Catalytica Plans Initial Public Offering of Catalytica Combustion Systems.

Business Editors

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--March 22, 2000

Catalytica, Inc. (Nasdaq:CTAL) announced today that it intends to conduct an initial public offering of its subsidiary, Catalytica Combustion Systems, Inc. Catalytica Combustion Systems develops and markets Xonon, a patented pollution prevention technology that is broadly applicable to stationary gas turbines, enabling them to produce essentially pollution-free power. Xonon-equipped small gas turbines also represent a practical, near-zero emissions solution for distributed power generation, an important emerging market.

According to Ricardo Levy, president and CEO of Catalytica, "Catalytica Combustion Systems has demonstrated continued progress over the last year and we believe that the time is right to infuse additional capital and enable the company to stand on its own as an innovator in the field of clean combustion. Moreover, this will enable us to offer better recognition of value for our businesses to our shareholders."

Catalytica Combustion Systems recently received its first commercial order for Xonon-equipped GE 7FA gas turbines for delivery to Enron's proposed power facility in Southern California. Additionally, Xonon's recent performance at a power generating facility in California satisfied the guidelines for achieved in practice from the Federal Environmental Protection Agency (EPA). Catalytica Combustion Systems is working with several major turbine manufacturers, including GE, Pratt & Whitney Canada, Solar Turbines, and Rolls-Royce Allison for the adaptation of Xonon to gas turbines in their product lines.

Catalytica Combustion Systems is currently 85% owned by Catalytica with the remaining 15% owned by Enron Corporation. Catalytica plans to conduct the initial public offering, which will be made only by means of a prospectus, within the next several months. Proceeds from the offering will be used by Catalytica Combustion Systems to continue the commercialization of its current product line and pursue applications of Xonon to other important markets including fuel cells and diesel combustion.

Xonon Cool Combustion is a patented pollution prevention system that avoids the formation of nitrogen oxide (NOx), a primary contributor to smog, by reducing localized combustion temperatures while achieving equivalent combustion efficiency and performance. Xonon has demonstrated NOx emissions of less than 2.5 parts per million (ppm) and dramatically reduces carbon monoxide and unburned hydrocarbons. Xonon avoids the use of post-combustion cleanup technologies which can be costly and in most cases use toxic chemicals to clean up pollution. As such, Catalytica believes that Xonon is the most cost-effective system for near-zero emissions for gas turbines for power production and for mechanical drive applications. Catalytica is exploring applications for Xonon in a wide variety of combustion systems beyond its current natural gas turbine applications.

Catalytica, Inc. finds new pathways to improve processes for chemical change. It operates through three subsidiaries: Catalytica Combustion Systems, Catalytica Pharmaceuticals, and Catalytica Advanced Technologies. Catalytica Pharmaceuticals applies innovative and patented catalytic technologies and other chemical processes to improve the steps for manufacturing pharmaceuticals and finds better and more efficient ways to produce products in commercial scale quantities. Catalytica Advanced Technologies serves as the incubator for new catalytic technologies for industrial applications. Catalytica employs over 1600 people and had 1999 revenues of $424 million. Find Catalytica on the World Wide Web at http://www.catalytica-inc.com.

This news release contains forward-looking statements regarding Catalytica's intention to conduct an initial public offering of its Catalytica Combustion Systems subsidiary, the Xonon system and its potential market opportunities, incorporation of the Xonon combustion system into gas turbines manufactured by others, the ability to market the Company's development, manufacturing and other services to current and prospective clients, and Catalytica's competitive position in its markets. Actual results could differ and such differences could be material. These statements involve risks and uncertainties, including without limitation, the fact that the market conditions or company position may change and an initial public offering would not occur, there may be unanticipated technical or other factors related to the incorporation of Xonon into gas turbines, installation timelines and regulatory review outcomes are uncertain, the market is an emerging market and actual market opportunities may differ from those stated. Catalytica undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date of this release. Investors are encouraged to review Catalytica's Form 10K for the year ending December 31, 1998, Forms 10Q for the periods ending March 31, June 30, and September 30, 1999, as well as Form S4/A dated August 19, 1999, filed with the Securities and Exchange Commission for additional factors that could affect Catalytica's future performance.

Note to Editors: Xonon and Cool Combustion are trademarks of Catalytica.