration systems

● Placing of 21,904,762 New Ordinary Shares to raise £23m for the Company and
2,089,606 Sale Shares

● 1 for 50 share consolidation

● Readmission to trading on AIM

Jim McColl, Executive Chairman of Clyde Process Solutions, comments:

"We are delighted to welcome MAC Equipment into our portfolio of process
technologies. We believe that this acquisition will enable us to build our
presence as a market leading provider of Pneumatic Conveying Injection Systems
and Air Pollution Control systems to the process industries we serve.

Significant synergies exist between Clyde Process Solutions and MAC Equipment,
the integration of which will provide benefits to the respective industry
groups and customers in markets such as gypsum, cement, iron & steel,
non-ferrous metals, food, chemicals and ethanol.

Clyde Process Solutions' global network, complemented by MAC Equipment's
process knowledge, expertise and success, particularly in North America, will
strengthen our process technologies which we offer to our customers


Clyde Process Solutions plc                  Tel: 01355 575 000                
Jim McColl, Chairman                                                           
Alex Stewart, Chief Executive                                                  
Arden Partners                               Tel: 020 7398 1600                
Paul Davies                                                                    
City Financial Associates                    Tel: 020 7090 7800                
James Caithie                                                                  


Placing Price (pence)                                      105                 
Number of Existing Ordinary Shares*                        513,500,000         
Number of New Ordinary Shares to be created from the       10,270,000          
Existing Ordinary Shares pursuant to the Consolidation                         
Number of New Ordinary Shares being placed pursuant to the 21,904,762          
Number of Sale Shares being sold pursuant to the Placing   2,089,606           
Maximum number of Earn Out Shares                          9,500,000           
Number of New Ordinary Shares in issue following the       32,174,762          
Percentage of Enlarged Share Capital being placed†         74.58%              
Percentage of Further Enlarged Share Capital being placed† 57.58%              
Estimated gross proceeds of the Placing receivable by the  £23m                
Market capitalisation following the Placing at the Placing £33.78m             

* assuming that no Warrants are exercised and that no Earn Out Shares are

† assuming that the Consolidation is approved by Shareholders at the EGM and
that no Warrants are exercised and that no Earn Out Shares are issued


Latest time and date for receipt of Proxy Forms           11a.m. on 14 April   
Extraordinary General Meeting                             11a.m. on 16 April   
Record date for the Consolidation                         5p.m. on 16 April    
Completion of the Acquisition and Admission and dealings  8.00 am on 17 April  
commence                                                  2007                 
in the Enlarged Share Capital on AIM                                           
CREST accounts credited for Placing Shares in             17 April 2007        
uncertificated form                                                            
Despatch of definitive certificates for the Placing       24 April 2007        
Shares in certificated form                                                    

Clyde Process Solutions plc

1. Introduction

The Company announced on 13 February 2007 that it had entered into the
Acquisition Agreement, pursuant to which it has conditionally agreed to acquire
the entire issued share capital of Pony Bidco for a total enterprise value of
US$84.5 million. The Company has today announced that it is seeking to raise £
23 million by means of the Placing of 21,904,762 New Ordinary Shares at a price
of 105 pence per share. 2,089,606 Sale Shares are being sold by Uberior
pursuant to the Placing.

On 13 February 2007, trading in the Company's Ordinary Shares was suspended on
AIM at the Company's request following the announcement that it had entered
into the Acquisition Agreement. The Board expects trading in the Ordinary
Shares to re-commence today.

The Acquisition will constitute a "reverse takeover" of Clyde Process Solutions
under the AIM Rules. The AIM Rules require that the Acquisition is subject to
the prior approval of Shareholders, which is to be sought at the Extraordinary
General Meeting, and the publication of a new admission document, which will be
sent to Shareholders today.

The Company also announces that it has appointed Arden Partners as its broker.

2. Reasons for the Proposals

Clyde Process Solutions is a non-trading holding company and was readmitted to
trading on AIM on 21 July 2006. The Company was formed as a cash shell to
identify, invest in and integrate technologies and solutions that are used in
process industries. Clyde Process Solutions owns, in its entirety, Clyde
Materials Handling which is engaged in the design, assembly, commissioning,
maintenance and after-sales service of Pneumatic Conveying and Pneumatic
Injection systems.

