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Mexichem Informs on the Decision of Petroquímica Mexicana de Vinilo S.A. of C.V. not to Rebuild its Vinyl Monochloride Production Capacity in Mexico

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Tlalnepantla de Baz, Estado de Mexico, December 20, 2017 – Mexichem, S.A.B. de C.V. (BMV: MEXCHEM*) (“The Company” or “Mexichem”) announced today that the Board of Directors of its joint venture, Petroquímica Mexicana de Vinilo S.A. of C.V. (PMV), a co-investment with PPQ Cadena Productiva S.L., subsidiary of Pemex Etileno (PPQC), and of Mexichem’s Vinyl Business Group, has decided not to rebuild its Vinyl Monochloride (VCM) production capacity. Therefore, the joint venture’s VCM production, and the assets and liabilities associated with ethylene production and auxiliary services associated with VCM and ethylene will be classified as discontinued operations in Mexichem’s financial statements for the years 2015, 2016 and 2017. The discontinued operation will not have an impact in PMV’s cash balance or cash flow (See Annex1). It is important to mention that Mexichem, PPQC and Pemex Etileno will continue to evaluate the possibility of investing in the future, jointly or separately, through PMV or another vehicle, in businesses related to the existing ones or in other types of businesses.

It is publicly known that on April 20, 2016 there was an explosion in the VCM plant of the Pajaritos Petrochemical Complex where two of the three plants are located, the VCM plant and the ethylene plant; as well as auxiliary services, such as energy generation and production, steam sales and water treatment. The VCM plant (Clorados III) was the one damaged. The chlorine and caustic soda production plant is located at a separate site.

This represents the exit of PMV from the VCM and ethylene businesses in Mexico, but not the chlorine-soda business, whose plant will continue to be operated by PMV, and therefore the alliance between the PPQC subsidiary of PEMEX Ethylene and Mexichem will remain in place.

PMV’s decision to exit the VCM and Ethylene businesses does not impact Mexichem’s guidance for EBITDA growth for 2017, which is expected to be between 20% and 25% above the $884 million reported in 2016.

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