Penford Corporation Expands Banking Credit Facility

  
    
  
  
    
      Penford Corporation (Nasdaq: PENX) today announced that it entered into 
      a $145 million credit facility on October 5, 2006 with several leading 
      commercial banks. This expanded facility increases the Company’s 
      available credit by $40 million to finance the previously announced 
      conversion of a portion of its existing manufacturing facility in Cedar 
      Rapids, Iowa, to ethanol production.
    
    
      The five-year facility consists of a $60 million revolving line of 
      credit expiring December 31, 2011, a five-year $40 million term loan, 
      and a $45 million capital expansion loan commitment maturing December 
      2012. The Company indicated that it would record a $0.6 million charge 
      in the first fiscal quarter of 2007 for the write off of unamortized 
      transaction costs associated with the prior debt facility.
    
    
      Penford announced in June plans to invest $42 million to expand its 
      Cedar Rapids, Iowa, site beyond starch to enable annual production of 
      approximately 40 million gallons of ethanol. The Company expects the 
      facility to begin producing ethanol by the end of 2007.
    
    
      “With significant infrastructure already in 
      place, Penford is positioned well to realize increased shareholder value 
      from extending into ethanol production due to our lower cost-of-entry, 
      faster time-to-market, advantageous logistics and favorable processing 
      economics. This expanded credit facility provides the financial support 
      required to fund the ethanol initiative, as well as to continue with 
      plans to support growth in our food businesses,” 
      said Tom Malkoski, Chief Executive Officer.
    
    
      The Administrative Agent for the new facility is Harris N.A. The 
      following banks also joined the facility: Australia and New Zealand 
      Banking Group, LaSalle Bank, Rabobank Nederland, and U.S. Bank.
    
    
      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) today announced that it entered
into a $145 million credit facility on October 5, 2006 with several
leading commercial banks. This expanded facility increases the
Company's available credit by $40 million to finance the previously
announced conversion of a portion of its existing manufacturing
facility in Cedar Rapids, Iowa, to ethanol production.

   The five-year facility consists of a $60 million revolving line of
credit expiring December 31, 2011, a five-year $40 million term loan,
and a $45 million capital expansion loan commitment maturing December
2012. The Company indicated that it would record a $0.6 million charge
in the first fiscal quarter of 2007 for the write off of unamortized
transaction costs associated with the prior debt facility.

   Penford announced in June plans to invest $42 million to expand
its Cedar Rapids, Iowa, site beyond starch to enable annual production
of approximately 40 million gallons of ethanol. The Company expects
the facility to begin producing ethanol by the end of 2007.

   "With significant infrastructure already in place, Penford is
positioned well to realize increased shareholder value from extending
into ethanol production due to our lower cost-of-entry, faster
time-to-market, advantageous logistics and favorable processing
economics. This expanded credit facility provides the financial
support required to fund the ethanol initiative, as well as to
continue with plans to support growth in our food businesses," said
Tom Malkoski, Chief Executive Officer.

   The Administrative Agent for the new facility is Harris N.A. The
following banks also joined the facility: Australia and New Zealand
Banking Group, LaSalle Bank, Rabobank Nederland, and U.S. Bank.

   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.