The Directors believe that the environmental and economic benefits generated
from Pneumatic Conveying and Air Filtration technologies is rapidly becoming
important to organisations operating in process industries, where reducing both
raw material consumption and emission levels, whilst improving productivity, is
critical to long-term sustainability. The Acquisition will provide the Company
with a strong platform to benefit from these developments.

MAC Equipment is a leading provider of Pneumatic Conveying systems in North
America. The Directors believe that this Acquisition will enable Clyde Process
Solutions to strengthen its international coverage in the Pneumatic Conveying
industry, while developing market share and expanding both process knowledge
and its technology portfolio. The Directors also intend to use the Acquisition
to expand the Clyde Process Solutions Pneumatic Conveying business through the
implementation of an integrated, international sales strategy, which will
utilise the infrastructures of both Clyde Materials Handling and MAC Equipment.

MAC Equipment is also a producer of Air Filtration systems in North America,
and the Directors intend to develop an Air Filtration business for the Enlarged
Group in markets not currently served by MAC Equipment using MAC Equipment's
existing infrastructure and technology, which will be enhanced by the process
expertise and geographic network of Clyde Materials Handling. Clyde Materials
Handling and MAC Equipment have complementary technologies which will help to
strengthen the Enlarged Group by cross-selling to their already existing

3. MAC Equipment

3.1 Overview

MAC Equipment is a technology-driven company offering material handling and air
quality control for customers in the food, chemicals, building products,
plastics and ethanol industries. MAC Equipment has more than 30 years of
experience in designing, engineering and manufacturing customised systems, and
in that time has become a leading provider of Pneumatic Conveying in North

The business was founded in 1969 and employed, as at 30 September 2006, 303
people who operate in three core operational business functions: engineered
systems and components, project management and controls and service centre.
These three operating groups meet customer needs by designing, manufacturing
and installing material handling, Air Filtration and process control systems.

MAC Equipment's corporate headquarters are in Kansas City, Missouri, USA. MAC
Equipment operates manufacturing facilities located in Sabetha, Kansas, USA and
Houston, Texas, USA, and a warehouse in Sabetha, Kansas, USA. The business also
operates two testing laboratories within its manufacturing facilities. The
Sabetha facility provides Air Filtration testing facilities while Houston
provides Pneumatic Conveying testing facilities.

MAC Equipment has five senior managers who have experience in the disciplines
of engineering, sales, marketing, finance and human resources. This senior
management team comprises Gary Cavey (President and Chief Executive), Jay Brown
(Vice President and Chief Financial Officer), Dan Geller (Vice President of
Sales and Marketing), Joe Stallbaumer (Vice President of Engineering) and
Kathleen Poehler (Director of Human Resources). The senior management team,
collectively, have 43 years' experience of working at MAC Equipment.

MAC Equipment utilises sales representatives in the promotion and selling of
certain products and services, which comprises of 24 agencies, employing 114
people in 39 locations across North America. MAC Equipment also has 8 account
executives who have knowledge and expertise in the fields of engineering,
Pneumatic Conveying and Air Filtration and they use these skills to develop
solutions for their customers.

3.2 Summary financials

In the 12 months ended 30 September 2006, MAC Equipment's turnover was US$80.1m
(12 months to 30 September 2005: US$63.4m, 12 months to 30 September 2004:
US$59.3m) and its profits before tax were US$6.4m (12 months to 30 September
2005: US$4.1m, 12 months to 30 September 2004: US$2.7m). MAC Equipment's
operating income in the 12 months ended 30 September 2006 was US$7.4m (12
months to 30 September 2005: U$5.2m, 12 months to 30 September 2004: US$4.4m).

3.3 Strategy

MAC Equipment is focused on growing its business organically and through
acquisition. MAC Equipment's customer markets, which include food, building
products and ethanol, are industries which are forecast for additional
investment in systems and equipment. MAC Equipment has also over the last few
years developed a series of new products with the intention of developing a
larger market share in its key customer markets.

