Arkenol Asia signs MOU with China's Central Resource Nothern Development Co. and Regal Best Limited, Hong Kong


LAKE FOREST, Calif.--(BUSINESS WIRE)--December 11, 1997--The L.L. Knickerbocker Co., Inc. (Nasdaq:KNIC- news; LLK) announced today that Arkenol Asia, Inc., California, Central Resource Northern Development Co., China, and Regal Best Limited,, Hong Kong, have signed a Memorandum of Understanding (MOU) to build the first biorefinery in China using Arkenol Asia's patented technology relating to the conversion of biomass materials to chemicals, cthanol and other environmentally friendly end-use products for sale in China. The MOU is subject to due diligence by all parties, estimated at 90 days, and to the signing of a definitive agreement. Arkenol Asia, Inc., a Delaware corporation, is owned 50% by LLK and 50% by Arkenol Holdings, LLC.

The signing of the MOU took place in an official signing ceremony and press conference held in Beijing at the Palace Hotel. witnesses to the signing were senior officials of China Ministry of Agriculture, China Ministry of Transportation and representatives of the Gold Supervision Bureau. Other invited guests in attendance included officials of the Ministry of Railways and the State Planning Commission representatives of Kidco, Thailand, Pacific Power International, Australia, and a senior Military official of Thailand.

Central Resource Northern Development Co., a wholly owned subsidiary of China Gold Supervision Bureau with 20,000 employees, is officially authorized to invest in overseas ventures.

``Utilizing Arkenol Asia's technology, China has the potential to be the largest producer of ethanol in the world,'' said Louis L. Knickerbocker, Chairman and CEO. ``China's growing concern and highest priority is the problem of pollution. As the largest consuming country in the world, China is currently generating 600 million tons of dry agricultural waste a year, at least 1200 times more dry agricultural waste than the United States, currently at 45 million tons a year. It is illegal in China to burn crops, but the volume of dry agricultural waste leaves farmers with few options. Arkenol Asia's process will incentivize the farmers by paying them to gather the waste. To put this into perspective, if Arkenol Asia used only 10 percent of the dry agricultural waste available in China, it would produce 600,000 barrels of ethanol a day.''

Mr. Knickerbocker added ``China is a financially sound country, currently with the second largest reserve in the world. Their growing demand for a cleaner environment, domestic clean energy production and the cutting edge technology demonstrated by Arkenol Asia for biorefinery energy supply, is what led China into negotiations for a joint venture, and the signing of a Memorandum of Understanding.''

Mr. Tung K. Lau, Director of International Relations for Arkenol Asia, Washington, DC, was also in attendance at the signing ceremony in Beijing. Mr. Lau is a former Department of Energy official who led numerous energy research and development missions to China and was the U.S. official that successfully implemented the first solar energy international agreement between the United States and China.

``We were very pleased to have Mr. Lau representing us at the official signing ceremony,'' said Mr. Knickerbocker. ``His background in the area of renewable energy is extensive and valuable. Mr. Lau was responsible for developing cooperative activities in the area of solar energy under the Hundred Counties integrated rural energy development program in China. This program was implemented to bring clean energy to 500 million people in the China's agriculture regions that lack basic electric power and transportation fuels.''

Mr. Lau stated that ``The objectives of this joint venture are to model Arkenol Asia's biorefinery projects after the Hundred Counties program, by constructing as many as 100 biorefineries over the next 10 to 15 years in conjunction with our joint venture partners Central Resource and Regal Best. The objectives of this MOU are to promote sustainable development in the vast agriculture areas in the People's Republic of China (PRC) by accelerating the deployment of renewable energy in China, with the support of our joint venture partners and to demonstrate the technical and economic feasibility of renewable energy for the rural inhabitants of the PRC.''

Representing Arkenol Asia at the signing was Mr. James R. Miller, also an officer of Arkenol Holdings, who said ``Arkenol Asia's biomass technology holds vast potential for China's agriculture based regions. It is suggested that China will need to import 1 million barrels of oil per day, ranging from 1 to 5 million barrels a day by the beginning of the year 2000. Arkenol Asia's technology has the potential to significantly reduce China's dependence on imported oil.''

The L.L. Knickerbocker Co., Inc. markets a wide variety of branded collectibles, jewelry and accessories and consumer products. The Company's primary focus is to create and build Brands which can be marketed through a variety of channels, including national and international retail and direct response mail. The Company has a 38.3% equity investment interest in Pure Energy Corporation, the exclusive worldwide licensee to an alternative fuel. Recently, the U.S. Patent Office issued a Notice of Allowance for claims covering the alternative fuel which is patent pending. In addition, the Company has a substantial equity interest (approximately 31%) in Ontro, Inc. and Insta-Heat, Inc., involved in the development of containers which self-heat food and beverages. The Company recently entered into a joint venture with Arkenol Holdings, LLC to construct power plants and biorefineries in a number of Southeast Asian countries. For more information, visit the L.L. Knickerbocker Company web site at   .

This press release contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and other factors. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of the factors described herein.