Debt Repayment and Placing

Environmental Recycling Technologies plc (the "Company")

Debt Repayment and Placing

The Company today announces a repayment of debt and a placing to raise £350,000 via the issue of new ordinary shares of 2.5 pence in the Company ("Ordinary Shares").

The Company has agreed to issue 14,000,000 new Ordinary Shares ("Debt Shares") at par value (the "Issue Price") in settlement of amounts due to creditors (the "Debt Conversion"). The issue of the Debt Shares will reduce the creditors of the Company by £350,000.

In addition to the Debt Conversion, the Company has also agreed to conditionally raise approximately £350,000, before expenses, by way of a placing of 14,000,000 new Ordinary Shares in the capital of the Company (the "Placing Shares") at the Issue Price (the "Placing"). The Placing is non-underwritten.

The repayment of creditors via the issue of the Debt Conversion and the raising of cash via a Placing is in line with the board of directors' (the "Board") on-going strategy to reduce the current liabilities of the Company.

The Issue Price is at a discount of 15.25 per cent to the closing mid-market price per Ordinary Share on 5 October 2010, being the last dealing day prior to the date of this announcement. The Directors believe the benefits of reducing the liabilities of the Company justify the discount to the mid-market price per Ordinary Share that the new Ordinary Shares have been issued at.

The Debt Shares and the Placing Shares will rank pari passu with the existing Ordinary Shares in the Company. Application has been made for the Debt Shares and the Placing Shares to be admitted to trading on the AIM market of the London Stock Exchange ("Admission"). It is expected that Admission will become effective on 12 October 2010.

Following the admission of the Debt Shares and the Placing Shares to trading on the AIM market of the London Stock Exchange ("Admission"), the Company will have 459,904,293 Ordinary Shares in issue. The Debt Shares and the Placing Shares will represent 6.1 per cent of the issued share capital of the Company immediately following Admission.

 6 October 2010

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