RNS Number:3380M
Applied Graphics Technologies Inc
13 June 2003



CONTACT:     Joseph D. Vecchiolla, President and Chief Operating Officer
             Applied Graphics Technologies, Inc.
             (212) 716-6730


FOR IMMEDIATE RELEASE


                 APPLIED GRAPHICS TECHNOLOGIES ANNOUNCES
                      SIGNING OF MERGER AGREEMENT


New York, June 13, 2003 - Applied Graphics Technologies, Inc. (AMEX:  AGD) ("
Applied Graphics") announced today that, pursuant to the unanimous approval of
its Board of Directors, it has entered into a definitive Agreement and Plan of
Merger (the "Merger Agreement") in connection with a comprehensive
recapitalization of Applied Graphics by KAGT Holdings, Inc. and KAGT Acquisition
Corp. ("Purchaser"), affiliates of funds managed by Kohlberg & Co., LLC.

Pursuant to the Merger Agreement, Purchaser will make a tender offer for all of
the outstanding shares of Applied Graphics common stock at a price of $0.85 per
share in cash.  The tender offer will be subject to customary conditions,
including a minimum condition that would require enough shares of Applied
Graphics common stock be tendered so that Purchaser would beneficially own more
than 50% of the outstanding shares of Applied Graphics common stock, on a fully
diluted basis, and a condition that Purchaser obtains the requisite financing
for the transaction pursuant to its commitment letters.  The tender offer will
also be conditioned on the contemporaneous closing of the recapitalization
referred to below.  Based on the last trading price of Applied Graphics common
stock on June 12, 2003, the price to be paid in the tender offer represents a
70% premium.  Purchaser has obtained binding commitments, subject to certain
conditions, from holders of 33.9% of the Applied Graphics common stock, on a
fully diluted basis, for their participation in the tender offer.

Concurrent with the closing of the tender offer, and conditioned on such
closing, Purchaser will complete a comprehensive recapitalization of Applied
Graphics in which all of Applied Graphics' existing debt and preferred stock
will be purchased or redeemed at substantial discounts, resulting in reductions
in debt, and interest and principal payments.  Pursuant to the recapitalization,
Applied Graphics plans to retire all of its outstanding 10% Subordinated Notes
due 2005 (the "Notes") and preference shares (the "Wace Preference Shares") of
its Wace Group Limited ("Wace") subsidiary.  To facilitate these transactions,
Applied Graphics and Wace are convening meetings of the holders of the Notes and
the Wace Preference Shares, respectively, to amend the provisions that govern
the Notes and Wace Preference Shares in order to allow for Applied Graphics and
Wace to purchase the outstanding Notes and Wace Preference Shares, respectively,
at specified prices.  Also concurrent with the closing of the tender offer,
Purchaser or its lenders plan to purchase all of Applied Graphics' senior debt,
or alternatively, Applied Graphics will borrow funds from Purchaser's lenders to
purchase all of its senior debt.  Applied Graphics has obtained binding
commitments to effectuate such recapitalization transactions, subject to certain
conditions, from all of its senior lenders, and a sufficient number of holders
of its outstanding Notes and the Wace Preference Shares such that, assuming
satisfaction of these commitments and the applicable conditions thereto, the
recapitalization transactions will be effectuated with respect to the senior
debt and Wace Preference Shares and will most likely be effectuated with respect
to the Notes.

Following the closing of the tender offer and subject to customary conditions,
Purchaser will be merged with and into Applied Graphics, and Applied Graphics
will continue as the surviving corporation.  Any shares not purchased in the
tender offer will be acquired for the same price in the second-step merger.
Purchaser has advised Applied Graphics that it intends to commence the tender
offer as soon as practicable.  There can be no assurances, however, that the
conditions to the closing of the tender offer will be satisfied or that the
tender offer will be consummated. Applied Graphics provides digital media asset
management services across all forms of media, including print, broadcast, and
the Internet and is a leading application service provider for the on-line
management of brands.  Applied Graphics offers a variety of digital imaging and
related services to major corporations, which include magazine and newspaper
publishers, advertisers and their agencies, entertainment companies, catalogers,
retailers, and consumer goods and packaging companies. From locations across the
United States, the United Kingdom, and Australia, Applied Graphics supplies a
complete range of services that are tailored to provide solutions for specific
customer needs, with a focus on improving and standardizing the management and
delivery of visual communications for clients on a local, national, and
international basis.  Additionally, Applied Graphics provides a wide range of
advertising and marketing-related creative services for customers, primarily in
retailing. Founded in 1987, Kohlberg & Co., LLC is a leading U.S. private equity
firm with offices in New York and California.  The firm has completed more than
30 buyout investments and over 60 add-on acquisitions, representing value in
excess of $4 billion.  Kolhberg & Co. and its affiliates currently manage more
than $2.5 billion in investment capital. 

Certain statements in this press release may contain "forward-looking statements" 
within the meaning of the Private Securities Litigation Reform Act of 1995, as 
amended. Such statements are inherently subject to known and unknown risks, 
uncertainties, and other factors that may cause actual results, performance or 
achievements of Applied Graphics to be materially different from those expected 
or anticipated in the forward-looking statements. Such factors are described in 
the Applied Graphics' SEC filings, including its Quarterly Reports on Forms 10-Q
and its Annual Report on Form 10-K. This announcement is not a recommendation, 
an offer to purchase or a solicitation of an offer to sell shares of Applied 
Graphics.  Purchaser has not commenced the tender offer for shares of Applied 
Graphics common stock.  Upon commencement of the tender offer, Purchaser will 
file with the Securities and Exchange Commission a Schedule TO and related 
exhibits, including the offer to purchase, letter of transmittal, and other 
related documents, and Applied Graphics will file a solicitation/recommendation 
statement on Schedule 14D-9. Shareholders should read the offer to purchase and 
solicitation/recommendation statement and the Schedule TO and related exhibits, 
as they will contain important information about the tender offer. 

When they become available, shareholders can obtain these documents free of 
charge from the U.S. Securities and Exchange Commission's website at 
www.sec.gov or from either Purchaser by directing a request to Kolhberg & Co., 
LLC, 111 Radio Circle, Mount Kisco, New York 10549, or from Applied Graphics, by
directing a request to Applied Graphics Technologies, Inc., 450 West 33rd Street, 
New York, New York 10001, Attention: Corporate Secretary.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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