PROSPECTUS

7,500,000 SHARES

[LOGO]

COMMON STOCK
($.01 PAR VALUE)

Of the 7,500,000 shares (the 'Shares') of common stock, $.01 par value per share
(the 'Common Stock'), of The General Chemical Group Inc. (the 'Company') offered
hereby, 2,500,000 Shares are being sold by the Company and 5,000,000 Shares are
being sold by a current stockholder of the Company (the 'Selling Stockholder').
See 'Principal and Selling Stockholders.' The Company will not receive any
proceeds from the sale of Shares by the Selling Stockholder.

The Shares are being sold in two concurrent offerings (the 'Offerings'), one
offering initially in the United States and Canada (the 'U.S. Offering') through
U.S. underwriters (the 'U.S. Underwriters') and one initially outside the United
States and Canada (the 'International Offering') through international
underwriters (the 'International Underwriters'). The U.S. Underwriters and the
International Underwriters are hereinafter collectively referred to as the
'Underwriters.' Of the 7,500,000 Shares being offered, 6,400,000 are being
offered in the U.S. Offering and 1,100,000 are being offered in the
International Offering, subject to transfers between the U.S. Underwriters and
the International Underwriters. See 'Underwriting.'

Prior to the Offerings, there has been no public market for the Common Stock.
For information relating to the factors considered in determining the initial
public offering price, see 'Underwriting.' The Common Stock has been approved
for listing, subject to official notice of issuance, on the New York Stock
Exchange under the trading symbol 'GCG.'

The Company is authorized to issue Common Stock and Class B Common Stock, par
value $.01 per share (the 'Class B Common Stock'). The Common Stock is entitled
to one vote per share and is not convertible into Class B Common Stock. The
Class B Common Stock is entitled to 10 votes per share, is generally
non-transferable and is convertible at any time on a share-for-share basis into
Common Stock. See 'Description of Capital Stock.'

Upon completion of the Offerings, the Company's current stockholders
collectively will own 100 percent of the outstanding Class B Common Stock, which
will represent 95.2 percent of the combined voting power of the shares of Common
Stock and Class B Common Stock (assuming no exercise of the Underwriters'
over-allotment options). Paul M. Montrone, the Chairman of the Company's Board
of Directors, is the sole trustee of a voting trust which, upon completion of
the Offerings, will hold all shares of the Class B Common Stock then owned by
the Company's current stockholders and therefore may be deemed to beneficially
own all such shares. See 'Principal and Selling Stockholders.'

SEE 'RISK FACTORS' BEGINNING ON PAGE 8 FOR CERTAIN RISK AND OTHER FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT COMPANY (1) STOCKHOLDER(1)(2)

Per Share........................................ $17.50 $1.09 $16.41 $16.41
Total(2)......................................... $131,250,000 $8,175,000 $41,025,000 $82,050,000

(1) Before deducting estimated expenses of $1,275,000, of which $425,000 is
payable by the Company and $850,000 is payable by the Selling Stockholder.

(2) The Company and the Selling Stockholder have granted the Underwriters 30-day
options to purchase up to 375,000 and 750,000 additional shares of Common
Stock, respectively, on the same terms and conditions as set forth above
solely to cover over-allotments, if any. If such options are exercised in
full, the total Price to Public, Underwriting Discount, Proceeds to Company
and Proceeds to Selling Stockholder will be $150,937,500, $9,401,250,
$47,178,750 and $94,357,500, respectively. The Selling Stockholder has the
right to assume any or all of the Company's option to the Underwriters. If
such option is fully assumed, and such option and the Selling Stockholder's
option to the Underwriters are exercised in full, the total Price to Public,
Underwriting Discount, Proceeds to Company and Proceeds to Selling
Stockholders will be $150,937,500, $9,401,250, $41,025,000 and $100,511,250,
respectively. See 'Underwriting.'

The Shares are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Shares will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York, or through the facilities of The
Depository Trust Company, on or about May 21, 1996.

SALOMON BROTHERS INC
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LAZARD FRERES & CO. LLC
MORGAN STANLEY & CO.
INCORPORATED
THE DATE OF THIS PROSPECTUS IS MAY 15, 1996.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a registration statement on Form S-1 under the Act with
respect to the Common Stock being offered by this Prospectus. This Prospectus
does not contain all of the information set forth in the registration statement
and the exhibits and schedules filed therewith. For further information about
the Company and the securities offered by this Prospectus, reference is made to
the registration statement and to the financial statements, schedules and
exhibits filed as part of it. Statements contained in this Prospectus about the
contents of any contract or any other documents are not necessarily complete,
and in each instance, reference is made to the copy of the contract or document
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference. A copy of the registration
statement may be inspected without charge and may be obtained at prescribed
rates at the Commission's principal office located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, the New York Regional Office located at Seven World
Trade Center, New York, New York 10048, and the Chicago Regional Office located
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.

The Company intends to furnish its stockholders with annual reports
containing financial statements certified by its independent auditors and
quarterly reports for the first three quarters of each fiscal year containing
unaudited financial information.

------------------------
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
appearing elsewhere in this Prospectus. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in 'Risk Factors.' Unless otherwise indicated, all
information in this Prospectus (i) assumes that the over-allotment options
granted to the Underwriters (collectively, the 'Over-allotment Option') are not
exercised, and (ii) gives effect to the conversion immediately prior to the
Offerings of each outstanding share of the Company's current common stock into
an identical number of shares of Class B Common Stock. Investors should
carefully consider the information set forth under 'Risk Factors' prior to
making a decision to purchase Shares in the Offerings.

THE COMPANY

The General Chemical Group Inc., which has a history dating back to 1899,
is a diversified manufacturing company predominantly engaged in the production
of inorganic chemicals, with manufacturing facilities located in the United
States and Canada. Through its Chemical Segment, the Company is a leading
producer of soda ash in North America, and a major North American supplier of
calcium chloride, sodium and ammonia salts, sulfites, nitrites, aluminum-based
chemical products, printing plates and refinery and chemical sulfuric acid
regeneration services to a broad range of industrial and municipal customers.
Through its Manufacturing Segment, the Company manufactures precision and highly
engineered stamped and machined metal products, principally automotive engine
parts.

During its more than 90-year history, the Company has built a strong
customer base and enjoys significant market shares in the majority of its
product lines. The Company believes that its strong market positions result from
its competitive strengths, including low cost manufacturing, technological,
marketing and distribution expertise, control over the supply of its primary raw
materials, high-quality products and customer service and the experience and
commitment of its management. These strengths and increased earnings
diversification have enabled the Company to demonstrate stability in its
operating cash flow over the past five years, even during periods of weak
economic activity in the United States. The Company plans to build upon its
strengths with strategic initiatives intended to increase profitability. These
initiatives currently include: (i) pursuit of long-term growth opportunities and
additional earnings diversification through product development, capacity
expansion, selective acquisitions and continuous quality improvement and (ii)
further operating cost reductions and improvements in operating efficiency. In
the recent past, primarily through capacity expansions and improved operating
efficiencies, the Company has achieved a more balanced earnings mix throughout
its major product lines in the Chemical Segment. In the future, in addition to
pursuing these strategic initiatives, the Company expects that growth will also
result from a more robust market for soda ash, its largest product line, as
export volumes continue to improve, particularly to Asia and Latin America, due
to the low cost position of the Company and other U.S. natural soda ash
producers and the continuing reduction in the global production capacity of
synthetic soda ash due to further plant closures.

Chemical Segment

The Company's Chemical Segment accounted for approximately 87 percent of
the Company's consolidated 1995 net revenues. Within the Chemical Segment, the
industrial chemical product lines consisting of soda ash and calcium chloride
accounted for approximately 47 percent of the Company's consolidated 1995 net
revenues. Soda ash, an inorganic chemical also referred to as sodium carbonate
or alkali, is used in the manufacture of many familiar consumer products found
in virtually every home, including glass, soap, detergent, paper, textiles and
food. The Company, with an estimated 23 percent market share based on 1995 sales
in the U.S. and Canadian markets, produces

natural soda ash through a 51 percent-owned partnership, General Chemical (Soda
Ash) Partners ('GCSAP'), at its plant in Green River, Wyoming, and synthetic
soda ash through its wholly-owned Canadian subsidiary at its plant in
Amherstburg, Ontario. General Chemical is the managing partner of GCSAP. Calcium
chloride, a co-product of the synthetic soda ash process, is sold primarily for
use on Canada's extensive network of unpaved roads for dust control and roadbed
stabilization during the summer and on highways for melting ice in the Northeast
United States during the winter.

The Company's Chemical Segment also includes the derivative products and
services product lines which accounted for approximately 40 percent of the
Company's consolidated 1995 net revenues. The derivative products and services
product lines encompass a wide range of products, including sulfuric acid,
sodium and ammonia salts, sulfites, aluminum-based chemical products and
nitrites, that are derived principally from the Company's production of soda ash
and regeneration of sulfuric acid. These derivative products are categorized
into five major product line groups whose end markets include refinery and
chemical sulfuric acid regeneration, water treatment, photo chemicals, pulp and
paper, chemical processing, semiconductor devices and printing.

Due to the Company's control and integration of the primary raw materials
for its derivative products and services product lines, the Company is able to
control quality while maintaining a competitive and less volatile cost
structure. The combination of high quality and a competitive cost structure has
resulted in the Company having leading market shares in the majority of the
specific market segments in which it competes.

Manufacturing Segment

The Company's Manufacturing Segment accounted for approximately 13 percent
of the Company's consolidated 1995 net revenues and specializes in the
manufacture of precision and highly engineered stamped and machined metal
products for the automotive industry. These products consist primarily of
automotive engine components such as rocker arms, roller rocker arms and roller
followers. During 1995, the Company built a second production facility to handle
additional volume requirements resulting from its participation in new engine
programs for the three major U.S. auto manufacturers. The Company is the sole
supplier to the new engine programs in which it participates. The Company also
manufactures fluid handling equipment sold to the automotive service market.

The Company is incorporated under the laws of the State of Delaware. The
Company's principal executive office is located at Liberty Lane, Hampton, New
Hampshire 03842 (telephone: (603) 929-2606). Unless the context otherwise
requires, the term the 'Company' refers to The General Chemical Group Inc. and
all of its subsidiaries.

THE OFFERINGS

Common Stock offered by the Company:
U.S. Offering.............................. 2,150,000 shares(1)
International Offering..................... 350,000 shares(1)
Total................................. 2,500,000 shares
Common Stock offered by the Selling Stockholder:
U.S. Offering.............................. 4,250,000 shares(1)
International Offering..................... 750,000 shares(1)
Total................................. 5,000,000 shares
Common Stock and Class B Common Stock to be
Outstanding after the Offerings:
Common Stock............................... 7,500,000 shares(2)
Class B Common Stock....................... 14,736,842 shares(3)(4)
Total................................. 22,236,842 shares
Proposed NYSE Symbol............................ 'GCG'
Voting Rights................................... The Common Stock and Class B Common Stock will vote together as
a single class on all matters, except as otherwise required by
law, with each share of Common Stock having one vote and each
share of Class B Common Stock having ten votes. Upon completion
of the Offerings, the Current Stockholders will own 100 percent
of the outstanding Class B Common Stock, which will represent
95.2 percent of the combined voting power of the shares of
Common Stock and Class B Common Stock (assuming no exercise of
the Over-allotment Option). See 'Description of Capital Stock'
and 'Principal and Selling Stockholders.'
Use of Proceeds................................. The Company expects to use the $40.6 million of net proceeds
from the sale of the Shares offered by the Company in the
Offerings to (i) repay indebtedness outstanding under General
Chemical's U.S. Revolving Credit Facility, (ii) repay other U.S.
bank debt of the Company and (iii) for general corporate
purposes. The Company will not receive any of the proceeds from
the sale of Shares by the Selling Stockholder. See 'Use of
Proceeds.'
Dividend Policy................................. The Company currently intends to pay a quarterly cash dividend
to its stockholders in an amount expected to be equivalent to a
quarterly cash dividend of $.05 per share (or an annual cash
dividend of $.20 per share). See 'Dividend Policy.'
Risk Factors.................................... See 'Risk Factors.'

- ------------------------------

(1) Excludes 750,000 and 375,000 shares of Common Stock to be sold by the
Selling Stockholder and the Company, respectively, if the Over-allotment
Option is exercised in full (or 1,125,000 shares of Common Stock to be sold
by the Selling Stockholder if the Over-allotment Option is exercised in full
and the Selling Stockholder assumes in full the Company's portion of the
Over-allotment Option). See 'Underwriting.'

(2) Excludes 2,200,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option and Incentive Plan (the '1996 Stock Plan'), and
850,000 shares of Common Stock issuable by the Company upon completion of
the Offerings under the Company's Restricted Unit Plan primarily in
satisfaction of the existing rights of employees under the Equity Program
and the Dividend Award Program (collectively, the 'Prior Equity Programs')
of the Company's wholly-owned subsidiary, General Chemical Corporation
('General Chemical'). See 'Management -- Restricted Unit Plan' and ' -- 1996
Stock Option and Incentive Plan.'

(3) Upon completion of the Offerings, the Selling Stockholder and the two other
current beneficial stockholders (collectively, the 'Current Stockholders')
will collectively own 100 percent of the Class B Common Stock, which will
represent 95.2 percent of the combined voting power of the outstanding
Common Stock and Class B Common Stock (assuming no exercise of the
Over-allotment Option). Assuming exercise in full of the Over-allotment
Option, the Current Stockholders would collectively own 13,986,842 shares of
Class B Common Stock, representing approximately 94.2 percent of the
combined voting power of the outstanding Common Stock and Class B Common
Stock (or 13,611,842 shares of Class B Common Stock representing 94.0
percent of said combined voting power if the Over-allotment Option is
exercised in full and the Selling Stockholder assumes in full the Company's
portion of the Over-allotment Option). Mr. Paul Montrone, a current
beneficial owner, is also the sole trustee of a voting trust which holds all
shares of the Class B Common Stock beneficially owned by the Current
Stockholders and therefore may be deemed to beneficially own all such
shares. See 'Principal and Selling Stockholders.'

(4) Each share of Class B Common Stock is convertible at any time into one share
of Common Stock and converts automatically into one share of Common Stock
upon a transfer to any person other than a Permitted Transferee (as defined
herein). See 'Description of Capital Stock.'

SUMMARY FINANCIAL INFORMATION

The following Summary Financial Information is derived from the Company's
Consolidated Financial Statements and should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this Prospectus.

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------------------- ----------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net revenues.................... $561,762 $544,704 $518,718 $525,912 $550,871 $128,661 $144,571
Operating profit................ 101,077 108,572 97,120 98,241(1) 106,997 22,471 27,530
Interest expense................ 48,891 42,047 37,917 33,006 26,704 6,802 6,464
Income from continuing
operations before income
taxes, extraordinary item and
cumulative effect of
accounting change (2)......... 31,066 42,253 43,421 46,698(1) 64,419 12,422 15,353
Income from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............. 20,672 23,811 27,236 28,305(1) 21,093(3) 7,890 9,316
Net income (loss) (4)........... $ 26,714(5) $(17,617)(6) $ 25,151 $ 20,102(1) $ 21,093(3) $ 7,890 $ 9,316
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
PER SHARE (7):
Income from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............. $1.05 $1.21 $1.38 $1.43(1) $1.07(3) $.40 $.47
Net income (loss)............... 1.35(5) (.89)(6) 1.27 1.02(1) 1.07(3) .40 .47
Weighted average number of
shares........................ 19,736,842 19,736,842 19,736,842 19,736,842 19,736,842 19,736,842 19,736,842
OTHER DATA:
Capital expenditures............ $ 20,607 $ 18,141 $ 20,221 $ 28,503 $ 34,093 $ 7,162 $ 8,622
Depreciation and amortization
(8)........................... 28,963 27,916 25,826 25,109 27,095 6,919 7,242
EBITDA (9)...................... 103,990 108,085 104,145 102,326 115,281 25,332 28,451
PRO FORMA DATA (10):
Net income...................... 40,583 9,828
Net income per share............ 1.76 .43

MARCH 31, 1996
-----------------------------
ACTUAL AS ADJUSTED (11)
--------- ----------------

BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.......................................... $ 21,623 $ 33,798
Adjusted working capital (12).............................................................. 22,148 19,748
Total assets............................................................................... 445,331 445,506
Long-term debt (13)........................................................................ 288,077 247,652
Total equity (deficit)..................................................................... (206,059) (165,459)

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(1) During 1994 the Company recorded a $9.0 million charge to earnings ($5.4
million net of tax) ($.27 per share) related to the July 26, 1993 Richmond,
California, incident. See 'Business -- Legal Proceedings.'

(2) Net of minority interest.

(3) In 1995, the Company recorded a nonrecurring charge to income tax expense
of $17.1 million ($.87 per share) for all years prior to 1995 related to
IRS examinations. See Note 2 of Notes to the Consolidated Financial
Statements.

(4) During 1993 and 1994 the Company recorded extraordinary losses related to
the early retirement of certain outstanding indebtedness of $2.1 million
and $8.2 million, respectively.

(5) The Company had income from discontinued operations of $6.0 million in
1991.

(6) The Company implemented Statement of Financial Accounting Standards No.
106, Employers' Accounting for Postretirement Benefits Other than Pensions,
on the immediate recognition basis effective January 1, 1992, which
resulted in an after tax charge of $41.4 million.

(7) Adjusted for all periods presented to reflect a 202,994.4539 per share
stock dividend effected as of October 17, 1994.

(8) Consolidated depreciation and amortization excluding amortization of
deferred financing costs.

(9) EBITDA is defined as income from continuing operations before net interest
(including amortization of deferred financing costs), income taxes,
extraordinary item and cumulative effect of accounting change, depreciation
and amortization, but after pre-tax minority interest in income, and is
presented because it is a widely accepted financial indicator of the
Company's ability to service and/or incur debt. EBITDA is not required by
generally accepted accounting principles and should not be considered as an
alternative to net income, consolidated cash flow from operations or any
other measure of performance required by generally accepted accounting
principles or as an indicator of the Company's operating performance.

(footnotes continued on next page)

(footnotes continued from previous page)

(10) Adjusted to give effect as of January 1, 1995 and January 1, 1996 to (i)
the sale of 2,500,000 Shares offered by the Company hereby and the use of
net proceeds therefrom as set forth under 'Use of Proceeds,' (ii) the
elimination of the effect of the $17.1 million nonrecurring tax charge and
(iii) the issuance of 850,000 units representing 850,000 shares of common
stock issuable under the Restricted Unit Plan. No adjustment has been made
for the one-time, after-tax charge of $6.3 million (or $.27 per share)
reflecting the accrual of awards payable as a result of the Offerings under
the terms of the Restricted Unit Plan.

(11) Adjusted to give effect as of March 31, 1996 to (i) the sale of 2,500,000
Shares offered by the Company hereby and the use of the net proceeds
therefrom as set forth under 'Use of Proceeds' and (ii) the prepayment in
conjunction with the Offerings of promissory notes totaling $12.0 million
from a former stockholder of the Company. No adjustment has been made for
the one-time, after-tax charge of $6.3 million (or $.27 per share)
reflecting the accrual of awards payable as a result of the Offerings under
the terms of the Restricted Unit Plan.

(12) Adjusted working capital consists of total current assets (excluding cash
and short-term investments) less total current liabilities (excluding the
current portion of long-term debt).

(13) Includes the current portion of long-term debt.

RISK FACTORS

Prospective purchasers should carefully consider all the information in
this Prospectus and in particular the following before deciding to purchase any
Shares.

INDUSTRY CYCLICALITY AND COMPETITION

The chemical industry has historically experienced periodic downturns that
have had an adverse effect on the industry as a whole and on the Company and its
profits. Furthermore, certain of the businesses in which the Company engages are
highly competitive.

The profitability of the Company's operations is affected by the market
price of soda ash more than any other factor. The price of soda ash has
fluctuated in recent years and is affected by numerous factors beyond the
Company's control -- such as increases in industry capacity, decreases in demand
for soda ash (or its end-use products such as glass, sodium based chemicals and
detergents) and the change in price and/or availability of substitute
products -- the effect of which cannot be accurately predicted.

Historically, the price of soda ash has fluctuated based on the rate of
industry capacity utilization by U.S. producers. In general, over time,
profitability increases and decreases with concomitant increases and decreases
in the industry utilization rate. After operating above 95 percent of estimated
realizable capacity from 1988 to 1991, industry utilization levels declined over
the next several years and reached a low of 86 percent in 1993. The drop in the
utilization rate was a result of the expansion by existing soda ash producers of
approximately 1.2 million tons of capacity (representing about 11 percent of
total U.S. capacity at that time), reduced exports to Europe and certain
customers' utilization of caustic soda in place of soda ash to take advantage of
a precipitous drop in caustic soda prices in 1993 as production of chlorine (a
co-product of caustic soda) increased. Caustic soda can be used as a substitute
for soda ash in the production of pulp and paper and certain other chemical
applications. Over the past two years, due predominantly to continued growth in
certain segments of the export market, combined with improved domestic
consumption (in part attributable to select customers switching back from
caustic soda to soda ash), industry utilization levels have returned to
approximately 95 percent.

Several existing U.S. natural soda ash producers have recently completed
capacity expansions totalling 1.3 million tons. Based on current market
conditions, the Company believes that export growth, the closure of additional
synthetic soda ash facilities outside North America and new customer
applications for soda ash will increase demand for U.S. soda ash to absorb this
increased capacity. Absent such improvements, the recently completed expansions
would likely lower the industry utilization rate.

In addition, in 1993, a company controlled by a private entrepreneur
announced plans to construct a 1.0 million-ton trona benefication plant at Green
River, Wyoming, employing new (and yet to be commercialized) technology. While
there can be no assurance that this plant will not proceed, its construction is
contingent upon obtaining all of the necessary regulatory approvals and permits,
mineral leases and financing. It is uncertain at this time whether any or all of
these requirements have been or will be met.

The soda ash industry, like other domestic industries with significant
export volume, faces certain competitive pressures overseas. In this regard,
fluctuations in the value of the U.S. dollar can alter the competitiveness of
U.S. soda ash sold in overseas markets. See 'Business -- Chemical Segment --
Industrial Chemicals -- Markets/Customers.'

1996 with an announced capacity of 300,000 tons, although the Company believes
actual production may be less. Some portion of the potential production will be
used for internal consumption by Ambar in its oil services business in the Gulf
Coast region.

RICHMOND WORKS JULY 26, 1993 INCIDENT

On July 26, 1993, a pressure relief device on a railroad tank car
containing oleum that was being unloaded at the Company's Richmond, California,
facility, ruptured during the unloading process, causing the release of a
significant amount of sulfur trioxide. Approximately 150 lawsuits seeking
substantial amounts of damages were filed against the Company on behalf of in
excess of 60,000 claimants in municipal and superior courts of California
(Contra Costa and San Francisco counties) and in federal court (United States
District Court for the Northern District of California). All state court cases
were coordinated before a coordination trial judge in Contra Costa County
Superior Court (In Re GCC Richmond Works Cases, JCCP No. 2906). The court, among
other things, appointed plaintiffs' liaison counsel and a plaintiffs' management
committee. The federal court cases were stayed until completion of the state
court cases.

After several months of negotiation under the supervision of a settlement
master, the Company and plaintiffs' management committee executed a
comprehensive settlement agreement which resolved the claims of approximately 95
percent of the claimants who filed lawsuits arising out of the July 26, 1993
incident, including the federal court cases. After a final settlement approval
hearing on October 27, 1995, the coordination trial judge approved the
settlement on November 22, 1995.

Pursuant to the terms of the settlement agreement, the Company, with funds
to be provided by its insurers pursuant to the terms of the insurance policies
described below, has agreed to make available a maximum of $180 million to
implement the settlement. Various 'funds' and 'pools' are established by the
settlement agreement to compensate claimants in different subclasses who meet
certain requirements. Of this amount, $24 million has been allocated for
punitive damages, notwithstanding the Company's strong belief that punitive
damages are not warranted. The settlement also makes available a maximum of $23
million of this $180 million for the payment of legal fees and litigation costs
to plaintiffs' class counsel and the plaintiffs' management committee.

The settlement agreement provides, among other things, that while claimants
may 'opt out' of the compensatory damages portion of the settlement and pursue
their own cases separate and apart from the class settlement mechanism, they
have no right to opt out of the punitive damages portion of the settlement.
Consequently, under the terms of the settlement, no party may seek punitive
damages from the Company outside of those provided by the settlement. The
deadline for claimants electing to opt out of the compensatory damages portion
of the settlement was October 5, 1995, and fewer than 3,000 claimants, which
constitutes approximately 5 percent of the total number of claimants, have
elected to so opt out. The various settlement pools and funds will be reduced to
create a reserve to fund the Company's defense and/or settlement (if any) of
opt-out claims. Except with respect to compensatory damage claims by claimants
electing to opt out, the settlement fully releases from all claims arising out
of the July 26, 1993 incident the Company and all of its related entities,
shareholders, directors, officers and employees, and all other entities who have
been or could have been sued as a result of the July 26, 1993 incident,
including all those who have sought or could seek indemnity from the Company.

Under the terms of the settlement agreement, settling claimants may receive
payment of their claims prior to the resolution of any appeal of the settlement
upon providing, among other things, a signed release document containing
language which fully releases the Company from any further claims, either for
compensatory or punitive damages, arising out of the July 26, 1993 incident.
Plaintiffs' liaison counsel are currently undertaking to obtain signed releases
from the approximately 95 percent of claimants who have elected to participate
in the settlement, and as of April 15, 1996 the Company had already received
releases from approximately 85 percent of the settling claimants. Final payments
to the plaintiffs' management committee on behalf of these settling claimants
have been made with funds provided principally by the Company's insurers
pursuant to the terms of the insurance policies described below, and further
payments will be made as additional releases are received and reviewed.

Notices of appeal of all or portions of the settlement approved by the
court have been filed by five law firms representing approximately 2,750
claimants, with approximately 2,700 of these claimants represented by the same
law firm. These claimants have not specified the amount of their claims in court
documents, although the Company believes that their alleged injuries are no
different in nature or extent than those alleged by the settling claimants.
Based on papers filed by the appellants with the California Court of Appeals,
the primary grounds for appeal are expected to be that the settlement is not
'fair, reasonable and adequate' under California law, that the trial court erred
in certifying a class action for purposes of settlement and in certifying a
mandatory punitive damage class, that the trial court awarded excessive
attorneys' fees to the plaintiffs' management committee and plaintiffs' class
counsel, that the trial court exceeded its authority in reducing contingent fees
payable to attorneys for representing individual claimants, and that the trial
court erroneously applied a state statute that governs unclaimed residuals
remaining from class action settlements. If the settlement is upheld on appeal,
the Company believes that any further liability in excess of the amounts made
available under the settlement agreement (such as for opt-outs) will not exceed
the available insurance coverage, if at all, by an amount that could be material
to its financial condition or results of operations.

The settlement also includes terms and conditions designed to protect the
Company in the event that the settlement as approved by the court is overturned
or modified on appeal. If such an overturn or modification occurs, the Company
has the right to terminate the settlement and make no further settlement
payments, and any then unexpended portions of the settlement proceeds
(including, without limitation, the $24 million punitive damage fund) would be
available to address any expenses and liabilities that might arise from such an
overturn or modification. In addition, as discussed above, in the event that the
settlement as approved by the court is overturned or modified on appeal, the
release document signed by settling claimants contains language which fully
releases the Company from any further claims, either for compensatory or
punitive damages, arising out of the July 26, 1993 incident. The Company
believes that it will have obtained releases from a majority of the remaining
settling claimants prior to any such appeal being ruled on by an appellate
court.

While there can be no assurances regarding how an appellate court might
rule, the Company believes that the settlement will be upheld on appeal. In the
event of a reversal or modification of the settlement on appeal, with respect to
lawsuits by any then remaining claimants (opt-outs and settling claimants who
have not signed releases) the Company believes that, whether or not it elects to
terminate the settlement in the event it is overturned or modified on appeal, it
will have adequate resources from its available insurance coverage to vigorously
defend these lawsuits through their ultimate conclusion, whether by trial or
settlement. However, in the event the settlement is overturned or modified on
appeal, there can be no assurance that the Company's ultimate liability
resulting from the July 26, 1993 incident would not exceed the available
insurance coverage by an amount which could be material to its financial
condition or results of operations, nor is the Company able to estimate or
predict a range of what such ultimate liability might be, if any.

The Company has insurance coverage relating to the July 26, 1993 incident
which totals $200 million. The first two layers of coverage total $25 million
with a sublimit of $12 million applicable to the July 26, 1993 incident, and the
Company also has excess insurance policies of $175 million over the first two
layers. In 1993, the Company reached an agreement with the carrier for the first
two layers whereby the carrier paid the Company $16 million in settlement of all
claims the Company had against that carrier. In the third quarter of 1994, the
Company recorded a $9 million charge to earnings which represents the Company's
estimated minimum liability (net of the insurance settlement already received)
for costs which the Company believes it will incur related to this matter. The
Company's excess insurance policies, which are written by two Bermuda-based
insurers, provide coverage for compensatory as well as punitive damages. Both
insurers have executed agreements with the Company confirming their respective
commitments to fund the settlement as required by their insurance policies with
the Company and as described in the settlement agreement. In addition, these
same insurers currently continue to provide substantially the same insurance
coverage to the Company.

LEVERAGE

The Company had $288.1 million of total long-term debt at March 31, 1996.
During the last nine months of 1996, the Company will be required to repay $15.5
million of long-term debt. The high level of the Company's indebtedness poses
risks to investors in the Shares, including the risks that the Company might not
generate sufficient cash flow to service the Company's obligations, that the
Company might not be able to obtain additional financing in the future and that
the Company may be more highly leveraged than certain of its competitors which
may put it at a competitive disadvantage. The Company's ability to service its
debt will depend on its future performance, which will be subject to prevailing
economic and competitive conditions and to other factors. See 'Capitalization,'
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Description of Indebtedness.'

