Headwaters Incorporated Announces Hydrogen Peroxide Acquisition.

SOUTH JORDAN, Utah -- Headwaters Incorporated (NYSE: HW) today announced DegussaHeadwaters Korea has entered into agreements to acquire a hydrogen peroxide facility and an exclusive supply contract. DegussaHeadwaters Korea, a joint venture owned equally by Degussa and Headwaters, will exclusively supply a new propylene oxide facility owned by SKC Chemicals Group ("SKC") with hydrogen peroxide. To enable this, the joint venture is acquiring a hydrogen peroxide facility in Ulsan, Korea from Kemira Oyj, Helsinki, Finland. The transaction still remains subject to regulatory approvals. DegussaHeadwaters Korea will more than double the annual capacity of this facility from its current 35,000 tons. The joint venture's aim is to further expand its market position, especially in the ever growing economic region of Asia.

Degussa AG, located in Dusseldorf, Germany, has achieved a far-reaching breakthrough in its hydrogen peroxide business ("H2O2") through licensing of its HPPO technology. With annual capacity exceeding 550,000 tons, Degussa is the world's second largest producer of this environmentally compatible bleaching and oxidization agent. Degussa's hydrogen peroxide activities contribute significant growth for its Building Blocks Business Unit, generating sales of 1.1 billion euros in 2005, and employing approximately 4,500 employees.

Together with the high-tech engineering company, Uhde, located in Dortmund, Germany, Degussa has developed an innovative process for producing propylene oxide ("PO") from hydrogen peroxide, the so-called "HPPO" process. SKC Chemicals Group ("SKC"), a Korean company headquartered in Seoul, recently signed a licensing agreement with Degussa and Uhde to produce HPPO. SKC is planning to bring an HPPO facility on stream at its site in Ulsan at the beginning of 2008. The facility will have an annual capacity of 100,000 tons. The Korean chemical company intends to serve the strongly growing demand for propylene oxide in the Asian market. Propylene oxide is a raw material used in the production of polyurethane, which is used in furniture and autoseat upholstery.

Degussa Management Board Chairman Professor Utz-Hellmuth Felcht stated: "Our successful process innovation has opened up a gateway to an extremely attractive growth market for Degussa. In the future, hydrogen peroxide will not only be used to bleach paper and pulp, but will also be employed in large quantities for chemical synthesis." The major propylene oxide producers are making plans to construct facilities with annual capacity levels of at least 250,000 tons of propylene oxide. These facilities would each require more than 180,000 tons of hydrogen peroxide per year.

During the innovative Degussa-Uhde HPPO process, hydrogen peroxide and propylene react to form propylene oxide when a special catalyst, also supplied by Degussa, is used. A significantly lower capital investment makes this technology more economically viable than the production process currently employed. In addition, apart from water, no significant quantities of byproducts are produced.

In addition to the current progress being made with HPPO, Degussa and Headwaters are also working on another milestone, namely the catalytic direct synthesis of hydrogen peroxide ("DSHP"). The DegussaHeadwaters direct synthesis process will be commercially available starting in 2007. The combination of the HPPO process with DSHP offers additional cost advantages over conventional propylene oxide manufacturing processes.

"We are extremely pleased with our Degussa relationship. Degussa has brought a high level of technical and marketing expertise to our joint venture," said Kirk Benson, chairman and CEO of Headwaters. "We are excited about the future completion of our hydrogen peroxide demonstration plant in Germany and the scale-up of direct synthesis manufacturing using our NxCat hydrogen peroxide nanocatalyst."

About Degussa AG

Degussa AG is the global market leader in specialty chemicals. Our business is creating essentials-innovative products and system solutions that make indispensable contributions to our customers' success. In fiscal 2005, around 44,000 employees worldwide generated sales of 11.8 billion euros and operating profits (EBIT) of 940 million euros.

About Headwaters Incorporated

Headwaters Incorporated is a world leader in creating value through innovative advancements in the utilization of natural resources. Headwaters is a diversified growth company providing products, technologies and services to the energy, construction and home improvement industries. Through its alternative energy, coal combustion products, and building materials businesses, the company earns a growing revenue stream that provides the capital needed to expand and acquire synergistic new business opportunities.

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