Penford Corporation Announces Ethanol Groundbreaking

  
    
  
  
    
      Penford Corporation (Nasdaq: PENX), a global leader in ingredient 
      systems for food and industrial applications, today announced the 
      groundbreaking of its new ethanol production facility. Penford 
      previously announced an investment of $42 million for approximately 40 
      million gallons of ethanol production capacity at its Cedar Rapids, 
      Iowa, facility. The Company expects the facility to be producing ethanol 
      by the end of 2007.
    
    
      “On June 28 we announced plans to enter the 
      growing bio-fuels market,” said Tom Malkoski, 
      Penford Corporation President and Chief Executive Officer. “We 
      are progressing as planned and project milestones have been obtained. We 
      have contracted with three industry-leading firms for the design, 
      engineering and construction to help assure that the process and cost 
      profile will be optimal for the site. Bid packages for the longer ‘lead-time’ 
      items have been issued. We have received requisite permits for 
      construction, and water and air emissions. Full project funding was 
      obtained on October 5 through a $145 million credit facility with 
      several leading commercial banks. The credit agreement expanded our 
      available credit by $40 million to finance the construction of the 
      ethanol facility, and to continue to support growth in our food 
      businesses.”
    
    
      “Obtaining the air permit was a significant 
      achievement for Penford,” stated Tim 
      Kortemeyer, President of Penford Products Company. “The 
      permit allows the Cedar Rapids facility to increase grind capacity by 
      30% over historical levels. The ethanol facility is being designed to 
      efficiently produce between 25 and 45 million gallons of ethanol per 
      year. The increase in grind rate, along with the range of ethanol 
      production, should allow for flexibility in the product mix of 
      industrial starch and ethanol based upon market conditions and customer 
      needs.”
    
    
      “Additionally, we believe the fermentation 
      platform will extend the potential of our Cedar Rapids bio-processing 
      asset by expanding our range of starch modification reactions and by 
      opening up opportunities for high value added industrial chemicals over 
      the next several years,” Malkoski added.
    
    
      Penford Corporation develops, manufactures and markets specialty 
      natural-based ingredient systems for various applications, including 
      papermaking, textiles and food products. Penford has nine locations in 
      the United States, Australia and New Zealand.
    
    
      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 disclaims any intention or obligation 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 filings 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; 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 and energy cost 
      volatility; foreign currency exchange rate fluctuations; changes in 
      assumptions used for determining employee benefit expense and 
      obligations; or other unforeseen developments in the industries in which 
      Penford operates.
    
  
Penford Corporation (Nasdaq: PENX), a global leader in ingredient
systems for food and industrial applications, today announced the
groundbreaking of its new ethanol production facility. Penford
previously announced an investment of $42 million for approximately 40
million gallons of ethanol production capacity at its Cedar Rapids,
Iowa, facility. The Company expects the facility to be producing
ethanol by the end of 2007.

   "On June 28 we announced plans to enter the growing bio-fuels
market," said Tom Malkoski, Penford Corporation President and Chief
Executive Officer. "We are progressing as planned and project
milestones have been obtained. We have contracted with three
industry-leading firms for the design, engineering and construction to
help assure that the process and cost profile will be optimal for the
site. Bid packages for the longer 'lead-time' items have been issued.
We have received requisite permits for construction, and water and air
emissions. Full project funding was obtained on October 5 through a
$145 million credit facility with several leading commercial banks.
The credit agreement expanded our available credit by $40 million to
finance the construction of the ethanol facility, and to continue to
support growth in our food businesses."

   "Obtaining the air permit was a significant achievement for
Penford," stated Tim Kortemeyer, President of Penford Products
Company. "The permit allows the Cedar Rapids facility to increase
grind capacity by 30% over historical levels. The ethanol facility is
being designed to efficiently produce between 25 and 45 million
gallons of ethanol per year. The increase in grind rate, along with
the range of ethanol production, should allow for flexibility in the
product mix of industrial starch and ethanol based upon market
conditions and customer needs."

   "Additionally, we believe the fermentation platform will extend
the potential of our Cedar Rapids bio-processing asset by expanding
our range of starch modification reactions and by opening up
opportunities for high value added industrial chemicals over the next
several years," Malkoski added.

   Penford Corporation develops, manufactures and markets specialty
natural-based ingredient systems for various applications, including
papermaking, textiles and food products. Penford has nine locations in
the United States, Australia and New Zealand.

   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
disclaims any intention or obligation 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 filings 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; 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 and energy cost
volatility; foreign currency exchange rate fluctuations; changes in
assumptions used for determining employee benefit expense and
obligations; or other unforeseen developments in the industries in
which Penford operates.