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Cytec Completes First Phase Sale of Two Product Lines, Water Treatment Chemicals and Acrylamide

Posted on: Monday, 2 October 2006, 09:00 CDT

Cytec Industries (NYSE:CYT) said today that it has completed the first of three phases of the sale of its global water treatment chemicals and acrylamide product lines to Kemira Group. This phase includes the entire product lines with the exception of Cytec's Botlek manufacturing site in the Netherlands, which is expected to close in early 2007, and certain assets at various subsidiaries in Asia/Pacific and Latin America which are expected to close within the next six months. The timing of the flow of funds is approximately $208 million received today for this closing, an estimated $20 million upon the Botlek closing and an estimated $12 million upon completion of the transfer of the assets at the various subsidiaries for an estimated total of $240 million. Between this closing and the remaining applicable closings, Cytec will contract manufacture and sell water treatment chemicals and acrylamide at the Botlek site solely to Kemira and provide distribution services for Kemira for the products at those Cytec subsidiaries that were not included in this closing. The remaining closings are subject to certain conditions and the amounts could change due to final working capital transferred. The estimated 2006 sales of the two product lines are approximately $300 million.

Included in this phase of the transaction are essentially all of the sales, marketing, manufacturing, R&D and technical services personnel and four manufacturing sites, Mobile, Alabama, Longview, Washington, Bradford, UK, and the acrylamide manufacturing plant at Cytec's Fortier, Louisiana facility which will be operated by Cytec personnel under a long term manufacturing agreement. Cytec will also continue to supply acrylonitrile to the Kemira acrylamide plant under a long term supply agreement. In addition, under various long term manufacturing agreements, Cytec will manufacture certain water treatment products for Kemira at several of its sites and Kemira will manufacture for Cytec certain mining chemicals at the Mobile, Alabama site and various other products at the Botlek site.

David Lilley, Chairman, President and Chief Executive Officer said, "I want to thank the Cytec and Kemira employees who have worked hard to complete this phase one closing on schedule while maintaining the ongoing business of the product lines. We wish the transferred employees and Kemira well."

Mr. Lilley commented further, "Net after-tax proceeds from this transaction will be used to pay down debt and further improve our balance sheet. As a reminder, the net effect of this divestiture, excluding any anticipated gains on the actual closings, and giving effect to the use of net after-tax proceeds to pay down debt is expected to be about $0.04 dilutive and $0.15 dilutive to earnings per diluted share in 2006 and 2007, respectively. However, after taking into account the net effect of our previously announced restructuring actions in 2006, we expect the impact on 2007 earnings per share to be essentially neutral. We will now move forward with a keen concentration on our growth businesses."

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Achieving the results described in these statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in Cytec's filings with the Securities and Exchange Commission.

Corporate Profile

Cytec Industries Inc. is a global specialty chemicals and materials company focused on developing, manufacturing and selling value-added products. Our products serve a diverse range of end markets including aerospace, adhesives, automotive and industrial coatings, chemical intermediates, inks, mining and plastics. We use our technology and application development expertise to create chemical and material solutions that are formulated to perform specific and important functions in the finished products of our customers.

Source: Business Wire

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