CNA charges Innophos Mexican unit $36 million for water errors

Innophos Inc.'s Mexican subsidiary, Innophos Fosfatados de Mexico, S. de R.L. de C.V. (Innophos Fosfatados), has received notice of claims from the Comision Nacional del Agua -- the national water commission -- of Mexico for possible errors relating to payment of governmental duties, taxes and other charges for the extraction and use of water from national waterways from 1998 through 2002 at the company's Coatzacoalcos manufacturing plant...

CRANBURY, NJ, Nov. 12, 2004 (BUSINESS WIRE) -- Innophos Inc.'s Mexican subsidiary, Innophos Fosfatados de Mexico, S. de R.L. de C.V. (Innophos Fosfatados), has received notice of claims from the Comision Nacional del Agua -- the national water commission -- of Mexico for possible errors relating to payment of governmental duties, taxes and other charges for the extraction and use of water from national waterways from 1998 through 2002 at the company's Coatzacoalcos manufacturing plant.

Innophos, Inc. is working closely with Innophos Fosfatados to thoroughly investigate and evaluate these claims, to protect the company's interests, and respond in an expeditious manner. At current exchange rates, the basic claims for governmental duties, taxes and other charges total approximately $36 million. There are also claims for interest, inflation adjustments and penalties under the Mexican federal tax code of approximately $96 million. Based on information obtained to date, management believes Innophos Fosfatados has made good faith efforts to pay all applicable federal, state and local governmental duties, taxes and other charges for water usage in Mexico, and that Innophos Fosfatados has valid bases for challenging the validity and amount of these claims.

Innophos believes the Company is indemnified against these claims under the terms of the sale agreement with Rhodia S.A. and its affiliates (Rhodia), from which the company was purchased on Aug. 13. On Nov. 8, the company sent Rhodia a formal notice of its contractual rights of indemnification from Rhodia with respect to these claims. Rhodia has not yet responded to our notice of indemnification. Innophos, Inc. is investigating other avenues of relief with respect to liabilities or other damages that may arise from this matter.

Innophos Inc. is a leading North American manufacturer of specialty phosphates serving a diverse range of customers across multiple applications, geographies and channels.

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