VOTING CONTROL BY AND RELATIONSHIP WITH PRINCIPAL STOCKHOLDERS; ANTI-TAKEOVER
EFFECT OF DUAL CLASSES OF STOCK

Holders of Common Stock are entitled to one vote per share and holders of
Class B Common Stock are entitled to 10 votes per share. Upon completion of the
Offerings, Paul M. Montrone, Chairman of the Board of Directors, and a grantor
retained annuity trust (the 'GRAT') of which Mr. Montrone is a beneficiary and
currently a co-trustee, each will beneficially own approximately 33.5 percent of
the outstanding Class B Common Stock, and Stonor Group Limited ('Stonor'), the
Selling Stockholder, will own approximately 33.0 percent of the outstanding
Class B Common Stock (35.3 percent and 29.4 percent, respectively, if the
Over-allotment Option is exercised in full and 36.3 percent and 27.5 percent,
respectively, if the Over-allotment Option is exercised in full and the Selling
Stockholder assumes in full the Company's portion of the Over-allotment Option).
These holdings of Class B Common Stock represent 31.9 percent, 31.9 percent and
31.4 percent, respectively, of the combined voting power of the outstanding
shares of Common Stock and Class B Common Stock (assuming no exercise of the
Over-allotment Option), or 33.2 percent, 33.2 percent and 27.8 percent,
respectively, if the Over-allotment Option is exercised in full (or 34.1
percent, 34.1 percent and 25.9 percent, respectively, if the Over-allotment
Option is exercised in full and the Selling Stockholder assumes in full the
Company's portion of the Over-allotment Option). Pursuant to the terms of a
voting trust agreement dated as of March 31, 1995 by and between Mr. Montrone
and Stonor, Mr. Montrone is the sole trustee of a voting trust which will hold
all shares of Class B Common Stock owned by the Current Stockholders.
Accordingly, until the earlier of the date of termination of the voting trust
(March 31, 2005 or the occurrence of certain other events) or the date on which
a significant portion of the shares of Class B Common Stock held in the voting
trust are withdrawn therefrom (which withdrawal is permitted in connection with
a sale of shares by any such stockholder in a public or private sale), Mr.
Montrone alone will have sufficient voting power (without the consent of any
other stockholder of the Company) to elect the entire Board of Directors of the
Company and, in general, to determine the outcome of any corporate transactions
or other matters submitted to the stockholders for approval, including mergers
and sales of assets, and to prevent, or cause, a change of control of the
Company. Mr. Montrone's ability to affect the business affairs and operations of
the Company will be increased by his position as Chairman of the Company's Board
of Directors. After the consummation of the Offerings, the Company intends to
seek the election of at least two directors who are neither officers nor
employees of the Company. In addition, Mr. Montrone may from time to time
acquire shares of Common Stock or warrants, options or rights to acquire shares
of Common Stock in the open market or in privately negotiated transactions, and
the Company has entered into an agreement with Mr. Montrone pursuant to which
the Company has agreed not to take any actions attempting to interfere with any
such acquisitions. See 'Principal and Selling Stockholders.' In April 1996, the
Company entered into a Stockholder Agreement with the GRAT and Mr. Montrone
pursuant to which the GRAT granted to the Company a right of first refusal with
respect to any transfer of shares of Common Stock by the GRAT through March 1,
2001. In exchange, the Company agreed to register for sale under the Securities
Act of 1933, as amended (the '1933 Act'), at any time beginning on March 1, 1997
and ending on March 1, 2001, shares of Common Stock which the GRAT may from time
to time distribute to Mr. Montrone or his assignees, although Mr. Montrone would
not be obligated to sell any such shares of Common Stock. The Company
subsequently entered into a similar agreement with Stonor.

Mr. Montrone and Paul Meister are Managing Directors of Latona Associates
Inc. (the 'Adviser'), a management company controlled by Mr. Montrone. On
January 1, 1995, the Company entered into an agreement with the Adviser to
provide the Company with strategic guidance and advice related to financings,
security offerings, recapitalizations and restructurings, tax, corporate
secretarial, employee benefit and other administrative services as well as to
provide advice regarding the Company's automotive parts manufacturing
businesses. In 1996, Mr. Meister joined the Adviser with the objective of
enhancing its ability to provide these strategic services and to develop and
pursue acquisitions and business combinations designed to enhance the long-term
growth prospects and value of the Company.

Under its agreement with the Adviser, the Company has agreed to pay (and
paid during 1995) the Adviser an annual fee of $5.5 million, payable quarterly
in advance, adjusted annually after 1995 for increases in the U.S. Department of
Labor, Bureau of Labor Statistics, Consumer Price Index. In addition, in
connection with any acquisition or business combination with respect to which
the Adviser advises the Company, the Company has agreed to pay the Adviser
additional fees comparable to those received by investment banking firms for
such services (subject to the approval of a majority of the independent
directors of the Company). The agreement extends through December 31, 2004. The
agreement may be terminated by either party if the other party ceases, or
threatens to cease, to carry on its business, or has committed a material breach
of the agreement which is not remedied within 30 days of notice of such breach.
The agreement may also be terminated by the Company if Mr. Montrone ceases to
hold, directly or indirectly, shares of the Company's capital stock constituting
at least 20 percent of the total of all shares of Common Stock and Class B
Common Stock then issued and outstanding.

The terms of the agreement between the Company and the Adviser were not the
result of arm's length negotiations. Mr. Montrone, who controls both the Adviser
and the Company, negotiated the terms of the agreement and will receive
substantial economic benefits from the fees to be paid to the Adviser by the
Company. While there can be no assurance that the amount of fees to be paid by
the Company to the Adviser will not exceed the amount that the Company would
have to pay to obtain from unaffiliated third parties the services to be
provided by the Adviser, the Company believes that employees of the Adviser have
extensive knowledge concerning the Company's business which would be impractical
for a third party to obtain. As a result, the Company has not compared the fee
payable to the Adviser with fees that might be charged by third parties for
similar services. The Company has adopted a policy that any amendment to, waiver
of, extension of or other change in the terms of the agreement with the Adviser,
as well as any transactions perceived to involve potential conflicts of
interest, will require the approval of a majority of the independent directors
of the Company.

ENVIRONMENTAL CONSIDERATIONS

General. The Company's operations are subject to numerous laws and
regulations relating to the protection of human health and the environment in
the U.S. and Canada. The Company believes that it is in substantial compliance
with such laws and regulations. However, as a result of the Company's
operations, it is involved from time to time in administrative and judicial
proceedings and inquiries relating to environmental matters. These include
several currently pending administrative proceedings concerning alleged
environmental violations at the Company's facilities. Based on information
available at this time with respect to potential liability involving these
facilities, the Company believes that any such liability would not have a
material adverse effect on its financial position or results of operations. In
addition, modifications of existing laws and regulations or the adoption of new
laws and regulations in the future, particularly with respect to environmental
and safety standards, as well as the discovery of additional or unknown
environmental contamination, if any, at the Company's facilities, could require
expenditures which might be material to the Company's results of operations or
financial condition. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Environmental Matters' and
'Business -- Environmental Matters.'

Accruals/Insurance. The Company's accruals for environmental liabilities
are recorded based on current interpretations of environmental laws and
regulations when it is probable that a liability has been incurred and the
amount of such liability can be reasonably estimated. Accruals for environmental
matters were $15.9 million and $16.6 million at December 31, 1994 and 1995,

respectively. The Company maintains a comprehensive insurance program, including
customary comprehensive general liability insurance for bodily injury and
property damage caused by various activities and occurrences and significant
excess coverage to insure against catastrophic occurrences such as the July 26,
1993 Richmond, California, incident. The Company does not maintain any insurance
related specifically to remediation of existing or future environmental
contamination, if any. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Environmental Matters,'
'Business -- Environmental Matters and Legal Proceedings' and Note 5 of Notes to
the Consolidated Financial Statements.

DEPENDENCE ON MINERAL LEASES FOR RAW MATERIALS

The natural soda ash businesses of the Company and the other producers at
Green River, Wyoming are dependent upon their ability to mine trona ore pursuant
to federal, state and private mineral leases at Green River. Applications for
renewal of federal government leases by the Company and all other lease holders
are currently being held pending a review by the Bureau of Land Management of
the U.S. Department of the Interior (the 'BLM') of the royalty rate for trona
extracted under federal leases and certain other provisions of the leases.
Pursuant to its current leases, the Company has a preferential right to renew
such leases for successive ten-year periods on reasonable terms and conditions
prescribed by the Secretary of the Interior. The Company has been notified by
the BLM that it will increase the federal royalty rate on mining trona from 5
percent to 6 percent of soda ash sales on renewed leases and from 5 percent to 8
percent of soda ash sales on new leases. These increases will apply to leases
for renewal by all Green River producers. Furthermore, the BLM has indicated
that it will renew leases currently held in the next two to three months. The
BLM action will likely result in a comparable royalty rate increase on state and
private leases throughout the industry. Management does not believe that the
renewal terms and conditions proposed by the Secretary of the Interior will have
a material effect on the Company.

LABOR RELATIONS

As of December 31, 1995, of the Company's 2,294 employees, 1,268 were
represented by ten different unions through 25 separate contracts. As a result,
the Company may be subject to work stoppages, strikes or other labor
disruptions. Since the beginning of 1986, the Company has renegotiated a total
of 91 contracts. Five of these negotiations have resulted in labor disruptions.
During each of these labor disruptions, Company management has operated the
plants and supplied customers without interruption until the labor disruption
was settled and a new contract agreed upon. During 1996, eight contracts,
including the contracts covering employees at the Green River and Amherstburg
facilities, will be up for renewal. See 'Business -- Employees/Labor Relations.'

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after the
Offerings could adversely affect the market price of the Common Stock. In
addition to the 7,500,000 Shares to be sold in the Offerings (assuming no
exercise of the Over-Allotment Option), 14,736,842 shares of the Class B Common
Stock owned by the Current Stockholders of the Company can be converted into
Common Stock which will be eligible for sale in the public market following the
date of this Prospectus. However, the holders of these shares have agreed not to
publicly offer, sell or otherwise dispose of such shares of Common Stock owned
by them for 180 days from the date of this Prospectus without the consent of
Salomon Brothers Inc. See 'Underwriting.' After the expiration of such
agreement, pursuant to Rule 144 under the 1933 Act, such stockholders may sell
such shares without registration, subject to certain limitations. If the Current
Stockholders should sell or otherwise dispose of a substantial amount of Common
Stock in the public market, the prevailing market price for the Common Stock
could be adversely affected. See 'Principal and Selling Stockholders' and
'Shares Eligible for Future Sale.'

ABSENCE OF A PUBLIC TRADING MARKET; OFFERING PRICE; POSSIBLE VOLATILITY OF STOCK
PRICE

Prior to the Offerings, there has been no public market for the Common
Stock, and there can be no assurance that an active market will develop upon
consummation of the Offerings. Consequently, the offering price of the Common
Stock will be determined by negotiations among the Company, the Selling
Stockholder and the Underwriters. See 'Underwriting' for a description of the
factors to be considered in determining the initial public offering price. The
trading price of the Common Stock

after the Offerings could be subject to significant fluctuations in response to
variations in quarterly operating results, the gain or loss of significant
contracts, changes in management or new products or services by the Company or
its competitors, general trends in the industry and other events or factors. In
addition, the stock market has experienced extreme price and volume fluctuations
which have affected the market price for many companies in similar industries
and which have often been unrelated to the operating performance of these
companies. These broad market fluctuations may adversely affect the market price
of the Company's Common Stock.

EFFECT OF CERTAIN ANTITAKEOVER PROVISIONS

Certain provisions of the Company's certificate of incorporation and
By-laws could delay or frustrate the removal of incumbent directors and could
make more difficult a merger, tender offer or proxy contest, involving the
Company, even if such events would be beneficial, in the short term, to the
interests of the stockholders. The Company's certificate of incorporation and
By-laws provide for, among other things, two classes of Common Stock, exclusive
authority of the Chairman of the Board of Directors, the President or a majority
of directors, unless otherwise required by law, to call special meetings of the
stockholders, and certain advance notice requirements for stockholder proposals,
including nominations for election to the Board of Directors. In addition, the
Company's Board of Directors has the authority to issue up to 10,000,000 shares
of Preferred Stock in one or more series and to fix the voting powers,
designations, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof without
stockholder approval. See 'Description of Capital Stock -- Certain Provisions of
Certificate of Incorporation and By-laws.'

OPERATING HAZARDS

The Company's revenues are dependent on the continued operation of its
various manufacturing facilities. The operation of chemical manufacturing plants
involves many risks, including the breakdown, failure or substandard performance
of equipment, natural disasters and the need to comply with directives of
government agencies. The occurrence of material operational problems, including
but not limited to the above events, may have a material adverse effect on the
productivity and profitability of a particular manufacturing facility, or with
respect to certain facilities, the Company as a whole, during the period of such
operational difficulties.

The Company's operations are also subject to various hazards incident to
the production of industrial chemicals, including the use, handling, processing,
storage and transportation of certain hazardous materials. These hazards can
cause personal injury and loss of life, severe damage to and destruction of
property and equipment, environmental damage and suspension of operations.
Claims arising from any future catastrophic occurrence may result in the Company
being named as a defendant in lawsuits asserting potentially large claims. See
'Business -- Legal Proceedings.'

GENERAL LITIGATION EXPENSE

In addition to the matters discussed above, because the production of
certain chemicals involves the use, handling, processing, storage and
transportation of hazardous materials, and because certain of the Company's
products constitute or contain hazardous materials, the Company has been subject
to claims of injury from direct exposure to such materials and from indirect
exposure when such materials are incorporated into other companies' products.
There can be no assurance that as a result of past or future operations, there
will not be additional claims of injury by employees or members of the public
due to exposure, or alleged exposure, to such materials. Furthermore, the
Company also has exposure to present and future claims with respect to workplace
exposure, workers' compensation and other matters, arising from events both
prior to and after the Offering. There can be no assurance as to the actual
amount of these liabilities or the timing thereof. See 'Business -- Legal
Proceedings.'

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of the Common Stock in the Offerings will incur an immediate and
substantial dilution in the net tangible book value per share of Common Stock of
$24.94 per share. See 'Dilution.'

USE OF PROCEEDS

The net proceeds from the sale of the 2,500,000 Shares offered by the
Company in the Offerings, after deducting underwriting discounts and commissions
and offering expenses payable by the Company, will be approximately $40.6
million. The Company expects to use the net proceeds (i) to repay in full
outstanding borrowings under General Chemical's U.S. Revolving Credit Facility;
(ii) to repay in full the balance of indebtedness owed by Toledo Technologies
and PDI under separate credit facilities; and (iii) for general corporate
purposes. Loans outstanding under the U.S. Revolving Credit Facility mature on
March 31, 1999 and bear interest at a fluctuating rate based on the prime rate
or LIBOR, at the Company's option (6.2 percent as of March 31, 1996). Loans
outstanding under the credit facilities of Toledo Technologies and PDI are
subject to semi-annual repayments which commenced December 31, 1994 continuing
through December 31, 1998 and bear interest at fluctuating rates based on the
prime rate or LIBOR, at the Company's option (as of March 31, 1996, 7.7 percent
under the Toledo Technologies credit facility and 7.7 percent under the PDI
credit facility). See 'Capitalization' and 'Description of Indebtedness.' The
Company will not receive any proceeds from the sale of Shares by the Selling
Stockholder. In addition, in March 1996 a stockholder of the Company prepaid a
$2 million promissory note to the Company, and a former stockholder has agreed
to prepay $12 million of indebtedness owed to the Company upon completion of the
Offerings. The proceeds of such prepayments will be used for general corporate
purposes. See 'Certain Relationships and Transactions.'

DIVIDEND POLICY

The Company currently intends to pay a quarterly cash dividend to its
holders of Common Stock and Class B Common Stock. The first cash dividend, for
the period commencing on the closing of the Offerings and ending on June 30,
1996, is expected to be declared on or about June 12, 1996 and is expected to be
equivalent to a quarterly cash dividend of $.05 per share pro rated by the
number of days in such period (or an annual cash dividend of $.20 per share).
However, no dividends will be payable unless they are declared by the Board of
Directors and funds are legally available for payment of such dividends. As a
holding company with no direct operations of its own, the Company's ability to
pay cash dividends on the Common Stock and Class B Common Stock depends on the
ability of its operating subsidiaries to pay cash dividends to the Company. The
payment of cash dividends by the Company's subsidiaries to the Company is
subject to certain restrictions under the terms of various agreements governing
the long-term debt of the Company's subsidiaries. Consequently, the Company's
subsidiaries' ability to pay cash dividends to the Company may effectively be
limited by such agreements. During the fiscal years ended December 31, 1994 and
1995, the Company paid aggregate cash dividends of $13.8 million and $19.7
million, respectively. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources' and
'Description of Indebtedness.'

DILUTION

The net tangible book value (deficit) of the Company's Common Stock as of
March 31, 1996 was $(206.1) million or $(10.44) per share. 'Net tangible book
value (deficit)' per share represents the amount of total tangible net assets
less total liabilities, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale of 2,500,000 shares of Common Stock
offered by the Company hereby, and after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company and receipt
of the net proceeds by the Company in the Offerings, the pro forma net tangible
book value (deficit) of the Company as of March 31, 1996 would have been
$(165.5) million, or $(7.44) per share, representing an immediate increase in
net tangible book value of $3.00 per share to existing stockholders and an
immediate dilution of $24.94 per share to new investors purchasing Shares in the
Offerings. The following table illustrates the resulting per share dilution with
respect to the Shares of Common Stock to be sold by the Company in the
Offerings:

Initial public offering price per share................................. $17.50
------
Net tangible book value (deficit) per common share before the
Offerings........................................................ $(10.44)
Increase per share attributable to new investors................... 3.00
-------
Pro forma net tangible book value (deficit) per share after the
Offerings............................................................. (7.44)
------
Dilution per share to new investors..................................... $24.94
------
------

CAPITALIZATION

The following table sets forth, as of March 31, 1996, the actual cash and
capitalization of the Company, and such cash and capitalization as adjusted for
the sale by the Company of 2,500,000 of the Shares in the Offerings and the
application of the net proceeds therefrom (see 'Use of Proceeds'), together with
the application of the prepayment of $12 million of indebtedness from a former
stockholder of the Company (see 'Certain Relationships and Transactions'). The
adjustment does not include a one-time, after-tax charge of approximately $6.3
million in the fiscal quarter in which the Offerings are completed reflecting
the accrual of awards payable as a result of the Offerings under the terms of
the Company's Restricted Unit Plan. See 'Management -- Restricted Unit Plan.'
This table should be read in conjunction with the Consolidated Financial
Statements of the Company and the notes thereto included elsewhere in this
Prospectus.

MARCH 31, 1996
------------------------
AS
ACTUAL ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)

Cash....................................................................... $ 21,623 $ 33,798
-------- -----------
-------- -----------
Total debt:
U.S. Revolving Credit Facility........................................ $ 26,000 $ --
Other U.S. bank debt (1).............................................. 14,425 --
Bank Term Loan........................................................ 95,652 95,652
GC Canada Revolving Credit Facility................................... -- --
GC Canada 9.09% Senior Notes Due 1999................................. 52,000 52,000
9 1/4% Senior Subordinated Notes Due 2003............................. 100,000 100,000
-------- -----------
Total long-term debt............................................. 288,077 247,652
-------- -----------
Minority interest (2)...................................................... 33,634 33,634
-------- -----------
Equity (deficit):
Preferred Stock, $.01 par value; authorized: 10,000,000 shares; none
issued or outstanding............................................... -- --
Common Stock, $.01 par value; authorized: 50,000,000 shares;
100,000,000 as adjusted; issued and outstanding: 19,736,842 shares;
7,500,000 shares as adjusted (3).................................... 197 75
Class B Common Stock, $.01 par value; authorized: none; 40,000,000
shares as adjusted; issued and outstanding: none; 14,736,842 shares
as adjusted......................................................... -- 147
Capital deficit....................................................... (237,140) (196,565)
Foreign currency translation adjustments.............................. (1,401) (1,401)
Retained earnings..................................................... 32,285 32,285
-------- -----------
Total equity (deficit)........................................... (206,059) (165,459)
-------- -----------
Total capitalization........................................ $115,652 $ 115,827
-------- -----------
-------- -----------

- ------------------------------

(1) Consists of indebtedness of Toledo Technologies and PDI. See 'Description of
Indebtedness.'

(2) Represents 49 percent minority interest in GCSAP.

(3) Excludes 2,200,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Plan and approximately 850,000 shares of Common Stock
issuable by the Company upon completion of the Offerings under the Company's
Restricted Unit Plan primarily in satisfaction of the existing rights of
employees under the Prior Equity Programs. See 'Management -- Restricted
Unit Plan' and ' -- 1996 Stock Option and Incentive Plan.'

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company have been
derived from and should be read in conjunction with the Company's Consolidated
Financial Statements. The Company's Consolidated Financial Statements for the
three years ended December 31, 1995 have been audited by Deloitte & Touche LLP,
the Company's independent auditors, and are included elsewhere in this
Prospectus. The selected financial data for the three months ended March 31,
1995 and 1996 have been derived from unaudited financial statements. In the
opinion of management, the unaudited financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company at March 31, 1995 and 1996
and the results of operations and its cash flows for the three months ended
March 31, 1995 and 1996. The results of operations for the three months ended
March 31, 1996 are not necessarily indicative of the results of operations that
may be expected for the entire year 1996.

YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS:
Net revenues.................... $ 561,762 $ 544,704 $ 518,718 $ 525,912 $ 550,871
Cost of sales................... 407,146 378,205 363,268 361,637 387,255
Gross profit.................... 154,616 166,499 155,450 164,275 163,616
Selling, general and
administrative expense........ 53,539 57,927 58,330 57,034 56,619
Richmond incident costs......... -- -- -- 9,000 --
Operating profit................ 101,077 108,572 97,120 98,241 106,997
Minority interest............... 24,504 24,314 17,733 16,957 19,458
Interest income................. 4,930 4,131 3,019 2,487 2,937
Foreign currency transaction
(gains) losses................ (246) 3,585 1,719 4,004 (1,382)
Other (income) expense.......... 1,792 504 (651) 63 735
Income from continuing
operations before interest,
income taxes, extraordinary
item and cumulative effect of
accounting change............. 79,957 84,300 81,338 79,704 91,123
Interest expense................ 48,891 42,047 37,917 33,006 26,704
Income from continuing
operations before income
taxes, extraordinary item and
cumulative effect of
accounting change............. 31,066 42,253 43,421 46,698 64,419
Income tax provisions........... 10,394 18,442 16,185 18,393 43,326(1)
Income from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............. 20,672 23,811 27,236 28,305 21,093(1)
Income before extraordinary item
and cumulative effect of
accounting change............. 26,714 23,811 27,236 28,305 21,093(1)
Net income (loss) (2)........... $ 26,714 $ (17,617)(3) $ 25,151 $ 20,102 $ 21,093(1)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
PER SHARE (4):
Income from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............. $ 1.05 $ 1.21 $ 1.38 $ 1.43 $ 1.07(1)
Net income (loss)............... 1.35 (.89)(3) 1.27 1.02 1.07(1)
Dividends....................... -- 2.84 .49 .70 1.00
Weighted average number of
shares outstanding............ 19,736,842 19,736,842 19,736,842 19,736,842 19,736,842
OTHER DATA:
Capital expenditures............ $ 20,607 $ 18,141 $ 20,221 $ 28,503 $ 34,093
Depreciation and amortization
(5)........................... 28,963 27,916 25,826 25,062 27,095
EBITDA (6)...................... 103,990 108,085 104,145 102,279 115,281
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash, cash equivalents and
short-term investments........ $ 73,348 $ 56,199 $ 43,818 $ 28,701 $ 19,025
Adjusted working capital (7).... 38,377 10,675 (6,252) 4,471 12,484
Total assets.................... 505,051 446,861 425,944 433,627 431,325
Long-term debt (8).............. 393,006 366,322 306,200 304,750 291,495
Total equity (deficit).......... (163,263) (237,968) (223,051) (216,831) (215,336)

THREE MONTHS ENDED
MARCH 31,
----------------------

1995 1996
--------- ---------

STATEMENT OF OPERATIONS:
Net revenues.................... $ 128,661 $ 144,571
Cost of sales................... 92,850 103,060
Gross profit.................... 35,811 41,511
Selling, general and
administrative expense........ 13,340 13,981
Richmond incident costs......... -- --
Operating profit................ 22,471 27,530
Minority interest............... 4,139 6,458
Interest income................. 811 608
Foreign currency transaction
(gains) losses................ (142) (51)
Other (income) expense.......... 61 (86)
Income from continuing
operations before interest,
income taxes, extraordinary
item and cumulative effect of
accounting change............. 19,224 21,817
Interest expense................ 6,802 6,464
Income from continuing
operations before income
taxes, extraordinary item and
cumulative effect of
accounting change............. 12,422 15,353
Income tax provisions........... 4,532 6,037
Income from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............. 7,890 9,316
Income before extraordinary item
and cumulative effect of
accounting change............. 7,890 9,316
Net income (loss) (2)........... $ 7,890 $ 9,316
--------- ---------
--------- ---------
PER SHARE (4):
Income from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............. $ .40 $ .47
Net income (loss)............... .40 .47
Dividends....................... .14 --
Weighted average number of
shares outstanding............ 19,736,842 19,736,842

OTHER DATA:
Capital expenditures............ $ 7,162 $ 8,622
Depreciation and amortization
(5)........................... 6,919 7,242
EBITDA (6)...................... 25,332 28,451
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash, cash equivalents and
short-term investments........ $ 29,324 $ 21,623
Adjusted working capital (7).... 4,363 22,148
Total assets.................... 426,885 445,331
Long-term debt (8).............. 296,745 288,077
Total equity (deficit).......... (211,650) (206,059)

- ------------------------------

(1) The Company recorded a nonrecurring charge to income tax expense of $17.1
million ($.87 per share) for all years prior to 1995 related to IRS
examinations. See Note 2 of Notes to the Consolidated Financial Statements.

(2) During 1993 and 1994 the Company recorded extraordinary losses related to
the early retirement of certain outstanding indebtedness of $2.1 million and
$8.2 million, respectively.

(3) The Company implemented Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other than Pensions, on
the immediate recognition basis effective January 1, 1992, which resulted in
an after tax charge of $41.4 million.

(4) Adjusted for all periods presented to reflect a 202,994.4539 per share stock
dividend effected as of October 17, 1994.

(5) Consolidated depreciation and amortization excluding amortization of
deferred financing costs.

(6) EBITDA is defined as income from continuing operations before net interest
(including amortization of deferred financing costs), income taxes,
extraordinary item and cumulative effect of accounting change, depreciation
and amortization, but after pre-tax minority interest in income and is
presented because it is a widely accepted financial indicator of the
Company's ability to service and/or incur debt. EBITDA is not required by
generally accepted accounting principles and should not be considered as an
alternative to net income, consolidated cash flows from operations or any
other measure of performance required by generally accepted accounting
principles or as an indicator of the Company's operating performance.

(7) Adjusted working capital consists of total current assets (excluding cash
and short-term investments) less total current liabilities (excluding the
current portion of long-term debt).

(8) Includes the current portion of long-term debt.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the Company's
Consolidated Financial Statements and the notes thereto included elsewhere in
this Prospectus.

GENERAL

During 1995, net revenues increased $25.0 million, or 5 percent, to $550.9
million, reflecting higher sales in both the Chemical and Manufacturing
Segments. Within the Chemical Segment, increased sales were attributable to
higher soda ash pricing and moderately higher volumes while the stronger sales
performance in the Manufacturing Segment was due to volume and product mix
improvements in higher value automotive engine parts. Excluding the 1994
one-time charge of $9.0 million related to the July 26, 1993 incident at the
Company's Richmond, California, manufacturing facility, operating profit
remained essentially unchanged at $107.0 million as higher sales were offset by
an unfavorable product mix, essentially due to lower calcium chloride volumes
caused by the mild winter weather in 1995, and higher manufacturing expenses.
Excluding the 1994 one-time charge, earnings before interest, income taxes and
extraordinary item improved $2.4 million due to foreign exchange gains versus a
loss in the prior year, partially offset by higher minority interest.

Chemical Segment

Within the Chemical Segment, a more robust soda ash market during 1995
favorably affected the Company's performance. During 1995, due to increases in
demand, total U.S. production of soda ash increased 7 percent to a record 11.0
million tons resulting in all U.S. producers being effectively sold out through
most of the year. The strength in the soda ash market was led by continued
growth in exports, especially in Asia and Latin America, and secondarily due to
improved domestic consumption. For the first time in four years, industry soda
ash pricing increased with average 1995 industry prices up 5 percent to an
estimated $74 per ton level. Given the current favorable market conditions, 1996
industry soda ash prices, which were predominantly set in annual contract
negotiations in late 1995, are expected to be in excess of $80 per ton.
Management anticipates the 1996 volumes in the U.S. soda ash market will meet or
exceed the prior year level, despite first quarter inventory adjustments by
customers reflecting some late 1995 prebuying before the price increase as well
as the impact of harsh winter conditions early in 1996.

Sales resulting from the improved soda ash market in 1995 were partially
offset by substantially lower calcium chloride sales due to the mild winter
conditions that prevailed, in contrast to the prior year when the harsh winter
in the northeast United States led to strong winter calcium chloride sales.

