April 25, 2006

EQUITA to acquire Hardmaterials and Ceramics business divisions from Boart Longyear – Companies to operate as two independent entities, trading as Barat Carbide and Barat Ceramics

In a joint deal with company management, Equita Fonds 3, a fund advised by Equita Management GmbH, a private equity company under the umbrella of the Harald Quandt Group, is to acquire the Boart Longyear HMSR (Hardmaterials and Softrock Tools) and Boart Ceramics GmbH divisions from Longyear Holdings, INC, Salt Lake City. The two Boart Longyear businesses, HMSR and Boart Ceramics, are headquartered in Burghaun (Hessen) and Auma (Thuringia) respectively. An agreement signed to this effect and the simultaneous closing of the deal have since been released. The parties agreed not to disclose the volume of the deal or any other details of the transactions. The businesses develop, produce and market hard metals andceramic products for wear-intensive industrial applications and are active not only through itsplants in Germany but also in South Africa, China, and the USA.

Due to the complex structural status of the hard metal and ceramic businesses within the Boart Longyear Group, the transaction is to be completed in the form of two separate deals: the acquisition of HMSR division with production facilities in Germany, China and South Africa, will be structured as an asset deal (i.e. the acquisition of actual assets), while the ceramics division in Auma will be acquired via a share deal (i.e. the acquisition of company stock). In future, the two divisions will operate separately and fully independently of one another, trading as Barat Carbide GmbH and Barat Ceramics GmbH in their respective markets.

Headquartered in Bad Homburg, Equita Management GmbH specializes in complex transactions involving midsized companies in the German-speaking countries. The current transaction is to be managed through the Equita Fonds 3 issued in November 2005, via acquisition companies having been established specifically for this purpose in Germany and, for Barat Carbide, also in South Africa, China, and the USA. Financing for the acquisition of Barat Carbide is to be provided by Dresdner Bank, and by Sparkasse Gera-Greiz in the case of the Barat Ceramics deal. The Equita Fonds 3 has an open-ended fund structure and runs for an unlimited term. This enables the fund to also make longer-term investments in midsized companies. At first closing in November 2005, the Equita Fonds 3 had raised total equity commitments in excess of €133m. Due in Q/3 2006, final closing is expected to generate a target volume of €300m. The two businesses develop, produce and market a wide-ranging product portfolio encompassing wear-resistant components for a variety of industrial applications: the principal products manufactured by Barat Carbide Group (HMSR) include hard metal products and steel hard metal tools used in wear-intensive industrial applications, and tools for the mining, civil engineering and roadbuilding sectors. The core competency of Barat Ceramics is the manufacture of precision components, the applications here including machine and plant engineering, measuring and control technology, and the semiconductor and medical equipment industries. In the past fiscal year, consolidated sales of the two divisions stood at €79m, with hard metals and steel hard metal tools having accounted for €67m and ceramic products for €12m of this total. Worldwide, the Group has a headcount of approx. 800, of which 300 are based in Burghaun and 170 at the Auma facility.

Both businesses are active in markets characterized by above-average growth potentials. Due to the continued high demand for commodities on the part of Asian users, demand for hard metal products required in the mining, extraction and processing of ores and minerals will remain buoyant, giving a sustained boost to the hard metals division. Management assessments suggest that annual growth rates of up to 6% can be expected over the next five years. In the market for steel hard metal tools, growth of some 2 to 3% p.a. is anticipated. This segment, too, is benefiting from economic developments in the Asia-Pacific region, and from the worldwide extension of road transport networks. Clients include leading worldwide OEMs (original equipment manufacturers) such as Caterpillar, Herrenknecht, DBT, and former parent company Boart Longyear.

Growth rates of some 5% are expected in technical ceramic products. The company, founded in 1909, is poised to benefit from growth in the medical technology sector and increasing demand for components in all sectors of the engineering and plant engineering industries.

On signing the agreement, Karl-Georg Hildebrand, managing director of the Barat Carbide Group, stated: “With the backing of new owner Equita, we shall place the future focus of activities firmly on our core business. We are delighted to have found, in Equita, a majority  shareholder that will support us in ongoing moves to build our market position still further. Together, we shall implement rapid steps to capitalize on the existing development potentials available to Barat Carbide Group. The main geographic focus of these efforts will be alongside Europe on the former GUS states, China and the USA.”

These thoughts were echoed by Ulrich Werner, managing director of Barat Ceramics, who also stressed Equita’s entrepreneurial skills and experience in the small and midsized enterprise (SME) sector: “In Equita, we have found an owner committed to leveraging corporate potentials over the longer term rather than seeking to realize short-term yields. Building on our common roots in Germany’s small and midsized enterprise segment, we shall systematically pursue and expand the growth path at Barat Ceramics, continuing to extend our market position, most notably in our core markets Germany, Switzerland, and northern Italy.”

Hans J. Moock, managing director of Equita Management GmbH, added: “Barat Carbide and Barat Ceramics are both companies that are to be numbered among the leading players in stable growth markets. Not least on account of our long-term investment strategy, and our familiarity with the internal process structures and workflows inside midsized companies, we have proved to be a reliable and dependable partner to our portfolio companies. Several years of market experience, a skilled management team, an innovative product portfolio, and aboveaverage growth potentials on global markets, and in diversified industries, make Barat Carbide and Barat Ceramics an attractive investment for Equita. Both companies show strong growth potentials, which will be tapped by pursuing a combination of organic growth and a carefully targeted buy-and-build strategy in association with management.”

Further information:

Equita Management GmbH

Hans J. Moock
Telephone: +49(0)6172 9441-225

Barat Carbide GmbH, Burghaun

Karl-Georg Hildebrand
Telephone: +49(0)6652 823-20

Barat Ceramics GmbH, Auma

Ulrich Werner
Telephone: +49(0)36626 98-200

On behalf of Equita Management GmbH:

Charles Barker Corporate Communications GmbH, Frankfurt am Main

Irina Kobboldt
Telephone: +49(0)69 794090-30
Kornelia Spodzieja
Telephone: +49(0)69 794090-40