There is also a growing demand for air pollution control equipment in
geographical regions outside of MAC Equipment's domestic market. The Directors
intend that expansion abroad will form a part of MAC Equipment's growth

The existence of a large number of competitors may present opportunities for
consolidation within the Pneumatic Conveying and Air Filtration industries.
With MAC Equipment's position as a leading provider of Pneumatic Conveying in
North America, which is complemented by an established management team, MAC
Equipment can add to the Enlarged Group's revenue and markets.

3.4 Technology correlation

The solutions that MAC Equipment creates for its customers utilise Pneumatic
Conveying and Air Filtration technologies.

MAC Equipment produces Lean Phase Pneumatic Conveying systems, which conveys
materials at low to moderate capacities over medium distances, from single or
multiple points to multiple destinations. These systems are versatile and
adaptable for different materials and the low operating pressures allow lower
cost pipelines and fittings. Lean Phase Pneumatic Conveying is extremely
cost-effective and is well suited for handling nonabrasive, non-fragile, or
light materials.

MAC Equipment provides dust filter solutions that can be used in heavy or low
dust environments. Air Filtration equipment includes dust collectors, baghouse
filters, cartridge collectors, mist collectors and cyclones. MAC Equipment
produces Air Filtration systems, which can be sold as stand-alone units
although certain components are used in Pneumatic Conveying systems to filter
process dust from the air stream.

MAC Equipment operates two testing laboratories within its manufacturing
facilities. The testing laboratory in Sabetha, Kansas, USA provides Air
Filtration testing whilst the Houston, Texas, USA facility provides Pneumatic
Conveying testing. These laboratories have supported MAC Equipment in
developing customised solutions that meet the specific needs of their
customers. These laboratories, in the 12 months ended 30 September 2006, have
created several new products focused on both Pneumatic Conveying and Air

MAC Equipment has a proven track record of developing, launching and selling
new technologies into process-based manufacturing environments from their
laboratories in Sabetha and Houston, USA.

3.5 Customers

MAC Equipment has provided customised solutions to organisations that operate
across a range of markets, notably within the food, ethanol and building
products sectors. The list below contains a selection of customers to which MAC
Equipment has provided solutions, together with the market sector in which they

Market sector Customers

Food Kraft, Pepsico, Imperial Sugar, Nestle, Wrigleys

Building products Georgia Pacific, Vycom, Lafarge, National Gypsum, GE Plastics

Ethanol Broin and Associates, Inc.

Chemicals Degussa, Chevron Phillips, ExxonMobil, Dow, Reckitt Benckiser, BASF

Below is one brief case study from selected sectors in which MAC Equipment
operates, demonstrating how it has helped each customer:

3.5.1 Ethanol

Broin and Associates, Inc is a leader in the design, construction and operation
of dry mill plants for the ethanol industry. Working with Broin and Associates
since 2002, MAC Equipment have developed products that specifically address
ethanol processing applications, which include Air Filtration and Pneumatic
Conveying systems. This partnership has resulted in MAC Equipment supplying 28
Pneumatic Conveying and Air Filtration systems to companies in the ethanol

3.5.2 Building products

Vycom Corporation is a manufacturer of extruded foam and solid PVC products.
MAC Equipment has designed, managed and built three projects for Vycom, each
including Pneumatic Conveying systems and process controls. These systems
provide Vycom with the ability to mix PVC resin with other ingredients to
produce PVC compounds and integrate 11 separate processes that unload,
transfer, scale, feed, mix, screen and extrude different raw materials to
create one finished PVC product. Vycom utilises the resulting PVC products for
the production of numerous building products, which are deployed in a variety
of residential, industrial, marine and commercial applications.

3.6 Head office and operations

MAC Equipment's corporate head office is in Kansas City, Missouri, USA, while
the remainder of operations are based in Sabetha, Kansas, USA and Houston,
Texas, USA. MAC Equipment has one wholly-owned subsidiary, PNEU Real Estate,
Inc. which holds the title to MAC Equipment's head office.

