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Macfarlane Group PLC (MACF)

Macfarlane Group PLC

Offer Update
Macfarlane Group PLC
20 October 2000


              MACFARLANE GROUP PLC CASH OFFER FOR
               BRITISH POLYTHENE INDUSTRIES PLC
               MACFARLANE FINANCING ARRANGEMENTS

On 17 October 2000, Macfarlane posted its Offer Document which
contained the formal Offer made by Noble Grossart on behalf of
Macfarlane.  Macfarlane today also provides summary details of
its  financing arrangements relating to the Offer as presented
to  the  shareholders  of Macfarlane in Macfarlane's  circular
dated  17  October  2000. The definitions used  in  the  Offer
Document apply throughout this announcement.

As  indicated  in the Offer Document, full acceptance  of  the
Offer would require an aggregate cash payment by Macfarlane of
approximately  £92.3 million which would  be  drawn  from  new
banking facilities made available for the purpose.  These  new
banking facilities, a summary of which IS set out below, will
also  provide funding for working capital, the refinancing  of
existing  borrowings  and the restructuring  of  the  enlarged
group.

Macfarlane has entered into:

(i)  a  facility agreement (the 'Facility Agreement') dated 29
     August 2000 between (i) Macfarlane, (ii) The Governor and
     Company  of the Bank of Scotland ('the Agent') (as  agent
     for  and  on  behalf  of the banks ('the  Banks')  listed
     therein,  as arranger, as issuing bank, as clearing  bank
     and  as  security  trustee) and (iii)  the  Banks  listed
     therein  (as amended by supplemental agreements dated  20
     September  2000  and  16 October 2000  between  the  same
     parties) in terms of which the Banks have agreed to  make
     available  to  Macfarlane  and  the  other  Borrowers  as
     defined  therein  a multi-currency term  loan,  revolving
     credit  and  guarantee facility of up to £230,000,000  on
     the   terms  set  out  therein.  The  Facility  Agreement
     contains   representations,   warranties,   undertakings,
     events of default and indemnities which are customary for
     facility   agreements  of  its  nature.    The   Facility
     Agreement  is  initially to be secured by  the  grant  in
     favour  of  The  Governor  and Company  of  the  Bank  of
     Scotland  (as security trustee for and on behalf  of  the
     Banks) of:-
     
     (a)  a  floating charge and guarantee by each  member  of
          the Macfarlane group incorporated in Scotland (other
          than any non-trading subsidiary); and
     
     (b)  a  guarantee  and debenture by each  member  of  the
          Macfarlane group incorporated in England  and  Wales
          (other than any non-trading subsidiary); and
     
     (c)  standard  securities  or legal charges  or  overseas
          equivalents (as appropriate) by Macfarlane or any of
          its subsidiaries over certain heritable, freehold or
          leasehold property (or overseas equivalent).
     
     The  Facility Agreement includes the following  financial
     and other covenants:
     
     (a)  Macfarlane  covenants to comply  with  the  interest
          cover, cash flow cover and debt cover covenants  set
          out  in the Facility Agreement, each of which is  to
          be tested on a quarterly basis;
     
     (b)  Macfarlane undertakes to comply with the  City  Code
          as   in  force  from  time  to  time,  the  relevant
          provisions of the Financial Services and Markets Act
          2000  and  all other statutes, laws and  regulations
          which are relevant in the context of the Offer;
     
     (c)  Macfarlane undertakes, on the request of  the  Agent
          at  any  time  after  the date on  which  the  Offer
          becomes or is declared unconditional in all respects
          and in any event within one month after the date  on
          which the Offer becomes or is declared unconditional
          in  all  respects  to  procure  that  such  security
          documents   as   the  Agent  may   require   (acting
          reasonably)  are granted in favour of the  Agent  as
          security  trustee for and on behalf of the Banks  by
          such members of the Macfarlane group (other than any
          non-trading  subsidiary) as  the  Agent  may  notify
          Macfarlane  in respect of advances or other  amounts
          borrowed  from the Banks (or any of them) under  the
          Facility Agreement for working capital or any  other
          purposes  (other  than  for  the  purposes  of   the
          acquisition  of the entire issued share  capital  of
          BPI);
     
     (d)  Macfarlane  shall  not  and shall  procure  that  no
          member  of  the Macfarlane group shall (without  the
          prior written consent of the Agent):-
     
          (i)  incur  or  permit  to subsist any  indebtedness
               (including  the grant of any guarantee  by  any
               member  of  the  Macfarlane  group  other  than
               Permitted  Indebtedness  (as  defined  in   the
               Facility Agreement);
          
          (ii) create  or  permit to subsist  any  encumbrance
               over  all or any part of its present or  future
               revenues   or   assets  other  than   Permitted
               Encumbrances   (as  defined  in  the   Facility
               Agreement); or
          
          (iii)     sell, lease, transfer or otherwise dispose
               of,  by  one or more transactions or series  of
               transactions (whether related or not) the whole
               or  any  part of its present or future revenues
               or  assets  or any interest therein except  for
               Permitted Disposals (as defined in the Facility
               Agreement).
          
     Events of default include:
     
     (a)  any  Borrower (as defined in the Facility Agreement)
          failing  to  pay any sum of principal  due  from  it
          under the Facility Agreement in the manner specified
          therein  and on the due date for payment thereof  or
          to  pay any other sums within three days of the date
          for payment thereof (unless such delay in payment is
          caused  by a mechanical or administrative error  and
          such  payment is made within three business days  of
          its original due date); or

     (b)  any  member of the Macfarlane group (other than  any
          non-trading subsidiary) failing to perform or comply
          with any other obligation expressed to be assumed by
          it  in  the Financing Documents (as defined  in  the
          Facility Agreement) and such failure, if capable  of
          remedy  or  cure,  is not remedied or  cured  within
          21  days after the Agent has given notice thereof to
          such member of the Macfarlane group; or

     (c)  any Borrower repudiating the Facility Agreement.