The derivative products and services product lines comprised more than
one-half of the Chemical Segment's operating income (net of minority interest)
during 1995. Margins declined somewhat in 1995 as moderate growth in sales
volume in most markets, particularly the refinery and chemical sulfuric acid
regeneration market, was more than offset by lower prices in the water treatment
and pulp and paper markets, as well as by higher manufacturing expenses.

Manufacturing Segment

Net revenues in the manufacturing segment increased $8.5 million, or 14
percent, to $70.0 million, primarily due to volume and product mix improvements
toward higher value automotive engine parts and new business at the Company's
wholly-owned subsidiary, Toledo Technologies, Inc. ('Toledo Technologies'). To
accommodate this new business and change of product mix, Toledo Technologies
constructed a second manufacturing facility that became operational during the
middle of 1995. In spite of the higher sales, operating profit for the
Manufacturing Segment was down slightly due to the start-up costs associated
with the new facility and higher expenses at the Company's Balcrank subsidiary.

RESULTS OF OPERATIONS

The following table sets forth certain income statement data for each of
the three years in the period ended December 31, 1995 and for the three months
ended March 31, 1995 and 1996 (dollars in millions).

THREE MONTHS
ENDED MARCH
YEARS ENDED DECEMBER 31, 31,
----------------------------------------------------- -------------
1993 1994 1995 1995
------------- ------------- --------------- -------------

Net revenues................................... $518.7 100% $525.9 100% $550.9 100% $128.7 100%
Cost of sales.................................. 363.3 70 361.6 69 387.3 70 92.9 72
------ --- ------ --- ------ --- ------ ---
Gross profit................................... 155.4 30 164.3 31 163.6 30 35.8 28
Selling, general and administrative expense.... 58.3 11 57.0 11 56.6 10 13.3 10
Richmond incident costs........................ -- -- 9.0 2 -- -- -- --
------ --- ------ --- ------ --- ------ ---
Operating profit............................... 97.1 19 98.3 19 107.0 19 22.5 18
Interest expense............................... 37.9 7 33.0 6 26.7 5 6.8 5
Interest income................................ 3.0 1 2.5 -- 2.9 1 .8 --
Foreign currency transaction (gains) losses.... 1.7 -- 4.0 1 (1.4) -- (.1) --
Other expense (income), net.................... (.6) -- .1 -- .7 -- .1 --
Minority interest.............................. 17.7 4 17.0 3 19.5 4 4.1 3
------ --- ------ --- ------ --- ------ ---
Income before income taxes and extraordinary
item......................................... 43.4 8 46.7 9 64.4 12 12.4 10
Income tax provision........................... 16.2 3 18.4 4 43.3(1) 8 4.5 4
------ --- ------ --- ------ --- ------ ---
Income before extraordinary item............... 27.2 5 28.3 5 21.1 4 7.9 6
Extraordinary item -- loss from extinguishment
of debt (net of tax)......................... 2.1 -- 8.2 1 -- -- -- --
------ --- ------ --- ------ --- ------ ---
Net income..................................... $ 25.1 5% $ 20.1 4% $ 21.1 4% $ 7.9 6%
------ --- ------ --- ------ --- ------ ---
------ --- ------ --- ------ --- ------ ---

1996
-------------

Net revenues................................... $144.6 100%
Cost of sales.................................. 103.1 71
------ ---
Gross profit................................... 41.5 29
Selling, general and administrative expense.... 14.0 10
Richmond incident costs........................ -- --
------ ---
Operating profit............................... 27.5 19
Interest expense............................... 6.5 4
Interest income................................ .6 --
Foreign currency transaction (gains) losses.... (.1) --
Other expense (income), net.................... (.1) --
Minority interest.............................. 6.5 4
------ ---
Income before income taxes and extraordinary
item......................................... 15.3 11
Income tax provision........................... 6.0 4
------ ---
Income before extraordinary item............... 9.3 6
Extraordinary item -- loss from extinguishment
of debt (net of tax)......................... -- --
------ ---
Net income..................................... $ 9.3 6%
------ ---
------ ---

- ------------------------------

Note: Percentages may not add due to rounding.

(1) Includes a nonrecurring charge to income tax expense of $17.1 million for
all years prior to 1995 related to IRS examinations. See Note 2 of Notes to
the Consolidated Financial Statements.

Three Months Ended March 31, 1996 Compared with Three Months Ended March 31,
1995

Net revenues for the three months ended March 31, 1996 were $144.6 million
or 12 percent higher than the prior year level due to higher soda ash sales in
the Chemical Segment reflecting favorable pricing as well as higher
Manufacturing Segment sales reflecting higher volume and product mix
improvements.

Cost of sales as a percentage of net revenues was 71 percent for the first
three months of 1996 versus 72 percent for the prior year level due to favorable
soda ash pricing, partially offset by higher manufacturing expenses.

Selling, general and administrative expense was 10 percent of net revenues
for the first three months of 1996, which was comparable with the 1995 level.

Interest expense for the first three months of 1996 was $6.5 million which
approximated the 1995 level.

Interest income for the first three months of 1996 was $.6 million as
compared with $.8 million for the same period of 1995.

The foreign currency transaction gain for 1996 was $.1 million which
approximated the 1995 amount.

Minority interest for the first three months of 1996 was $6.5 million as
compared with $4.1 million for the same period last year, reflecting higher
earnings of GCSAP due to favorable pricing.

Net income for the first three months of 1996 was $9.3 million as compared
with $7.9 million for the same period in 1995, for the foregoing reasons.

1995 Compared with 1994

Net revenues were $550.9 million for 1995 as compared with $525.9 million
for 1994. This increase in net revenues of 5 percent was primarily the result of
higher soda ash sales in the Chemical Segment reflecting favorable pricing and
higher volumes as well as higher Manufacturing Segment sales as the result of
volume and product mix improvements toward higher priced automotive engine parts
reflecting market share gains at the big three automotive manufacturers. Lower
calcium chloride volumes partially offset these increases.

Cost of sales as a percentage of net revenues was 70 percent for 1995 as
compared with 69 percent for 1994. Higher manufacturing expenses and a change in
sales mix, partially offset by favorable soda ash pricing, account for this
increase.

Selling, general and administrative expense was 10 percent of net revenues
in 1995 versus 11 percent in 1994 due to the higher sales level and lower
spending.

The $6.3 million decrease in interest expense for 1995 as compared with
1994 was primarily due to the early retirement of General Chemical's Senior
Secured 14% Second Priority Notes in November 1994.

Interest income for 1995 was $2.9 million as compared with $2.5 million for
1994. The increase was primarily due to a full year of interest income on notes
receivable in 1995 versus eight months for 1994.

The foreign currency transaction gain for 1995 was $1.4 million as compared
with a $4.0 million loss in 1994, principally due to the impact of exchange rate
fluctuations on a $52 million U.S. denominated loan of the Company's Canadian
subsidiary. The impact of these foreign currency transaction (gains) losses on
this loan is noncash.

Other expense for 1995 included losses on disposal of assets of $1.0
million. Other expense for 1994 included a pension curtailment gain of $1.2
million, partially offset by losses on disposal of assets of $1.0 million.

Minority interest for 1995 was $19.5 million compared with $17.0 million
for 1994, reflecting higher earnings of GCSAP.

Net income for 1995 was $21.1 million versus $20.1 million for 1994, due to
the foregoing, a nonrecurring charge to income tax expense in 1995 of $17.1
million (see Note 2 of Notes to the Consolidated Financial Statements) and an
extraordinary item of $8.2 million in 1994 related to the early extinguishment
of debt.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of ('FAS 121'). The Company is required
to adopt FAS 121 in 1996. This statement will require the Company to review and
adjust the carrying amount of long-lived assets and certain intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company does not expect
that the adoption of FAS 121 will have a material effect on the Company's
results of operations or financial condition.

1994 Compared with 1993

Net revenues for 1994 of $525.9 million were $7.2 million or one percent
higher than the prior year as a result of increased sales of automotive engine
parts in the Manufacturing Segment. Chemical Segment sales increased $1.0
million due to increased sales volume particularly in calcium chloride and
sulfuric acid regeneration services, partially offset by the impact of
unfavorable pricing for soda ash.

Cost of sales as a percentage of net revenues was 69 percent versus 70
percent for 1993. The Company's cost reduction and deferral program enabled the
Company to improve its gross margin percentage.

Selling, general and administrative expense was 11 percent of net revenues
in 1994 which was comparable with the 1993 level. Total selling, general and
administrative expense decreased by $1.3 million.

Interest expense decreased by $4.9 million in 1994 versus 1993 primarily
due to open market purchases and early retirement of General Chemical's Senior
Secured 14% Second Priority Notes.

The $0.5 million decrease in interest income was due to lower interest
rates and lower cash balances.

The foreign currency transaction loss for 1994 was $4.0 million as compared
with a $1.7 million loss in 1993, principally due to the impact of exchange rate
fluctuations on a $52 million U.S. denominated loan of the Company's Canadian
subsidiary. The impact of these foreign currency transaction losses on this loan
is noncash.

Other expense was $0.1 million in 1994 as compared to other income of $0.6
million for 1993. Other expense for 1994 included a pension curtailment gain of
$1.2 million, partially offset by losses on disposal of assets of $1.0 million.
Other income for 1993 included gains on asset disposals of $1.0 million.

Minority interest for 1994 was $17.0 million compared with $17.7 million
for the prior year, reflecting lower earnings of GCSAP.

Net income for 1994 was $20.1 million versus $25.2 million for the prior
year due to the foregoing and a $6.1 million higher extraordinary item related
to the early extinguishment of long-term debt.

SEASONALITY AND QUARTERLY FINANCIAL DATA

The following table, which has not been audited or reviewed by the
Company's independent public accountants, sets forth the summary unaudited
quarterly financial information of the Company for each quarter in 1994 and
1995. In the opinion of management, such information has been prepared on the
same basis as the audited consolidated financial statements appearing elsewhere
in this Prospectus and reflects all adjustments necessary for a fair
presentation of such unaudited quarterly results. The quarterly results should
be read in conjunction with the audited consolidated financial statements of the
Company included elsewhere in this Prospectus. Results of operations for any
particular quarter are not necessarily indicative of results of operations for a
full year.

The Company has historically experienced a certain amount of seasonality in
sales of its products with the result that the net sales and operating income
have been generally higher in the second fiscal quarter relative to the three
remaining quarters. The historically stronger second quarter performance is
generally attributable to sales of calcium chloride for dust control and roadbed
stabilization and sales of soda ash to the glass industry for beverage
containers in preparation for the summer season when demand is traditionally
higher. Notwithstanding the historic seasonality, due to the anticipated
strength of the U.S. soda ash market throughout the remainder of 1996, combined
with the GCSAP capital program to boost onstream availability, the Company
expects greater comparability with respect to soda ash volumes over the
remaining three quarters of 1996.

1994 1995
-------------------------------------- --------------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)

Net revenues........ $125,445 $136,911 $129,433 $134,123 $128,661 $143,062 $142,457 $136,691
Operating profit.... 23,522 33,232 13,707(1) 27,780 22,471 31,100 30,741 22,685
Minority Interest... 3,278 4,748 4,150 4,781 4,139 5,064 5,725 4,530
EBIT(2)............. 19,116 27,882 10,683 19,536 18,413 26,727 25,960 17,086
Net income (loss)... 3,688 11,486 1,417 3,511 7,890 12,764 12,626 (12,187)(3)

- ------------

(1) During the third quarter of 1994 the Company recorded a $9.0 million charge
to earnings related to the July 26, 1993 Richmond, California, incident. See
'Business -- Legal Proceedings.'

(2) EBIT is defined as income from continuing operations before net interest
(including amortization of deferred financing costs), income taxes,
extraordinary item and cumulative effect of accounting change, but after
pretax minority interest in income, and is presented because it is a widely
accepted financial indicator of the Company's ability to service/or incur
debt. EBlT is not required by generally accepted accounting principles and
should not be considered as an alternative to net income, consolidated cash
flow from operations or any other measure of performance required by
generally accepted accounting principles or as an indicator of the Company's
operating performance.

(3) The Company recorded a nonrecurring charge to income tax expense of $17.1
million for all years prior to 1995 related to IRS examinations. See Note 2
of Notes to the Consolidated Financial Statements.

In the fiscal quarter in which the Offerings are completed, the Company
will record a one-time pre-tax charge of $10.4 million ($6.3 million after-tax
or $.27 per share) in connection with the awards payable under the Restricted
Unit Plan, reflecting the portion earned under the Prior Equity Programs.
Additional compensation expense will be recorded over the remaining five-year
vesting period of the Restricted Unit Plan, including an after-tax charge of
$0.2 million ($0.4 million pre-tax) in each of the third and fourth quarters of
1996. See 'Management -- Restricted Unit Plan.'

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $21.6 million at March 31, 1996 as compared
with $19.0 million at December 31, 1995. During the first three months of 1996,
the Company generated cash flow from operating activities of $12.7 million, made
capital expenditures of $8.6 million and made net repayments of $3.4 million of
long-term debt.

The Company had working capital of $23.9 million at March 31, 1996 as
compared with $9.6 million at December 31, 1995. The increase in working capital
reflects higher accounts receivable and cash balances, partially offset by
higher income taxes payable. These changes arose in the normal course of
business. During the second quarter of 1996, the Company borrowed $10 million
under the U.S. Revolving Credit Facility to fund its share of the payments made
in connection with the settlement of the civil litigation relating to the
Richmond, California, July 26, 1993 incident, as discussed below.

On August 4, 1994, General Chemical amended its U.S. Revolving Credit
Facility to increase availability thereunder from $80 million to $130 million
and extended the maturity to March 31, 1999.

GC Canada has a revolving credit facility of $15 million (Canadian)
(approximately $11 million U.S.) which expires on June 22, 1997 and is subject
to one-year extensions at GC Canada's request and at the lender's discretion.
This revolving credit facility is secured by the receivables and inventory of GC
Canada and bears interest at a rate equal to a spread over a reference rate
chosen by GC Canada from various options.

While certain of the Company's subsidiaries' debt facilities are
outstanding, the Company's subsidiaries must meet specific financial tests, on
an ongoing basis, which are customary for these types of facilities. Except as
provided by applicable corporate law, there are no restrictions on the Company's
ability to pay dividends from retained earnings. However, the payment of cash
dividends by the Company's subsidiaries to the Company is subject to certain
restrictions under the terms of various agreements covering the Company's
subsidiaries' long-term debt. Toledo Technologies, PDI and Balcrank are not
permitted under each subsidiary's respective debt agreements to pay cash
dividends. Assuming certain financial covenants are met, General Chemical is
permitted to pay cash

dividends of up to 50 percent of the net income (subject to certain adjustments)
of General Chemical for the applicable period. Consequently, the Company's
ability to pay cash dividends on Common Stock may effectively be limited by such
agreements.

The Company anticipates that the capital spending level for 1996 will be
approximately $20 million higher than prior year levels due predominantly to
special projects such as the Green River reliability upgrade and the
construction of a new ultra-high purity sulfuric acid plant at the Richmond,
California, manufacturing facility.

Management believes that the Company's cash flow will be sufficient to
cover its future interest expense, capital expenditures, debt maturities and
working capital requirements.

With respect to the July 26, 1993 Richmond, California, incident, on that
date a pressure relief device on a railroad tank car containing oleum that was
being unloaded at the Company's Richmond, California, facility, ruptured during
the unloading process, causing the release of a significant amount of sulfur
trioxide. Approximately 150 lawsuits seeking substantial amounts of damages were
filed against the Company on behalf of in excess of 60,000 claimants in
municipal and superior courts of California (Contra Costa and San Francisco
counties) and in federal court (United States District Court for the Northern
District of California). All state court cases were coordinated before a
coordination trial judge in Contra Costa County Superior Court (in Re GCC
Richmond Works Cases, JCCP No. 2906). The court, among other things, appointed
plaintiffs' liaison counsel and a plaintiffs' management committee. The federal
court cases were stayed until completion of the state court cases.

95 percent of claimants who have elected to participate in the settlement, and
as of April 15, 1996 the Company had already received releases from
approximately 85 percent of the settling claimants. Final payments to the
plaintiffs' management committee on behalf of these settling claimants have been
made with funds provided principally by the Company's insurers pursuant to the
terms of the insurance policies described below and further payments will be
made as additional releases are received and reviewed.

Notices of appeal of all or portions of the settlement approved by the
court have been filed by five law firms representing approximately 2,750 claims,
with approximately 2,700 of these claimants represented by the same law firm.
These claimants have not specified the amount of their claims in court
documents, although the Company believes that their alleged injuries are no
different in nature or extent than those alleged by the settling claimants.
Based on papers filed by the appellants in the California Court of Appeals, the
primary grounds for appeal are expected to be that the settlement is not 'fair,
reasonable and adequate' under California law, that the trial court erred in
certifying a class action for purposes of settlement and in certifying a
mandatory punitive damage class, that the trial court awarded excessive
attorneys' fees to the plaintiffs' management committee and plaintiffs' class
counsel, that the trial court exceeded its authority in reducing contingent fees
payable to attorneys for representing individual claimants, and that the trial
court erroneously applied a state statute that governs unclaimed residuals
remaining from class action settlements. If the settlement is upheld on appeal,
the Company believes that any further liability in excess of the amounts made
available under the settlement agreement (such as for opt-outs) will not exceed
the available insurance coverage, if at all, by an amount that could be material
to its financial condition or results of operations.

While there can be no assurances how an appellate court might rule, the
Company believes that the settlement will be upheld on appeal. In the event of a
reversal or modification of the settlement on appeal, with respect to lawsuits
by any then remaining claimants (opt-outs and settling claimants who have not
signed releases), the Company believes that, whether or not it elects to
terminate the settlement in the event it is overturned or modified on appeal, it
will have adequate resources from its available insurance coverage to vigorously
defend these lawsuits through their ultimate conclusion, whether by trial or
settlement. However, in the event the settlement is overturned or modified on
appeal, there can be no assurance that the Company's ultimate liability
resulting from the July 26, 1993 incident would not exceed the available
insurance coverage by an amount which could be material to its financial
condition or results of operations, nor is the Company able to estimate or
predict a range of what such ultimate liability might be, if any.

with the Company confirming their respective commitments to fund the settlement
as required by their insurance policies with the Company and as described in the
settlement agreement. In addition, these same insurers currently continue to
provide substantially the same insurance coverage to the Company. See
'Business -- Legal Proceedings.'

ENVIRONMENTAL MATTERS

The Company has an established program to ensure that its facilities comply
with environmental laws and regulations. Expenditures made pursuant to this
program approximated $11.4 million in 1995 (of which approximately $3.5 million
represented capital expenditures and approximately $7.9 million related to
ongoing operations and the management and remediation of hazardous substances).
Expenditures for 1994 approximated $7.9 million (of which approximately $1.6
million represented capital expenditures and approximately $6.3 million related
to ongoing operations and the management and remediation of hazardous
substances). The Company expects similar expenditures in 1996 to be in the range
of $12.0 million to $14.0 million; however, should environmental laws and
regulations affecting the Company's operations become more stringent, or should
the Company discover any additional or unknown environmental contamination
relating to its operations, the Company's costs for environmental compliance may
increase above such range.

Additionally, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ('CERCLA'), and similar state 'Superfund'
statutes have been construed as imposing joint and several liability on present
and former owners and operators of contaminated sites and transporters and
generators of hazardous substances for remediation of contaminated properties
regardless of fault. The Company has received written notice from the
Environmental Protection Agency (the 'EPA') that it has been identified under
CERCLA as a potentially responsible party ('PRP') at three Superfund sites. With
respect to two of these sites, the Company does not believe that its liability,
if any, arising therefrom will be material to its results of operations or
financial condition. With respect to the other site, known as the Avtex site,
which is located in Front Royal, Virginia, the Company has provided for the
estimated costs of certain activities requested by the EPA at the site in its
accrual for environmental liabilities. See 'Business -- Environmental
Matters -- Pending Proceedings.' In addition, Congress continues to consider
reauthorization and modification of the CERCLA statute and because passage of
any such new law has not yet occurred, the Company does not have sufficient
information to ascertain its impact on the Company's potential liabilities, if
any.

In 1990, the EPA released a proposed rule, parts of which were finalized in
1993, that establishes standards for the implementation of a corrective action
program under the Resource Conservation and Recovery Act ('RCRA'). Corrective
action programs require facilities that are operating under a permit, or are
seeking a permit, to treat, store or dispose of hazardous wastes and to
investigate and remediate environmental contamination. During the third quarter
of 1995, the Company conducted a facility investigation at its Pittsburg,
California, manufacturing facility, pursuant to RCRA and the terms of its
Hazardous Waste Facility Permit for the site, and submitted the report of such
investigation to the Department of Toxic Substances Control of the California
Environmental Protection Agency ('Cal EPA'). Additional work relating to the
study is currently ongoing. The Company estimates that the potential costs for
implementing corrective action at such facility will be less than $2.0 million
payable over the next several years and has provided for the estimated costs in
its accrual for environmental liabilities.

In 1989, groundwater contamination in municipal drinking water wells
located in the town of Weaverville, North Carolina, was identified near the
Weaverville plant of the Company's wholly-owned subsidiary, Balcrank Products,
Inc. ('Balcrank'). The contaminants, primarily perchloroethylene ('PCE'), were
present as a result of discharges which took place during the tenure of the
former property owner. The North Carolina Department of Environmental Management
('NCDEM') notified the EPA of the PCE contamination, which notification resulted
in the placement of the site on the CERCLA Information System ('CERCLIS'), a
list of sites identified for further investigation under CERCLA. At the same
time, under NCDEM supervision, Balcrank voluntarily commenced remedial
activities, including installation of a shallow groundwater remediation system.
Results demonstrating

that substantial containment of the contaminants had been achieved using the
system were submitted to NCDEM and to the EPA in October, 1993. Currently,
Balcrank, NCDEM and the EPA are involved in discussions pursuant to which
Balcrank, again under NCDEM supervision, will voluntarily conduct additional
investigative activities with respect to a deeper bedrock aquifer, including
remedial feasibility studies and activities as appropriate. The Company
estimates that the potential cost for any such activities will not exceed $4.3
million payable over the next several years, and has provided for the estimated
costs in its accrual for environmental liabilities.

In addition, under the authority of the Canadian Environmental Protection
Act, on February 14, 1995 the Ministry of Environment and Energy of the Province
of Ontario ('MOEE') published final regulations implementing the
Municipal-Industrial Strategic Abatement program ('MISA') relative to effluent
discharges into Ontario waterways, including certain limitations on the toxicity
and alkalinity of such effluent. The new regulations and their impact on the
operation of the Amherstburg facility of the Company's wholly-owned Canadian
subsidiary, General Chemical Canada Ltd. ('GC Canada'), which discharges
effluent into the Detroit River, is now estimated to require capital
expenditures which will not exceed $1.7 million payable over the next five
years, and annual operating expenses in connection with operating and
maintaining the equipment necessary to meet the proposed regulations which will
not exceed $0.5 million per year.

INFLATION

Inflation has had a minimal effect on the results of the Company.

BUSINESS

GENERAL

The Company was organized in 1988. The Company's principal operating
subsidiaries were transferred in 1986 by AlliedSignal to a predecessor of the
Company, at which time new operating management was installed.

The Company's primary business strategy is to increase profitability
through a series of initiatives including selective acquisitions. The Company
believes that its control over the supply of its primary raw materials, its
low-cost operating structure, its stable cash flow, its reputation for high
quality and customer service and its experienced management team provide a
foundation for future growth. Key elements of this strategy, which are discussed
in more detail throughout this section, are:

Earnings Growth and Diversification. Since 1990, the Company has
diversified its earnings base by increasing the profitability of its
derivative product lines and services. In part due to increased earnings
diversification, the Company has demonstrated stability in its operating
cash flow over the past five years, even during periods of weak economic
activity in the United States. Through selective acquisitions, the Company
intends to further improve profitability. The Company currently has no
commitments, understandings, or arrangements with respect to any specific
acquisitions.

Expansion. The Company has expanded its production capacity at its natural
soda ash, synthetic soda ash/calcium chloride and sulfuric acid plants and
has completed a new production facility for Toledo Technologies. The
Company is in the process of further improving its production capabilities
at its Green River soda ash plant and constructing the new ultra-high
purity sulfuric acid plant described below.

Product Improvement and Diversification. Management has undertaken a
number of initiatives to improve and diversify the Company's product
lines. The Company has increased the purity of its electronic grade
chemicals, developed and produced a new line of coagulants and coagulant
aids for its water treatment chemicals product line, developed technology
to assist customers in switching from caustic soda to soda ash and
diversified its product lines by adding product grades such as food-grade
calcium chloride and sodium nitrite technical liquor. The Company is
currently in the final stages of permitting for an ultra-high purity
sulfuric acid plant in Richmond, California, to service the semiconductor
industry. The facility will significantly improve product purity while
increasing existing capacity for this product by 50 percent. The Company
expects construction of this new facility to begin shortly. In addition,
emphasizing its commitment to quality, the Company has received ISO 9002
certification at nearly all of its major facilities including its Green
River, Wyoming, soda ash plant, its Canadian soda ash and calcium chloride
plant and an integrated facility in Delaware that regenerates sulfuric
acid and produces sodium and ammonia salts, sulfites and sulfuric acid.

Cost Reduction and Operating Efficiency Improvements. Management of the
Company continually seeks opportunities to reduce operating costs. Since
taking control in 1986, management has renegotiated energy, raw material
and labor contracts, has invested capital to improve productivity,
capacity and quality and has reduced the Company's workforce from more
than 3,600 to fewer than 2,300 employees. For example, the Company has
recently initiated a capital program to boost the onstream availability of
its Green River soda ash plant

that will result in 200,000 tons of potential production by 1997 that was
previously not achievable due to periodic production curtailments for
routine maintenance.

Capitalization on Firmer Soda Ash Markets. The Company expects that future
growth will result from a more robust market for soda ash as export
volumes continue to improve, particularly to Asia and Latin America, due
to the low cost position of the Company and other U.S. natural soda ash
producers combined with the continuing reduction in the global production
capacity of synthetic soda ash due to additional plant closures. The
Company believes that the cost reduction and operating efficiency
improvements and the expansion outlined above have positioned the Company
to further capitalize on the firmer soda ash market.

For certain information concerning the Company's revenue, operating profit
or loss and identifiable assets attributable to each of the Company's segments
and geographic areas, see Note 7 of Notes to the Consolidated Financial
Statements.

PRODUCT SALES

The Company's net revenues by product line during the last three years are
as follows:

YEARS ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------ ------ ------
(DOLLARS IN MILLIONS)

Chemical Segment
Industrial Chemical Product Lines................................... $260.3 $254.1 $265.3
Derivative Products and Services Product Lines...................... 207.5 214.4 221.0
Intercompany Eliminations........................................... (4.4) (4.1) (5.4)
------ ------ ------
Total-Chemical Segment................................................... 463.4 464.4 480.9
Manufacturing Segment.................................................... 55.3 61.5 70.0
------ ------ ------
Total.......................................................... $518.7 $525.9 $550.9
------ ------ ------
------ ------ ------

CHEMICAL SEGMENT

Industrial Chemicals

Soda ash and calcium chloride comprise the Company's industrial chemical
product lines. The primary end markets for soda ash include glass production,
sodium-based chemicals, detergents, pulp and paper and water treatment. Total
industry production of soda ash in the U.S. and Canada during 1995 was
approximately 11.5 million tons with U.S. producers estimated to have exported
nearly four million tons. The total annual world market for soda ash currently
is estimated at 34 million tons. The major end markets for calcium chloride are
somewhat seasonal and are centered on highway and road maintenance. During the
summer, calcium chloride is used for dust control and road bed stabilization
while during the winter calcium chloride is used for melting ice. Total industry
production of calcium chloride in the U.S. and Canada during 1995 was
approximately 1.1 million tons.

The Company is a leading producer of soda ash in the U.S. and Canada with
an estimated 23 percent market share based on 1995 sales, and is the only
producer of both synthetic and natural soda ash in North America. The Company,
through GCSAP, its 51 percent-owned partnership, produces natural soda ash by
refining mined trona deposits at its plant in Green River, Wyoming. The Green
River basin, where all but one of the U.S. producers of natural soda ash are
located, contains the largest known, economically recoverable trona deposits in
the world. Synthetic soda ash is produced by the Company's Canadian subsidiary
at its plant in Amherstburg, Ontario, by using the synthetic process, which
combines sodium from salt brine with carbon dioxide generated from limestone to
produce soda ash. This production process, which is energy and labor intensive,
is considerably more costly than refining natural soda ash. The Amherstburg
plant remains profitable due to its operating efficiency, the successful
marketing of the co-product calcium chloride and its favorable freight rates to
major Canadian soda ash markets.

Historically, the price of soda ash has fluctuated based on the rate of
capacity utilization by U.S. producers. After operating at an estimated 95
percent of estimated realizable capacity from 1988 -- 1991, utilization levels
declined over the next several years and reached a low of 86 percent in 1993
before improving to 89 percent in 1994 and an estimated 95 percent in 1995. The
drop in utilization was a result of the expansion by existing soda ash producers
of approximately 1.2 million tons of capacity (representing about 11 percent of
U.S. capacity), reduced exports to Europe and certain customers' utilization of
caustic soda in place of soda ash to take advantage of a precipitous drop in
caustic soda prices in 1993 as production of chlorine (a co-product of caustic
soda) increased. Caustic soda can be used as a substitute for soda ash in the
production of pulp and paper and certain other chemical applications.