3.7 Ownership

MAC Equipment is wholly owned by Pony Bidco. The shareholders of Pony Bidco are
Alex Stewart, Jim McColl and Bill Thomson who each own 331/3 per cent. of the
share capital of Pony Bidco.

3.8 Terms of the Acquisition

It is proposed that the Company acquires the entire issued share capital of
Pony Bidco for a consideration of £99 together with the assumption of all of
the debt of Pony Bidco. The debt of Pony Bidco consists of the bridging
facility agreement dated 12 February 2007.

When Clyde Process Solutions sought to acquire MAC Equipment, the timescale
required by the competitive bid process imposed by the financial seller of MAC
Equipment was incompatible with the requirement for the Company to seek
shareholder approval for the Acquisition. Accordingly, in order to meet this
timescale, the decision was taken to set up Pony Bidco, a special purpose
vehicle, to acquire MAC Equipment; that acquisition being funded by a Bank of
Scotland bridging facility of US$84.5 million. On 12 February 2007, Pony Bidco,
by way of an agreement and plan of merger, acquired MAC Equipment for a total
enterprise value of US$76.5 million subject to certain adjustments. The
difference between the total enterprise value of US$84.5 million being paid for
Pony Bidco and the enterprise value of US$76.5 million paid by Pony Bidco for
MAC Equipment reflects fees to be paid by Pony Bidco to professional advisers
and to the Bank of Scotland in respect of the transactions. The total
enterprise value of Pony Bidco of US$84.5 million is being funded by the
proceeds of the Placing being applied, inter alia, to the partial repayment of
the bridging facility agreement and by certain loan facilities.

As part of the arrangements described above, Alex Stewart, Jim McColl and Bill
Thomson have guaranteed between them £2 million of the debt in Pony Bidco.
These guarantees are collateralised by £2 million of deposits in a blocked
deposit account which is offsetable against the US$84.5 million bridging
facility. When the guarantees are released, as part of the refinancing
following the Acquisition, the blocked funds will be released. It is the
intention that certain of the Directors as set out below will invest a minimum
of £2 million in Placing Shares as part of the Placing, the proceeds of which
will be used to, inter alia, partially repay the bridging facility.

Name                      Cash amount of             Number of Placing Shares  
                          subscription (£)                                     
Alex Stewart              455,952                    434,240                   
Jim McColl                1,167,154                  1,111,575                 
Bill Thomson              232,477                    221,407                   
Graham Lees               144,415                    137,538                   

4. Clyde Process Solutions

Clyde Process Solutions is a non-trading holding company and wholly owns Clyde
Materials Handling, which is an engineering-led solutions provider, which
utilises its technology, expertise and process knowledge to develop bespoke
solutions for its customers. The Clyde Materials Handling Group is engaged
internationally in the design, assembly, commissioning, maintenance and
aftersales of spares of Pneumatic Conveying and Pneumatic Injection systems for
granular and powder type materials, using positive pressure, vacuum and
injection systems. The Clyde Materials Handling Group's key markets are in the
Ferrous metals (notably iron and steel), Non-Ferrous metals (notably copper)
and minerals (notably gypsum and cement) industries, which are served through
profit units in the UK, USA, Brazil and China.

Clyde Materials Handling and its predecessors have been in operation for over
20 years, and in that time have built up a substantial and diverse reference
list of solutions for its customers. Clyde Materials Handling's products
pneumatically transport materials around its customers' sites. Clyde Materials
Handling also creates solutions which inject materials into its customers'
production processes.

Clyde Materials Handling has developed solutions aimed at transforming the
effectiveness of its customers' operations, of which two have been patented.
Clyde Materials Handling has been ISO9001 certified since 2004 and serves many
organisations, such as Corus, Codelco and BPB.

Clyde Materials Handling's technologies and solutions are complemented by a
management team who, collectively, have over 150 years' experience within the
engineering industry. The majority of the management team have worked for Clyde
Materials Handling and its predecessors in senior positions.

The Clyde Materials Handling Group (excluding the Company) employed 110 people
on average in the 12 months to 28 February 2006. The Clyde Materials Handling
Group operates from offices located in the UK, USA, Brazil and China and has
interests in India, Singapore and South Africa. In addition, Clyde Materials
Handling has an international network of agents who market and distribute Clyde
Materials Handling's solutions.

