Neomarkka - Company Announcement

AVILON SEEKS CORPORATE RESTRUCTURING

NEO INDUSTRIAL PLC STOCK EXCHANGE RELEASE    7 September, 2011 at 10.45 am

AVILON SEEKS CORPORATE RESTRUCTURING

Avilon Ltd, part of Neo Industrial's Viscose Fibers business has today
submitted an application in its local district court for a corporate
restructuring. Behind the arrangement is Avilon's currently critical liquidity
situation. The restructuring's objective is to secure the company's promising
long-term development by ensuring its short-term operating conditions. 

Despite facing short term market induced difficulties, Avilon's long-term
prospects are promising. Avilon's market situation has changed almost monthly.
However, Avilon still has confidence in its long-term outlook. Corporate
restructuring is a necessary protective measure against any single creditor's
actions endangering the continuation of Avilon's mid-term operations and
production. 

Avilon's tight liquidity situation is due to the overheating of the viscose
fiber market that started last spring and led to an unprecedented, short-term
weakening of the fiber market and price. Avilon's Valkeakoski-based factory has
been in a temporary shutdown since the end of July, and sales of the existing
stock have been less than Avilon hoped. 

The United States, main market of Avilon's strategically important product,
fire-retardant fiber, suffers from a stagnated construction market. Hence,
Avilon's customers' stock levels are currently high. The basic viscose fiber
market is, however, already recovering. 

- We are now working towards the moment when profitable production can be
restarted and we can utilize our achievements thus far: successful startup of
the factory, our innovation enabling the use of paper pulp, attaining a good
market position on the US fire-retardant fiber market, as well as new product
innovations now very close to commercializing, comments Avilon's Managing
Director Heikki Hassi. 

Avilon's recently launched technology business related negotiations have
proceeded well. Possible license sales will have a significant immediate as
well as a long-term effect on Avilon's financial situation. 



Neo Industrial Plc

Markku E. Rentto
Managing Director


FURTHER INFORMATION:
Claus Carlsen, Operative Director, Avilon, tel. +358 207 800 502

www.neoindustrial.fi

Neo Industrial Plc's strategy is to invest mainly in industrial companies with
similar synergic benefits. The aim of investments is with active ownership to
develop the purchased companies and establish additional value. Returns are
sought through both dividend flow and an increase in value. Neo Industrial's B
shares are listed on the NASDAQ OMX Helsinki Stock Exchange. 

Neo Industrial's business segments are Cable (Reka Cables, Expokabel, Nestor
Cables), Viscose Fibers (Avilon) and Single Family Housing (Finndomo).