Penford Cedar Rapids Flood Recovery Update
10 October 2008 - 6:00AM
Business Wire
Penford Corporation (Nasdaq: PENX), a global leader in renewable,
natural-based ingredient systems for food and industrial
applications, announced the following developments: The Company�s
principal subsidiary, Penford Products Co., has substantially
completed the restoration of the industrial starch manufacturing
operations at its Cedar Rapids, Iowa plant, which had been shut
down by record flooding in June of this year. The facility�s
current processing rate has reached pre-flood levels and the full
range of industrial starch products is being produced. Effective as
of September 15, 2008, the Company announced the termination of the
force majeure event that had shut down industrial starch operations
at the plant. The Company has begun to resupply its industrial
starch customers under existing contracts. The systematic recovery
and transition to resupply substantially all of customers�
contracted requirements is expected to be completed by the end of
calendar 2008. The Company has resumed the production and sale of
ethanol. The Company�s ethanol plant currently can produce fuel
grade ethanol at a rate of approximately 35-37 million gallons per
year. The Company expects that its ethanol assets will be in
position to achieve full design production capability of 45 million
gallons per year by the end of 2008. As previously announced, the
Company intends to expense a majority of the costs of the flood in
the 4th quarter of its 2008 fiscal year, which ended on August 31.
Direct costs of the flood determined to date are in the range of
$45-$47 million, which include continuing expenses during the shut
down, but do not include lost profits. These costs will have a
material impact on the Company�s FY 2008 4th quarter and full year
results, which will be announced on November 13. On July 9, 2008,
Penford executed an amendment to its credit agreement which
temporarily adjusts the calculation of selected covenants for the
effect of the damage costs and insurance payments related to the
Cedar Rapids flood. The Company believes that it has adequate
financial resources and liquidity to execute its Cedar Rapids plant
recovery plans and to meet its future operating and capital needs.
The Company is continuing to work with its flood and property
(including business interruption) insurance carriers, but does not
expect to complete the submission of all claim documentation until
December. The Company intends to claim coverage for losses
exceeding $30 million, but the amount recovered may be materially
more or less than this estimate. Since the Company�s insurers have
not yet affirmed coverage for all material aspects of the Company�s
claim, the Company cannot provide assurance as to the amount or
timing of the ultimate recoveries under its policies. Insurance
proceeds will be recognized in the financial statements as they are
received. About Penford Corporation Penford Corporation develops,
manufactures and markets specialty natural-based ingredient systems
for a variety of applications. Penford has nine locations in the
United States, Australia and New Zealand. The Cedar Rapids site is
the Company�s largest manufacturing plant. The statements contained
in this release that are not historical facts are forward-looking
statements that represent management�s beliefs and assumptions
based on currently available information. Forward-looking
statements can be identified by the use of words such as
�believes,� �may,� �will,� �looks,� �should,� �could,�
�anticipates,� �expects,� or comparable terminology or by
discussions of strategies or trends. Although the Company believes
that the expectations reflected in such forward-looking statements
are reasonable, it cannot give any assurances that these
expectations will prove to be correct. Such statements by their
nature involve substantial risks and uncertainties that could
significantly affect expected results. Actual future results could
differ materially from those described in such forward-looking
statements, and the Company does not intend to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Among the factors that could cause
actual results to differ materially are the risks and uncertainties
discussed in this release and those described from time to time in
other filings made by the Company with the Securities and Exchange
Commission which include, but are not limited to, competition; the
possibility of interruption of business activities due to equipment
problems, accidents, strikes, weather or other factors; product
development risk; changes in corn and other raw material prices and
availability; expectations regarding the ethanol facility; changes
in general economic conditions or developments with respect to
specific industries or customers affecting demand for the Company�s
products, including unfavorable shifts in product mix;
unanticipated costs, expenses or third party claims; the risk that
results may be affected by construction delays, cost overruns,
technical difficulties, nonperformance by contractors or changes in
capital improvement project requirements or specifications;
interest rate, chemical and energy cost volatility; foreign
currency exchange rate fluctuations; changes in assumptions used
for determining employee benefit expense and obligations; other
unforeseen developments in the industries in which Penford
operates; and other factors described in the �Risk Factors� section
in reports filed by the Company with the Securities and Exchange
Commission.
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