Over the past two years, higher production rates, due to increased demand,
have boosted capacity utilization levels to an estimated 95 percent and have
resulted in favorable 1996 price increases for North American producers. Because
of the low-cost position of the U.S. soda ash producers, U.S. exports of soda
ash have nearly quadrupled since 1982, growing at a compound annual rate of 10
percent, and in total represented just under 4 million tons in 1995. In the last
two years alone, U.S. exports have increased 900,000 tons. The Company believes
that in the future, U.S. producers will continue to capitalize on both the
growth in world markets, especially in Asia, Latin America and Eastern Europe
and the closure of older, uneconomical synthetic soda ash plants. In this
regard, since 1993, five producers have announced the closure of six plants with
an aggregate capacity of 1.7 million tons of soda ash, representing
approximately 4 percent of 1995 world capacity.

Markets/Customers. The Company's industrial chemical product lines,
consisting of soda ash and calcium chloride, are sold for glass production,
sodium-based chemicals, detergents, pulp and paper, water treatment and highway
and road maintenance.

The glass production market is comprised of manufacturers of bottles and
other containers, commercial, residential and automobile windows, mirrors,
fiberglass, television tubes, lighting ware, tableware, glassware and laboratory
ware. Approximately one-half of the domestic soda ash industry demand is
attributable to glass production.

Within the glass sector, container glass is the major end use and comprises
the majority of current demand. Historically, domestic consumption of soda ash
in the glass container industry has been adversely affected by the increasing
use of recycled glass cullet and competition from aluminum containers and
plastic containers made of polyethylene terephthalate ('PET'). Although
management believes this trend will continue, it has slowed over the last
several years as the rate of recycling has levelled off.

Sales of soda ash into the sodium based chemicals market represent
approximately one-fourth of domestic consumption. The chemical industry uses
soda ash as a source of sodium ions and as a fluxing agent where it is mainly
used in the production of sodium bicarbonate, sodium phosphates, sodium
silicates and chrome chemicals.

In the detergent market, soda ash is used as a component of powdered
detergents and this market represents approximately one-eighth of domestic soda
ash consumption. Soda ash is often the prime alkali used to make phosphates and
silicates for dry detergent applications. Due to reformulating by select
customers, the Company has seen an increasing demand for the light soda ash
product that is produced in North America only by General Chemical at its
Amherstburg plant. Light soda ash is preferred in some markets such as
detergents due to its lower bulk density, higher absorptivity rates and faster
rates of reaction.

Additional markets for soda ash include pulp and paper and water treatment.
In the pulp and paper market, soda ash supplies the sodium ion required in the
pulping of wood fiber. In the water treatment market, soda ash can be used to
control pH levels and also provides the sodium ion needed for water softening.

Due to the low-cost position of the U.S. natural soda ash producers, the
export market plays an important role in the supply and demand fundamentals of
the industry. The Company, along with the other five U.S. producers of natural
soda ash, exports soda ash through the American Natural Soda Ash Corporation
('ANSAC'), an export organization organized in 1984 under the Webb-Pommerene

Act. ANSAC ships to all parts of the world except Canada and Western Europe.
Each individual member's allocation of ANSAC volume is based on the member's
total nameplate capacity, with any member's expansion phased-in over a
multi-year period for allocation purposes.

Taking advantage of its low-cost position, U.S. exports (through ANSAC and
directly by producers) have grown from 1.1 million tons in 1982 to just under
4.0 million tons in 1995 with the primary regions of growth having been the
Asian and Latin America markets. Part of the success of U.S. exports has been a
result of the breadth of the customer base, evidenced by the fact that at least
100,000 tons of U.S. soda ash were shipped to each of ten different countries in
1995.

In spite of the breadth of export markets, U.S. producers' shipments into
the Western European market during 1995 totalled only 0.1 to 0.2 million tons
after peaking at more than 0.6 million tons in 1992. The lower exports are
attributable to the stronger U.S. dollar, more aggressive pricing by local
producers and the opening of an antidumping inquiry during 1993 by the European
Community's Executive Commission into United States exports of soda ash to the
European Community. During October 1995, the Commission levied provisional
antidumping duties against five of the six U.S. producers with the Company
receiving the lowest levy of 2.5 percent. The remaining four producers received
levies ranging from 5 percent to 9 percent. The Commission intends to review all
provisional dumping duties one year after implementation. The duty is not
expected to have a material effect on the Company's soda ash sales.

The Company expects total exports, which currently represent approximately
one-third of U.S. production, to continue to serve as the foundation for further
growth in the marketplace. In addition to the projected increase in worldwide
demand for soda ash, especially in Asia, Latin America and Eastern Europe, and
an improved market share in Western Europe, the Company believes export growth
will be further facilitated by the closure of older, uneconomical synthetic soda
ash plants. Since 1993, five foreign producers have announced the closure of six
plants with an aggregate capacity of 1.7 million tons of soda ash, representing
approximately 4 percent of 1995 world capacity. The latest foreign producer to
announce the closing of its synthetic facility was TOSOH Corporation, a
subsidiary of which is a 24 percent partner of GCSAP, which recently disclosed
that in September 1996 it will close its 300,000-ton production facility in
Japan and act as a distributor to its existing customer base by sourcing soda
ash from the U.S. market through ANSAC. TOSOH Corporation is the first Japanese
company to announce such a closing.

In addition to soda ash, the industrial chemicals product line includes
calcium chloride which is sold predominantly into the highway and road
maintenance market. Calcium chloride, a co-product of the synthetic soda ash
process utilized by the Company's Amherstburg plant, is used primarily on
Canada's extensive network of unpaved roads for dust control and roadbed
stabilization during the summer and on highways for melting ice during the
winter. Other applications include retail ice control, concrete additive, water
treatment and oil field uses. Generally, exports into the United States
represent approximately one-third to one-half of GC Canada's calcium chloride
sales, although export volume can vary based on weather conditions. Although the
summer road market is the dominant end use in the Canadian market, the winter
deicing market and industrial applications are the major end use markets in the
U.S.

GC Canada is the largest producer of calcium chloride in Canada. The
Company believes that GC Canada's approximately 50 strategic storage and
distribution locations throughout Canada and its experienced sales force and
specialty distributors will allow it to maintain its market position as the
dominant calcium chloride producer in Canada. During 1995, approximately 55,000
tons of calcium chloride were imported into Canada from the U.S. In 1996, the
Canadian import duty on calcium chloride is 2.5 percent which has been declining
by 1.25 percent per year since 1989 and will be entirely eliminated by January
1, 1998.

The Company's most significant growth opportunity in the calcium chloride
market is in the Canadian winter highway ice control market. Calcium chloride,
when used with road salt, improves the effectiveness of the salt and enables the
use of lower dosages and less frequent application of road salt. With
environmental pressures to reduce the use of road salt, management believes that
the use of calcium chloride will increase in North America, although there can
be no assurance that such use will increase.

Production Facilities. The Company produces soda ash at two facilities: its
plant in Green River, Wyoming, which produces natural soda ash, and its plant in
Amherstburg, Ontario, which produces synthetic soda ash. Since taking control in
1986, new management has instituted operating improvements at the Green River
facility that have substantially increased output at the plant, with production
per employee increasing approximately 90 percent since 1985. Production
improvements have included the complete elimination of labor-intensive
conventional mining techniques through the purchase of bore mining equipment.
Additional significant cost savings have also been realized through reductions
in utility and transportation costs. In its ongoing effort to boost production
and operating efficiency, the Company has commenced a capital program that will
improve the 'on stream' reliability of the Green River facility. The Green River
facility can consistently produce in excess of 200,000 tons of soda ash a month
resulting in a nameplate capacity of 2.4 million tons. However, due to downtime
for routine maintenance at the facility, annual production is generally limited
to 2.2 million tons. The capital program currently underway, which is scheduled
to be completed in 1997, will permit the Company to operate continuously, even
when routine maintenance is being performed, and therefore, should maintain the
production reliability of the Green River facility at 2.4 million tons.

The Amherstburg plant produces soda ash and calcium chloride using the
synthetic process. Management believes that the plant is one of the world's most
efficient synthetic soda ash plants. The higher-cost synthetic process is
utilized outside the U.S. due to the lack of economically recoverable trona
deposits in the rest of the world. All other North American synthetic soda ash
operations have been shut down in the face of competition from lower-cost
natural soda ash operations. The Amherstburg plant remains profitable due to its
operating efficiency, the successful marketing of the co-product calcium
chloride and its favorable freight rates to major Canadian soda ash markets.
Annual nameplate capacity at the Amherstburg plant totals 500,000 tons of soda
ash and 450,000 tons of calcium chloride.

In February, 1993 the Company's management's commitment to quality was
recognized as Green River became the first U.S. soda ash facility to be awarded
ISO 9002 certification by the International Standards Organization. Management
believes that ISO 9002 certification, an internationally recognized standard of
quality in manufacturing, will become increasingly important to future market
penetration in Western Europe. The Green River plant has also been recognized by
Ford Motor Company as a Q-1 (top rated) supplier for several years. The
Amherstburg facility was awarded ISO 9002 certification in May, 1994.

General Chemical Soda Ash Partnership. The Green River plant is owned by
GCSAP, a partnership of which the Company is the managing partner and in which
the Company owns a 51 percent equity interest. The Andover Group, Inc., which is
a wholly owned subsidiary of ACI International Limited, owns a 25 percent equity
interest, and TOSOH Wyoming, Inc., which is a wholly owned subsidiary of TOSOH
America, Inc., owns a 24 percent equity interest. ACI International Limited is a
major world producer of container glass and a customer of GCSAP. TOSOH Wyoming
Inc.'s ultimate parent company, TOSOH Corporation, is a leading Japanese
chemical company whose operations include a 300,000-ton synthetic soda ash
facility in Nanyo, Japan, (which TOSOH has announced it will close in September,
1996). ACI International Limited is a subsidiary of BTR Nylex Limited ('BTR'), a
leading Australian industrial company which competes in a diverse range of
manufacturing and marketing businesses, including chemical polymers, packaging,
engineering, building products and textiles. General Chemical and BTR have been
in partnership at the Green River facility since 1986.

There are no material restrictions on the distribution of funds from GCSAP
to General Chemical and available cash is distributed quarterly to the three
partners in accordance with their ownership percentages. The partnership related
agreements include prohibitions against the transfer of its equity interests by
any of the current partners (either directly or through the sale of the
subsidiary holding the partnership interest) or withdrawal from the partnership
without the consent of the other partners. These provisions also provide put and
call options in respect of any proposed sale to protect the other partners. See
Note 5 of Notes to the Consolidated Financial Statements.

Control of Resources. Natural soda ash is produced from trona ore which the
Company mines under leases with the United States Government, the State of
Wyoming and the Union Pacific Resources Corporation. Within the trona bed (No.
17) which the Company is currently mining, the Company's estimated proven
reserves consist of approximately 107 million tons of extractable ore. At the
1995 operating rate of 2.2 million tons of soda ash per year (4.1 million tons
of trona ore), there is approximately a 26-year supply. For the three years
ended December 31, 1995, annual production of trona ore averaged approximately
3.8 million tons. In addition, the Company's reserves contain three other major
minable trona beds containing approximately 328 million tons of extractable ore.
These beds, which may require significant capital to access, should provide more
than 80 years of added reserves based on current operating rates.

All applications for renewal of United States government leases in Wyoming
with the Company and all other trona leaseholders are being held pending a
review by the BLM of the royalty rate for trona extracted under the leases and
certain other provisions of the leases. Pursuant to its current leases, the
Company has a preferential right to renew such leases for successive ten-year
periods on reasonable terms and conditions prescribed by the Secretary of the
Interior. The Company has been notified by the BLM that it will increase the
federal royalty rate on mining trona from 5 percent to 6 percent of soda ash
sales on renewed leases and from 5 percent to 8 percent of soda ash sales on new
leases. The increases will apply to leases for renewal by all Green River
producers. Furthermore, the BLM has indicated that it will renew leases
currently held in the next two to three months. The BLM action will likely
result in a comparable royalty rate increase on state and private leases
throughout the industry. Management believes that the renewal terms and
conditions proposed by the Secretary of the Interior will not have a material
effect on the Company.

The synthetic process for manufacturing soda ash combines sodium from salt
brine with carbon dioxide generated from heating limestone in a coal-fired kiln
to produce soda ash. Based on current production levels the Company has
approximately 34 years of salt reserves at present. Limestone reserves owned by
the Company total approximately 15 years, with an option on an additional six
years of reserves. However, the Company is not currently utilizing its limestone
reserves and is instead purchasing all of its limestone requirements under a
long-term contract with a major limestone producer due to the economic benefit
of using purchased limestone.

Competition. The U.S. and Canadian soda ash industry is comprised of the
companies listed below. General Chemical, FMC Corporation, Oriental Chemical Co.
and Solvay Minerals all have joint venture partners.

1996 ANNUAL NAMEPLATE
OWNER/MANAGING PARTNER LOCATION CAPACITY IN TONS PARTNER(S)
- --------------------------- ------------ ---------------------- ------------------------------------
(IN THOUSANDS)

General Chemical........... Wyoming 2,400 ACI (25%), TOSOH (24%)
Amherstburg 500 --
--------
2,900
FMC Corporation............ Wyoming 3,550** Sumitomo/Nippon Sheet Glass (20%)
Oriental Chemical Co....... Wyoming 2,300 Union Pacific Resources Corp. (49%)
Solvay Minerals............ Wyoming 2,300** Asahi Glass (20%)
North American Chemical
Co....................... California 1,500** --
TG Soda Ash Inc*........... Wyoming 1,300 --
--------
Total U.S. and Canadian Capacity....
13,850
--------
--------

- ------------------------------

* 100% owned by Elf Aquitaine.

** Nameplate capacity includes recently completed expansions.

Due to the U.S. producers' low-cost position and increasing worldwide
demand for soda ash, the ownership of the U.S. facilities has become more global
in nature as both international customers and producers have invested in Green
River facilities. This was best exemplified in May 1992 when Solvay

Minerals, a subsidiary of Solvay, SA, which is the world's largest producer of
soda ash with synthetic capacity in excess of 4.0 million tons, purchased
Tenneco Inc.'s 80 percent interest in its 2.0 million-ton Green River facility
for $500 million. More recently, in the first quarter of 1995, Sumitomo
Corporation and Nippon Sheet Glass collectively purchased a 20 percent stake in
the FMC facility. Finally, in the first quarter of 1996, Oriental Chemical Co.
purchased Rhone-Poulenc's 51 percent interest in its soda ash facility.

In addition to Solvay SA, TOSOH Corporation, Oriental Chemical Co. and
Asahi Glass also operate synthetic soda ash facilities outside of North America.
Management believes that the global ownership of the various Green River,
Wyoming, facilities may further boost U.S. exports, both direct, and through
ANSAC, and accelerate the closure of synthetic soda ash plants outside of North
America, although there can be no assurance that this will occur.

With respect to calcium chloride, the Company, with 450,000 tons of
capacity, is the largest producer of calcium chloride in Canada. Its major
competitors are Dow Chemical in the U.S. and local producers in Western Canada.
In the United States, the Company is the third largest distributor of calcium
chloride behind Dow Chemical and Tetra Technologies. It is estimated that Dow
Chemical has 700,000 tons of capacity. The next largest U.S. producer is Tetra
Technologies, which operates four plants with estimated total capacity of
300,000 tons. Tetra Technologies has announced its intention to expand one of
its existing facilities by 100,000 tons. In addition, Ambar Inc., an oil
services company, has announced its intention to enter the calcium chloride
market and has subsequently purchased an existing salt evaporation facility in
Michigan for conversion to calcium chloride production. Ambar has announced that
the facility is expected to come on stream in the latter half of 1996 with
announced capacity of 300,000 tons, although the Company believes actual
production may be less. Some portion of the potential production will be used by
Ambar for internal consumption in its oil service business in the Gulf Coast
region. The Company believes that the Company's long standing reputation and
service, strategic location, size and extent of its storage and distribution
facilities and use of its sales force and specialty distributors will allow it
to maintain its leading market share positions in the highway and road
maintenance market, although no assurances can be given that this will occur.

Pricing/Capacity Utilization. Historically, the price of soda ash has
fluctuated based on the rate of capacity utilization by U.S. producers. The
industry destabilized in 1982 as Tenneco Inc. brought a new 1.0
million-ton-per-year plant (purchased by Solvay Minerals in 1992) on line and
aggressively pursued commitments from potential purchasers of the new plant's
volume at a time when the economy was depressed, glass manufacturers were
consolidating facilities and the export market was still being developed. This
combination of events resulted in industry soda ash prices decreasing from an
average of $91 per ton in 1981 to $65 per ton in 1986. From 1986 to 1991,
industry soda ash prices recovered to $84 per ton, mainly due to the surge in
exports which now provide a stable and growing demand component to the U.S.
industry. During the 1992 -- 1994 period, industry prices weakened to the $70
per ton level as a result of the expansion by existing soda ash producers of
approximately 1.2 million tons of capacity (representing about 11 percent of
U.S. capacity at that time), reduced exports to Europe and certain customers'
utilization of caustic soda in place of soda ash to take advantage of a
precipitous drop in caustic soda prices in 1993 as production of chlorine (a
co-product of caustic soda) increased. Industry fundamentals began to improve in
1994 due primarily to the continuation of growth in exports reflecting the U.S.
low cost position coupled with the closure of synthetic soda ash plants and,
secondarily, due to increased domestic consumption. Since 1982, U.S. exports of
soda ash have nearly quadrupled, growing at a compound annual rate of 10 percent
and currently in total represent just under 4 million tons. Consequently, prices
recovered in 1995 to the $74 per ton level and management expects average
industry soda ash prices to climb above the $80 per ton level in 1996.

In spite of recently completed capacity expansions by existing U.S.
producers totalling 1.3 million tons, based on current market conditions,
management does not believe soda ash pricing will be adversely affected over the
near term. Although these capacity expansions have been known about for some
time, U.S. soda ash contract prices strengthened in 1996. FMC, which boosted its
nameplate capacity by 700,000 tons to 3.6 million tons, has indicated that
approximately one-third of

the expansion is targeted for a large domestic chemical company for a new
neutralization application that represents an incremental demand for soda ash.
In addition, FMC's new joint venture partner, Nippon Sheet Glass, is expected to
increase its use of U.S.-sourced soda ash for its requirements in Japan. The
other two significant capacity expansions were completed by Solvay Minerals,
which increased capacity by 300,000 tons, and North American Chemical Co., which
increased capacity by 250,000 tons.

The Company believes that U.S. producers will continue to capitalize on
both the growth in world markets, especially in Asia, Latin America and Eastern
Europe, and an increasing market share in the Western European markets where
U.S. producers currently have less than a five percent share. In this regard,
export growth has been particularly strong over the past two years as U.S.
exports have grown by 900,000 tons. Management believes export growth will also
be facilitated by the closure of older, uneconomical synthetic soda ash plants.
Since 1993, five foreign producers have announced the closure of six plants with
an aggregate capacity of 1.7 million tons of soda ash, representing
approximately four percent of 1995 world capacity. The latest foreign producer
to announce the closing of its synthetic facility was TOSOH Corporation which
recently disclosed that in September, 1996 it will close its facility in Japan
that has 300,000 tons of capacity. TOSOH Corporation, which also owns 24 percent
of the Company's Green River plant, became the first Japanese company to
announce such a closing.

Since the 1982 construction of the Tenneco Inc. facility, there have been
no new natural soda ash plants built in North America. Capacity expansion has
been achieved by expansion of existing facilities and improved operating
efficiencies with such new natural soda ash capacity generally being offset by
the closure of older, uneconomical synthetic soda ash plants. Management
estimates that construction of a new natural soda ash plant with a 1.0
million-ton-per-year capacity would take three years to build after engaging in
a time-consuming regulatory approval and permitting process, and would cost in
excess of $400 million. Management believes that the current price of soda ash
would have to increase substantially to support such a capital expenditure.

The following chart indicates the average industry price of soda ash per
ton and U.S. capacity utilized during the period from 1981-1995.

AVERAGE PRICE U.S. CAPACITY
YEAR PER TON(1) UTILIZATION(2)
- ------------------------------------------ ------------- -------------

1981...................................... $91 84%
1982...................................... 88 74
1983...................................... 77 80
1984...................................... 67 80
1985...................................... 68 80
1986...................................... 65 84
1987...................................... 67 89
1988...................................... 67 97
1989...................................... 77 99
1990...................................... 83 97
1991...................................... 84 95
1992...................................... 81 92
1993...................................... 74 86
1994...................................... 70 89
1995(3)................................... 74 95

- ------------------------------

(1) Based on data from the U.S. Geological Survey (not adjusted for inflation),
FOB production facility.

(2) Based on announced capacity (as reported by the U.S. Geological Survey)
adjusted to 95% which management believes better approximates onstream
capacity.

(3) Industry estimate.

The Company's soda ash pricing in Canada is determined by the industry
pricing established at Green River, Wyoming, plus freight, duty and currency
exchange. In 1996, the import duty on soda ash entering Canada is 2.5 percent
and has been declining by 1.25 percentage points annually since

1989. The import duty will be entirely eliminated by January 1, 1998. Since most
of the Canadian market for soda ash is in Ontario and Quebec, the Amherstburg
facility enjoys a substantial freight advantage, which somewhat insulates it
from lower production costs at U.S. natural soda ash production facilities.

DERIVATIVE PRODUCTS AND SERVICES

The Company's derivative products and services product lines include a wide
variety of products such as sulfuric acid, sodium and ammonia salts, sulfites,
aluminum based chemical products and nitrites that are derived principally from
its primary production of soda ash and regeneration of sulfuric acid. The
Company's products are categorized into five major product lines with end
markets including refinery and chemical sulfuric acid regeneration, water
treatment, photo chemicals, pulp and paper, chemical processing, semiconductor
devices and printing.

Due to the control and integration of its primary raw materials throughout
its product offering, the Company is able to control quality and maintain a
competitive, less volatile cost structure. Consequently, the Company has leading
market share positions in the majority of its specific market segments in which
it competes.

Markets/Customers. The Company's derivative products and services product
lines consist of five major product lines that sell into a broad range of end
markets as categorized in the table below.

PRODUCT LINES
SULFUR FINE WATER ELECTRONIC PRINTING PLATES
END MARKET PRODUCTS CHEMICALS CHEMICALS CHEMICALS AND CHEMICALS

Chemical Processing............................ * * * *
Photo Chemicals................................ *
Printing....................................... *
Pulp and Paper................................. * * *
Refinery and Chemical Sulfuric Acid
Regeneration................................. *
Semiconductor.................................. * * *
Water Treatment................................ * * *

The Company's products that are sold into the chemical processing market
include sodium and potassium nitrite, potassium fluoride, fluoborate derivatives
and sulfuric acid. Sodium nitrite, of which the Company is one of only two North
American producers, is primarily used as a reactant in the manufacture of
various organics (i.e. dyes and pigments and rubber processing chemicals) as
well as in applications as a heat transfer salt in high temperature chemical
reactions and as a cooling tower corrosion inhibitor. The potassium fluoride and
fluoborate derivatives are low-volume, higher-priced, chemicals sold through the
Company's distributors for applications in brazing fluxes, agricultural
chemicals, surfactants and analytical reagents. These chemicals are consumed in
numerous applications as a safer alternative to more hazardous raw materials.
Sulfuric acid is a basic industrial chemical and is used in the manufacture of
titanium pigments, fertilizer, synthetic fibers, steel, petroleum, aluminum
sulfate ('alum'), paper and many other products.

The Company's products that are sold into the photo chemicals market are
sodium and ammonia sulfites and bisulfites where the major applications include
fixing and developing solutions for conventional film and x-ray processes. In
part due to the high purity of its products, broad product mix and quality of
both its dry and liquid products, the Company has leading market share positions
in these products.

Sales into the printing market consist predominately of lithographic
plates, with sales of pressroom chemicals and automatic plate processors serving
as complementary products. The Company, through its wholly-owned subsidiary
Printing Developments, Inc. ('PDI'), utilizes a unique bimetal printing plate
system which provides higher resolution and better color reproduction while

offering greater durability than the polymer system used by most other industry
participants. The Company targets medium to large offset lithographers that
emphasize high quality production in the newspaper insert, commercial,
publication and metal decorating markets.

Sales into the pulp and paper market are primarily alum, enhanced
coagulants, sulfuric acid and sulfites. In the pulp and paper industry, alum and
enhanced coagulants are used to impart water resistance ('sizing') to paper and
to treat the substantial quantities of influent water required in the
papermaking process. Through its broad geographical network of plants, the
Company is the leading supplier of alum to the pulp and paper industry. Through
its Syracuse Technical Center, the Company is able to offer specialized product
application expertise which is not available from the majority of its
competitors. In the early 1990s, the Company closed seven alum plants to reduce
costs as alum lost market share in the pulp and paper industry to competing
products, a trend the Company believes has mostly been completed. Sulfuric acid
is used in the sulfur dioxide pulp bleaching process, in pH adjustments and in
pulp mill water treatment. The sodium sulfite products have a number of
applications in the pulp and paper market that are growing moderately such as
reducing bleaching agents like chlorine and hydrogen peroxide, digesting of
fibers in the thermo-mechanical pulping process, and as a raw material for other
bleaching agents.

The refinery and chemical sulfuric acid regeneration services market
primarily includes the regeneration of spent sulfuric acid for the refining and
chemical industries as well as environmental services such as pollution
abatement and sulfur recovery for select refineries. The refineries use sulfuric
acid as an alkylation process catalyst in the production of high-quality, high
octane and low vapor pressure gasoline. The alkylation process contaminates and
dilutes the sulfuric acid catalyst, generating an 85 percent to 90 percent spent
sulfuric acid stream, which is then removed from the process and recycled to the
Company. The spent sulfuric acid is delivered to the Company from the refineries
via pipeline or tank truck and is thermally decomposed to regenerate fresh
sulfuric acid. The acid is then recycled back to the refinery as fresh acid. The
Company provides a similar service to the chemical industry in connection with
the manufacture of ion exchange resins, silicone polymers, liquid detergents and
surfactants. The Company's customer base is regionalized and is generally based
on plant proximity with regeneration services usually provided pursuant to
long-term contracts.

The refinery and chemical sulfuric acid regeneration services market has
grown over the last several years which has resulted in the Company undertaking
a series of plant expansions, the latest being completed at the end of 1995. The
market growth is predominantly due to the favorable properties of alkylate (a
gasoline blending component) when added as a component of the gasoline formula.
In particular, alkylate has a low vapor pressure and does not contain olefins,
aromatics or benzene (other gasoline blending components) and only trace amounts
of sulfur, each of which have been identified by the EPA as increasing gasoline
emission problems and leading to lower air quality. In 1989, the government
lowered the Reid Vapor Pressure requirements for gasoline to limit volatile
organic compound emissions which served to increase the attractiveness of
alkylate as a gasoline blending component. In 1990, Congress passed the Clean
Air Act which mandated emission reductions through improved gasoline with yet to
be defined reformulated gasoline regulations. Although the impact on alkylation
is still unclear, California legislation has placed limitations on olefins and
aromatics which resulted in increased demand which led to the Company's most
recent expansion of its regeneration facilities.

Sales into the semiconductor market consist of high-purity semiconductor
acids, caustics and etchants that are marketed to customers throughout North
America, Western Europe and the Pacific Rim. These customers manufacture silicon
wafers and convert the wafers to integrated circuits. The Company anticipates
that growth for electronic chemicals will be in premium quality products used on
newly-constructed fabrication lines. As semiconductor circuitry continues to
shrink in size, increased emphasis will be placed on minimizing impurity levels
in the chemicals used to produce microprocessor chips. The Company believes that
as a basic manufacturer of many of the chemicals it supplies to the
semiconductor market, it is uniquely able to control the quality of its product
which may result in an advantage over product resellers. In addition to
semiconductor acids, caustics and etchants, the Company also sells a number of
fluoborate derivative products for electroplating. The

Company has particularly targeted the Pacific Rim for product line growth where
20 percent of existing Company sales in the semiconductor market already take
place.

The Company's products that are sold into the water treatment market
primarily consist of alum, enhanced coagulants, sodium and ammonia salts and
sulfites. Through its broad geographic network of 28 strategically located
plants throughout the United States and Canada, the Company is the largest North
American producer of alum, which is used as a flocculant and coagulant for the
treatment of water and waste water. The customer base predominately consists of
municipalities with contracts generally awarded annually on a bid basis. Several
new products have been recently introduced with the support of the Company's
technical center such as a new class of enhanced coagulants and an application
program for lake purification. Through its Syracuse Technical Center, the
Company has taken an industry leadership position in working with regulators to
set drinking water standards and in recommending best practices for water
treatment facilities. The Company believes that stricter water quality
regulations such as the proposed amendments to the Safe Drinking Water Act of
1986 should result in increased demand for its coagulant products. The Company
also has leading market share positions for its sodium and ammonia salt and
sulfite products. These products work as dechlorination agents and as oxygen
removal agents to inhibit the corrosion of steel lines and equipment. In
general, although there are many competing products as well as competitors in
the water treatment market, due to the increasing federal guidelines, the
Company anticipates future growth in the market place.

Production Facilities. The manufacturing base of the derivative products
and services product lines consists of 34 plants located throughout the United
States and Canada. The major facility is located in North Claymont, Delaware and
is the largest spent sulfuric acid regeneration plant on the East Coast while
also serving as the Company's base for the production of sodium and ammonia
salts, sulfites and sulfuric acid. Other major facilities that regenerate
sulfuric acid are located in Richmond, California, and Anacortes, Washington,
where they are tied by pipeline to their major customers. The production
facility for high-purity semiconductor etchants is located in Pittsburg,
California, which is in close proximity to major customers in Silicon Valley.
The Company produces lithographic plates and plate and pressroom chemicals at
its facility in Racine, Wisconsin. Twenty-eight of the Company's derivative
products and services plants, including six in Canada, manufacture aluminum
sulfate and enhanced coagulants such as polyaluminum chloride and are
strategically located near major customers.

