Songwon: New strategic approach and increased commitment to the Polymer Industry

Songwon announced today the completion of its strategic review and a number of related initiatives which will be a quantum leap in its commitment to the polymer industry. Songwon Industrial Co., Ltd., with manufacturing facilities in Ulsan South Korea, is a major producer of antioxidants and is serving the global markets indirectly through a distribution agreement with Clariant. Songwon began producing additives for the PVC industry in the mid 1960’s and antioxidants for the polymer industry in the mid 1980’s.

The strategic initiatives include:
• The investment in a second manufacturing site for the production of phenolic and phosphite antioxidants. The new facility will be located approximately two miles from the existing facility and will be completely independent of the original plant. Consistent with the approach Songwon has employed in the existing operations, the new plant will include the back integration into key raw materials and intermediates and is being built on the anticipation of the needs of the announced expansions in the Polymer Markets.

• The extension of the global product range to include Hindered Amine Light Stabilizers (HALS), Benzotriazole UV Light Absorbers, and key niche antioxidants to serve specific application needs. The new product lines will be marketed under the brand names Songlight™, Songsorb™, and Songnox™.

• The establishment of direct channels to serve the global markets. Following the establishment of Matsubara Bussan Co., Ltd. in Japan and Shanghai Songwon Brilliant Chemicals Co., Ltd. in China, Songwon International AG has been operational from July 1, 2006 covering EMEA and Americas.

• The vision is to grow into the position of a preferred solution provider by bringing value to the customers with a secure and efficient supply of essential chemicals, the extended product range and physical form capability, and the application expertise to provide the appropriate solution for the application and markets served.

Kyung-Jae Park, Chairman and CEO of Songwon Industrial, stated “We have decided that it is vital and strategically necessary to be present directly in the global markets and to modify our business models accordingly. In spite of a long and successful relationship with Clariant, the two companies have agreed not to renew the existing distributorship agreement after the natural expiration date. During the transition period through the end of 2007, our direct sales force will co-exist in the market with our distributor sales team. Songwon International and Clariant will work together to ensure a seamless transition.”

Jongho Park, President and COO of Songwon Industrial, added, “Songwon has committed $120 million to the design, construction, and initial operation of the new plant. The project will be executed in two phases. The first phase which should be completed 2Q’07 will bring Songwon’s Antioxidant Production capacity to approximately 55,000 metric tons, representing a 60% increase over today’s capability. The first phase investment is designed to support a second phase of expansion which Songwon will implement as the market conditions require. Consistent with Songwon philosophy, the back integration into the key raw materials and intermediates brings value to our customers and enhances security of supply, control of quality, and efficiency. The technology employed in the new facility represents the culmination of 25 years of experience and continuous improvement in the manufacture of the polymer stabilizers beginning with raw materials, through key intermediates, all the way through to the final physical forms.”

Maurizio Butti, President of Songwon International added, “Songwon fully understood and recognized the value of a full product line of Polymer Stabilizers. This provides efficiencies in the supply chain and a single point of contact for our customers. Songwon and Songwon International recognize the global needs of our major customers and therefore have decided to extend Songwon’s Asian offering into the global markets. The first launch in the EMEA and the Americas will take place in September 2006 and will include the Songlight™ range of Hindered Amine Light Stabilizers and the Songsorb™ range of UV light absorbers. Additional Songnox™, Songlight™ and Songsorb™ specialty products will be added in 2007 to fill special application needs”.

Chairman Park concluded, “After 40 years of consistent and continuous growth, these steps represent the natural evolution and the commitment of Songwon in the global market. The challenges ahead present opportunities for us to serve our valuable customers. We look forward to meeting the challenges and succeeding in the implementation of our strategic plans.”

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