Debt Restructuring and Conversion

ENVIRONMENTAL RECYCLING TECHNOLOGIES PLC

(AIM: ENRT)

 Debt Restructuring and Conversion

Environmental Recycling Technologies plc ("ERT" or "the Company") (AIM: ENRT), which has developed and is exploiting the patented rights to the Powder Impression Moulding ("PIM") process capable of converting mixed waste plastics into commercially viable products, is pleased to announce it has reached agreement on the terms of a debt restructuring and debt-for-equity transaction which will have the effect of significantly strengthening the Company's balance sheet and eliminating debt servicing costs.

Under the agreement, ERT has agreed to issue 225,241,928 new ordinary shares of 2.5p each ("the New Ordinary Shares") to third party lenders in satisfaction of existing loans and accrued interest amounting in total to £5,631,048. The loans which are being repaid by the transaction were subject to annual rollover and carried an annual rate of interest of 7.5 per cent. with a significantly higher penal rate and costs .

The effective issue price of 2.5p is at a premium of approximately 28.2 per cent. to the closing mid-market price per Ordinary Share of 1.95 pence on 11 October 2012, being the last dealing day prior to the date of this announcement.

The New Ordinary Shares will be issued at par and the transaction is conditional only on admission of the New Ordinary Shares to AIM. Application will be made for the New Ordinary Shares to be admitted to AIM and it is expected that dealings in the New Ordinary Shares will commence with effect from 19 October 2012.

Further to the issue of New Ordinary Shares the following shareholder has a disclosable interest:

It is expected that this holding will be distributed to a number of beneficial holdings shortly after Admission.

In addition the balance of the Company's debt (including all interest and fees) amounting to £1,841,369 has been converted to a secured five (5) year loan note at an interest rate of 2% above the Bank of England base rate

Managing Director Roger Baynham commented:

"This is a transformational deal for ERT which strengthens the balance sheet, addresses debt at a discounted rate that is favourable to ERT and closely follows on from the appointment of Lee Clayton as the Company's Chief Operating Officer. With this step and the new licences which have recently been signed, the Company looks to the future with considerable confidence."

In accordance with the Disclosure and Transparency Rules (DTR 5.6.1R), the Company confirms that, following this issue, its issued share capital comprises 786,286,107 ordinary shares of 2.5p each ("Ordinary Shares"). All of the Ordinary Shares have equal voting rights and none of the Ordinary Shares are held in Treasury. The total number of voting rights in the Company is therefore 786,286,107. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Disclosure and Transparency Rules.

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Environmental Recycling Technologies plc (ERT) is a leading developer of innovative technologies specifically focusing on plastic waste recycling. The company holds the worldwide intellectual property rights to the Powder Impression Moulding (PIM) Process.