As the demand for commodities produced across the metals and minerals markets
increases, so should the requirement for increased process efficiencies.

5. Synergies between MAC Equipment and Clyde Materials Handling

The Directors believe that a number of synergies exist between MAC Equipment
and Clyde Materials Handling.

5.1 Sales networks

MAC Equipment is an established business with significant sales generated
predominately in North America, supported by sales representatives and a group
of industry specialists. Clyde Process Solutions is an established business
that has profit units within the UK, USA, Brazil and China. Significant
opportunities exist for both MAC Equipment and Clyde Process Solutions to
develop both revenue and market share by utilising the respective sales
networks of both businesses.

5.2 Process synergies

MAC Equipment specialises in supplying Lean Phase Pneumatic Conveying systems,
whilst Clyde Materials Handling specialises in Dense Phase Pneumatic Conveying
systems. The combination of these Pneumatic Conveying technologies creates a
more comprehensive solutions provider to the respective industry groups and
customers of both businesses.

5.3 Customers

MAC Equipment and Clyde Materials Handling both have worked for internationally
known organisations and bringing together the capabilities of both businesses
will provide the respective customers with access to a wider range of solutions
and services.

5.4 Overheads and infrastructure

MAC Equipment is an established business in North America and has experienced
finance, sales, marketing, human resources and engineering support and service
personnel. Clyde Materials Handling can utilise all of these functions in North
America without having to invest in additional overheads, as well as using MAC
Equipment's manufacturing and testing facilities, which could support Clyde
Materials Handling in creating bespoke solutions for customers.

6. Current Trading and Prospects for the Enlarged Group

Trading in Clyde Process Solutions since 31 August 2006 has been strong, with
revenue, margins and costs in line with management's expectations and ahead of
the prior period. Existing contracts are being executed effectively and the
Clyde Materials Handling Group is receiving a good flow of enquiries.

MAC Equipment's trading since 30 September 2006 has been in line with
expectations, and ahead of the prior period. Key financial metrics throughout
the MAC Equipment business are encouraging, with revenue, gross profit and
earnings before interest, tax, depreciation and amortisation exceeding budget
and the prior period. Gross margins are slightly below expectation, although
well ahead of the prior period. Project bookings indicate encouraging growth.

7. The Placing

The Company proposes to raise approximately £23 million (before expenses) by
the allotment and issue of 21,904,762 New Ordinary Shares at the Placing Price
pursuant to the Placing. 2,089,606 Sale Shares are being sold by Uberior
pursuant to the Placing. The Placing Shares will represent 74.58 per cent. of
the Enlarged Share Capital of the Company on Admission, and, assuming the
maximum number of Earn Out Shares are issued, approximately 57.58 per cent. of
the Further Enlarged Share Capital. The proceeds of the Placing will be used to
cover the costs of the Admission and partial repayment of the bridging facility
agreement. The remainder of the bridging facility agreement will be repaid by
bank funding.

Pursuant to the Placing Agreement, Arden Partners has conditionally agreed to
place with institutional and other investors the 21,904,762 New Ordinary Shares
at the Placing Price. To the extent that it is not able to procure subscribers,
Arden Partners has conditionally agreed to subscribe as principal for the
21,904,762 New Ordinary Shares itself. Atorka has conditionally agreed to
subscribe for £9,000,000 of the Placing equating to 26.64 per cent. of the
Enlarged Share Capital. Atorka will receive the right to appoint one Director
to the Board of the Company at any time following Admission.

Application will be made to the London Stock Exchange for all the Enlarged
Share Capital to be admitted to trading on AIM. Dealings in the New Ordinary
Shares are expected to commence on 17 April 2007.

8. Related Party Transaction

Alex Stewart, Jim McColl and Bill Thomson are directors and are also
shareholders of Pony Bidco meaning that the Acquisition constitutes a related
party transaction under rule 13 of the AIM Rules. This requires John Hall and
Graham Lees, who are not directors or shareholders of Pony Bidco, to consult
with the Company's nominated adviser, CFA, to consider whether the terms of the
Acquisition, and the deal fee payable to Clyde Blowers, are fair and reasonable
insofar as the Shareholders of Clyde Process Solutions are concerned. They have
done so and therefore make the recommendation to the Shareholders set out in
the admission document to be sent to Shareholders today.

