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Companhia Providencia to Enter U.S.

August 3, 2008

Brazilian firm announces plans for two-line operation.

Brazilian spunmelt maker Companhia Providencia has established a wholly-owned subsidiary with the intent to begin production in the U.S. The company's board of directors has approved a plan to establish this subsidiary with the goal of creating a two-line nonwovens operation that will make an estimated 40,000 tons of nonwovens per year.

The two lines will represent an investment of $120 million for the company. The first line is expected to begin operation in July 2009; the second will come onstream during the first half of 2010. Both will be purchased from Reicofil.

According to executives this deal was intended to reduce logstic costs and better position itself with its customer base in North America. Companhia Providencia currently operates nine spunmelt nonwovens line, all in Brazil. Its sales are split evenly between its local Brazilian market and foreign sales, including North America.

Companhia Providencia is the second Brazilian nonwovens producer to announce a North American expansion this year. In April, Fitesa said it would invest $120 million in North America with an eye on the hygiene, medical and industrial markets. The new venture will produce high quality, fine denier, lightweight fabrics on two production lines, which have already been ordered. The new lines will come onstream in late 2009 in a yet-to-be-determined U.S. location. Fitesa operated a production site in North Carolina in the early 1990s before selling it to Polymer Group.

According to executives, the expansion is part of the company's long term growth strategy and reassures Fitesa’s commitment to its customers within the NAFTA region. The company has extensive experience in the U.S. where it operates a production site in North Carolina from 1991 to 1995.

Fitesa already produces 40,000 tons of spunmelt nonwovens per year in Brazil.