Since taking control in 1986, management has expanded facilities, improved
operating efficiencies through equipment upgrades and closed 12 unprofitable
plants to improve the earnings of the derivative products and services product
lines. Specifically, management has doubled the capacity of its regeneration
business through a series of expansions to capitalize on the growing
requirements of this market. Currently, the Company is in the final stages of
permitting an ultra-high purity sulfuric acid plant in Richmond, California,
that will significantly improve product purity while increasing existing
capacity for this product by 50 percent to simultaneously meet the higher purity
and demand levels of the semiconductor industry. The Company expects
construction of this new facility to begin shortly.

Control of Resources. The Company's competitive-cost position and
high-quality products are in part attributable to its control of several
critical raw materials that serve as the feedstock for the majority of its
products. In connection with the sulfuric acid regeneration business, the
Company has the capability to manufacture sulfuric acid and sulfur dioxide
relatively inexpensively. Sulfur dioxide and soda ash are the major raw
materials in the manufacture of sodium salts, sulfites and nitrites and the
Company is the only producer to control both raw materials. Sulfuric acid, in
addition to being sold in the merchant market by the Company, is also an
important raw material in the manufacture of aluminum sulfate as well as in the
manufacture of high purity semiconductor acids. Consequently, major raw material
purchases are limited to sulfuric acid where it is uneconomical for the Company
to supply itself due to distribution costs, bauxite and hydrate (for the
manufacture of alum), sulfur (for the manufacture of sulfuric acid), and
aluminum (for the manufacture of printing plates).

Competition. Although the Company generally has significant market shares
in the product areas in which it competes, most of its end markets are extremely
competitive and, therefore, raising prices

has been difficult over the past several years and will likely continue to be so
in the near future. The Company's major competitors are typically segregated by
end markets and include international, regional and, in some cases, small
independent producers. In many cases, due to freight costs, the proximity of the
production facility to the end market user is the critical factor in being
competitive.

In addition to the refineries that perform their own acid regeneration,
competitors include Coulton, DuPont, Olin, PVS and Rhone-Poulenc, which also
have acid regeneration facilities that are generally located near their major
customers. Major competitors in sodium and ammonia salts, sulfites and nitrites
include BASF, Calabrian, Cytec, DuPont, Kerley, Rhone-Poulenc, and Solvay S.A.,
although no competitor competes in all markets or products with the Company.

MANUFACTURING SEGMENT

Through Toledo Technologies and Balcrank, the Company manufactures
automotive engine parts and fluid handling equipment for original equipment
manufacturers ('OEMs') and the automotive services market. Toledo Technologies,
located in Toledo, Ohio, manufactures rocker arms, roller rocker arms, roller
followers and other stamped and machined metal products for the automotive
industry. In overhead valve internal combustion engines, rocker arms and roller
rocker arms act as levers that open and close valves, allowing air and gas
mixture into the combustion chambers and combusted gas into the exhaust system.
In overhead cam engines, roller followers ride along the camshaft and open and
close the valves. Other products manufactured include general stampings and
rocker arm shafts that hold rocker arms in place.

Toledo Technologies' customer base consists primarily of domestic
automobile and truck manufacturers and other OEMs. Its three primary customers
are Chrysler, Ford and General Motors and, in each case, the Company is the sole
supplier for the engine programs in which it participates. During 1995, the
Company added new General Motors business arising out of GM's new 3.1 liter and
2.2 liter engine programs. Beginning in 1996, the Company expects to continue to
boost sales of its more value-added roller followers (requiring both stamping
and assembly) as automotive engine technology continues to switch from overhead
valve to overhead cam engines. To accommodate new Ford and Chrysler business and
growth in roller follower components, the Company has recently completed its
second manufacturing facility, which is also located in Toledo, Ohio.

Balcrank, located in Weaverville, North Carolina, principally manufactures
fluid handling equipment (air-driven pumps, hose reels, control handles and
accessories) for the automotive services market. Balcrank also manufactures
other products including trailer hitches and manual controls, such as cranks and
handwheels for machine tools. Products are sold to both distributor and OEM
customers by the Company's field sales force, augmented by a network of
manufacturers' representatives.

With respect to automotive engine parts, the Company's competitors such as
Hitchner Manufacturing, Eaton and captive OEMs do not currently produce stamped
metal products and instead emphasize other engine technology designs such as
castings. Competitors in the fluid handling services market include divisions of
BTR plc, Graco, Ingersoll-Rand and Pentair.

CUSTOMERS; SEASONALITY; BACKLOGS

The Company does not have any single customer, or a small number of
customers, the loss of any one or more of which would have a material adverse
effect on the Company. Sales of calcium chloride are concentrated in late spring
and summer. Sales of soda ash to the glass container industry are somewhat
seasonal because sales of beverage containers are stronger in the summer. Due to
the nature of the Company's business, there are no significant backlogs. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality and Quarterly Financial Data.'

ENVIRONMENTAL MATTERS

Regulation. The Company's various inorganic chemical manufacturing
operations, which have been conducted at a number of facilities for many years,
are subject to numerous laws and regulations relating to the protection of human
health and the environment in the U.S. and Canada. The Company believes that it
is in substantial compliance with such laws and regulations. However, as a
result of its operations, the Company is involved from time to time in
administrative and judicial proceedings and inquiries relating to environmental
matters. These include several currently pending administrative proceedings
concerning alleged environmental violations at Company facilities. Based on
information available at this time with respect to potential liability involving
these facilities, the Company believes that any such liability will not have a
material adverse effect on its financial position or results of operations.
However, modifications of existing laws and regulations or the adoption of new
laws and regulations in the future, particularly with respect to environmental
and safety standards, or discovery of any additional or unknown environmental
contamination, if any, could require capital expenditures which may be material
or otherwise adversely impact the Company's operations. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Environmental Matters.'

Accruals/Insurance. The Company's accruals for environmental liabilities
are recorded based on current interpretation of environmental laws and
regulations when it is probable that a liability has been incurred and the
amount of such liability can be reasonably estimated. Accruals for environmental
matters were $15.9 million and $16.6 million at December 31, 1994 and December
31, 1995, respectively. The Company maintains a comprehensive insurance program,
including customary comprehensive general liability insurance for bodily injury
and property damage caused by various activities and occurrences and significant
excess coverage to insure against catastrophic occurrences such as the July 26,
1993 Richmond, California, incident. However, it does not maintain any insurance
other than as described above for potential liabilities related specifically to
remediation of existing or future environmental contamination, if any. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Environmental Matters.'

The Company has an established program to ensure that its facilities comply
with environmental laws and regulations. Expenditures made pursuant to this
program approximated $11.4 million in 1995 (of which approximately $3.5 million
represented capital expenditures and approximately $7.9 million related to
ongoing operations and the management and remediation of hazardous substances).
Expenditures for 1994 approximated $7.9 million (of which approximately $1.6
million represented capital expenditures and approximately $6.3 million related
to ongoing operations and the management and remediation of hazardous
substances). The Company expects similar expenditures in 1996 to be in the range
of $12.0 million to $14.0 million; however, should environmental laws and
regulations affecting the Company's operations become more stringent, the
Company's costs for environmental compliance may increase above such range.

Additionally, CERCLA, and similar state Superfund statutes have been
construed as imposing joint and several liability on present and former owners
and operators of contaminated sites and transporters and generators of hazardous
substances for remediation of contaminated properties regardless of fault. The
Company has received written notice from the EPA that it has been identified
under CERCLA at three Superfund sites. With respect to two of these sites, the
Company does not believe that its liability, if any, arising therefrom will be
material to its results of operations or financial condition. With respect to
the other site, known as the Avtex site, which is located in Front Royal,
Virginia, the Company has provided for the estimated costs of certain activities
requested by the EPA at the site in its accrual for environmental liabilities.
In addition, Congress continues to consider reauthorization and modification of
the CERCLA statute and because passage of any such new law has not yet occurred,
the Company does not have sufficient information to ascertain its impact on the
Company's potential liabilities, if any.

In 1990, the EPA released a proposed rule, parts of which were finalized in
1993, that establishes standards for the implementation of a corrective action
program under RCRA. Corrective action programs require facilities that are
operating under a permit, or are seeking a permit to treat, store or dispose of
hazardous wastes, to investigate and remediate environmental contamination.
During the

third quarter of 1995, the Company conducted a facility investigation at its
Pittsburg, California, manufacturing facility, pursuant to RCRA and the terms of
its Hazardous Waste Facility Permit for the site, and submitted the report of
such investigation to the Cal EPA. Additional work relating to the study is
currently ongoing. The Company estimates that the potential costs for
implementing corrective action at such facility will be less than $2.0 million
payable over the next several years and has provided for the estimated costs in
its accrual for environmental liabilities.

In 1989, groundwater contamination in municipal drinking water wells
located in the town of Weaverville, North Carolina was identified near the
Weaverville plant of the Company's Balcrank subsidiary. The contaminants,
primarily PCE, were present as a result of discharges which took place during
the tenure of the former property owner. The NCDEM notified the EPA of the PCE
contamination, which notification resulted in the placement of the site on
CERCLIS, a list of sites identified for further investigation under CERCLA. At
the same time, under NCDEM supervision, Balcrank voluntarily commenced remedial
activities, including installation of a shallow groundwater remediation system.
Results demonstrating that substantial containment of the contaminants had been
achieved using the system were submitted to NCDEM and to the EPA in October,
1993. Currently, Balcrank, NCDEM and the EPA are involved in discussions
pursuant to which Balcrank, again under NCDEM supervision, will voluntarily
conduct additional investigative activities with respect to a deeper bedrock
aquifer, including remedial feasibility studies and activities as appropriate.
The Company estimates that the potential cost for any such activities will not
exceed $4.3 million payable over the next several years, and has provided for
the estimated costs in its accrual for environmental liabilities.

In addition, under the authority of the Canadian Environmental Protection
Act, on February 14, 1995, The Ministry of Environment and Energy of the
Province of Ontario published final regulations implementing the MISA program
relative to effluent discharges into Ontario waterways, including certain
limitations on the toxicity and alkalinity of such effluent. The new regulations
and their impact on the operation of GC Canada's Amherstburg facility, which
discharges effluent into the Detroit River is now estimated to require capital
expenditures which will not exceed $1.7 million payable over the next five years
and annual operating expenses in connection with operating and maintaining the
equipment necessary to meet the proposed regulations which will not exceed $0.5
million per year.

On January 30, 1996 the Ontario Ministry of Natural Resources (the
'Ministry') issued an order to the Company to cease solution mining activities
in certain sections of the Amherstburg plant's brine well fields until the
Company completed a review of, among other things, the stability and
interconnectivity of certain of the brine caverns and submitted certain required
records and data. Under the order, as modified by the Ministry in February 1996,
the Company's production was impacted during the first quarter, although it is
currently operating the Amherstburg plant within normal operating ranges. In
addition, the Company owns significant additional brine fields that the Company
is developing as part of its customary raw material sourcing program which could
substitute for the impacted brine wells. Moreover, the Company and its outside
consultant are currently conducting certain evaluations and collecting various
data relating to the stability of the brine caverns and expects, upon completion
of this work within the next several months, to be in a position to petition the
Ministry to lift the remainder of the order. Consequently, the Company believes
that the order and related remedial expenses will not have a material adverse
effect on its results of operations or financial condition. In the event that
the Ministry were to order the Company to permanently cease solution mining of
all or a material portion of its existing brine fields (an outcome which the
Company believes is unlikely), there could be a material adverse effect on the
operations of the Amherstburg plant until such substitute brine fields were
brought into full production.

Pending Proceedings. At any time, the Company potentially may be involved
in a number of proceedings with various regulatory authorities which could
require the Company to pay various fines and penalties relating to violations of
environmental laws and regulations at its sites, to remediate contamination at
some of these sites, to comply with applicable standards or other requirements,
or to incur capital expenditures to add or change certain pollution control
equipment or processes at its sites. Again, although the amount of any liability
that could arise with respect to these matters cannot be accurately predicted,
it is the opinion of management that the ultimate resolution of these matters

will have no material adverse effect on the Company's operations or financial
condition. The following information addresses those matters of which the
Company is presently aware.

Following a period of voluntary testing and investigation performed by the
Company at its Marrero, Louisiana, aluminum sulfate manufacturing facility, the
Company executed a Cooperative Agreement with the Louisiana Department of
Environmental Quality-Inactive and Abandoned Sites Division ('DEQ-IASD') on
October 20, 1995. This agreement formalizes the Company's willingness to
voluntarily remediate certain contamination at the facility which occurred
during the tenure of a former owner. The Company estimates that the potential
cost to remediate such contamination will be less than $1.5 million payable over
the next several years and has provided for the estimated cost of such
remediation plan in its accrual for environmental liabilities.

By letter dated March 22, 1990 from the EPA, the Company received a Notice
of Potential Liability pursuant to Section 107(a) of CERCLA with respect to a
site located in Front Royal, Virginia (the 'Avtex Site'), owned at the time by
Avtex Fibers, Inc., which has filed for bankruptcy. A sulfuric acid plant
adjacent to the main Avtex Site was previously owned and operated by the Company
(the 'acid plant'). The letter requested that the Company perform certain
activities at the acid plant including providing site security, preventing
discharges, removing certain specific residue and sludges from two storage
vessels and the transfer line to the main Avtex facility and determining the
extent of contamination at the site, if any. In April 1991, the Company
submitted a draft work plan with respect to the acid plant including each of the
activities requested by the EPA discussed above. The Company has provided for
the estimated costs of $1.6 million for these activities in its accrual for
environmental liabilities. The EPA has not yet responded to this work plan, nor
has it requested that an initial investigation and feasibility study for the
acid plant be performed. As a result, the extent of remediation required, if
any, is unknown. The Company believes that the acid plant is separate and
divisible from the main Avtex Site and, as a result, is not subject to any
liability for costs related thereto. The Company will continue to vigorously
assert this position with the EPA. There has been very limited contact by the
EPA with the Company since 1993, as it appears that the EPA is focused on
remediation activities at the main Avtex Site.

EMPLOYEES/LABOR RELATIONS

As of December 31, 1995, the Company had 2,294 employees, 863 of whom were
full-time salaried employees, 1,268 were full-time hourly employees covered
under 25 different union contracts and 163 were hourly employees working in
nonunion facilities.

The Company's 25 union contracts have durations which vary from two to four
years. Since 1986, the Company has been involved in 91 labor negotiations, only
five of which have resulted in work disruptions. During these disruptions,
management has operated the plants and supplied customers without interruption
until the labor disruptions were settled and new contracts were agreed upon. In
this respect, eight contracts, including the contracts covering employees at the
Green River and Amherstburg facilities, will be up for renewal during 1996.

PROPERTIES

In conducting its operations, the Company uses properties having offices,
storage facilities or manufacturing facilities at 84 locations throughout the
United States, Canada and the Philippines. Thirty-three of these properties are
leased while the remainder are owned by the Company. The leased properties are
occupied under rental agreements having terms ranging up to six years and under
month-to-month tenancies. The Company's headquarters is located in Hampton, New
Hampshire.

The locations and uses of certain major properties of the Company are as
follows:

LOCATION USE

United States *Pittsburg, California Manufacturing Facility
*Richmond, California Manufacturing Facility
*North Claymont, Delaware Manufacturing Facility Offices
and Warehouse
*East St. Louis, Illinois Manufacturing Facility
**Hampton, New Hampshire Offices
**Parsippany, New Jersey Offices
Solvay, New York Manufacturing Facility
Weaverville, North Carolina Manufacturing Facility, Offices
and Warehouse
Toledo, Ohio Manufacturing Facility, Offices
and Warehouse
*Marcus Hook, Pennsylvania Manufacturing Facility, Offices
and Warehouse
*Anacortes, Washington Manufacturing Facility
Racine, Wisconsin Manufacturing Facility and
Offices
Green River, Wyoming Trona Mine and Manufacturing
Facility
Canada Amherstburg, Ontario Manufacturing Facility and
Undeveloped Lots
**Mississauga, Ontario Offices
Valleyfield, Quebec Manufacturing Facility

- ------------------------------

* Each of the indicated has been pledged as security by General Chemical for
the U.S. Revolving Credit Facility and Bank Term Loan.

** Leased.

The Company's Green River plant currently has a nameplate capacity of
approximately 2.4 million tons of soda ash per year. The plant is owned by
GCSAP, a partnership of which General Chemical is the managing partner and in
which General Chemical has a 51 percent equity interest, the Andover Group,
Inc., which is a wholly owned subsidiary of ACI International Limited, has a 25
percent equity interest and TOSOH Wyoming, Inc., which is a wholly owned
subsidiary of TOSOH America, Inc., has a 24 percent equity interest. Each
partner is prohibited from transferring its interest in GCSAP or withdrawing
from GCSAP without the prior written consent of the other partners.

In addition to such restrictions on the transfer of interests in GCSAP,
there are certain restrictions and obligations with respect to the transfer of
either General Chemical's interest in GCSAP or the voting securities of General
Chemical. For further information, see Note 5 of Notes to the Consolidated
Financial Statements.

Reserves. The Company mines trona ore under leases with the United States
government, the State of Wyoming, and the Union Pacific Resources Corporation.
The Company's trona reserves and mines are located in the Green River, Wyoming,
area. In the Green River basin, the Green River formation was deposited in a
lake that began in the early Eocene geologic period (approximately 35 million
years ago) as a large body of fresh water, shrank in size and became saline,
expanded, and then became fresh water again. In general, the sediments deposited
during the saline phase of this lake, which included the trona deposits, are
called the Wilkins Peak Member, and the overlying and underlying fresh water
deposits are called the Laney Shale Member and Tipton Shale Member,
respectively.

The Wilkins Peak Member contains at least 42 beds of trona in an area of
about 1,300 square miles, at depths ranging from about 400 feet to 3,500 feet.
The major beds, those that are known to exceed 4 feet in thickness and to
underlie at least 100 square miles, are numbered 1 through 25, beginning with
the bottommost beds. One bed, No. 17, is currently being mined at the Company's
Green River facility at a depth of about 1,600 feet. The underground mine is
accessible by one

service and personnel shaft, one production shaft and three ventilation shafts.
The trona deposits are mined through continuous mining and bore mining
techniques which use machines to rip the ore from the seam. Both methods use the
room and pillar technique mine plan.

Surface operations include facilities for crushing, calcining, dissolving,
classifying, clarifying, crystallizing, drying (conversion of monohydrate to
anhydrate), storing and loading.

The Company's estimated proven reserves within bed No. 17, which the
Company is currently mining, consist of approximately 107 million tons of
extractable ore. At the 1995 operating rate of 2.2 million tons of soda ash per
year (4.1 million tons of trona ore), there is approximately a 26-year supply.
For the three years ended December 31, 1995, annual production of trona ore
averaged approximately 3.8 million tons. In addition, the Company's reserves
contain three other major minable trona beds containing approximately 328
million tons of extractable ore. These beds, which may require significant
capital to access, will provide more than 80 years of added reserves based on
current operating rates.

At the Company's synthetic soda ash plant in Amherstburg, Ontario, Canada,
the Company uses salt and limestone as its raw materials. Based on current
production levels the Company has approximately 34 years of salt reserves.
Limestone reserves owned by the Company total approximately 15 years, with an
option on an additional six years of reserves. However, the Company is not
currently utilizing its limestone reserves and is instead purchasing all of its
limestone requirements under a long-term contract with a major limestone
producer due to the economic benefit of using purchased limestone.

LEGAL PROCEEDINGS

General. In addition to the Richmond Works, July 26, 1993 incident, which
is discussed below, the Company is involved in claims, litigation,
administrative proceedings and investigations of various types in several
jurisdictions. Although the amount of any liability which could arise with
respect to these actions cannot be accurately predicted, the opinion of
management based upon currently available information is that any such liability
not covered by insurance will have no material adverse effect on the Company.

Richmond Works July 26, 1993 Incident. On July 26, 1993, a pressure relief
device on a railroad tank car containing oleum that was being unloaded at the
Company's Richmond, California, facility, ruptured during the unloading process,
causing the release of a significant amount of sulfur trioxide. Approximately
150 lawsuits seeking substantial amounts of damages were filed against the
Company on behalf of in excess of 60,000 claimants in municipal and superior
courts of California (Contra Costa and San Francisco counties) and in federal
court (United States District Court for the Northern District of California).
All state court cases were coordinated before a coordination trial judge in
Contra Costa County Superior Court (In Re GCC Richmond Works Cases, JCCP No.
2906). The court, among other things, appointed plaintiffs' liaison counsel and
a plaintiffs' management committee. The federal court cases were stayed until
completion of the state court cases.

The settlement agreement provides, among other things, that while claimants
may 'opt out' of the compensatory damages portion of the settlement and pursue
their own cases separate and apart from the class settlement mechanism, they
have no right to opt out of the punitive damages portion of the settlement.
Consequently, under the terms of the settlement, no party may seek punitive
damages from the Company outside of those provided by the settlement. The
deadline for claimants electing to opt out of the compensatory damages portion
of the settlement was October 5, 1995, and fewer than 3,000 claimants, which
constitutes less than 5 percent of the total number of claimants, have elected
to so opt out. The various settlement pools and funds will be reduced to create
a reserve to fund the Company's defense and/or settlement (if any) of opt-out
claims. Except with respect to compensatory damage claims by claimants electing
to opt out, the settlement fully releases from all claims arising out of the
July 26, 1993 incident the Company and all of its related entities,
shareholders, directors, officers and employees, and all other entities who have
been or could have been sued as a result of the July 26, 1993 incident,
including all those who have sought or could seek indemnity from the Company.

Under the terms of the settlement agreement, settling claimants may receive
payment of their claims prior to the resolution of any appeal of the settlement
upon providing, among other things, a signed release document containing
language which fully releases the Company from any further claims, either for
compensatory or punitive damages, arising out of the July 26, 1993 incident.
Plaintiffs' liaison counsel are currently undertaking to obtain signed releases
from the approximately 95 percent of claimants who have elected to participate
in the settlement, and as of April 15, 1996 the Company had already received
releases from approximately 85 percent of the settling claimants. Final payments
to the plaintiffs' management committee on behalf of these settling claimants
have been made with funds provided principally by the Company's insurers
pursuant to the terms of the insurance policies described below and further
payments will be made as additional releases are received and reviewed.

Notices of appeal of all or portions of the settlement approved by the
court have been filed by five law firms representing approximately 2,750
claimants, with 2,700 of these claimants represented by the same law firm. These
claimants have not specified the amount of their claims in court documents,
although the Company believes that their alleged injuries are no different in
nature or extent than those alleged by the settling claimants. Based on papers
filed by the appellants in the California Court of Appeals, the primary grounds
for appeal are expected to be that the settlement is not 'fair, reasonable and
adequate' under California law, that the trial court erred in certifying a class
action for purposes of settlement and in certifying a mandatory punitive damage
class, that the trial court awarded excessive attorneys' fees to the plaintiffs'
management committee and plaintiffs' class counsel, that the trial court
exceeded its authority in reducing contingent fees payable to attorneys for
representing individual claimants, and that the trial court erroneously applied
a state statute that governs unclaimed residuals remaining from class action
settlements. If the settlement is upheld on appeal, the Company believes that
any further liability in excess of the amounts made available under the
settlement agreement (such as for opt-outs) will not exceed the available
insurance coverage, if at all, by an amount that could be material to its
financial condition or results of operations.

While there can be no assurances regarding how an appellate court might
rule, the Company believes that the settlement will be upheld on appeal. In the
event of a reversal or modification of the

settlement on appeal, with respect to lawsuits by any then remaining claimants
(opt-outs and settling claimants who have not signed releases) the Company
believes that, whether or not it elects to terminate the settlement in the event
it is overturned or modified on appeal, it will have adequate resources from its
available insurance coverage to vigorously defend these lawsuits through their
ultimate conclusion, whether by trial or settlement. However, in the event the
settlement is overturned or modified on appeal, there can be no assurance that
the Company's ultimate liability resulting from the July 26, 1993 incident would
not exceed the available insurance coverage by an amount which could be material
to its financial condition or results of operations, nor is the Company able to
estimate or predict a range of what such ultimate liability might be, if any.

Milwaukee, Wisconsin Proceedings. On April 29, 1996, the Company was
served with a complaint in the Circuit Court of Milwaukee County, State of
Wisconsin, captioned Winiarski vs. Peck Foods, et. al., (No. 96CV602593) by the
representatives of twenty-six plaintiffs naming several defendants, including
Peck Foods Corporation, Sara Lee Corporation, E.D. Wesley Company, the City of
Milwaukee and the Company in connection with the March, 1993 outbreak of
cryptosporidia bacteria in the public water supply in the City of Milwaukee,
which the complaint alleges caused the death of the plaintiffs. Several
insurance companies have also been named in the complaint as defendants. The
complaint alleges, among other things, that certain defendants other than the
Company illegally disposed of waste into the water supply which caused the
outbreak and that the City of Milwaukee failed to properly operate its water
treatment plant in a manner that would have prevented the outbreak. The
principal allegations against the Company are that a water treatment chemical
sold to the City of Milwaukee by the Company should have removed the bacteria
and failed to do so and that the Company consulted with the City concerning
water purification. The plaintiffs allege damages in excess of $1.0 million for
personal injury, economic loss, emotional distress, pain and suffering, medical
expenses and punitive damages. No discovery has been undertaken to date with
respect to the matter. The Company believes that it has substantial defenses to
the complaint and intends to vigorously defend itself in this matter. The
Company further believes that its available insurance provides adequate coverage
in the event of an adverse result in this matter, and that this matter will not
have a material adverse effect on its financial condition or results of
operations.

MANAGEMENT

The following table sets forth the names and positions of the executive
officers and directors of the Company or General Chemical as of the date of this
Prospectus. All directors will be elected each year at the annual meeting of
stockholders. Additional information with respect to those persons who serve as
executive officers and directors is set forth below:

NAME AGE POSITION

Paul M. Montrone.......................... 55 Chairman of the Board of Directors
Richard R. Russell........................ 53 President, Chief Executive Officer and Director
Ralph M. Passino.......................... 45 Vice President and Chief Financial Officer
DeLyle W. Bloomquist*..................... 37 Vice President and General Manager -- Industrial Chemicals
Bodo B. Klink*............................ 58 Vice President of Marketing
James N. Tanis*........................... 51 Vice President and General Manager -- Derivative Products and
Services
Edward J. Waite, III*..................... 48 Vice President, General Counsel and Secretary
James A. Wilkinson*....................... 55 Vice President of Manufacturing
Paul M. Meister........................... 43 Director

- ------------------------------

* Executive Officers of General Chemical.

Pursuant to the terms of a voting trust to which the Current Stockholders
have contributed all of their shares of Class B Common Stock, Mr. Montrone, as
sole voting trustee, is obligated to nominate and vote for himself for election
as one of the Company's directors. Following consummation of the Offerings, Mr.
Montrone, as trustee of the voting trust, will control 100 percent of the voting
power of the outstanding Class B Common Stock, which will represent 95.2 percent
of the combined voting power of the outstanding Common Stock and Class B Common
Stock (assuming no exercise of the Over-allotment Option).

Paul M. Montrone, Chairman of the Board of Directors, has been a director
since 1988 and was President of the Company from 1987 to 1994. Since 1991, he
has been President and Chief Executive Officer of Fisher Scientific
International Inc. ('Fisher'), a provider of instruments, equipment and other
products to the scientific community. Mr. Montrone was Managing
Director-President of The Henley Group, Inc. ('Henley') and its predecessors and
an executive officer of certain of its affiliates from prior to 1991 to 1992.
Mr. Montrone was Vice Chairman of the Board of Abex from 1992 to 1995. Mr.
Montrone is also a director of Wheelabrator Technologies, Inc. and Fisher.

Richard R. Russell, President, Chief Executive Officer and Director of the
Company, has held such positions since 1994. Mr. Russell is also the President
and Chief Executive Officer and a director of General Chemical, positions he has
held since 1986. Until 1990, Mr. Russell was also a Managing Director of Henley
and its predecessors, a position he had held since Henley was formed in early
1986.

Ralph M. Passino, Vice President and Chief Financial Officer of the
Company, has held such positions since 1994. Mr. Passino is also Chief Financial
Officer and Vice President of Administration of General Chemical, positions he
has held since 1986, and a director of General Chemical, a position he has held
since 1994.

DeLyle W. Bloomquist, Vice President and General Manager -- Industrial
Chemicals of General Chemical, has held such position since 1996. Between 1995
and 1996, Mr. Bloomquist had been the Director of the Company's Corporate
Distribution Department. Between 1993 and 1995, Mr. Bloomquist served as
Controller -- Industrial Chemicals. Between 1991 and 1993, Mr. Bloomquist had
been the Manager of Services at the Company's Green River Soda Ash operations.

Bodo B. Klink, Vice President of Marketing of General Chemical, has held
such position since 1993. Between 1991 and 1993, Mr. Klink had been General
Manager -- Water Chemicals. Earlier in 1991, Mr. Klink was the General
Manager -- Electronic Chemicals. Between 1987 and 1991, Mr. Klink was the
Company's Director of International Operations.

James N. Tanis, Vice President and General Manager -- Derivative Products
and Services of General Chemical, has held such position since 1987.

Edward J. Waite, III, Vice President, General Counsel and Secretary of
General Chemical, has held such position since 1989.

James A. Wilkinson, Vice President of Manufacturing of General Chemical,
has held such position since 1986.

