Citadel Environmental Group signs Letter of Intent.

LOS ANGELES--(BUSINESS WIRE)--Dec. 4, 1996--Citadel Environmental Group (NASDAQ EBB:CTEV) has entered into a Letter of Intent to acquire 51 percent of Arizona Medical Recovery and Reprocessing (AMRR) which in turn owns 51 percent of Applied Medical Technologies (AMT).

As part of the acquisition, AMRR and AMT will be combined resulting in Citadel owning 51 percent of the combined companies. AMRR and AMT are engaged in the recycling and reprocessing of non-critical surgical instruments and other related medical devices.

AMRR was formed in 1995 and has 1996 revenues of $1,600,000. All revenues to date have come from the AMT facility in Utah which has the capability to generate annual revenue of $3 million. A second reprocessing facility is scheduled to open in Arizona next month. This reprocessing facility will have the ability to generate annual revenues of approximately $15-18 million.

The terms of the acquisition will be a $1.5 million cash contribution for working capital to expand the operation and a $2 million line of credit for equipment and facility financing.

AMT and AMRR's management team is led by Pauline Sill, president and chief executive officer, who will continue to manage the company under a long-term employment agreement. Upon completion of the proposed acquisitions, Citadel's intent is to form an additional subsidiary which will oversee the operations of AMT, AMRR and Citadel's medical waste treatment facilities.

Sill has agreed to be the president and CEO of the new subsidiary. Citadel's newest Medical Waste Treatment facility permit was recently deemed complete and is expected to commence operations sometime in the second quarter of this year.

Completion of the acquisitions is expected to close on or about Jan. 15, 1997. Citadel is an environmental holding company specializing in financing small to medium environmental companies.

CONTACT: Citadel Environmental Group

Joseph Gorman, 909/396-5153

Fax: [phone]