CSM to Restructure Purac Division

27/09/07 CSM subsidiary PURAC intends to restructure its operations by integrating the new production plant in Thailand into the overall production capacity and by discontinuing lactic acid production in the Netherlands and Spain as a result of a strategic review. Furthermore, in the Netherlands, the production of lactitol in Gorinchem will be closed down and the manufacturing plant in Ter Apelkanaal will be sold. Overall 160 jobs are affected. CSM said that the new manufacturing footprint, which will be implemented in the course of 2008, will substantially improve the results of PURAC. The asset write down is expected to range between EUR40 million and EUR55 million depending on the sale proceeds.

The lactic acid market is developing into a highly competitive market in which production capacity needs to be used in the most efficient way. Therefore, Purac’s lactic acid manufacturing will be discontinued in the Netherlands (Gorinchem) and Spain (Montmelo). It is no longer economically feasible to produce lactic acid in those plants. In the future, all lactic acid will be produced in the PURAC factories in Thailand (Rayong), Brazil (Campos) and the US (Blair).

The lactic acid factory in Gorinchem will specialize in the production of lactic acid derivatives, in which production of lactitol is no longer considered strategic and will be discontinued. The lactic acid factory in Montmelo will gradually be transformed into a new D (-) and lactide plant to meet the increasing demand in PLA (Poly Lactic Acid) markets in line with the recently announced PLA innovations for the bio-plastics industry.

The production of gluconic acid and gluconates is no longer considered strategic. PURAC recently sold its gluconic acid business in Janesville (US) and now intends to sell the manufacturing plant in Ter Apelkanaal. The unions and works councils have been informed and will be counseled. Compulsory dismissals can not be excluded.

Fabrizio Rampinelli, Managing Director of PURAC: “The new manufacturing footprint will align the structure and capacity of the PURAC organization with market potential and future demand. The new organization will result in higher levels of efficiency necessary to improve our results and will allow us to increase our flexibility towards our customers.”