Paul M. Meister has been a Director since 1996. Mr. Meister has been Senior
Vice President and Chief Financial Officer of Fisher since 1991. Mr. Meister was
Managing Director of Henley and its predecessors from prior to 1991 to 1992 and
was a Senior Vice President of Abex, Inc. from 1992 to 1995. Mr. Meister is also
a director of Power Control Technologies, Inc.

After the consummation of the Offerings, the Company intends to seek the
election of at least two directors who are neither officers nor employees of the
Company.

THE BOARD OF DIRECTORS AND BOARD COMMITTEES

The business of the Company will be managed under the direction of the
Company's Board of Directors.

In conjunction with the Offerings, the Company's Board of Directors will
establish an Audit Committee (the 'Audit Committee') to recommend the firm to be
appointed as independent accountants to audit financial statements and to
perform services related to the audit, review the scope and results of the audit
with the independent accountants, review with management and the independent
accountants the Company's year-end operating results, and consider the adequacy
of the internal accounting procedures. The Audit Committee will consist of two
directors who are neither officers nor employees of the Company.

The Company's Board of Directors will also establish a Compensation
Committee (the 'Compensation Committee'), a Nominating Committee (the
'Nominating Committee') and an Executive Committee (the 'Executive Committee').
The Compensation Committee, which will consist of at least two directors who are
outside, disinterested directors, will review and recommend the compensation
arrangements for all directors and officers, approve such arrangements for other
senior level employees and administer and take such other action as may be
required in connection with certain compensation and incentive plans of the
Company and its subsidiaries. The Nominating Committee, which will consist of
Messrs. Montrone and Meister, will nominate persons for election to the Board.
The Nominating Committee will consider nominees recommended by stockholders in
accordance with the procedure contained in the Company's By-laws. Stockholder
recommendations may be sent to the Nominating Committee, c/o Secretary, The
General Chemical Group Inc., Liberty Lane, Hampton, New Hampshire 03842. Mr.
Montrone will be the Chairman of the Nominating Committee. The Executive
Committee, which will consist of Messrs. Montrone, Meister and Russell, will
address significant corporate, operating and management matters between meetings
of the full Board.

COMPENSATION OF DIRECTORS

The non-employee directors of the Company will be entitled, following the
Offerings, to receive cash compensation and compensation pursuant to the plans
described below.

Cash Compensation. Non-employee directors of the Company will receive
compensation of $40,000 per year, with no additional fees for attendance at the
Company's Board of Directors or committee meetings. Employee directors will not
be paid any fees or additional compensation for service as members of the
Company's Board of Directors or any of its committees. All directors will be
reimbursed for expenses incurred for attending the Company's Board of Directors
and committee meetings.

Deferred Compensation Plan for Non-Employee Directors. Prior to the
Offerings, the Company will adopt the Deferred Compensation Plan for
Non-Employee Directors, pursuant to which a non-employee director may elect,
generally prior to the commencement of any calendar year, to have all

or any portion of the director's compensation for such calendar year and for
succeeding calendar years credited to a deferred compensation account. Amounts
credited to the director's account will accrue interest based upon the average
quoted rate for ten-year U.S. Treasury Notes. Deferred amounts will be paid in a
lump sum or in installments in the director's discretion commencing on the first
business day of the calendar year following the year in which the director
ceases to serve on the Company's Board of Directors or of a later calendar year
specified by the director.

Retirement Plan for Non-Employee Directors. Prior to the Offerings, the
Company will adopt the Retirement Plan for Non-Employee Directors, pursuant to
which any director who retires from the Company's Board of Directors with at
least five years of service as a non-employee director will be eligible for an
annual retirement benefit for the remainder of the director's lifetime. The
annual retirement benefit is equal to 50 percent of the director fee in effect
at the date of the director's retirement for a director who retires with five
years of eligible service and is increased by 10 percent of the director fee in
effect at the date of the director's retirement for each additional year of
service, up to 100 percent of such fee for 10 or more years of service as a
non-employee director or for directors who retire after age 70. Payment of the
retirement benefits to any director will commence upon the later of the
director's retirement from the Company's Board of Directors or the attainment of
age 60. Retirement benefits may be suspended or terminated if the retired
director refuses to render consultative services and advice to the Company or
engages in activity which competes with the Company's business.

Restricted Unit Plan for Non-Employee Directors. Prior to the Offerings,
the Company will adopt the Restricted Unit Plan for Non-Employee Directors. Each
non-employee director of the Company as of the date of the Offerings, will
receive a one-time grant of 5,000 restricted units ('Restricted Units') under
the Restricted Unit Plan for Non-employee Directors evidencing a right to
receive shares of Common Stock, subject to certain restrictions. Each
non-employee director of the Company who becomes a director after the Offerings
will, upon becoming a director, receive a one-time grant of 5,000 Restricted
Units. The Company will maintain a memorandum account for each director who
receives a grant of Restricted Units and credit to such account the amount of
any cash dividends and shares of stock of any subsidiary distributed on the
shares of Common Stock ('Dividend Equivalents') underlying such director's
Restricted Units from the date of grant until the payment date described below.
No shares of Common Stock will be issued at the time the Restricted Units are
granted, and the Company will not be required to set aside a fund for any such
grant or for amounts credited to the memorandum account. Neither the Restricted
Units nor the memorandum account may be sold, assigned, pledged or otherwise
disposed of. Twenty-five percent of the Restricted Units and the related
Dividend Equivalents will vest for each year of service as a non-employee
director of the Company. Vested Restricted Units and the related Dividend
Equivalents will not be payable until the director ceases to be a member of the
Company's Board of Directors. At that time the director will receive one share
of Common Stock for each vested Restricted Unit, provided that a director may
elect, prior to the date on which Restricted Units vest, to have payment
deferred to a later date. Any Restricted Units and related Dividend Equivalents
that have not vested at the time the director ceases to be a non-employee
director of Company will be cancelled unless service has terminated because of
death or disability, in which event all such Restricted Units and related
Dividend Equivalents will vest immediately. When payment of Restricted Units is
made, the directors will also receive cash and securities equal to the related
Dividend Equivalents, together with interest on the cash based upon the average
quoted rate for ten-year U.S. Treasury Notes. In the event of a stock dividend,
stock split, recapitalization, merger, liquidation or similar event, the Board,
in its sole discretion, may make equitable adjustments in outstanding awards and
the number of shares of Common Stock reserved for issuance under the plan.

COMPENSATION OF EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table summarizes the compensation paid to the Chief Executive
Officer and the four other most highly compensated executive officers or key
employees (the 'Named Executives') with respect to the fiscal years 1993, 1994
and 1995.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
----------------------------------
OTHER ANNUAL ALL OTHER
SALARY BONUS COMPENSATION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (1) ($) (2)
- -------------------------------------------------------- ---- ------- ------- ------------ ------------

Richard R. Russell ..................................... 1995 350,000 400,000 300,000 39,000
President, Chief Executive Officer and Director 1994 350,000 300,000 225,000 39,000
1993 350,000 475,000 655,000 50,000
Ralph M. Passino ....................................... 1995 235,000 210,000 150,000 23,000
Vice President and Chief Financial Officer 1994 220,000 155,000 115,000 23,000
1993 220,000 185,000 340,000 24,000
James N. Tanis ......................................... 1995 235,000 185,000 150,000 23,000
Vice President and General Manager -- Derivative 1994 220,000 160,000 115,000 23,000
Products and Services of General Chemical 1993 220,000 195,000 340,000 24,000
James A. Wilkinson ..................................... 1995 210,000 115,000 118,000 18,000
Vice President, Manufacturing of General Chemical 1994 200,000 95,000 90,000 18,000
1993 200,000 125,000 260,000 21,000
Edward J. Waite, III ................................... 1995 190,000 120,000 118,000 17,000
Vice President, General Counsel and Secretary of 1994 182,000 90,000 90,000 11,000
General Chemical 1993 180,000 117,000 255,000 17,000

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(1) Amounts shown include dividend awards made pursuant to the Prior Equity
Programs, which vest and are payable over three years. There will be no
further awards under these programs following the Offerings.

(2) Amounts listed in this column reflect the Company's contributions to the
Company's Savings and Profit Sharing Plan and Supplemental Savings Plan.

RESTRICTED UNIT PLAN

Prior to the Offerings, the Company will adopt a Restricted Unit Plan
authorizing the issuance of 850,000 units (subject to adjustment for stock
splits, stock dividends or other similar events) to participants thereunder.
Each unit represents one share of Common Stock, which will be issued to the
participant upon vesting unless the participant elects to defer receipt thereof.
The Restricted Unit Plan is being established generally to facilitate the
issuance of units to approximately 70 key employees in satisfaction and
replacement of the rights earned beginning in 1989 under the Prior Equity
Programs. Following the Offerings, no employees will have any rights with
respect to the Prior Equity Programs (other than the right to receive
distributions from amounts previously credited to the dividend award pools).
Generally, units available for issuance under the Restricted Unit Plan will be
issued to the participants upon completion of the Offerings.

All units issued pursuant to the Restricted Unit Plan will be issued at no
cost to the recipient. All awards are subject to a five-year vesting schedule
such that 10 percent of the award vests six months after the date of grant and
an additional 10 percent vests on each of the first and second anniversaries
thereof, 20 percent on the third anniversary, and 25 percent on each of the
fourth and fifth anniversaries. Units under the Restricted Unit Plan may not be
sold, transferred or otherwise encumbered or disposed of prior to vesting. The
Restricted Unit Plan will be administered by the Compensation Committee. The
Committee may at any time waive such restrictions or accelerate the date or
dates on which such restrictions lapse. If a participant terminates employment
for any reason prior to the vesting of such units, such unvested portion shall
automatically be forfeited back to the Company and will become available for
reissuance under the Restricted Unit Plan. Prior to the issuance of shares under
the Restricted Unit Plan, unit holders will not have any rights of a stockholder
with respect to shares issuable under the Restricted Unit Plan (except that
dividends otherwise payable with respect to shares issuable in respect of
outstanding units will accrue to the benefit of the participant and will be paid
to the participant at the time of receipt of such shares). The Restricted Unit
Plan provides that in the event of a 'Change of Control' (as defined in the
Restricted Unit Plan) of the Company, all units will automatically vest.

Upon completion of the Offerings, executive officers as a group will
receive 400,274 shares under the Restricted Unit Plan and the Named Executives
will receive shares as follows: Mr. Russell: 114,364, Mr. Passino: 57,182, Mr.
Tanis: 57,182, Mr. Wilkinson: 44,475, and Mr. Waite: 44,475. In connection with
the Offerings, the Company will record an after-tax charge of $6.3 million in
the fiscal quarter in which the Offerings are completed, reflecting the accrual
of amounts earned under the Prior Equity Programs. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Seasonality and
Quarterly Financial Data.'

1996 STOCK OPTION AND INCENTIVE PLAN

Prior to the Offerings, the Company will adopt the 1996 Stock Option and
Incentive Plan (the '1996 Stock Plan') to provide for the grant of awards
covering a maximum of 2,200,000 shares of Common Stock. The 1996 Stock Plan
authorizes (i) the grant of stock options, (ii) the grant of shares of Common
Stock with or without conditions and restrictions; (iii) the grant of
performance share awards entitling the recipient to receive shares of Common
Stock upon the achievement of performance goals; and (iv) stock appreciation
rights ('rights') accompanying options or granted separately. An award under the
1996 Stock Plan, other than an award of restricted shares of Common Stock, may
provide for the crediting to the account of, or the current payment to, the
holder thereof of Dividend Equivalents.

In connection with the Offerings, the Company intends to grant options
under the 1996 Stock Plan to purchase 400,000, 50,000, 50,000, 20,000, 20,000
and 580,000 shares to Messrs. Russell, Passino, Tanis, Wilkinson and Waite and
all executive officers as a group, respectively. In addition, the Company
intends to grant to Mr. Meister options to purchase 400,000 shares of Common
Stock. All such options will have an exercise price equal to the price to the
public in the Offerings. The options to be granted to Messrs. Russell and
Meister will vest over a series of three-year periods commencing on the date of
the achievement of the following thresholds: for the first one-third of the
option shares, vesting will begin when and if the market price of the Common
Stock reaches $37 per share; for the second one-third, vesting will begin when
and if such market price reaches $46 per share; and for the final one-third,
vesting will begin when and if such market price reaches $56 per share. In any
event, all of Mr. Russell's and Mr. Meister's options will vest in full on the
tenth anniversary of the grant date. All other options for executive officers
will vest 30 percent, 30 percent and 40 percent on the first, second and third
anniversaries, respectively, of the grant date.

The following is a summary of certain features of the 1996 Stock Plan:

Plan Administration; Eligibility. The 1996 Stock Plan is administered by
the Compensation Committee. All members of the Compensation Committee must be
'disinterested persons' as that term is defined under the rules promulgated by
the Securities and Exchange Commission.

The Compensation Committee has full power to select, from among the
employees eligible for awards, the individuals to whom awards will be granted,
to make any combination of awards to participants, and to determine the specific
terms of each award, subject to the provisions of the 1996 Stock Plan. Persons
eligible to participate in the 1996 Stock Plan will be those officers, directors
and employees of the Company and its subsidiaries and other key persons who are
responsible for or contribute to the management, growth or profitability of the
Company and its subsidiaries, as selected from time to time by the Compensation
Committee.

Stock Options. The 1996 Stock Plan permits the granting of (i) options to
purchase Common Stock intended to qualify as incentive stock options ('Incentive
Options') under Section 422 of the Code, and (ii) options that do not so qualify
('Non-Qualified Options'). The option exercise price of each option will be
determined by the Compensation Committee but may not be less than 100 percent of
the fair market value of the shares on the date of grant in the case of
Incentive Options and 50 percent in the case of Non-Qualified Options. Employees
participating in the 1996 Stock Plan may elect, with the consent of the
Compensation Committee, to receive discounted Non-Qualified Options in lieu of
cash bonuses.

The term of each option will be fixed by the Compensation Committee and may
not exceed ten years from date of grant in the case of an Incentive Option. The
Compensation Committee will

determine at what time or times each option may be exercised and, subject to the
provisions of the 1996 Stock Plan, the period of time, if any, after death,
disability or termination of employment during which options may be exercised.
Options may be made exercisable in installments, and the exercisability of
options may be accelerated by the Compensation Committee.

Upon exercise of options, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument acceptable to
the Compensation Committee or, if the Compensation Committee so permits, by
delivery of shares of Common Stock already owned by the optionee. The exercise
price may also be delivered to the Company by a broker pursuant to irrevocable
instructions to the broker from the optionee. At the discretion of the
Compensation Committee, stock options granted under the 1996 Stock Plan may
include a 're-load' feature pursuant to which an optionee exercising an option
by the delivery of shares of Common Stock would automatically be granted an
additional stock option (with an exercise price equal to the fair market value
of the Common Stock on the date the additional stock option is granted) to
purchase that number of shares of Common Stock equal to the number delivered to
exercise the original stock option. The purpose of this feature is to enable
participants to maintain their equity interest in the Company without dilution.

To qualify as Incentive Options, options must meet additional Federal tax
requirements, including limits on the value of shares subject to Incentive
Options which first become exercisable in any one year, and a shorter term and
higher minimum exercise price in the case of certain large stockholders.

Restricted Stock. The Compensation Committee may also award restricted
shares of Common Stock subject to such conditions and restrictions as the
Compensation Committee may determine ('restricted stock'). The conditions and
restrictions applicable to a restricted stock award may include the achievement
of certain performance goals and/or continued employment with the Company
through a specified restricted period. At the time an award of restricted stock
is made, a certificate for the number of shares of restricted stock will be
issued in the name of the employee with the payment of such purchase price as
the Compensation Committee may determine, but the certificate will be held in
custody by the Company for the employee's account. The shares of Common Stock
evidenced by such certificate may not be sold, transferred, otherwise disposed
of or pledged prior to satisfaction or lapsing of such conditions or
restrictions, as the case may be. The Compensation Committee, in its sole
discretion, will determine whether cash and stock dividends with respect to
restricted stock will be paid currently to the employee or withheld for the
employee's account and whether and on what terms dividends withheld may bear
interest. Subject to the foregoing restrictions, the employee will have,
commencing on the date of grant, all rights and privileges of a stockholder as
to such shares of Common Stock.

Awards may provide for the incremental lapse or termination of
restrictions. The Compensation Committee may also, in its discretion, shorten or
terminate such restrictions or waive any conditions for the lapse or termination
of restrictions with respect to all or any of the restricted stock.

Unless the Compensation Committee determines otherwise, an employee will
forfeit all rights in unvested restricted stock upon termination of employment
for any reason, prior to the expiration or termination of such restrictions and
the satisfaction of any other conditions prescribed by the Compensation
Committee.

Unrestricted Stock. The Compensation Committee may also grant shares (at no
cost or for a purchase price determined by the Compensation Committee) which are
free from any restrictions under the 1996 Stock Plan ('Unrestricted Stock').
Unrestricted stock may be issued to employees in recognition of past services or
other valid consideration, and may be issued in lieu of cash bonuses to be paid
to such employees.

Subject to the consent of the Compensation Committee, an employee or key
person of the Company may make an irrevocable election to receive a portion of
his compensation in Unrestricted Stock (valued at fair market value on the date
the cash compensation would otherwise be paid).

Subject to the consent of the Compensation Committee, a non-employee
director may, pursuant to an irrevocable written election at least six months
before directors' fees would otherwise be paid, receive all or a portion of such
fees in Unrestricted Stock, valued at fair market value on the date the

directors' fees would otherwise be paid. In certain instances, a non-employee
director may also elect to defer a portion of his directors' fees payable in the
form of Unrestricted Stock, in accordance with such rules and procedures as may
from time to time be established by the Company. During the period of deferral,
the deferred unrestricted stock would receive dividend equivalent rights.

Performance Share Awards. The Compensation Committee may also grant
performance share awards to employees entitling the recipient to receive shares
of Common Stock upon the achievement of individual or Company performance goals
and such other conditions as the Compensation Committee shall determine
('Performance Share Award'). Except as otherwise determined by the Compensation
Committee, rights under a Performance Share Award not yet earned will terminate
upon a participant's termination of employment.

Stock Appreciation Rights. The Compensation Committee may also award stock
appreciation rights separately ('freestanding rights') or in connection with any
option granted under the 1996 Stock Plan, either at the time of grant or
subsequently ('tandem rights'). Upon exercise (subject in the case of a tandem
right to the surrender of the related option or a portion thereof), the holder
will be entitled to receive cash, shares of Common Stock or a combination
thereof, in an amount equal to the excess of the fair market value on the date
of exercise of one share of Common Stock over the exercise price per share
specified in the related option (or, in the case of a freestanding right, the
price per share specified in such right) times the number of shares with respect
to which the stock appreciation right is exercised. When tandem rights are
exercised, the option to which they relate will cease to be exercisable to the
extent of the number of shares with respect to which the tandem rights and
limited rights are exercised, but will be deemed to have been exercised for
purposes of determining the number of shares available for the grant of further
awards under the 1996 Stock Plan.

Nontransferability of Options and Rights; Termination of Employment.
Options and stock appreciation rights will not be transferable other than by
will or the laws of descent and distribution and may be exercised during the
holder's lifetime only by the holder or by the holder's guardian or legal
representative (unless such exercise would disqualify an option as an incentive
stock option). Upon the termination of employment of an employee for cause as
defined in the 1996 Stock Plan, all options held by the employee under the 1996
Stock Plan, to the extent not theretofore exercised, will terminate. Unless the
Compensation Committee shall otherwise provide at or after the time of grant, if
employment is otherwise terminated, except by reason of death or disability, an
option (to the extent otherwise exercisable) may be exercised at any time within
three months after such termination. In the case of the death or disability of
an employee while employed, any vested options may be exercised within a period
of one year after the employee's death or total disability. In either case, the
option and right is subject to earlier expiration by its terms.

Adjustments for Stock Dividends, Mergers, Etc. The Compensation Committee
will make appropriate adjustments in outstanding awards to reflect stock
dividends, stock splits and similar events. In the event of a merger,
liquidation, sale of the Company or similar event, the Compensation Committee,
in its discretion, may provide for substitution or adjustments of outstanding
options, or may terminate all unexercised options with or without payment of
cash consideration.

Amendments and Termination. The Board of Directors may at any time amend or
discontinue the 1996 Stock Plan and the Compensation Committee may at any time
amend or cancel outstanding awards for the purpose of satisfying changes in the
law or for any other lawful purpose. However, no such action may be taken which
adversely affects any rights under outstanding awards without the holder's
consent. Further, Plan amendments may be subject to stockholder approval to the
extent required by the Securities Exchange Act of 1934 to ensure that awards are
exempt under Rule 16b-3, or required by the Code to preserve the qualified
status of Incentive Options.

Change of Control Provisions. Under the 1996 Stock Plan, upon the
occurrence of a Change of Control Event, outstanding options and stock
appreciation rights become immediately exercisable in full, and outstanding
restricted share and performance share awards vest in full. A Change of Control
Event is defined in the 1996 Stock Plan and includes (i) any person or group,
with certain exceptions, acquiring the beneficial ownership of securities
representing more than 35 percent of the voting power of the Company's then
outstanding voting securities having the right to elect directors, (ii) a change
in the composition of a majority of the Board of Directors of the Company unless
the selection

or nomination of each of the new members was approved by a majority of incumbent
members of the Board of Directors of the Company or (iii) approval by the
Company's stockholders of a consolidation, a merger in which the Company does
not survive, or the sale of all or substantially all of the Company's assets.
Such provisions of the 1996 Stock Plan may have an anti-takeover effect.

Federal Income Tax Consequences

Set forth below is a description of the Federal income tax consequences
under the Code of the grant and exercise of the various types of benefits that
may be awarded under the 1996 Stock Plan.

Incentive Stock Options. Under the Code, an employee will not realize
taxable income by reason of the grant or the exercise of an Incentive Option. If
an employee exercises an Incentive Option and does not dispose of the shares
until the later of (a) two years from the date the option was granted or (b) one
year from the date the shares were transferred to the employee, the entire gain,
if any, realized upon disposition of such shares will be taxable to the employee
as long-term capital gain, and the Company will not be entitled to any
deduction. If an employee disposes of the shares within such one-year or
two-year period in a manner so as to violate the holding period requirements (a
'disqualifying disposition'), the employee generally will realize ordinary
income in the year of disposition, and, provided the Company complies with
applicable withholding requirements, the Company will receive a corresponding
deduction, in an amount equal to the excess of (1) the lesser of (x) the amount,
if any, realized on the disposition and (y) the fair market value of the shares
on the date the option was exercised over (2) the option price. Any subsequent
gain or loss realized on the disposition of the shares acquired upon exercise of
the option will be long-term or short-term capital gain or capital loss
depending upon the holding period for such shares. The employee will be
considered to have disposed of his shares if he sells, exchanges, makes a gift
of or transfers legal title to the shares (except by pledge or by transfer on
death). If the disposition is by gift and violates the holding period
requirements, the amount of the employee's ordinary income (and the Company's
deduction) is equal to the fair market value of the shares on the date of
exercise less the option price. If the disposition is by sale or exchange, the
employee's tax basis will equal the amount paid for the shares plus any ordinary
income realized as a result of the disqualifying distribution. The exercise of
an Incentive Option may subject the employee to the alternative minimum tax.

An employee who surrenders shares of Common Stock in payment of the
exercise price of an Incentive Option generally will not, under proposed
Treasury Regulations, recognize gain or loss on his surrender of such shares.
The surrender of shares of Common Stock previously acquired upon exercise of an
Incentive Option in payment of the exercise price of another Incentive Option
is, however, a 'disposition' of such shares of Common Stock. If the Incentive
Option holding period requirements described above have not been satisfied with
respect to such shares of Common Stock, such disposition will be a disqualifying
disposition that may cause the employee to recognize ordinary income as
discussed above.

Under proposed Treasury Regulations, all of the shares of Common Stock
received by an employee upon exercise of an Incentive Option by surrendering
shares of Common Stock will be subject to the Incentive Option holding period
requirements. Of those shares, a number of shares (the 'Exchange Shares') equal
to the number of shares of Common Stock surrendered by the employee will have
the same tax basis for capital gains purposes (increased by any ordinary income
recognized as a result of any disqualifying disposition of the surrendered
shares if they were Incentive Option shares) and the same capital gains holding
period as the shares surrendered. For purposes of determining ordinary income
upon a subsequent disqualifying disposition of the Exchange Shares, the amount
paid for such shares will be deemed to be the fair market value of the shares
surrendered. The balance of the shares received by the employee will have a tax
basis (and a deemed purchase price) of zero and a capital gains holding period
beginning on the date of exercise. The Incentive Option holding period for all
shares will be the same as if the option had been exercised for cash.

An Incentive Option that is exercised by an employee more than three months
after an employee's employment terminates will be treated as a Non-Qualified
Option for Federal income tax purposes. In the case of an employee who is
disabled, the three-month period is extended to one year and in the case of an
employee who dies, the three-month period does not apply.

Non-Qualified Options. There are no Federal income tax consequences to
either the optionee or the Company on the grant of a Non-Qualified Option. On
the exercise of a Non-Qualified Option, the optionee (except as described below)
has taxable ordinary income equal to the excess of the fair market value of the
Common Stock received on the exercise date over the option price of the shares.
The optionee's tax basis for the shares acquired upon exercise of a
Non-Qualified Option is increased by the amount of such taxable income. The
Company will be entitled to a Federal income tax deduction in an amount equal to
such excess, provided the Company complies with applicable withholding rules.
Upon the sale of the shares acquired by exercise of a Non-Qualified Option,
optionees will realize long-term or short-term capital gain or loss depending
upon their holding period for such shares.

Section 83 of the Code and the regulations thereunder provide that the date
for reporting and determining the amount of ordinary income (and the Company's
equivalent deduction) upon exercise of a Non-Qualified Option and for the
commencement of the holding period of the shares thereby acquired by an
executive officer or director subject to Section 16 of the Securities Exchange
Act of 1934 (a 'Section 16(b) person,') will be delayed until the date that is
the earlier of (i) six months after the date of the exercise and (ii) such time
as the shares received upon exercise could be sold at a gain without the person
being subject to such potential liability.

An optionee who surrenders shares of Common Stock in payment of the
exercise price of a Non-Qualified Option will not recognize gain or loss on his
surrender of such shares. Such an optionee will recognize ordinary income on the
exercise of the Non-Qualified Option as described above. Of the shares received
in such an exchange, the number of shares equal to the number of shares
surrendered will have the same tax basis and capital gains holding period as the
shares surrendered. The balance of the shares received will have a tax basis
equal to their fair market value on the date of exercise, and the capital gains
holding period will begin on the date of exercise.

As a result of new Section 162(m) of the Code, after the end of the
transition period in the regulations for companies that become publicly held,
the Company's deduction for Non-Qualified Options and other awards under the
1996 Stock Plan may be limited to the extent that a 'covered employee' (i.e.,
the chief executive officer or one of the four highest compensated officers who
is employed on the last day of the Company's taxable year and whose compensation
is reported in the summary compensation table in the Company's proxy statement)
receives compensation in excess of $1,000,000 in such taxable year of the
Company (other than pursuant to plans and arrangements adopted by the Company
prior to the Offerings and performance-based compensation that otherwise meets
the requirements of Section 162(m) of the Code).

Parachute Payments. The termination of restrictions on restricted stock or
the exercise of any portion of any option or stock appreciation right that is
accelerated due to the occurrence of a Change of Control Event may cause a
portion of the payments with respect to such restricted stock or accelerated
options or stock appreciation rights to be treated as 'parachute payments' as
defined in the Code. Any such parachute payments may be non-deductible to the
Company, in whole or in part, and may subject the recipient to a non-deductible
20 percent Federal excise tax on all or a portion of such payments (in addition
to other taxes ordinarily payable).

PENSION PLANS

The General Chemical Corporation Salaried Employees' Pension Plan (the
'Pension Plan') is a defined benefit plan that generally benefits full-time,
salaried employees. A participating employee's annual retirement benefit is
determined by the employee's credited service under the Pension Plan and average
annual earnings during the five years of the final ten years of service credited
under the Pension Plan for which such employee's earnings were highest. Annual
earnings include principally salary, overtime and short-term incentive
compensation. The Pension Plan provides that a participating employee's right to
receive benefits under the Pension Plan becomes fully vested after five years of
service. Under the Pension Plan, benefits are adjusted by a portion of the
social security benefits received by participants.

In addition, the Named Executives participate in an unfunded nonqualified
excess benefit plan which pays benefits which would otherwise accrue in
accordance with the provisions of the Pension Plan, but which are not payable
under the Pension Plan by reason of certain benefit limitations imposed by the
Code.

The table below indicates the estimated maximum annual retirement benefit a
hypothetical participant would be entitled to receive under the Pension Plan and
the excess benefit plan (without regard to benefit limitations imposed by the
Code) before any deduction for social security benefits if the retirement
occurred December 31, 1995, at the age of 65, after the indicated number of
years of credited service and if average annual earnings equaled the amounts
indicated.

YEARS OF CREDITED SERVICE (2)
--------------------------------------------------------
AVERAGE ANNUAL EARNINGS (1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS

$ 200,000..................................... $ 60,000 $ 80,000 $100,000 $100,000 $105,000
250,000..................................... 75,000 100,000 125,000 125,000 131,250
300,000..................................... 90,000 120,000 150,000 150,000 157,500
400,000..................................... 120,000 160,000 200,000 200,000 210,000
500,000..................................... 150,000 200,000 250,000 250,000 262,500
600,000..................................... 180,000 240,000 300,000 300,000 315,000
700,000..................................... 210,000 280,000 350,000 350,000 367,500
800,000..................................... 240,000 320,000 400,000 400,000 420,000
900,000..................................... 270,000 360,000 450,000 450,000 472,500
1,000,000..................................... 300,000 400,000 500,000 500,000 525,000

- ------------------------------

(1) Compensation qualifying as annual earnings under the Pension Plan
approximates the amounts set forth as Salary and Bonus in the Summary
Compensation table for the individuals listed on such table.

