GLG Life Tech Corporation
TSX : GLG

GLG Life Tech Corporation

May 01, 2008 06:00 ET

GLG Life Tech Corporation Announces Strategic Alliance and Multi-Decade Supply Agreement With Cargill

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 1, 2008) - GLG Life Tech Corporation ("GLG") (TSX:GLG) announces the signing of a strategic alliance and long-term renewable supply agreement with Cargill Inc. ("Cargill") for the supply of Rebaudioside A ("RA") extract. The initial term of this agreement is for 10 years and is automatically renewable through at least 2030. GLG is currently a supplier to Cargill for high quality stevia extract for its rebiana product. The companies have worked in close partnership to develop a world-class supply chain for the ingredient, including leaf supply and extract manufacturing. The agreement aligns both the interests of GLG and Cargill to pursue the successful development of the rebiana supply chain.

"This agreement is a major milestone for GLG. Our company will produce high quality stevia extract through a vertically integrated supply chain beginning with patent pending stevia seedlings, exclusive stevia growing areas, through to proprietary processing and extract technology. Cargill's long term commitment to our business provides a solid foundation for future growth, capital investment and secures a leading market position for our company," said Dr. Luke Zhang, Chairman and President of GLG.

Key highlights under the terms of this agreement:

- GLG will provide a minimum of 80% of Cargill's RA stevia extract global requirements for the first five years of the agreement.

- GLG will be Cargill's exclusive Chinese supplier of RA stevia extract for the term of the agreement. GLG will also be Cargill's agent in China for any additional RA stevia extract sourcing opportunities that should arise.

- This agreement includes annual minimum purchase and supply quantities for both parties that define the minimum binding quantities over the term of the agreement for both Cargill and GLG. Cargill will have a rolling 3 year minimum commitment, the value of which is estimated by GLG to approach $US 200 million in the first 3 years.

- GLG expects to earn an average EBITDA margin of 30% during the first five years of the contract.

- Cargill has the right to purchase up to 93% of GLG's production of RA extract.

- Cargill will take the lead role in arranging working capital financing for GLG's stevia leaf purchases each year.

- New product opportunities from GLG are to be offered to Cargill on a right of first refusal basis.

- Should Cargill wish to terminate the agreement early, it may do so on three years notice.

This new agreement will replace the current supply arrangements between the parties as of October 1, 2008. The new agreement is effective from today and certain amendments to the existing agreement will be made to align the bridge period until the new agreement takes full effect.

"GLG's long term vision along with its history in the growing areas and surrounding communities for stevia in China make them an excellent strategic partner. This is part of the journey to introduce and develop this new, natural, zero calorie sweetener for use in foods and beverages around the world," said Marcelo Montero, President, Cargill Health and Nutrition.

About GLG Life Tech Corporation

GLG Life Tech Corporation specializes in growing, refining, and producing high grade stevia extract, a natural, zero-calorie sweetener. With fully integrated stevia operations, GLG is the leading supplier of high quality stevia production in China. The Corporation is also engaged in the distribution of nutritional products in China and holds exclusive agreements with Weider Global Nutrition and Shandong Yong He Tang Health Products Chain Stores Ltd., whose franchise network includes over 1,400 locations. Please visit www.glglifetech.com for further information.

About Cargill, Incorporated

Cargill, Incorporated is an international provider of food, agricultural and risk management products and services. With 158,000 employees in 66 countries, the company is committed to using its knowledge and experience to collaborate with customers to help them succeed. For more information, visit http://www.cargill.com.

Forward-looking statements: Certain statements in this press release constitute "forward-looking statements". Such forward-looking statements include, without limitation, statements evaluating the market and general economic conditions and discussing future-oriented costs, expenditures and other financial or operating performances. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. While the Company has based these forward-looking statements on its current expectations about future events, the statements are not guarantees of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors include amongst others the effects of general economic conditions, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgments in the course of preparing forward-looking statements. Please refer to the heading "Risk Factors" in our Annual Information Form in respect of our year-ended December 31, 2007 and the risk factors in our Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2007 for a discussion of these and other factors underlying forward-looking statement, both of which are available on SEDAR at www.sedar.com under the Company's names. In light of these factors, the forward-looking events discussed in this press release might not occur. Further, although the Company has attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. As there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, readers should not place undue reliance on forward-looking statements.

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