Bellevue, WA, August 4, 1998 - Penford Corporation (NASDAQ:PENX) today announced that the Securities and Exchange Commission has declared effective the registration statement relating to the company's planned spin-off of its Penwest Pharmaceuticals Co. (PPC) subsidiary to Penford shareholders.

Penford Corporation also announced that its Board of Directors has approved the spin-off plan, and set August 10, 1998 as the record date for the spin-off, and August 31, 1998 as the distribution date.

Following the spin-off, Penwest Pharmaceuticals will be listed on the Nasdaq National Market under the symbol "PPCO."

The spin-off represents the culmination of the plan announced last year by Penford Corporation to foster the growth potential of its pharmaceuticals business and, separately, its specialty paper chemicals and food ingredients businesses, which will be the continuing businesses of Penford Corporation.

Penford Corporation develops, manufactures and markets specialty carbohydrate- based chemicals for papermaking and specialty food ingredients through its Penford Products Co. and Penford Food Ingredients Co. businesses. Its Penwest Pharmaceuticals Co. subsidiary is engaged in the research, development and commercialization of novel drug delivery technologies and is an established manufacturer and distributor of excipients used in binding, disintegrating and lubricating tableted pharmaceutical and nutritional products.

This press release contains forward-looking statements concerning the completion of the spin-off of PPC. There are a variety of factors which could cause actual events to differ materially from those projected in the forward-looking statements, including without limitation, (i) the risk that the spin-off may not be completed as the result of future developments in Penford Corporation's or PPC's business or conditions in the securities markets or necessary government rulings or approvals or third party consents or agreements or other developments, (ii) the risk of unanticipated costs and expenses or other events affecting Penford Corporation's or PPC's business prior to the distribution date, and (iii) other risks listed in Penford Corporation's SEC reports, including the reports on Form 10-K for the year ended August 31, 1997 and Form 10-Q for the quarter ended May 31, 1998, and in the Registration Statement on Form 10 filed with the SEC by Penwest Pharmaceuticals Co.