(2) The number of years of credited service under the Pension Plan for Messrs.
Russell, Passino, Tanis, Wilkinson and Waite, is approximately 19, 16, 8,
11, and 7, respectively.

PERFORMANCE PLAN

Prior to the Offerings, the Company will adopt the General Chemical Group
Inc. Performance Plan (the 'Performance Plan') for the purpose of providing
incentives to certain key employees of the Company and its subsidiaries.
Eligible employees will be determined by the Compensation Committee.

The Performance Plan provides an opportunity for eligible employees to earn
annual cash bonuses and other periodic cash awards based solely on the
attainment of preestablished performance goals. The material terms of the
performance goals and the compensation payable to covered employees are
discussed below.

Participants. The employees eligible to participate in the Performance Plan
are employees of the Company or any of its subsidiaries.

Awards. The general parameters of the Performance Plan allow for a maximum
annual bonus payment that can be earned per individual of no more than the
lesser of $2,000,000 and 200 percent of the individual's base salary. These
parameters represent the upper limits of the performance based incentive program
and do not necessarily indicate the actual award that will be made since awards
will be based solely on attainment of the stated performance objectives.

Performance Criteria. For awards ('Awards') other than annual bonuses, the
Compensation Committee will allocate a portion of each award (the 'Allocated
Portion') to each year in a performance period it shall establish (the
'Performance Period'). The performance objectives for an annual bonus or
Performance Period may be based upon either company-wide or operating unit
performance in any of the following areas: earnings per share, revenues,
operating cash flow, operating earnings, working capital to sales ratio or
return on capital (the 'Performance Objectives'). A determination as to whether
the applicable Performance Objectives have been attained, in whole or in part,
will be made by the Compensation Committee following the end of the relevant
year. Subject to the discretion of the Compensation Committee to reduce the
amount payable, a participant will earn an annual bonus or the Award related to
an Allocated Portion, whichever is applicable, upon the achievement of the
target level of performance applicable to any one Performance Objective. The
earned Award related to an Allocated Portion for a year in a Performance Period
shall be subject to a three year vesting schedule except that vesting shall also
occur upon an individual's death, disability

(as defined in the plan) or termination with the consent of the Compensation
Committee or upon a change of control of the Company or termination of the
Performance Plan. The Compensation Committee may permit the participants to
defer receipt of all or a portion of their Awards under the plan. Since the
Performance Objectives and target levels of performance for 1996 have not yet
been established, the Awards which the Named Executives may earn in 1996 cannot
be determined at this time. However, if the Performance Plan had been in effect
in 1995 and the Performance Objectives were fully met, the Named Executives
would have been eligible for cash awards equal to twice their respective
salaries reflected in the Summary Compensation Table.

Administration. The Performance Plan will be administered by the
Compensation Committee, who sets the performance targets, measures the results
and determines the amounts payable under the Performance Plan. The Compensation
Committee cannot increase the amounts payable under the Performance Plan, but
retains discretionary authority to reduce the amount of compensation that would
otherwise be payable to the Named Executives even if the target level of
performance is attained. The Performance Plan may be amended or terminated at
any time at the sole discretion of the Compensation Committee.

OTHER PROGRAMS

The Company will maintain a program pursuant to which certain key officers
of the Company will be entitled to reimbursement of certain medical expenses
that are excluded or subject to limitations in coverage under the Company's and
its subsidiaries' basic employee group medical plans. The maximum amount which
may be reimbursed under such program is $5,000 per year for each covered
officer.

The Company and its subsidiaries will maintain deferred compensation
programs to which participants may defer all or any portion of their annual
salary and/or incentive compensation and elect to receive payment of such
deferred amounts in future years based on certain deferral options. Amounts
deferred will be credited on the books of the Company or such subsidiary and
interest will accrue on such amounts based on the average quoted rate for
ten-year U.S. Treasury Notes.

The Company also maintains qualified defined contribution retirement plans
under which eligible participants may, subject to certain statutory limits,
elect to contribute up to 18 percent of their compensation under one plan and up
to 16 percent under another plan, all of which may be made on a pre-tax basis.
The Company makes an additional contribution under one plan equal to 50 percent
of each participant's own contributions up to a maximum Company contribution of
4 percent of the participant's compensation and under another plan a minimum of
30 percent and, at the discretion of the Company based on performance, up to a
maximum of 100 percent of each participant's contributions, which are not in
excess of 6 percent of the participant's compensation. The Named Executives also
participate in an unfunded, nonqualified excess defined contribution retirement
plan which pays benefits which would otherwise accrue in accordance with the
provisions of the defined contribution retirement plans but which are not
payable by reason of certain benefit limitations imposed by the Code.
Participants generally become vested in these additional contributions over five
years.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee will consist entirely of independent directors
who have no significant relationship with the Company or its officers or
directors.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock and Class B Common Stock as
of March 15, 1996 (assuming the original automatic conversion of all Common
Stock held by the Current Stockholders into Class B Common Stock upon filing of
the Certificate in accordance with its terms) and as adjusted to reflect the
sale of the Shares offered hereby by (i) each person known to the Company to own
beneficially more than 5 percent of the outstanding shares of the Company's
Common Stock or Class B Common Stock (including the Selling Stockholder), and
(ii) all directors and executive officers of the Company as a group. Except as
noted below, no person or entity is known by the Company to beneficially own any
shares of the Company's Common Stock or Class B Common Stock at March 15, 1996.

BENEFICIAL OWNERSHIP
OF CLASS B
BENEFICIAL OWNERSHIP COMMON STOCK
OF CLASS B NUMBER OF AFTER OFFERINGS (2)
COMMON STOCK SHARES OF -------------------------------
PRIOR TO OFFERINGS COMMON STOCK
-------------------------- BEING PERCENT OF
NUMBER OF OFFERED NUMBER OF CLASS B
NAME OF BENEFICIAL OWNER (1) SHARES PERCENT (3) (2)(4) SHARES COMMON STOCK (3)
- ------------------------------------------ ---------- ----------- ------------ ---------- ----------------

Stonor Group Limited (6)(7)............... 9,868,421 50.0% 5,000,000 4,868,421 33.0%
Paul M. Montrone (7)...................... 19,736,842 100.0 -- 14,736,842 100.0
All executive officers and directors as a
group (9 persons)(7).................... 19,736,842 100.0 -- 14,736,842 100.0

PERCENT OF
COMMON STOCK
AND CLASS B
NAME OF BENEFICIAL OWNER (1) COMMON STOCK (3)(5)
- ------------------------------------------ -------------------

Stonor Group Limited (6)(7)............... 21.9%
Paul M. Montrone (7)...................... 66.3
All executive officers and directors as a
group (9 persons)(7).................... 66.3

- ------------------------------

(1) The address of Stonor Group Limited is c/o Fiduciary Management Services
Limited, 3 Parliament Square, Castletown, Isle of Man IM91LA. The address of
all other listed stockholders is c/o The General Chemical Group, Liberty
Lane, Hampton, New Hampshire 03842.

(2) Assumes no exercise of the Over-allotment Option.

(3) Applicable percentage of ownership as of March 15, 1996 is based upon
19,736,842 shares of Class B Common Stock outstanding. Applicable percentage
of ownership after the Offerings is based upon 7,500,000 shares of Common
Stock and 14,736,842 shares of Class B Common Stock outstanding.

(4) Consists of 5,000,000 shares to be sold by Stonor of which Mr. Montrone may
be deemed the beneficial owner (see Note 6 below). The shares to be sold by
Stonor will be shares of Common Stock resulting from the conversion by
Stonor of a like number of its shares of Class B Common Stock into Common
Stock.

(5) The shares of Class B Common Stock owned by Stonor, Mr. Montrone and all
executive officers and directors as a group represent 31.4 percent, 95.2
percent and 95.2 percent, respectively, of the combined voting power of the
outstanding shares of Common Stock and Class B Common Stock (assuming no
exercise of the Over-allotment Option), and 27.8 percent, 94.2 percent and
94.2 percent, respectively, of such voting power if the Over-allotment
Option is exercised in full (or 25.9 percent, 94.0 percent and 94.0 percent,
respectively, of such voting power if the Over-allotment Option is exercised
in full and the Selling Stockholder assumes in full the Company's portion of
the Over-allotment Option).

(6) Stonor is a corporation incorporated under the laws of Liberia. The sole
stockholder of Stonor is The Wroxton Trust (the 'Trust'). The sole trustee
of the Trust is Indosuez Trust Company (Cayman) Ltd. (the 'Trustee'). The
Trustee has sole investment power with regard to the property held in the
Trust, and therefore may also be deemed to be a beneficial owner of the
shares of the Company's Class B Common Stock listed above. Stonor has
contributed its shares of the Company's Class B Common Stock to a voting
trust of which Mr. Montrone is the sole trustee. Accordingly, Mr. Montrone
will have sole voting power with regard to the shares of the Company's Class
B Common Stock listed above.

(7) Includes 9,868,421 shares (4,868,421 shares after the Offerings) of Class B
Common Stock owned by Stonor of which Mr. Montrone may be deemed to be the
beneficial owner due to his position as the sole trustee of a voting trust
to which he and Stonor have contributed all of their shares of the Company's
Class B Common Stock. Until termination of the voting trust, Mr. Montrone
has sole voting power with regard to the shares held by the voting trust.
Mr. Montrone disclaims beneficial ownership of all shares beneficially owned
by Stonor. The voting trust terminates on the earlier of (i) March 31, 2005,
(ii) the withdrawal from the trust of all shares of Class B Common Stock by
one or both of Stonor or Mr. Montrone (which withdrawal is permitted by the
voting trust agreement in connection with a sale of shares by either
Stockholder in a public or private sale), (iii) the death or incapacity of
Mr. Montrone or (iv) the mutual agreement of Stonor and Mr. Montrone. In
March 1996, Mr. Montrone granted to the GRAT voting trust certificates
representing 4,934,210 shares of Class B Common Stock, or 33.5 percent of
the outstanding shares of Class B Common Stock and 22.2 percent of the
outstanding shares of Common Stock and Class B Common Stock outstanding
after the Offerings. Mr. Montrone and his wife, Sandra G. Montrone, are
co-trustees of the GRAT. By virtue of her position as co-trustee, Ms.
Montrone may be deemed the beneficial owner of all shares held by the GRAT.
In April 1996, the Company entered into a Stockholder Agreement with the
GRAT and Mr. Montrone pursuant to which the GRAT granted to the Company a
right of first refusal with respect to any transfer of shares of Common
Stock by the GRAT through March 1, 2001. In exchange, the Company agreed to
register for sale under the 1933 Act at any time beginning on March 1, 1997
and ending on March 1, 2001 shares of Common Stock which the GRAT may from
time to time distribute to Mr. Montrone or his assignees, although Mr.
Montrone would not be obligated to sell any such shares of Common Stock. The
Company subsequently entered into a similar agreement with Stonor.

CERTAIN RELATIONSHIPS AND TRANSACTIONS
Messrs. Montrone and Meister are Managing Directors of the Adviser, a
management company controlled by Mr. Montrone. On January 1, 1995, the Company
entered into an agreement with the Adviser to provide the Company with strategic
guidance and advice related to financings, security offerings, recapitalizations
and restructurings, tax, corporate secretarial, employee benefit services and
other administrative services as well as to provide advice regarding the
Company's automotive business. In 1996, Mr. Meister joined the Adviser with the
objective of enhancing its ability to provide these strategic services and to
develop and pursue acquisitions and business combinations designed to enhance
the long-term growth prospects and value of the Company.
Under its agreement with the Adviser, the Company has agreed to pay (and
has paid during 1995) the Adviser an annual fee of $5.5 million, payable
quarterly in advance, adjusted annually after 1995 for increases in the U.S.
Department of Labor, Bureau of Labor Statistics, Consumer Price Index. In
addition, in connection with any acquisition or business combination with
respect to which the Adviser advises the Company, the Company has agreed to pay
the Adviser additional fees comparable to those received by investment banking
firms for such services (subject to the approval of a majority of the
independent directors of the Company). The agreement extends through December
31, 2004. The agreement may be terminated by either party if the other party
ceases, or threatens to cease, to carry on its business, or commits a material
breach of the agreement which is not remedied within 30 days of notice of such
breach. The agreement may also be terminated by the Company if Mr. Montrone
ceases to hold, directly or indirectly, shares of the Company's capital stock
constituting at least 20 percent of the total of all shares of Common Stock and
Class B Common Stock then issued and outstanding. Prior to 1995 similar services
were provided by Bayberry Management Corp. ('Bayberry'), a management
corporation controlled by Mr. Montrone. During the years 1993 and 1994, the
Company paid fees totalling approximately $5.8 million and $6.2 million,
respectively, for the services provided by Bayberry. The agreement with Bayberry
terminated on December 31, 1994.
The terms of the agreement between the Company and the Adviser were not the
result of arm's length negotiations. Mr. Montrone, who controls both the Adviser
and the Company, negotiated the terms of the agreement and will receive
substantial economic benefits from the fees to be paid to the Adviser by the
Company. While there can be no assurance that the amount of fees to be paid by
the Company to the Adviser will not exceed the amount that the Company would
have to pay to obtain from unaffiliated third parties the services to be
provided by the Adviser, the Company believes that the employees of the Adviser
have extensive knowledge concerning the Company's business which would be
impractical for a third party to obtain. As a result, the Company has not
compared the fee payable to the Adviser with fees that might be charged by third
parties for similar services. The Company has adopted a policy that any
amendment to, waiver of, extension of or other change in the terms of the
agreement with the Adviser, as well as any transactions perceived to involve
potential conflicts of interest, will require the approval of a majority of the
independent directors of the Company.
Mr. Montrone, who will own (exclusive of the holdings of the GRAT)
approximately 33.5 percent of the outstanding shares of Class B Common Stock and
22.2 percent of the outstanding shares of Common Stock and Class B Common Stock
upon completion of the Offerings, may from time to time acquire shares of Common
Stock or warrants, options or rights to acquire shares of Common Stock in the
open market or in private transactions. Mr. Montrone and the Company have
entered into an agreement pursuant to which the Company agreed not to take any
actions attempting to interfere with any such acquisitions. In April 1996, the
Company entered into a Stockholder Agreement with the GRAT and Mr. Montrone
pursuant to which the GRAT granted to the Company a right of first refusal with
respect to any transfer of shares of Common Stock by the GRAT through March 1,
2001. In exchange, the Company agreed to register for sale under the 1933 Act at
any time beginning on March 1, 1997 and ending on March 1, 2001 shares of Common
Stock which the GRAT may from time to time distribute to Mr. Montrone or his
assignees, although Mr. Montrone would not be obligated to sell any such shares
of Common Stock. The Company subsequently entered into a similar agreement with
Stonor.
On April 22, 1994, Toledo Technologies and PDI each borrowed $10.0 million
pursuant to credit agreements between Wells Fargo Bank, as agent, and Toledo
Technologies and PDI, respectively. See 'Description of Indebtedness -- Toledo
Technologies Credit Facility' and ' -- PDI Credit Facility.' PDI loaned $9.0
million of these borrowings to a former stockholder of the Company, and Toledo
Technologies loaned $3.0 million of these borrowings to the same former
stockholder and $2.0 million to Mr. Montrone. The loans bear interest at the
fixed rate of 7.25 percent, payable quarterly, and provide for payment of
principal in ten equal installments commencing June 30, 1996 through December
31, 2000. Mr. Montrone prepaid the loan to him in March 1996. The former
stockholder has agreed that in the event that the Offerings are completed, the
loan to such former stockholder will be prepaid in full.

DESCRIPTION OF INDEBTEDNESS

The following are summaries of certain provisions of the long-term
indebtedness of the Company and its subsidiaries. These summaries are not
complete descriptions of such indebtedness and are qualified in their entirety
by reference to the agreements and other documents relating to such
indebtedness, which are filed as exhibits to the Registration Statement of which
this Prospectus is a part and may be obtained as described under 'Additional
Information.'

GENERAL CHEMICAL U.S. REVOLVING CREDIT FACILITY

Loans outstanding under General Chemical's $130 million U.S. Revolving
Credit Facility bear interest, which is due quarterly, at a rate equal to a
spread over a reference rate chosen by General Chemical from the lender's prime
rate and LIBOR options. As of March 31, 1996, there were $26.0 million in
borrowings outstanding under the U.S. Revolving Credit Facility and the rate of
interest on such loans was 6.2 percent.

General Chemical's obligations under the U.S. Revolving Credit Facility are
secured by (1) substantially all of the assets of General Chemical, (2) 65
percent of the capital stock of the parent of GC Canada, (3) General Chemical's
51 percent general partnership interest in GCSAP, and (4) all of the stock of
the other direct and indirect subsidiaries of General Chemical. Loans
outstanding under the U.S. Revolving Credit Facility will mature on March 31,
1999. The U.S. Revolving Credit Facility contains various restrictive covenants
and financial covenants, including, among other things, covenants requiring
General Chemical to maintain certain levels of cash flow coverage, consolidated
net worth and leverage. In addition, the U.S. Revolving Credit Facility
restricts the payment of dividends by General Chemical to the Company to
essentially 50 percent of General Chemical's consolidated net income.

In addition to events of default customary in agreements of this type, the
U.S. Revolving Credit Facility provides for an event of default upon a 'change
in control,' which is defined to include the failure of a former stockholder
and/or Mr. Montrone and certain of their affiliates, prior to the occurrence of
an initial public offering, to own directly or indirectly at least 50 percent of
the capital stock of General Chemical.

GENERAL CHEMICAL BANK TERM LOAN

The Bank Term Loan of $100 million requires 23 equal quarterly principal
installments of $4.3 million commencing February 4, 1996 through August 4, 2001.
The Bank Term Loan bears interest at a rate equal to a spread over a reference
rate chosen by General Chemical from various options. The rate in effect at
March 31, 1996 was 7.4 percent. The Bank Term Loan contains the same covenants
and events of default as the U.S. Revolving Credit Facility.

GENERAL CHEMICAL 9 1/4% SENIOR SUBORDINATED NOTES DUE 2003

In 1993, General Chemical issued $100 million of its 9 1/4% Senior
Subordinated Notes (the 'Senior Subordinated Notes'). Interest on the Senior
Subordinated Notes is due on each February 15 and August 15. The Senior
Subordinated Notes will mature on August 15, 2003, and are redeemable, at the
option of General Chemical, in whole or in part, at any time on or after August
15, 1998 at redemption prices beginning at 103.5 percent of principal amount on
August 15, 1998 and declining to 100 percent on August 15, 2001. Until August
15, 1996, General Chemical may redeem, at its option, the Senior Subordinated
Notes at 109.25 percent of the principal amount thereof plus accrued interest to
the date of redemption with the proceeds of one or more offerings of equity
securities, provided that at least $70 million in aggregate principal amount of
the Senior Subordinated Notes originally issued remain outstanding immediately
after any such redemption. In the event of a change of control of General
Chemical (which is defined substantially in the same manner as in the U.S.
Revolving Credit Agreement), each holder of Senior Subordinated Notes may
require General Chemical to repurchase the Senior Subordinated Notes it holds at
a price equal to 101 percent of the principal amount of the Senior Subordinated
Notes plus accrued and unpaid interest to the date of repurchase.

The Senior Subordinated Notes are unsecured obligations of General Chemical
subordinated in right of payment to all existing and future senior indebtedness
of General Chemical, including the obligations under the U.S. Revolving Credit
Facility.

The indenture under which the Senior Subordinated Notes were issued
contains various restrictive covenants, including a covenant that restricts the
payment of dividends by General Chemical to the Company to essentially 50
percent of General Chemical's consolidated net income.

GC CANADA 9.09% SENIOR NOTES DUE 1999

In 1992, GC Canada issued US $52 million of GC Canada Notes to certain
private investors pursuant to a note purchase agreement. The GC Canada Notes
bear interest at 9.09 percent per annum, which is payable on May 20 and November
20 of each year, with the entire principal amount due at maturity on May 20,
1999.

Subject to certain limitations and premium payments, the GC Canada Notes
may be prepaid, in whole or in part, at any time. At the option of GC Canada,
the GC Canada Notes may be redeemed, in whole or in part by payment of the
principal amount being prepaid (plus accrued interest) together with a
make-whole premium calculated using a discount rate equal to 0.5 percent plus
the then current yield on U.S. Government Securities having a weighted average
life to maturity similar to the GC Canada Notes.

Under the agreement relating to the GC Canada Notes, GC Canada is permitted
to pay essentially 100 percent of its consolidated earnings as dividends to
General Chemical. The GC Canada Notes Agreement provides for events of default
and limitations customary in agreements of this type, including requirements for
a minimum fixed charge coverage ratio, restrictions on the ability of GC Canada
and its subsidiaries to incur indebtedness, and prohibitions on certain mergers
or consolidations, asset sales, liens, investments and stock issuances.

GC CANADA REVOLVING CREDIT FACILITY

GC Canada entered into a $15 million (Canadian) revolving credit facility
on June 22, 1992. This facility bears interest at a rate equal to a spread over
a reference rate chosen by GC Canada from various options. Interest is due
monthly, and the facility expires on June 22, 1997, with annual renewal options
at the lender's discretion.

The GC Canada revolving credit facility is secured by all the receivables
and inventories of GC Canada and contains a covenant which prohibits the
impairment of security interests and other restrictive covenants and events of
default which are similar to the GC Canada Notes Agreement. As of March 31,
1996, there were no outstanding borrowings under the GC Canada revolving credit
facility.

TOLEDO TECHNOLOGIES CREDIT FACILITY

Toledo Technologies entered into a credit facility on April 22, 1994 which
provided for a $10 million term loan and a $5 million revolving credit facility.
Both facilities bear interest, which is due quarterly, at a rate equal to a
spread over a reference rate chosen by Toledo Technologies from the lender's
prime rate and LIBOR options. As of March 31, 1996, the interest rate on loans
outstanding for the term loan and revolving credit facility was 7.7 percent. The
Toledo Technologies credit facility is secured by all inventory, equipment,
fixtures, receivables and trademarks of Toledo Technologies, by a pledge by the
Company of Toledo Technologies' capital stock and other securities. The credit
facility contains various restrictive covenants and financial covenants,
including, among other things, covenants requiring Toledo Technologies to
maintain certain levels of consolidated net worth, cash flow coverage and
leverage. As of March 31, 1996, there was $6.3 million in borrowings outstanding
under the term loan facility and there was $2.5 million in borrowings
outstanding under the revolving credit facility. The term loan is subject to
semi-annual repayments which commenced December 31, 1994 and continue through
December 31, 1998, and the revolving credit facility expires December 31, 1998.
See 'Certain Relationships and Transactions.'

PDI CREDIT FACILITY

PDI entered into a credit facility on April 22, 1994, which provided for a
$10 million term loan and a $3 million revolving credit facility. Both
facilities bear interest, which is due quarterly, at a rate equal to a spread
over a reference rate chosen by PDI from the lender's prime rate and LIBOR
options. As of March 31, 1996, the interest rate on loans outstanding under the
term loan facility was 7.7 percent. The PDI credit facility is secured by all
inventory, equipment, fixtures, receivables and trademarks of PDI, by a pledge
by the Company of PDI's capital stock and other securities. The credit facility
contains various restrictive covenants and financial covenants including, among
other things, covenants requiring PDI to maintain certain levels of consolidated
net worth, cash flow coverage and leverage. As of March 31, 1996, there was $5.7
million in borrowings outstanding under the term loan facility and there were no
borrowings outstanding under the revolving credit facility. The term loan is
subject to semi-annual repayments which commenced December 31, 1994 and continue
through December 31, 1998, and the revolving credit facility expires December
31, 1998. See 'Certain Relationships and Transactions.'

BALCRANK CREDIT FACILITY

Balcrank entered into a $1 million revolving credit facility on April 22,
1994. The facility bears interest, which is due quarterly, at a rate equal to a
spread over the lender's prime rate. Interest is due quarterly in arrears. The
ability to borrow under the revolving credit facility expires April 30, 1997.
The Balcrank credit facility is secured by all inventory, equipment, fixtures,
receivables and trademarks of Balcrank. The credit facility contains various
restrictive covenants and financial covenants, including, among other things,
covenants requiring Balcrank to maintain certain levels of consolidated net
worth and cash flow coverage. As of March 31, 1996, there were no borrowings
outstanding under this revolving credit facility.

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

Upon consummation of the Offerings, the authorized capital stock of the
Company will consist of 100,000,000 shares of Common Stock, 40,000,000 shares of
Class B Common Stock and 10,000,000 shares of undesignated preferred stock
issuable in series by the Board of Directors (the 'Preferred Stock'). Upon
consummation of the Offerings, 7,500,000 shares of Common Stock will be issued
and outstanding, 14,736,842 shares of Class B Common Stock will be issued and
outstanding and no shares of Preferred Stock will be issued or outstanding. The
following summary description of the capital stock of the Company is qualified
in its entirety by reference to the Company's Amended and Restated Certificate
of Incorporation (the 'Certificate'), and By-Laws, as amended (the 'By-laws'),
copies of which are filed as exhibits to the Registration Statement of which
this Prospectus is a part. The Certificate and By-laws have been adopted by the
stockholders and the Board of Directors of the Company.

Common Stock and Class B Stock

Upon filing of the Certificate with the Secretary of State of Delaware
prior to the consummation of the Offerings, each share of Common Stock then
outstanding will be automatically converted into one share of Class B Common
Stock. The Common Stock and Class B Common Stock are substantially identical,
except for disparity in voting power. See 'Risk Factors -- Voting Control by and
Relationship with Principal Stockholders; Anti-takeover Effect of Dual Classes
of Common Stock.' Each share of Common Stock entitles the holder of record to
one vote and each share of Class B Common Stock entitles the holder to ten votes
at each annual or special meeting of stockholders, in the case of any written
consent of stockholders, and for all other purposes. The holders of Common Stock
and Class B Common Stock will vote as a single class on all matters submitted to
a vote of the stockholders, except as otherwise provided by law. Neither the
holders of Common Stock nor the holders of Class B Common Stock have cumulative
voting or preemptive rights. The Company may, as a condition to counting the
votes cast by any holder of Class B Common Stock at any annual or special
meeting of stockholders, in the case of any written consent of stockholders, or
for any other purpose, require such holder to furnish such affidavits or other
proof as it may reasonably request to establish that the Class B Common Stock
held by such holder has not, by virtue of the provisions of the Certificate,
been automatically converted into Common Stock, as discussed below.

The holders of Common Stock and Class B Common Stock will be entitled to
receive dividends and other distributions as may be declared thereon by the
Board of Directors of the Company out of assets or funds of the Company legally
available therefor, subject to the rights of the holders of any series of
Preferred Stock and any other provision of the Certificate. The Certificate
provides that if at any time a cash dividend or other distribution in cash or
other property is paid on either the Common Stock or the Class B Common Stock, a
dividend or other distribution in cash or other property will also be paid on
the Class B Common Stock or Common Stock, as the case may be, in an equal amount
per share. The Certificate provides that if dividends are declared that are
payable in shares of Common Stock or Class B Common Stock, such dividends shall
be payable at the same rate on both classes of stock, provided that the
dividends payable in shares of Common Stock shall be payable only to holders of
Common Stock and the dividends payable in shares of Class B Common Stock shall
be payable only to holders of Class B Common Stock. The Certificate provides
that shares of Common Stock or Class B Stock may not be split up, subdivided,
combined or reclassified, unless at the same time the shares of the other class
are also split up, subdivided, combined or reclassified in a manner which
maintains the same proportionate equity ownership between the holders of Common
Stock and Class B Common Stock as existed immediately prior to the transaction.

In the event of any liquidation, dissolution or winding up of the Company,
the holders of Common Stock and the holders of Class B Common Stock will be
entitled to receive the assets and funds of the Company available for
distribution after payments to creditors and to the holders of any Preferred
Stock of the Company that may at the time be outstanding, in proportion to the
number of shares held by them, respectively, without regard to class.

The Certificate provides that no person holding record or beneficial
ownership of shares of Class B Common Stock (a 'Class B Holder') may transfer,
and the Company will not register the transfer of, such shares of Class B Common
Stock, except to a Permitted Transferee. A Permitted Transferee generally means
an affiliate of the Class B Holder. In certain circumstances set forth in the
Certificate, changes in ownership or control of a Class B Holder will result in
the automatic conversion of such holder's Class B Common Stock into Common
Stock. The Certificate also provides that the Company may require as a condition
to registering the transfer of any shares of Class B Common Stock the furnishing
of such affidavits and other proof as the Company reasonably may request to
establish that such proposed transferee is a Permitted Transferee. In addition,
upon any purported transfer of shares of Class B Common Stock not permitted
under the Certificate, all shares of Class B Common Stock purported to be so
transferred will be deemed to be converted into shares of Common Stock, and
stock certificates formerly representing such shares of Class B Common Stock
will thereupon and thereafter be deemed to represent an identical number of
shares of Common Stock.

Class B Holders may convert each share of such Class B Common Stock at any
time and from time to time into one fully paid and non-assessable share of
Common Stock. The Certificate requires that the Company reserve and keep
available sufficient shares of Common Stock for issuance in connection with such
conversion rights. Following the original automatic conversion into Class B
Common Stock, shares of Common Stock are not convertible into shares of Class B
Common Stock.

