CP Kelco Announces International Biogums Manufacturing Improvements

CHICAGO--()--May 21, 2003--As the world leader in biogums, CP Kelco is implementing a plan to boost production capabilities and further reinforce the company's position as the most cost effective producer in the biogums marketplace. Major components of the plan include:

-- Continued expansion of the company's Okmulgee, Okla. facility

-- Expanded xanthan gum production in its Knowsley, United Kingdom facility

-- Termination of a xanthan gum contract manufacturing agreement

According to Robert Toth, president and chief executive officer, this comprehensive production plan is evidence of CP Kelco's aggressive commitment to reinforce its global leadership position in biogums, especially in xanthan gum. "We are delighted at how this plan leverages our market leadership and enables us to pursue the competitive manufacturing position required to meet the future needs of our customers around the world," said Toth.

The plan centers around recently completed negotiations that enable CP Kelco to withdraw from an existing contract manufacturing arrangement that originally ran until 2009. The early termination agreement will begin yielding benefits immediately. "As CP Kelco reduces, then eliminates, the amount of material produced under this toll manufacturing arrangement, we will increase capacity at our existing facilities," said Mike Size, biogums business unit director. "These decisions and investments are important as we continue to improve our production flexibility and cost position."

CP Kelco is making additional investments in expanding its Okmulgee plant--an expansion highlighted by completion of a new state-of-the-art wastewater treatment facility. The Okmulgee site, which occupies 95 acres, is the largest biogum facility in the world.

"Our capacity expansion at Okmulgee is significant because it allows us to relocate toll-produced capacity in-house--and that makes production more cost effective," said Size. "This is important because the biogums market is competitively priced around the globe and we are committed to being the industry leader in operational efficiency."

CP Kelco's expanded production capacity in Knowsley compliments the Okmulgee expansion and the Knowsley site is adding work shifts in response to increased material demand. "There's a growing demand in the European market for 'identity preserved' products," Size said. "Our investment in added production at Knowsley reflects our commitment to the growing business we have in Europe."

Size added that CP Kelco's original biogums plant in San Diego, California continues to be an important component of the company's global strategy. "The San Diego site is critical to our ongoing success. Besides world scale production of xanthan gum, we utilize our manufacturing technology and flexibility there to produce a broad array of custom and specialized products."

About CP Kelco:

CP Kelco is the global leader in the hydrocolloids (thickeners and stabilizers) market, with leading positions in xanthan gum and pectin and a strong position in carrageenan. The company has more than 2,000 customers in over 100 countries, with facilities in North America, Europe, Asia and Latin America. Formed in 2000 by the combination of the Copenhagen Pectin/Food Gums Division of Hercules Incorporated and the Kelco Biopolymers business of Monsanto Company, CP Kelco's principal share-holders are Lehman Brothers Merchant Banking Partners II L.P. and Hercules Incorporated (NYSE: HPC).

Contacts

CP Kelco
Jack Koberstine, 312/554-7813

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Contacts

CP Kelco
Jack Koberstine, 312/554-7813