9. Directors of the Enlarged Group

Details of the board of the Enlarged Group, following Admission and completion
of the Acquisition, are the same as the current Clyde Process Solutions board.

10. Share Consolidation

The Directors consider that a consolidation of the ordinary share capital of
the Company should lead to a relative reduction in the bid-offer spread and so
help to improve liquidity in the Company's shares. Accordingly, it is proposed
that the ordinary share capital of the Company be consolidated on the basis of
one New Ordinary Share for every 50 Existing Ordinary Shares held at 5.00 p.m.
on 16 April 2007. Holders of fewer than 50 Existing Ordinary Shares will not be
entitled to receive a New Ordinary Share following the Consolidation.
Shareholders with a holding in excess of 50 Existing Ordinary Shares but which
is not exactly divisible by 50 will have their holding of New Ordinary Shares
rounded down to the nearest whole number of New Ordinary Shares following the
Consolidation. Fractional entitlements, whether arising from holdings of fewer
or more than 50 Existing Ordinary Shares, will be aggregated and sold in the
market and the proceeds will be donated by the Company to charity.

The New Ordinary Shares will have the same rights attaching to them as the
Existing Ordinary Shares.


"Acquisition"             the proposed acquisition by the Company of the entire
                          issued share capital of Pony Bidco to be effected    
                          pursuant to the Acquisition Agreement                
"Acquisition Agreement"   the agreement dated 12 February 2007 between (1) the 
                          Company and (2) the shareholders of Pony Bidco under 
                          which the Company has conditionally agreed to acquire
                          the entire issued share capital of Pony Bidco        
"Admission"               the re-admission of the Enlarged Share Capital to    
                          trading on AIM, becoming effective in accordance with
                          the AIM Rules                                        
"Admission Document"      the document to be sent to Shareholders today seeking
                          their approval for the resolutions at the            
                          Extraordinary General Meeting                        
"AIM"                     the market of that name operated by the London Stock 
"AIM Rules"               the AIM Rules for Companies published by the London  
                          Stock Exchange                                       
"Arden Partners"          Arden Partners plc                                   
"Atorka"                  Atorka Group hf                                      
"Board" or "Directors"    the directors of the Company as at today's date      
"CFA"                     City Financial Associates Limited                    
"Clyde Materials          Clyde Materials Handling Limited, a wholly owned     
Handling"                 subsidiary of Clyde Process Solutions                
"Clyde Materials Handling Clyde Materials Handling Limited, its parent company,
Group"                    Clyde Process Solutions and/or all or any of its     
                          subsidiaries as the context requires or permits      
"Clyde Blowers"           Clyde Blowers Limited                                
"Company" or "Clyde       Clyde Process Solutions plc                          
Process Solutions"                                                             
"Consolidation" or "Share the proposed consolidation of the issued and unissued
Consolidation"            Ordinary Shares into New Ordinary Shares on the basis
                          of one New Ordinary Share for every 50 Ordinary      
                          Shares to take place immediately prior to Admission  
"CREST"                   the relevant system (as defined in the CREST         
                          Regulations) in respect of which CRESTCo is the      
                          Operator (as defined in the CREST Regulations)       
"Earn Out Shares"         the New Ordinary Shares to be issued as part of the  
                          consideration for the acquisition of Clyde Materials 
                          Handling in 2006 if certain performance conditions   
                          are met                                              
"Enlarged Group"          the Company and its subsidiaries and subsidiary      
                          undertakings following the completion of the         
"Enlarged Share Capital"  the entire issued Ordinary Share capital of the      
                          Company immediately following Admission, comprising  
                          the New Ordinary Shares created from the Existing    
                          Ordinary Shares pursuant to the Consolidation and the
                          Placing Shares                                       
"Existing Ordinary        the Ordinary Shares in issue immediately prior to the
Shares"                   Consolidation                                        
"Extraordinary General    the extraordinary general meeting of the Company to  
Meeting"                  be held at 11 am on 16 April 2007 at the offices of  
                          Maclay Murray & Spens LLP, One London Wall, London   
                          EC2Y 5AB                                             
"Further Enlarged Share   the Enlarged Share Capital, together with the maximum
Capital"                  number of Earn Out Shares                            
"London Stock Exchange"   London Stock Exchange plc                            
"MAC Equipment"           MAC Equipment, Inc, a wholly owned subsidiary of Pony
"New Ordinary Shares"     ordinary shares of 25p each in the capital of the    
                          Company to be created pursuant to the Consolidation  
                          with ISIN GB00B1TSKR82                               
"Ordinary Shares"         the ordinary shares of 0.5p each in the capital of   
                          the Company with ISIN GB00B06GHL16                   
"Placing"                 the conditional placing of the Placing Shares by     
                          Arden Partners either as agent for the Company as    
                          described in this Document, pursuant to the Placing  
