Crop Care Australasia Reaches Agreement with Syngenta

21st December, 2000

Orica Limited today announced that Crop Care Australasia, its 88% beneficially owned crop protection business, has negotiated an early termination of its product distribution agreement with Syngenta.

This step will pave the way for Crop Care to add new products to its portfolio and to forge alliances with new principals to build its product range to meet the needs of its customers and the market generally.

Termination of the distribution agreement had been foreshadowed to the market as a possibility, following the announced formation of Syngenta (a merger between Zeneca and Novartis) but the terms now achieved by Orica provide a sound platform for a smooth transition for the Crop Care business.

Crop Care Australasia and Syngenta Ltd have agreed to terminate the distribution agreement under which Crop Care currently distributes certain Syngenta crop protection products in Australia, New Zealand and the Pacific Islands. The termination takes effect on 1 April 2001.

As part of the termination arrangements the parties have agreed:

• As required by the current agreement, Syngenta will pay Crop Care a termination payment of A$50 million in September 2002.
• Syngenta will compensate Crop Care an agreed level of lost profit covering the period April 2001 to September 2002. The compensation is comprised of commission payments by Syngenta to Crop Care of A$10 million in April 2001 and monthly payments for the period April 2001 to September 2002.
• Crop Care will continue to distribute and toll formulate certain Syngenta products in Australia, New Zealand and the Pacific Islands under new mutually beneficial long term contracts.
• Crop Care and Syngenta will cooperate to effect a smooth transition.

Crop Care will retain ownership of its formulation plants in Queensland and Western Australia.

Managing Director and Chief Executive Officer of Orica Limited, Philip Weickhardt, said, "This is a positive outcome for Crop Care, Incitec and Orica because we avoid the market risks associated with the two year termination period provided for under the contract and it will allow us to much more rapidly deploy the introduction of new product offerings".

"While some near term loss of market share is expected, the business is in excellent condition to rebuild and exploit a new range of opportunities. We are very confident that our people will successfully build upon the competitiveness of our crop protection business in the near term," Mr Weickhardt said.

The effect of these changes on profits for the financial years 2001 and 2002 is expected to be positive after taking account of the compensation due to Crop Care. Profits thereafter will depend on the rate at which new products are added to expand the business.

Syngenta Limited is a subsidiary of Syngenta AG. Syngenta AG was formed in November 2000 following the merger of Zeneca Agrochemicals and Novartis' agribusiness.

Crop Care is jointly owned by Incitec and Orica Ltd.