Press Release

Neo Industrial to supply PPV technology license to China viscose staple fiber producer Tangshan Sanyou Xingda; enables use of paper pulp

Tue, Nov 13, 2012

HELSINKI, Nov. 12, 2012 (Press Release) -Carbatec Ltd. and the Chinese manufacturer Tangshan Sanyou Xingda Chemical Fibre Co. Ltd. have signed a non-exclusive license agreement for the use of PPV® technology at the customers main mill site in Tangshan, China. PPV Technology enables the use of 100% paper pulp in viscose manufacturing. The agreement which has been signed is based on the letter or intent signed between the parties in July 2012.

Tangshan Sanyou will pay royalties to Carbatec based on the use of PPV® Technology. In addition Neo Industrial Viscose fibres segment will supply the paper pulp used under the agreement.

With an annual capacity of around 480.000 tons Tangshan Sanyou is number 2 by volume in China and number 4 in the world.The company is one of the world's fastest growing viscose staple fibre manufacturersanda technology leader among Chinese producers.

After implementing PPV® technology at the mill both paper grade and dissolving pulp can be used, which ensures the lowest production costs under all circumstances.At current Chinese spot market pulp prices Tangshan Sanyou'ssavings potential by using PPV® technology is around $150 per ton of produced viscose staple fibre. Calculated on the basis of September average spot prices the savings by using PPV® technology were around $400 per ton of produced viscose staple fibre. In addition to the direct cost savings achieved by using PPV technology the mill also gains an improvement in raw material availability as the demand for viscose grows.

"The license agreement is a significant step for Carbatec and commercializing PPV helps establish our foundation for becoming a key technology development company in the viscose industry. Tangshan Sanyou is an excellent reference customer both in China and elsewhere" Says Heikki Hassi, CEO of Carbatec

The patented PPV® technology was developed and put into full scale use at Avilon's viscose mill in Valkeakoski, Finland at the beginning of 2011. The technology makes it possible to use 100% paper grade pulp instead of dissolving pulp as the main raw material in the process. The technology gives users a significant competitive advantage as paper pulp is cheaper than dissolving pulp. The use of PPV® Technology also improves the tensile strength and whiteness of the final product.

Neo Industrial's strategy is to invest mainly in industrial companies with similar synergic benefits. The aim of investments is with active ownership to develop the purchased companies and establish additional value. Returns are sought through both dividend flow and an increase in value. Neo Industrial's class B shares are listed on the NASDAQ OMX Helsinki Stock Exchange. Neo Industrial's business segments are Cable and Viscose Fibers.

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