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NATIONAL ENVIRONMENTAL GROUP COMMENCES REORGANIZATION PLAN

 NATIONAL ENVIRONMENTAL GROUP COMMENCES REORGANIZATION PLAN
 NEW BRUNSWICK, N.J., Aug. 17 /PRNewswire/ -- National Environmental Group, Inc. (AMEX: NEG) announced today that it has commenced its 1992 Plan for Reorganization.
 The company will form a new wholly owned subsidiary, Key Energy Group, Inc. (KEG). KEG will be capitalized with approximately 5.1 million shares of common stock. The company plans to merge National Environmental Group Inc. and KEG (the Recapitalization Merger). As part of the 1992 Plan of Reorganization the company is making simultaneous offers to its debt and equity holders to exchange their holdings for common stock.
 Under the terms of the exchange offers, the company said it intends to offer approximately 2,624,086 shares (after giving effect to the Recapitalization Merger) of common stock to holders of: the 7-1/2 percent Convertible Subordinated Bonds due 1998 of YFC International Finance N.V. (the Eurobonds); the 12 percent Senior Secured Subordinated Convertible Debentures due 1999 of ESKEY, Inc. (the ESKEY Senior Debentures) and the 10-3/4 percent Subordinated Convertible Debentures due 2003 of ESKEY (the ESKEY Debentures).
 The exchange offers will be conditioned upon acceptance by a minimum of 90 percent of the debt to be converted. If such minimum is not achieved the company said it intends to file a prepackaged plan of reorganization (the Prepackaged Plan) under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). Under the Prepackaged Plan the equity holders and holders of the exchangeable debt would receive the same consideration in exchange of their claims as they would receive in the exchange offers, except that under the Bankruptcy Code all equity holders and holders of Exchangeable Debt would be required to accept the consideration offered in the exchange offers or the Recapitalization Merger if the Prepackaged Plan is approved.
 Pursuant to the Recapitalization Merger each share of 14 percent Cumulative Convertible Preferred Stock (the Preferred Stock) of the company, including accrued and unpaid dividends thereon, will be converted into 1.04 shares of common stock of the post-merger company and each share of common stock of the company (the Common Stock) will be converted into .0178 shares of common stock of the post-merger company. The exchange offers are also conditioned upon the consummation of the Recapitalization Merger.
 In addition, the company will issue to existing holders of the preferred stock and common stock rights to purchase approximately 1 million shares of common stock at $1.90 per share (after giving effect to the Recapitalization Merger).
 Upon completion of the 1992 Plan of Reorganization and/or prepackaged bankruptcy the company's long-term debt and related interest expense will decrease substantially. In addition, the company will have positive equity in excess of $2.5 million.
 Francis D. John, president and chief executive officer of the company, stated, "The directors of the company determined that this reorganization plan is in the best interest of the company and its shareholders. While the company remains marginally profitable, NEG remains highly leveraged with 10.5 percent of the annual revenue going to service debt. In addition, the company and its subsidiaries have an extremely complex capital structure which makes it difficult for the market to understand the company and to value its securities. The board has concluded that the continued cyclical nature of the energy industry could in the future cause difficulties for the company if it continued to be burdened with current debt levels. Finally, with the successful completion of the 1992 Reorganization, the company said it believes it will be able to maintain its American Stock Exchange listing for the new KEG shares."
 The exchange offers and the rights offers will expire at 5 p.m., Sept. 30, 1992, unless extended by the company.
 For further information contact the company at 908-247-4822.
 /delval/
 -0- 8/17/92
 /CONTACT: Diane Mack of National Environmental Group, 908-247-4822/
 (NEG) CO: National Environmental Group, Inc. ST: New Jersey IN: SU: RCN


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Publication:PR Newswire
Date:Aug 17, 1992
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