MDS Commences Arbitration against AECL over Cancelled MAPLE Project and Files $1.6 Billion Court Claim against AECL and the Government of Canada

    TORONTO, July 9 /CNW/ - MDS Inc. (TSX: MDS; NYSE:   MDZ), a leading
provider of products and services to the global life sciences markets, today
announced that it has served Atomic Energy of Canada Limited (AECL) with
notice of arbitration proceedings. MDS will be seeking an order to compel AECL
to fulfill its contractual obligations under its 2006 interim and long-term
supply agreement (ILTSA) and if not granted, seeking significant monetary
damages. MDS has concurrently filed a court claim for $1.6 billion in damages
against AECL, for negligence and breach of contract, and against the
Government of Canada, for inducing breach of contract and for interference
with economic relations.
    "We have had to resort to taking these steps to protect the interests of
patients, the nuclear medicine community, our shareholders and our customers,"
said Stephen P. DeFalco, President and CEO, MDS Inc. "We are disappointed that
AECL and the Government decided to abandon the MAPLE project without
establishing a clear plan for the long-term supply of critical medical
    MDS's primary objective through the legal proceedings is to have AECL
honour its long standing commitment to replace the National Research Universal
(NRU) reactor by bringing the MAPLE reactors into service, and provide a
40-year supply of medical isotopes, required by patients worldwide for serious
medical needs.
    In 1996, MDS entered into an agreement with AECL for the design,
development and construction of two new nuclear reactors and a processing
facility, known as the MAPLE project. The project was intended to replace
AECL's NRU reactor, which produces approximately 50 per cent of the world's
medical isotopes. AECL agreed to provide interim supply of medical isotopes
from NRU until the MAPLE project was operational. The MAPLE project was to be
completed by the year 2000 at a planned cost to MDS of $145 million.
    By 2005, the project was not yet completed and costs had more than
doubled, with MDS's investment exceeding $350 million. To address these
issues, MDS entered mediation with AECL that resulted in a new agreement
reached in 2006. The 2006 agreement stipulated that AECL would bring the MAPLE
reactors into service commencing October 2008 and provide MDS with a 40-year
supply of isotopes.
    On May 16, 2008, AECL and the Government of Canada announced their
intention to discontinue the MAPLE project without prior notice to or
consultation with MDS. AECL and the Government also made their announcements
without disclosing any long-term plan for the supply of isotopes beyond
extending the license of the NRU.
    Prior to their announcement, in regular reviews with AECL to discuss the
status of the MAPLE project, AECL had consistently maintained that it would
complete the reactor project. AECL has stated that its decision will not
impact current supply of medical isotopes from the NRU, and the Government has
stated that it would like AECL to pursue an extension of the NRU operation
beyond its current license. While MDS supports this decision, it does not
adequately address long-term supply.

    The Importance of Isotope Supply

    Medical isotopes are used to diagnose potentially life-threatening
conditions such as heart disease and to treat serious diseases such as cancer.
Establishing a reliable supply of medical isotopes is an important issue for
patients worldwide. The NRU is one of only four reactors in the world with the
capacity to produce isotopes for commercial use. It supplies isotopes to MDS
Nordion who in turn processes them into medical isotopes that are then
distributed to radiopharmaceutical companies. These companies manufacture
radiopharmaceuticals and distribute them to hospitals and radiopharmacies
around the world.

    About MDS

    MDS Inc. (TSX: MDS; NYSE:   MDZ) is a global life sciences company that
provides market-leading products and services that our customers need for the
development of drugs and the diagnosis and treatment of disease. We are a
leading global provider of pharmaceutical contract research, medical isotopes
for molecular imaging, radiotherapeutics, and analytical instruments. MDS has
more than 5,500 highly skilled people in 29 countries. Find out more at or by calling 1-888-MDS-7222, 24 hours a day.

    Note to Editors:

    Learn more about the MAPLE project at and medical isotope supply at

For further information:

For further information: Media: Janet Ko, MDS Inc., (416) 213-4167,; Investors: Kim Lee, MDS Inc., (416) 675-6777 x34721,

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