Hydro to acquire majority stake Adubos Trevo

Norsk Hydro, the Norwegian oil and energy, light metals and fertilizer group, has signed an agreement with Trevisa Investimentos SA - Grupo Trevo to purchase the totality of their shares in the Brazilian fertilizer company Adubos Trevo S.A. At the same time, Hydro has also signed a Share Subscription Agreement with a group of Brazil’s leading banks who will convert their credits in Trevo into equity. The final shareholding between Hydro and the banks will be 58% and 38% respectively. Trevo's total assets amounted to BRL 186.6 million (equal to USD 102 million) per December 31, 1999, and Hydro will initially support Trevo with loans and guarantees.

Trevo was founded in 1930 and has traditionally been the third largest fertilizer company in Brazil with a market share of 10%. Due to an unsuccessful expansion plan, and the introduction of the new currency regime in the mid-1990s, the company has struggled with financial problems since 1996. While sales in 1994 were 1.6 million tons, only 0.5 million tons were sold in 1999. Trevo has its main operations in Rio Grande with its own deep sea port and production facilities for upgrading of fertilizer intermediates. Total capacity is about 1.7 million tons of fertilizer per year. The fertilizer market in Brazil is currently at 14.5 million tons per year and has grown by 7% per year since 1992.

The suggested acquisition fits within Hydro's strategy to act at the bottom of a cycle to take advantage of unique opportunities leading to growth in emerging markets. Hydro's existing operations in Latin America had an attractive profitability in 1999 and are showing continued improvements. The acquisition of Trevo will add economies of scale to Hydro's Latin American fertilizer operations and capitalizes on Hydro's existing production and trade network. Hydro will also be a supplier to Trevo delivering a combination of third party products and own production.

While increasing Hydro's Agri activities in Brazil, Hydro is downsizing in mature markets due to industry overcapacity and weak profitability. In year 2000 Hydro Agri expects to divest assets totalling approximately NOK 500 million of which NOK 200 million have already been realized. This comes in addition to closures.

Final completion (closing) of the transaction contemplated herein is subject to satisfaction of certain conditions precedent.