                          Agreement or as agent for Uberior, pursuant to the   
                          Vendor Placing Agreement                             
"Placing Agreement"       the conditional agreement dated 23 March 2007,       
                          between (1) the Company, (2) the Directors, (3) Arden
                          Partners and (4) CFA relating to the Placing         
"Placing Price"           105p per Placing Share                               
"Placing Shares"          21,904,762 New Ordinary Shares to be issued pursuant 
                          to the Placing, together with the Sale Shares        
"Pony Bidco"              Pony Bidco Limited (SC312119)                        
"Proposals"               the Acquisition, the Consolidation, the Placing and  
                          Admission as described in the Admission Document     
                          together with the related party transaction described
                          in paragraph 8 of this announcement                  
"Sale Shares"             the 2,089,606 New Ordinary Shares to be sold by      
                          Uberior pursuant to the Placing                      
"Shareholders"            the holders of Ordinary Shares                       
"Uberior"                 Uberior Equity Limited, of Level 1, Citymark, 150    
                          Fountainbridge, Edinburgh EH3 9PE                    
"UK"                      the United Kingdom of Great Britain and Northern     
"USA"                     the United States of America, its territories and    
                          possessions, any State of the United States of       
                          America and the District of Columbia and any area    
                          subject to its jurisdiction                          
"Vendor Placing           the conditional agreement dated 23 March 2007 between
Agreement"                (1) the Company, (2) Arden Partners and (3) Uberior  
                          relating to the Placing and the Sale Shares          
"Warrantholder"           a holder of Warrants                                 
"Warrants"                the existing warrants to subscribe for Ordinary      


"Air Filtration"          the process of removing particulate material from an 
                          air stream                                           
"baghouse filter"         a large fabric bag used to eliminate intermediate and
                          large particles. It operates like a vacuum cleaner   
                          bag, allowing air and smaller particles to pass      
                          through it, while entrapping larger particles        
"cartridge collector"     are generally pleated and are mounted in a horizontal
                          position, using gravity and airflow to collect dust  
"cyclone"                 a device used for collecting large particles, whereby
                          air enters through the top of a vertical cone, which 
                          then uses centrifugal force to push large particles  
                          against the side of the cyclone, where they drop into
                          a hopper and are collected                           
"Dense Phase Pneumatic    a method of pneumatic conveying which is the optimum 
Conveying"                solution for high rate transfer of abrasive or       
                          friable material. Material is dragged along, at a    
                          slower velocity than the conveying gas, and may flow 
                          in intermittent surges or waves, depending on loading
                          and gas velocity                                     
"desulphogypsum"          a synthetic form of gypsum derived from fossil-fuel  
                          sources that is being used commonly as a substitute  
                          raw material to mined gypsum in the production of    
"Dome Valve"              a valve used to control the progression of material  
                          in a process, ensuring an unrestricted opening for   
                          the optimum flow of materials                        
"dust collector"          a dust collector consists of a blower, dust filter, a
                          filter-cleaning system, and a dust receptacle or dust
                          removal system                                       
"Ferrous"                 a classification of metal which contains iron        
"Lean Phase Pneumatic     a method of pneumatic conveying which is best suited 
Conveying"                for transporting dust and fine particles. The        
                          material is pushed along a pipe in a fast flowing    
                          stream at high velocity                              
"mist collectors"         a process whereby centrifugal force is used to remove
                          wet particles, such as oil and water mist and fumes, 
                          as well as other machine tool by-products from       
                          industrial processes                                 
"Non-Ferrous"             a classification of metal which does not contain iron
                          e.g. copper, nickel, platinum and zinc               
"Pneumatic Conveying"     the moving of solids suspended in or forced by a gas 
                          stream through horizontal and/or vertical pipes      
"Pneumatic Injection"     a method of injecting material into the heart of a   
                          Process Vessel in a continuous, free flowing manner  
                          at variable velocities                               
"process industry"        include a broad spectrum of technologies and         
                          engineering industries such as chemicals,            
                          pharmaceuticals, petroleum, paper and wood products  
"Process Vessel"          a vessel into which materials are introduced and     
                          where they react with one another to create a product
                          e.g. coal injected into a blast furnace, reacts with 
                          carbon, lime, iron ore and hot air to create steel   
"Tuyere"                  a pipe, nozzle or other opening through which air is 
                          forced into a blast furnace or forge to facilitate   

