Kadant Expands Stock-Preparation Business in China

Acton, Massachusetts, USA 06, June 2006 --(BUSINESS WIRE)-- Kadant Inc. (NYSE:KAI) announced today that its Kadant Light Machinery (Jining) Co., Ltd. subsidiary in China has acquired, and assumed operating responsibility for the business of Jining Huayi Light Industry Machinery Co., Ltd. Huayi is a manufacturer of stock-preparation systems in China, and is located in Jining in Shandong Province.

On 31 May 2006, Kadant entered into a business transfer agreement with the sellers to commence the closing process for acquiring the Huayi assets. By 02 June 2006, Kadant had acquired the machinery, equipment, inventory, and related assets, and had assumed operating responsibility of the business. The acquisition of certain land-use rights and buildings will be completed upon the receipt of various government filings and registrations. The total purchase price for the acquisition, including the remaining assets to be acquired, will be approximately USD 20 million. The closing process is expected to be completed by the end of the second quarter.

The acquisition will be funded with approximately USD 10 million in borrowings in China, through a financing agreement with the Bank of China Ltd., and approximately USD 10 million in cash.

"This acquisition strengthens Kadant's position as the leading supplier of stock-preparation systems in China," said William A. Rainville, chairman and chief executive officer. "It will allow us to deliver our stock-prep systems and aftermarket products to customers there more effectively, supply parts and components to North America and Europe, and extend our customer base to include more small- to mid-size mills. The acquisition is an important part of our overall strategy to expand our business throughout Asia--in all our product lines."

Kadant Inc. is a leading supplier to the global pulp and paper industry, with a range of products and services for improving efficiency and quality in pulp and paper production, including paper machine accessories, and systems for stock preparation, fluid handling, and water management. Our fluid-handling products are also used to optimize production in the steel, rubber, plastics, food, and textile industries. In addition, we produce granules from papermaking by-products for agricultural and lawn and garden applications. Kadant is based in Acton, Massachusetts, with revenues of USD 244 million in 2005 and approximately 1400 employees in 16 countries worldwide. For more information, visit www.kadant.com.