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Nuplex to Buy Akzo Nobel Coatings Resins Business

Nuplex to Buy Akzo Nobel Coatings Resins Business

Statement made by Fred Holland, Chairman, Nuplex Industries Limited

Nuplex Industries Limited has made an offer to buy the Coatings Resins (CR) business of Akzo Nobel N.V. for a consideration of approximately €110 million (NZ$202m). CR is a global manufacturer and recognized technology leader in the development, manufacture and marketing of high performance resins for coatings, based on a broad range of resin types and technologies. CR is a well established solution provider to the largest coating manufacturers in the world and has a presence in Europe, the Americas and Asia.

This acquisition will transform Nuplex from an Australasia/Asia regional business into a global manufacturing and marketing group with sales well in excess of NZ$1 billion.

CR sales amounted to €256 million in calendar year 2003, while EBITDA amounted to €18.1m before deducting corporate charges of €0.6m. The offer is net of contributions to pension funds and other employee benefit plan liabilities which Nuplex is to take over.

CR is based in Bergen op Zoom, Netherlands where it has a manufacturing and research and development facility. Other facilities are in the UK, USA, Brazil, Malaysia, Indonesia, Thailand and The Peoples Republic of China. The business employs 774 people of which 355 are located in the Netherlands.

The CR assets acquired will be all shares in the wholly owned coatings resins subsidiaries of Akzo Nobel N.V., Akzo Nobel’s shares in joint venture companies in Asia and the coatings resins business assets currently operated within certain Akzo Nobel subsidiaries in the UK, USA and Brazil.

The consideration will be payable in cash and is being funded by a short term loan facility of up to €125million (NZ$230m) to be provided jointly by Westpac Banking Corporation and Commonwealth Bank of Australia. This loan will be re-financed by an issue of Nuplex shares for 30% of the purchase price plus the establishment of in-market longer term debt facilities for the balance. The share issue will be achieved by a private placement for up to 15% of Nuplex shares on issue plus an underwritten renounceable rights issue for the balance.

Settlement of this transaction is subject to the receipt of a number of regulatory approvals and to obtaining shareholder consent to the transfer of shares in the joint venture companies. It is also subject to Nuplex obtaining approval from its shareholders for the transaction and its financing. To this end a special meeting of shareholders will be convened as soon as possible to inform shareholders of the proposal and give consideration to the resolutions.

Nuplex has conducted an extensive due diligence process to evaluate the economic benefits to the group and to ensure that management fully understands the opportunities, risks and liabilities that come with this acquisition. The following strategic benefits are anticipated: Access to a strong Research and Development function that will provide technology strength to the Group and improve our offerings in Nuplex’s markets in Australasia and Asia. Bringing to the Group a strong management team that has global marketing experience and an understanding of world class process technology. Providing Nuplex with critical mass that will yield benefits internally in areas such as marketing, purchasing, operations, HR, systems and procedures. Established businesses in South East Asia and a new plant in China, the world’s fastest growing market. Growth opportunities in Eastern Europe and South America. The opportunity to introduce Nuplex technology to Northern Hemisphere markets.

Nuplex has evaluated this opportunity in financial terms taking into account the current run rate as disclosed by Akzo Nobel and projecting into the future based on information gained during the due diligence and negotiation process. The Board and senior management are confident of the following indicators: The Return on Investment based on the consideration payable is expected to comfortably exceed the Cost of Capital. Based on the funding structure that has been negotiated it is expected that the CR business will add to Earnings per Share in the first full year of reporting following settlement. At 30 June 2005 the leverage of the Group will be 46% (Senior Debt : Total Debt plus Equity) compared with 32% a year earlier.

Directors are pleased to have concluded negotiations with one of the world leaders in the coatings industry. It is anticipated that the transaction will become unconditional during November if Nuplex shareholder approval is obtained.

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