RHI AG successfully completes sale of the Heraklith insulating materials group

13. June 2006

On January 13, 2006, RHI signed a contract with the Knauf Group regarding the sale of the Heraklith Group. A purchase price of EUR 230 million on a debt-free basis was agreed. Today the transaction was closed; upon receipt of the purchase price, RHI has transferred all shares held in Heraklith AG to the Knauf Group.

The sale results in a book profit of more than EUR 60 million for RHI and a corresponding improvement in equity. Net liabilities to banks in the RHI Group are reduced to some EUR 450 million following the closing, including RHI’s EUR 400 million liabilities to banks, subordinated and interest free until end of 2006 (so-called “mezzanin capital”). At the beginning of RHI’s restructuring in early 2002, net liabilities to banks exceeded EUR 1,000 million.

With the sale of the Heraklith Group, RHI has successfully completed the realignment of the group portfolio started in 2002 and will in the future concentrate exclusively on expanding its position as world market leader in its core refractories business under the RHI Refractories brand.

RHI will use the newly gained financial scope for the consistent expansion of the refractories business. Good opportunities are arising worldwide to extend the strong market position and earnings power of RHI Refractories sustainably in the coming years. The objective is to increase revenue from currently EUR 1.2 billion to EUR 2.0 billion in the next five years based on organic growth and acquisitions.