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November 29, 2007

SGL Group strengthens carbon-fiber activities in the U.S.

SGL acquires Aldila’s interest in the Evanston JV, increasing SGL’s ownership to 100%

Gerald Ondrey

Yesterday, SGL Group ( — The Carbon Company — signed definitive agreements to acquire Aldila Inc.’s interest in Carbon Fiber Technology LLC (CFT; Evanston, Wyoming), a joint venture (JV) between SGL and Aldila. Since 1999, SGL Group and Aldila — the world’s leading producer of composite golf shafts — each held a 50% in the JV. The purchase price was agreed to be € 13 million. For SGL Group, this corresponds to less than an investment in a comparable greenfield plant, and bears the advantage of taking over an existing business and making use of a low cost and efficient infrastructure.

With an output of approximately 1,000 m.t./yr, the Evanston plant produces carbon fiber for a variety of applications, including wind power, automotive, engineering plastics and the recreation sector. The JV, which the Group had accounted for at equity to date, will henceforth be fully consolidated.

The acquisition of the JV is an integral part of the published growth strategy of SGL Group to expand the total production capacity for carbon fibers up to 12,000 m.t. by 2012. It is a key milestone in SGL Group’s intention to develop the Evanston plant into a major carbon fiber production site as a complement to the company’s sites in Europe. With the acquisition of the Aldila stake, 100% owned production capacity will increase from 500 to 1,000 m.t. As a next step, a second production line with a capacity of approximately 1,000 m.t./yr will be built. Project start is scheduled for beginning of December 2007, with full commercial production as of second quarter 2009. The Evanston plant is expected to continue to operate at capacity including its expansion due to long-term supply contracts with Aldila, as well as with other customers in the wind, engineering plastics, and other industries. Leveraging the existing infrastructure – together with its attractive cost position – the company further intends to raise production capacity stepwise at Evanston to around 4,000 m.t. by 2012.

Due to increasing substitution of traditional materials worldwide demand for carbon fiber of currently 30,000 m.t./yr, is expected to double by 2012 with stable annual growth rates of approximately 15%/yr. Among the eight producers of carbon fibers worldwide, SGL Group is the only European producer.

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