York Pharma - Update on Solvay Acquisition

Milton Keynes, UK, 14 January 2009, York Pharma plc (YRK.L), the specialist dermatology company, provides the following update on the acquisition of the Flammazine and Flammacerium brands ('the Brands') from Solvay Pharmaceuticals('the Acquisition').

On 1 October 2008, the Company announced the completion of the Acquisition, the terms of which provided for an initial payment to Solvay of EUR17.0m, paid for in part through a term loan facility negotiated by the Company with Fortress Credit Corporation ('Fortress').  The terms of the Acquisition also required the Company to make a final payment of EUR11.5m to Solvay Pharmaceuticals on or before 31 December 2008. Solvay and the Company had agreed an alternative arrangement in lieu of a cash settlement of this obligation.  However, this arrangement has now proved unacceptable to Fortress, as a result of which Fortress has triggered provisions within the agreements which have resulted in the repayment of the loan facility to Fortress and the release of all liens over the Company's assets.

As a result, the Brands together with the associated revenues have been returned to Solvay. However, York Pharma remains in discussion with Solvay and is exploring alternative ways to finance the reacquisition of the Brands.

Strategic Review

In the meantime, the Company has initiated a strategic review to restructure the business.  The results of this review will be announced in the near future.