Cleanpak International Announces Expansion with Acquisition of Chinese Cleanroom Production Company.

Business Editors/Technology Writers

PORTLAND, Ore.--(BUSINESS WIRE)--March 4, 2004

Cleanpak International, Inc., (Cleanpak) a United States cleanroom and air handling equipment supplier based in Portland, Ore., today announced its first expansion in China through a newly formed joint-venture partnership.

The net assets of Nanjing Purification Factory (NPF), a state-owned cleanroom manufacturing and construction company owned by Nanjing Electrical Machinery and Industrial Group (NEMIG), has been acquired by Cleanpak Asia Nanjing Purification Systems Company (Cleanpak Asia), a newly formed joint venture between Cleanpak, which holds controlling interest, and Nanjing Tianyun Purification Technology (NTPT) a Nanjing, China-based company launched by senior management of NPF.

Cleanpak Asia will immediately take over operations of NPF, maintaining current product and service offerings, while adding the higher technology products and services of Cleanpak International. Current NPF product and service offerings include engineer-to-order pharmaceutical and electronics class 100 to 10,000 clean room environment design, manufacturing, installation and certification.

"We're combining the valuable assets of both companies -- local talent and expertise and the highest level of clean environment engineering and manufacturing capabilities -- to capitalize on the growing needs of the Chinese clean environment equipment and construction market," said Laird Richardson, president of Cleanpak Asia. "China is now entering an era where new standards for clean environments will be required over a broader market base. Cleanpak Asia will be one of the few companies with the intricate understanding of local needs, and the capabilities to deliver products and services to meet the new, higher standards."

Wang Jian Ping, director and principal owner of NTPT, has managed operations of NPF for the past nine years. "We have seen the domestic purification market grow 10 percent per year over the past few years, and expect growth to continue at this rate for the next 10 years. As higher quality and technology requirements are expected in the market moving forward, many low-end suppliers will need drastic change or will fail. The low end-market of the past had low-entry barriers that created many start-up companies competing for these projects," said Mr. Wang.

"We are extremely bullish on the advances being made within the Chinese clean manufacturing environments," said Erik Krieger, chairman of Cleanpak International. "We are confident entering the Chinese market with the combined power of Cleanpak's technology and NTPT as our operating partner. Cleanpak has been an important contributor to building some of the cleanest manufacturing environments in the world; now we're bringing that expertise to the burgeoning Chinese marketplace."

Cleanpak Asia will operate from its headquarters in the Nanjing Free Port Development Zone. Located near a deep-water port on the Yangtze River, Cleanpak Asia's 100,000-square-foot facility, constructed in early 2000, was designed specifically to house the business offices and manufacturing workshops for cleanroom equipment production. Cleanpak Asia will retain more than 130 of the most experienced engineers, manufacturing and construction technicians, and sales and administrative staff from NPF.

"The Nanjing Municiple Government has been encouraging foreign investment in Nanjing and currently is boosting a new wave of reforming state-owned enterprises (SOEs), to attract more foreign investors. The government has released a series of new regulations, in addition to the existing preferential tax policies towards Wholly Owned Foreign Enterprises and Sino-Foreign Joint Ventures, to facilitate such investments. Furthermore, the government is encouraging the incumbent management groups of local SOEs to attempt co-ownership through management buyouts (MBOs). During the privatization process that involves MBOs, monetary rewards will be offered to incumbent SOE managers who successfully introduce foreign partners with capital and technologies. All these have acted favorably in this Cleanpak-Tianyun deal," said Mr. Zheng, chief executive officer of the state-owned holding company NEMIG.

Advisor to CLEANPAK and the Joint Venture was Lincoln Partners LLC, a Chicago-based M&A firm specializing in middle-market cross-border transactions.

Cleanpak International, a pioneer in clean environment technologies, has a distinct history in the industry of pushing the envelope through internal innovation and co-operative research and development with semi-conductor technology leaders. A previous subsidiary of Brod and McClung PACE Company, a leading Portland-based custom air handler manufacturer, Cleanpak continues its development of products and services, and is focusing on its semi-conductor clients' needs as they adopt 300mm wafer technology to be competitive in the global marketplace, and the pharmaceutical and bio-technology sectors.

Nanjing Electrical Machinery and Industrial Group (NEMIG) is a Nanjing-based state-owned holding company that has been assigned the responsibility by the PRC central government to privatize 102 state-owned enterprises (SOEs). Their holdings include SOEs in electrical power transmission, CNC machinery, construction machinery, optical instruments, electronic components, transportation equipment, specialty pumps and valves, boilers, fire protection equipment and real estate.