Ionics Receives Orders Totaling $320 Million for World's Largest Membrane-Based Water Reuse Project

Ionics, Incorporated has signed equipment supply and multi-year service contracts in Kuwait totaling $320 million with a project company led by Mohammed Abdulmohsin Al-Kharafi & Sons (the Kharafi Group), which will design, build, own, operate and maintain a 100-million-gallon-per-day wastewater treatment facility at Sulaibiya near Kuwait City. The Kharafi Group is a leading Middle East corporation with diversified activities and $3.3 billion turnover. The Sulaibiya facility will be the largest membrane-based water reclamation and reuse facility in the world. The signing of the contracts took place in conjunction with the finalization of bank financing which will enable the project company to commence construction.

Ionics will participate in the project, directly, and through several of its European subsidiaries, from three different perspectives: as a 25 percent equity partner in the project company; as the designer and supplier of the reverse osmosis (RO) and ultrafiltration (UF) membrane-based water purification systems; and as an operator of the membrane portion of the facility over the 27.5 year contract period. Ionics will include $130 million relating to this project in its reported bookings for the second quarter. This amount includes revenue for the design and supply of the RO and UF portion of the facility as well as revenue for the first five years of Ionics' contract to operate the RO-UF facility.

In early 2001, the consortium led by the Kharafi Group won a 30-year concession from the Kuwait government to recover and upgrade tertiary-treated wastewater from Kuwait City and the surrounding area. The purified water will be used to satisfy agricultural requirements which are currently impacting the drinking water supply. The projected revenues to the project company over the life of the contract are expected to total over $2 billion. The Kharafi Group has formed a separate joint venture company to construct the civil works and facility infrastructure as well as other portions of the project. The plant is expected to begin operation in 2005.

Commenting on the signing, Mr. Nasser Al-Kharafi, President of the Kharafi Group, stated, "I am confident that our partnership with Ionics, with its exceptional spirit of co-operation and teamwork, shall provide the benchmark and catalyst for the successful implementation of similar BOT projects in the Middle East region, which are particularly relevant due to the scarcity of this essential commodity in the area."

Similarly, Mr. Arthur L. Goldstein, Chairman and Chief Executive Officer of Ionics, stated, "The people of Ionics are very proud to be associated with this landmark project which has profound implications for water resources in many other regions around the world. We are especially pleased with our partnership with the Kharafi Group. We look forward to our role in helping to successfully secure sustainable water supplies for the region."

Ionics is a global separations technology company involved in the manufacture and sale of membranes, equipment and "own and operate" services for the purification, disinfection, concentration, treatment and analysis of water, wastewater and ultrapure water. Over a period of more than 50 years, Ionics has built more desalination plants than any company in the world.

Ionics, Incorporated

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