City Financial Associates Limited of 6 Laurence Pountney Hill, London EC4R 0BL
is acting as nominated adviser to the Company and Arden Partners plc of 3
Laurence Pountney Hill, London, EC4R 0EU is acting as broker to the Company in
relation to the Placing and Admission. Each of City Financial Associates
Limited and Arden Partners plc, who are authorised and regulated in the United
Kingdom by the Financial Services Authority, are acting for the Company (in the
capacities described above) and no one else in relation to the Placing and
Admission and will not be responsible to any other person (whether or not a
recipient of this announcement) for providing the protections afforded to their
respective customers or for advising any other persons in relation to the
Placing and Admission or any transaction or arrangement referred to in this

The information in this announcement does not constitute, or form part of, any
offer or invitation to sell or issue, or any solicitation of an offer to
purchase or subscribe for, any New Ordinary Shares and nor shall this
announcement, or any part of it, or the fact of its distribution, form the
basis of, or be relied on in connection with, any contract and any subscription
or application for shares in the Company to be issued in connection with the
Placing should only be made on the basis of information contained in the
Admission Document to be issued in connection with the Placing.

The distribution of this announcement in certain jurisdictions may be
restricted by law and therefore persons into whose possession this announcement
comes should inform themselves about and observe any such restrictions. Any
such distribution could result in a violation of the law of such jurisdiction.

Neither this announcement nor any copy of it may be taken or transmitted into
the United States of America, Australia, Canada, Japan, South Africa or the
Republic of Ireland or in any other country outside the United Kingdom where
such distribution may lead to a breach of law or regulatory requirements or
transmitted, distributed or sent to or by any national, resident or citizen of
such countries or to any US person (within the definition of Regulation S made
under the US Securities Act 1933 (as amended)).

The Admission Document, containing full details of the Proposals, will be
dispatched to the Shareholders and, for information only, to Warrantholders of
the Company today. This announcement contains forward-looking statements. These
statements relate to the Enlarged Group's future prospects, developments and
business strategies. Forward looking statements are identified by their use of
terms and phrases such as "believe", "could", "envisage", "estimate", "intend",
"may" "plan", "will" or the negative of those, variations or comparable
expressions, including references to assumptions. The forward-looking
statements in this announcement are based on current expectations and are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by those statements. If one or more
uncertainties materialise, or if the underlying assumptions prove incorrect,
the Enlarged Group's actual results may vary materially from those expected,
estimated or projected. Given these risks and uncertainties, potential
investors should not place any reliance on forward-looking statements. These
forward-looking statements relate only to the position as at the date of this
announcement. Neither the Directors nor the Company undertake any obligation to
update forward looking statements, other than as required by the AIM Rules or
by the rules of any other securities regulatory authority, whether as a result
of new information, future events or otherwise.

a d v e r t i s e m e n t