     Fees on normal commercial terms are payable by Macfarlane
     to  Bank  of  Scotland in connection  with  the  Facility
     Agreement.

     The  margin  over LIBOR payable pursuant to the  Facility
     Agreement is:

     (a)  in  relation to any advance under Tranche  A  and/or
          Tranche B (each as defined therein) one point  seven
          five per cent. (1.75%) per annum provided that:
     
          (i)  (subject  to  (iii)  below),  if  the   audited
               consolidated financial statements of the  Group
               delivered  to the Agent in terms of  Clause  31
               for  the  year ended 31 December 2001  disclose
               that  the  level of EBITDA (as defined therein)
               for the 12 month period prior to the date as of
               which  such  financial statements are  prepared
               is:-
          
               (A)  less   than  £68,000,000,  the  applicable
                    margin shall be increased to two per cent.
                    (2.0%) per annum;
          
               (B)  equal to or more than £68,000,000 but less
                    than  £77,500,000,  the applicable  margin
                    shall  be  one point seven five per  cent.
                    (1.75%) per annum;
               
               (C)  equal to or more than £77,500,000 but less
                    than  £88,000,000,  the applicable  margin
                    shall  be one point five per cent.  (1.5%)
                    per annum;
          
               (D)  equal  to  or  more than £88,000,000,  the
                    applicable margin shall be one  point  two
                    five per cent. (1.25%) per annum,
          
               in  each  case  with effect from  the  date  of
               delivery   of   such  financial  statement   by
               Macfarlane to the Agent or, if later, the  date
               on  which such financial statements are  to  be
               delivered to the Agent in accordance  with  the
               terms of this Agreement;
          
          (ii) (subject  to  (iii)  below),  if  the   audited
               consolidated financial statements of the  Group
               delivered  to the Agent in terms of  Clause  31
               for  the  year ended 31 December  2002  (or  in
               respect  of  any  subsequent  financial   year)
               disclose  that the level of EBITDA (as  defined
               therein) for the 12 month period prior  to  the
               date as of which such financial statements  are
               prepared is:-
          
               (A)  less   than  £86,000,000,  the  applicable
                    margin shall be increased to two per cent.
                    (2.0%) per annum;
          
               (B)  equal to or more than £86,000,000 but less
                    than  £97,500,000,  the applicable  margin
                    shall  be  one point seven five per  cent.
                    (1.75%) per annum;
          
               (C)  equal to or more than £97,500,000 but less
                    than  £106,500,000, the applicable  margin
                    shall  be one point five per cent.  (1.5%)
                    per annum;
          
               (D)  equal  to  or more than £106,500,000,  the
                    applicable margin shall be one  point  two
                    five per cent. (1.25%) per annum,
          
               in  each  case  with effect from  the  date  of
               delivery   of   such  financial  statement   by
               Macfarlane to the Agent or, if later, the  date
               on  which such financial statements are  to  be
               delivered to the Agent in accordance  with  the
               terms of this Agreement;
          
     (b)   in  respect of Advances under Tranche C, three  per
     cent. (3%) per annum; and
     
     (c)  if  at  any time an Event of Default (as defined  in
          the  Agreement) is continuing unwaived each  of  the
          rates  referred  to in (i) and (ii)  above  will  be
          increased  by  one per cent. (1%) per annum  for  so
          long as such breach continues unwaived;
     
(ii) a  facility  letter dated 29 August 2000  (the  'Facility
     Letter') between (i) Macfarlane and (ii) The Governor and
     Company of the Bank of Scotland ('BoS') in terms of which
     BoS  has  agreed to make available to Macfarlane and  the
     other   Borrowers  defined  therein  a  revolving  credit
     facility  of  up  to  £45,000,000 on the  terms  set  out
     therein.   It  is  intended that  sums  drawn  under  the
     Facility  Letter will be refinanced by the first  advance
     made   available  under  the  Facility  Agreement.    The
     obligations  of  the Borrowers under the Facility  Letter
     shall  be  unsecured  unless  the  aggregate  amount   of
     advances borrowed thereunder exceeds £16,500,000.
     
     The  margin over LIBOR payable in respect of the Facility
     Letter  is one point four per cent. (1.4%) per annum.
     
     Copies of the Facility Agreement and Facility Letter  may
     be inspected at the London offices of Dundas & Wilson CS,
     180  The  Strand, London WC2R 2NN during normal  business
     hours  on  any  week day (Saturday's and public  holidays
     excepted)  throughout  the period  for  which  the  Offer
     remains open for acceptance.

The  directors of Macfarlane, whose names are set out on  page
59  of  the  Offer  Document, accept  responsibility  for  the
information  contained in this announcement.  To the  best  of
the  knowledge and belief of the directors of Macfarlane  (who
have  taken  all reasonable care to ensure that  such  is  the
case),  the  information contained in  this  announcement  for
which  they  accept responsibility is in accordance  with  the
facts  and does not omit anything likely to affect the  import
of such information.

Noble Grossart, which is regulated in the UK by The Securities
and  Futures  Authority  Limited, is  acting  exclusively  for
Macfarlane and no one else in relation to the Offer  and  will
not  be  responsible to any person other than  Macfarlane  for
providing  the  protections afforded  to  customers  of  Noble
Grossart or for giving advice in relation to the Offer.



                                                                                
                                                                                
Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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