In the event of any corporate merger, consolidation, purchase or
acquisition of property or stock or other reorganization in which any
consideration is to be received by the holders of Common Stock or the Class B
Holders, the Class B Holders and the holders of Common Stock will receive the
same consideration on a per share basis.

All outstanding shares of Class B Common Stock shall automatically, without
further act or deed on the part of this Company or any other person, be
converted into shares of Common Stock on a share-for-share basis at such time as
the total number of shares of Class B Common Stock issued and outstanding
constitutes less than 10 percent of the total of all shares of Common Stock and
Class B Common Stock then issued and outstanding. Upon any such conversion,
stock certificates formerly representing shares of Class B Common Stock will
thereupon and thereafter be deemed to represent an identical number of shares of
Common Stock.

Except as expressly set forth in the Certificate, the rights of the holders
of Common Stock and the rights of the Class B Holders are in all respects
identical.

The Common Stock has been approved for listing, subject to official notice
of issuance, on the NYSE under the trading symbol 'GCG.' All outstanding shares
of Common Stock, including the Shares offered hereby, are or will be fully paid
and non-assessable.

Undesignated Preferred Stock

The Board of Directors of the Company is authorized, without further action
of the stockholders of the Company, to issue up to 10,000,000 shares of
Preferred Stock in classes or series and to fix the designations, powers,
preferences and the relative, participating, optional or other special rights of
the shares of each series and any qualifications, limitations and restrictions
thereon as set forth in the Certificate. Any such Preferred Stock issued by the
Company may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock.

The purpose of authorizing the Board of Directors to issue Preferred Stock
is, in part, to eliminate delays associated with a stockholder vote on specific
issuances. The issuance of Preferred Stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring or seeking to acquire, a significant portion of the outstanding
stock of the Company.

CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION AND BY-LAWS

General

A number of provisions of the Company's Certificate and By-laws deal with
matters of corporate governance and the rights of stockholders. Certain of these
provisions may be deemed to have an antitakeover effect and may discourage
takeover attempts not first approved by the Board of Directors (including
takeovers which certain stockholders may deem to be in their best interests). To
the extent takeover attempts are discouraged, temporary fluctuations in the
market price of the Company's Common Stock, which may result from actual or
rumored takeover attempts, may be inhibited. These provisions, together with the
staggered nature of the Board of Directors, also could delay or frustrate the
removal of incumbent directors or the assumption of control by stockholders,
even if such removal or assumption would be beneficial to stockholders of the
Company. These provisions also could discourage or make more difficult a merger,
tender offer or proxy contest, even if they could be favorable to the interests
of stockholders, and could potentially depress the market price of the Common
Stock. The Board of Directors of the Company believes that these provisions are
appropriate to protect the interests of the Company and all of its stockholders.
The Board of Directors has no present plans to adopt any other measures or
devices which may be deemed to have an 'antitakeover effect.'

Meetings of Stockholders

The Company's Certificate and By-laws provide that a special meeting of
stockholders may be called only by the Chairman of the Board of Directors, the
President or a majority or directors, unless otherwise required by law. The
Certificate and By-laws provide that only those matters set forth in the notice
of the special meeting may be considered or acted upon at that special meeting,
unless otherwise provided by law. In addition, the Company's By-laws set forth
certain advance notice and informational requirements and time limitations on
any director nomination or any new business which a stockholder wishes to
propose for consideration at an annual meeting of stockholders.

Indemnification and Limitation of Liability

The By-laws of the Company provide that directors and officers of the
Company shall be, and at the discretion of the Board of Directors non-officer
employees may be, indemnified by the Company to the fullest extent authorized by
Delaware law, as it now exists or may in the future be amended, against all
expenses and liabilities reasonably incurred in connection with service for or
on behalf of the Company and further permits the advancing of expenses incurred
in defending claims. The By-laws of the Company also provide that the right of
directors and officers to indemnification shall be a contract right and shall
not be exclusive of any other right now possessed or hereafter acquired under
any By-law, agreement, vote of stockholders or otherwise. The Certificate
contains a provision permitted by Delaware law that generally eliminates the
personal liability of directors for monetary damages for breaches of their
fiduciary duty, including breaches involving negligence or gross negligence in
business combinations, unless the director has breached his duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or a knowing
violation of law, paid a dividend or approved a stock repurchase in violation of
the Delaware General Corporation Law or obtained an improper personal benefit.
This provision does not alter a director's liability under the federal
securities laws. In addition, this provision does not affect the availability of
equitable remedies, such as an injunction or rescission, for breach of fiduciary
duty.

Amendment of the Certificate

The Certificate provides that an amendment thereof must first be approved
by a majority of the members of the Board of Directors and (with certain
exceptions) thereafter approved by the affirmative vote of a majority of the
total votes eligible to be cast by holders of voting stock, voting together as a
single class; provided, however, that the affirmative vote of 80 percent of the
total votes eligible to be cast by the holders of voting stock, voting together
as a single class, is required to amend provisions relating to the limitation of
liability of directors and amendments to the Certificate.

Amendment of By-laws

The Certificate provides that the By-laws may be adopted, amended or
repealed by the Board of Directors and any By-laws adopted by the directors may
be altered, amended or repealed by the Directors or by the stockholders. Such
action by the Board of Directors shall require the affirmative vote of a
two-thirds of the directors then in office. Such action by the stockholders of
the Company shall require the affirmative vote of at least eighty percent of the
total votes eligible to be cast by holders of voting stock.

Statutory Business Combination Provision

Although the Certificate and the By-laws contain provisions with the
antitakeover effects mentioned above, the Company has, in the Certificate,
expressly elected not to be governed by Section 203 of the Delaware General
Corporation Law ('Section 203'), which prohibits certain business combinations
with certain stockholders for a period of three years after they acquire 15
percent or more of the outstanding voting stock of a corporation.

TRANSFER AGENT AND REGISTRAR

The Company has selected Chemical Mellon Shareholder Services, LLC as the
transfer agent and registrar for the Company's Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, the Company will have 7,500,000 shares of
Common Stock and 14,736,842 shares of Class B Common Stock outstanding
(excluding 850,000 shares of Common Stock issuable in respect of units granted
under the Company's Restricted Unit Plan). Of the total shares outstanding, the
7,500,000 shares of Common Stock sold in the Offerings will be freely tradable
without restriction or further registration under the 1933 Act, except for any
shares purchased by affiliates of the Company, which will be subject to the
limitations of Rule 144 under the 1933 Act. All of the remaining 14,736,842
shares of Class B Common Stock outstanding (the 'Restricted Securities') may be
converted into Common Stock and sold only pursuant to an effective registration
statement filed by the Company or an applicable exemption, including an
exemption under Rule 144 under the 1933 Act.

In general, Rule 144 as currently in effect provides that any person (or
persons whose shares are aggregated), including a person who may be deemed an
'affiliate' of the Company (as defined under the 1933 Act), whose Restricted
Securities have been fully paid for at least two years from the later of the
date of issuance by the Company or acquisition from an affiliate, is entitled to
sell, within any three-month period, a number of shares that does not exceed the
greater of (i) the average weekly trading volume on the New York Stock Exchange
during the four calendar weeks preceding the date on which notice of such sale
is filed with the Securities and Exchange Commission (the 'Commission') or (ii)
one percent of the shares of Common Stock and Class B Common Stock then
outstanding (approximately 222,368 shares immediately after the Offerings). In
addition, sales under Rule 144 are subject to certain other restrictions
regarding the manner of sale, required notice and availability of public
information concerning the Company. After three years have elapsed from the
later of the issuance of Restricted Securities by the Company or their
acquisition from an affiliate, such shares may be sold without limitation,
pursuant to Rule 144(k), by persons who have not been affiliates of the Company
for at least three months. Affiliates, including members of the Board of
Directors and senior management, continue to be subject to these limitations.
Shares of Common Stock granted to, among others, its employees, officers and
directors pursuant to written compensation plans or contracts (including under
the Restricted Unit Plan or the 1996 Stock Plan) or shares of Common Stock sold
by the Company upon exercise of options granted under such plans. In each case
in reliance on the registration thereof under the 1933 Act, may be resold
without limitation by such persons who are not affiliates, and by such persons
who are affiliates without complying with the Rule's holding period
requirements.

Contemporaneous with the completion of the Offerings, the Company intends
to file a registration statement under the 1933 Act to register the shares of
Common Stock to be issued under the Restricted Unit Plan or reserved for
issuance under the 1996 Stock Plan or the Restricted Unit Plan for Non-Employee
Directors. Such registration will become automatically effective upon filing.
Shares of Common Stock issued under the Restricted Unit Plan, the 1996 Stock
Plan or the Restricted Unit Plan for Non-Employee Directors after the effective
date of such registration statement generally will be available for sale in the
open market, subject to Rule 144 limitations with respect to affiliates.

Beginning 90 days after the date of this Prospectus, approximately
14,736,842 shares of Class B Common Stock (if it is converted into Common Stock)
will be eligible for sale pursuant to Rule 144, subject, in some cases, to the
volume limitations described above. However, the holders of all such shares have
agreed not to sell, directly or indirectly, any shares of Common Stock into
which the Class B Common Stock is convertible for a period of 180 days following
the date of this Prospectus without the prior written consent of Salomon
Brothers Inc (the 'Lock-Up Agreement').

In April 1996, the Company entered into a Stockholder Agreement with the
GRAT and Mr. Montrone pursuant to which the GRAT granted to the Company a right
of first refusal with respect to any transfer of shares of Common Stock by the
GRAT through March 1, 2001. In exchange, the Company agreed to register for sale
under the 1933 Act at any time beginning on March 1, 1997 and ending on March 1,
2001 shares of Common Stock which the GRAT may from time to time distribute to
Mr. Montrone or his assignees, although Mr. Montrone would not be obligated to
sell any such shares of Common Stock. The Company subsequently entered into a
similar agreement with Stonor.

UNDERWRITING

Subject to the terms and conditions set forth in the U.S. Underwriting
Agreement, the Company and the Selling Stockholder have agreed to sell to each
of the U.S. Underwriters named below, and each of the U.S. Underwriters, for
whom Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities Corporation,
Lazard Freres & Co. LLC and Morgan Stanley & Co. Incorporated are acting as
representatives (the 'U.S. Representatives'), has severally agreed to purchase
from the Company and the Selling Stockholder, the respective number of Shares
set forth opposite its name below:

NUMBER OF
U.S. UNDERWRITERS SHARES
- -------------------------------------------------------------------------------- ---------

Salomon Brothers Inc ........................................................... 862,500
Donaldson, Lufkin & Jenrette Securities Corporation............................. 862,500
Lazard Freres & Co. LLC......................................................... 862,500
Morgan Stanley & Co. Incorporated............................................... 862,500
Bear, Stearns & Co. Inc. ....................................................... 125,000
CS First Boston Corporation..................................................... 125,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc...................................... 125,000
Goldman, Sachs & Co............................................................. 125,000
Lehman Brothers Inc. ........................................................... 125,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................. 125,000
J.P. Morgan Securities Inc. .................................................... 125,000
Oppenheimer & Co., Inc.......................................................... 125,000
PaineWebber Incorporated........................................................ 125,000
Schroder Wertheim & Co. Incorporated............................................ 125,000
Smith Barney Inc................................................................ 125,000
S.G. Warburg & Co. Inc. ........................................................ 125,000
Dain Bosworth Incorporated...................................................... 90,000
EVEREN Securities, Inc.......................................................... 90,000
Fahnestock & Co. Inc. .......................................................... 90,000
Jefferies & Company, Inc. ...................................................... 90,000
McDonald & Company Securities, Inc. ............................................ 90,000
Raymond James & Associates, Inc................................................. 90,000
Sanford C. Bernstein & Co., Inc................................................. 65,000
The Buckingham Research Group Incorporated...................................... 65,000
Doft & Co. Inc. ................................................................ 65,000
First Equity Corporation of Florida............................................. 65,000
First Manhattan Co. ............................................................ 65,000
First of Michigan Corporation................................................... 65,000
Janney Montgomery Scott Inc. ................................................... 65,000
Edward D. Jones & Co............................................................ 65,000
The Ohio Company................................................................ 65,000
Pennsylvania Merchant Group Ltd................................................. 65,000
Ragen Mackenzie Incorporated.................................................... 65,000
Roney & Co...................................................................... 65,000
Sanders Morris Mundy Inc........................................................ 65,000
Scott & Stringfellow, Inc. ..................................................... 65,000
---------
Total...................................................................... 6,400,000
---------
---------

In the U.S. Underwriting Agreement, the several U.S. Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the 6,400,000 Shares offered hereby (other than Shares covered by the
over-allotment option described below) if any such Shares are purchased. In the
event of a default by any U.S. Underwriter, the U.S. Underwriting Agreement
provides that, in certain circumstances, purchase commitments of the
nondefaulting U.S. Underwriters may be increased or the U.S. Underwriting
Agreement may be terminated.

The U.S. Underwriters have agreed to purchase such Shares from the Company
and the Selling Stockholder at the public offering price set forth on the cover
page of this Prospectus and the Company and the Selling Stockholder have agreed
to pay the U.S. Underwriters the underwriting discount set forth on the cover
page of this Prospectus for each Share so purchased. The Company and the Selling
Stockholder have been advised by the U.S. Representatives that the several U.S.
Underwriters propose initially to offer such Shares to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price, less a concession not in excess of $.65 per Share. The
U.S. Underwriters may allow, and such dealers may reallow, a concession not in
excess of $.10 per Share to other dealers. After the Offerings, the public
offering price and such concessions may be changed. The U.S. Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

To the extent that the U.S. Underwriters exercise such option, each U.S.
Underwriter will have a firm commitment, subject to certain conditions, to
purchase the same proportion of the option Shares as the number of Shares to be
purchased and offered by such U.S. Underwriter in the above table bears to the
total number of Shares initially offered by the U.S. Underwriters.

The Company and the Selling Stockholder have entered into an International
Underwriting Agreement with the International Underwriters named therein, for
whom Salomon Brothers International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation, Lazard Capital Markets and Morgan Stanley & Co.
International Limited are acting as representatives (the 'International
Representatives'), providing for the concurrent offer and sale of 1,100,000
Shares outside of the United States and Canada.

The Selling Stockholder and the Company have granted to the International
Underwriters options, exercisable during the 30-day period after the date of
this Prospectus, to purchase up to 110,000 and 55,000 additional Shares,
respectively, at the same public offering price per Share to cover
over-allotments, if any. The Selling Stockholder has the right to assume all or
any part of the Company's portion of the Over-allotment Option. The Selling
Stockholder and the Company have agreed to pay the International Underwriters
the underwriting discount set forth on the cover page of this Prospectus for
each additional Share so purchased. To the extent that the International
Underwriters exercise such options, each International Underwriter will have a
firm commitment, subject to certain conditions, to purchase the same proportion
of the option Shares as the number of Shares as the number of Shares to be
purchased and offered by such International Underwriter bears to the total
number of Shares initially offered by the International Underwriters.

The offering price and underwriting discount for the U.S. Offering and the
International Offering will be identical. The closing of each of the Offerings
is conditioned on the closing of the other Offering.

The U.S. Underwriters and the International Underwriters have entered into
an Agreement Between Underwriters and Managers (the 'Agreement Between')
pursuant to which each U.S. Underwriter has severally agreed that, as part of
the distribution of the 6,400,000 Shares offered by the U.S. Underwriters (a) it
is not purchasing any Shares for the account of anyone other than a United
States or Canadian Person, (b) it has not offered or sold, and will not offer or
sell, directly or indirectly, any such Shares or distribute this Prospectus to
any person outside the United States or Canada or to anyone other than a United
States or Canadian Person and (c) any dealer to whom it may sell any of the
Shares will represent and agree that it will comply with the restrictions set
forth in (a) and (b) and will not offer, sell, resell or deliver, directly or
indirectly, any of the Shares or distribute any prospectus relating to the
Shares to any other dealer who does not so represent and agree. Each
International Underwriter has severally agreed that, as part of the distribution
of the 1,100,000 Shares

offered by the International Underwriters, (i) it is not purchasing any Shares
for the account of any United States or Canadian Person, (ii) it has not offered
or sold, and will not offer or sell, directly or indirectly, any Shares or
distribute any Prospectus relating to the International Offering to any person
within the United States or Canada or to any United States or Canadian Person
and (iii) any dealer to whom it may sell any of the Shares will represent and
agree that it will comply with the restrictions set forth in (i) and (ii) and
will not offer, sell, resell or deliver, directly or indirectly, any of the
Shares or distribute any prospectus relating to the Shares to any other dealer
who does not so represent and agree.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between. As used in the
Agreement Between, 'United States' means the United States of America (including
the District of Columbia) and its territories, possessions and other areas
subject to its jurisdiction, 'Canada' means Canada, its provinces, territories,
possessions and other areas subject to its jurisdiction and 'United States or
Canadian Person' means any person who is a national or resident of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada, or any political
subdivision thereof, any estate or trust the income of which is subject to
United States or Canadian federal income taxation, regardless of its source
(other than a foreign branch of any United States or Canadian Person), and
includes any United States or Canadian branch of a person other than a United
States or Canadian Person.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of Shares as may
be mutually agreed. The price of any Shares so sold shall be the initial public
offering price, less an amount not greater than the concession to securities
dealers. To the extent that there are sales between the U.S. Underwriters and
the International Underwriters pursuant to the Agreement Between, the number of
Shares initially available for sale by the U.S. Underwriters or by the
International Underwriters may be more or less than the amount appearing on the
cover page of this Prospectus.

Pursuant to the Agreement Between, each U.S. Underwriter and each
International Underwriter has represented that (i) it has not offered or sold
and during the period of six months from the closing date of the Offerings will
not offer or sell any Shares to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which do not constitute an offer to the
public in the United Kingdom for the purposes of the Public Offers of Securities
Regulations 1995; (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 of Great Britain with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the issue of the Shares to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 of Great Britain or is a person to whom such document
may otherwise lawfully be issued or passed on.

Pursuant to the Lock-Up Agreement, the Company, the Selling Stockholder and
certain other parties have agreed, subject to certain limited exceptions, not to
sell, or otherwise dispose of, or announce the offering of, any Shares, or any
securities convertible into, or exchangeable for, or exercisable into, Shares
for a period of 180 days from the date hereof without the prior written consent
of Salomon Brothers Inc. See 'Shares Eligible for Future Sale.'

Pursuant to the Agreement Between, each U.S. Underwriter has represented
that it has not offered or sold, and has agreed not to offer or sell, any
Shares, directly or indirectly, in Canada in contravention of the securities
laws of Canada or any province or territory thereof and has represented that any
offer of Shares in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in which
such offer is made. Each U.S. Underwriter has further agreed to send to any
dealer who purchases from it any Shares a notice stating in substance that, by
purchasing such Shares, such dealer represents and agrees that it has not
offered or sold, and will not offer or sell, directly or indirectly, any of such
Shares in Canada in contravention of the securities laws of Canada or any
province or territory thereof and that any offer

of Shares in Canada or any province or territory thereof and that any offer of
Shares in Canada will be made only pursuant to an exemption from the requirement
to file a prospectus in the province or territory of Canada in which such offer
is made, and that such dealer will deliver to any other dealer to whom it sells
any of such Shares a notice to the foregoing effect.

The U.S. and International Underwriting Agreements provide that the Company
and the Selling Stockholder will indemnify the several U.S. Underwriters and
International Underwriters against certain liabilities, including liabilities
under the Securities Act, or contribute to payments the U.S. Underwriters and
International Underwriters may be required to make in respect thereof.

The U.S. Underwriters have reserved for sale, at the initial public
offering price, approximately 160,000 of the Shares offered hereby to directors,
officers and employees of the Company, their business affiliates and related
parties, in each case as such persons have expressed an interest in purchasing
such Shares in the Offerings. The number of Shares available for sale to the
general public will be reduced to the extent such persons purchase such reserved
Shares. Any reserved Shares not so purchased will be offered by the U.S.
Underwriters to the general public on the same basis as the other Shares offered
hereby.

Prior to the Offerings, there has been no public market for the Shares.
Accordingly, the initial public offering price for the Shares has been
determined by negotiation among the Company, the Selling Stockholder, the U.S.
Representatives and the International Representatives. Among the factors to be
considered in determining the initial public offering price will be the
Company's record of operations, its current financial condition, its future
prospects, the market for its products, the experience of management, the
economic conditions of the Company's industry in general, the general condition
of the equity securities market, the demand for similar securities of companies
considered comparable to the Company and other relevant factors. There can be no
assurance, however, that the prices at which Shares will sell in the public
market after the Offerings will not be lower than the price at which they are
sold by the U.S. Underwriters and the International Underwriters.

LEGAL MATTERS

Certain legal matters with respect to the Shares will be passed on for the
Company by Goodwin, Procter & Hoar LLP, Boston, Massachusetts, and for the
Underwriters by Latham & Watkins, New York, New York.

EXPERTS

The Consolidated Financial Statements of the Company and its Subsidiaries
as of December 31, 1994 and 1995, and for each of the three years in the period
ended December 31, 1995, included in this Prospectus and related financial
statement schedule of the Company included elsewhere in the Registration
Statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing in this Prospectus and elsewhere in the
Registration Statement, and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.

THE GENERAL CHEMICAL GROUP INC.
INDEX TO
FINANCIAL STATEMENTS

PAGE NO.
--------

Independent Auditors' Report -- Deloitte & Touche LLP.................................................. F-2
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and 1995 and
(unaudited) for the three months ended March 31, 1995 and 1996....................................... F-3
Consolidated Balance Sheets at December 31, 1994 and 1995 and (unaudited) at March 31, 1996............ F-4
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and
(unaudited) for the three months ended March 31, 1995 and 1996....................................... F-5
Consolidated Statements of Changes in Equity (Deficit) for the years ended December 31, 1993, 1994 and
1995 and (unaudited) for the three months ended March 31, 1996....................................... F-6
Notes to the Consolidated Financial Statements......................................................... F-7

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
THE GENERAL CHEMICAL GROUP INC.:

We have audited the accompanying consolidated balance sheets of The General
Chemical Group Inc. and subsidiaries as of December 31, 1994 and 1995, and the
related consolidated statements of operations, cash flows and changes in equity
(deficit) for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of The General Chemical Group Inc.
and subsidiaries at December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Parsippany, New Jersey
February 23, 1996 (April 15, 1996 as to the Richmond Works
July 26, 1993 Incident described in Note 5)

F-2

THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net revenues............................................ $518,718 $525,912 $550,871 $128,661 $144,571
Cost of sales........................................... 363,268 361,637 387,255 92,850 103,060
Selling, general and administrative expense............. 58,330 57,034 56,619 13,340 13,981
Richmond incident costs................................. -- 9,000 -- -- --
-------- -------- -------- -------- --------
Operating profit........................................ 97,120 98,241 106,997 22,471 27,530
Interest expense........................................ 37,917 33,006 26,704 6,802 6,464
Interest income......................................... 3,019 2,487 2,937 811 608
Foreign currency transaction (gains) losses............. 1,719 4,004 (1,382) (142) (51)
Other expense (income), net............................. (651) 63 735 61 (86)
-------- -------- -------- -------- --------
Income before minority interest, income taxes and
extraordinary item.................................... 61,154 63,655 83,877 16,561 21,811
Minority interest....................................... 17,733 16,957 19,458 4,139 6,458
-------- -------- -------- -------- --------
Income before income taxes and extraordinary item....... 43,421 46,698 64,419 12,422 15,353
Income tax provision.................................... 16,185 18,393 43,326 4,532 6,037
-------- -------- -------- -------- --------
Income before extraordinary item........................ 27,236 28,305 21,093 7,890 9,316
Extraordinary item -- loss from extinguishment of debt
(net of tax).......................................... (2,085) (8,203) -- -- --
-------- -------- -------- -------- --------
Net income......................................... $ 25,151 $ 20,102 $ 21,093 $ 7,890 $ 9,316
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Income (loss) per common share:
Income before extraordinary item................... $ 1.38 $ 1.43 $ 1.07 $ .40 $ .47
Extraordinary item................................. (.11) (.41) -- -- --
-------- -------- -------- -------- --------
Net income.................................... $ 1.27 $ 1.02 $ 1.07 $ .40 $ .47
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

See the accompanying notes to the consolidated financial statements.

F-3

THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED BALANCE SHEETS

DECEMBER 31, MARCH 31,
---------------------- -----------
1994 1995 1996
--------- --------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 28,701 $ 19,025 $ 21,623
Receivables, net................................................... 90,034 93,231 103,391
Inventories........................................................ 36,245 41,970 43,615
Deferred income taxes.............................................. 13,003 14,041 14,436
Other current assets............................................... 1,224 1,485 1,648
--------- --------- -----------
Total current assets.......................................... 169,207 169,752 184,713
Property, plant and equipment, net...................................... 209,066 215,557 216,796
Other assets............................................................ 55,354 46,016 43,822
--------- --------- -----------
Total assets.................................................. $ 433,627 $ 431,325 $ 445,331
--------- --------- -----------
--------- --------- -----------

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable................................................... $ 50,425 $ 50,987 $ 50,171
Accrued liabilities................................................ 78,479 83,018 82,848
Income taxes payable............................................... 7,131 4,238 7,923
Current portion of long-term debt.................................. 3,000 21,892 19,892
--------- --------- -----------
Total current liabilities..................................... 139,035 160,135 160,834
Long-term debt.......................................................... 301,750 269,603 268,185
Other liabilities....................................................... 182,081 188,645 188,737
--------- --------- -----------
Total liabilities............................................. 622,866 618,383 617,756
--------- --------- -----------
Minority interest....................................................... 27,592 28,278 33,634
--------- --------- -----------
Equity (deficit):
Preferred stock, $.01 par value; authorized: 10,000,000 shares;
issued and outstanding: none..................................... -- -- --
Common stock, $.01 par value; authorized: 50,000,000 shares; issued
and outstanding: 19,736,842 shares............................... 197 197 197
Capital deficit.................................................... (237,140) (237,140) (237,140)
Foreign currency translation adjustments........................... (1,414) (1,362) (1,401)
Retained earnings.................................................. 21,526 22,969 32,285
--------- --------- -----------
Total equity (deficit)........................................ (216,831) (215,336) (206,059)
--------- --------- -----------
Total liabilities and equity (deficit)........................ $ 433,627 $ 431,325 $ 445,331
--------- --------- -----------
--------- --------- -----------

See the accompanying notes to the consolidated financial statements.

F-4

THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- -------- -------- --------
(IN THOUSANDS) (UNAUDITED)

Cash flows from operating activities:
Net income.................................................. $ 25,151 $ 20,102 $ 21,093 $ 7,890 $ 9,316
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.......................... 28,319 26,700 28,258 7,230 7,539
Loss on extinguishment of debt......................... 3,441 13,570 -- -- --
Net (gain) loss on disposition of long-term assets..... (959) 1,023 950 3 85
Unrealized exchange (gain) loss........................ 2,106 3,101 (1,586) (160) 67
Changes in assets and liabilities:
(Increase) decrease in receivables..................... 2,029 (13,894) (2,631) 8,147 (10,657)
(Increase) decrease in inventories..................... 5,032 755 (5,406) (1,754) (1,659)
Increase (decrease) in accounts payable................ (1,755) 3,922 315 (5,230) (806)
Increase (decrease) in accrued liabilities............. 10,600 (2,371) 4,379 (3,540) (94)
Increase (decrease) in income taxes payable............ 6,837 (5,599) (2,866) 1,969 3,673
Increase (decrease) in other assets and liabilities.... 12,410 7,297 13,279 994 (133)
Increase (decrease) in minority interest............... (6,662) (2,179) 686 2,893 5,356
--------- --------- -------- -------- --------
Net cash provided by operating activities......... 86,549 52,427 56,471 18,442 12,687
--------- --------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures........................................ (20,221) (28,503) (34,093) (7,162) (8,622)
Net sales of short-term investments......................... 21,293 -- -- -- --
Proceeds from sales or disposals of long-term assets........ 1,401 183 577 9 --
(Loans to) payments from related parties.................... -- (14,000) -- -- 2,000
Cash acquired in excess of purchase price of acquisition.... -- 2,426 -- -- --
--------- --------- -------- -------- --------
Net cash provided by (used for) investing
activities...................................... 2,473 (39,894) (33,516) (7,153) (6,622)
--------- --------- -------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt................................ 178,374 243,964 6,200 1,300 5,000
Repayment of long-term debt................................. (244,080) (257,214) (19,455) (9,305) (8,418)
Dividends................................................... (13,730) (13,800) (19,650) (2,700) --
--------- --------- -------- -------- --------
Net cash used for financing activities............ (79,436) (27,050) (32,905) (10,705) (3,418)
--------- --------- -------- -------- --------
Effect of exchange rate changes on cash.......................... (674) (600) 274 39 (49)
--------- --------- -------- -------- --------
Increase (decrease) in cash and cash equivalents................. 8,912 (15,117) (9,676) 623 2,598
Cash and cash equivalents at beginning of period................. 34,906 43,818 28,701 28,701 19,025
--------- --------- -------- -------- --------
Cash and cash equivalents at end of period....................... $ 43,818 $ 28,701 $ 19,025 $ 29,324 $ 21,623
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
Supplemental information:
Cash paid for income taxes.................................. $ 19,199 $ 23,347 $ 22,704 $ 2,743 $ 2,268
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------
Cash paid for interest...................................... $ 34,510 $ 31,307 $ 25,543 $ 7,867 $ 7,299
--------- --------- -------- -------- --------
--------- --------- -------- -------- --------

See the accompanying notes to the consolidated financial statements.

F-5

THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
AND (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1996

FOREIGN
CURRENCY
COMMON CAPITAL TRANSLATION RETAINED
STOCK DEFICIT ADJUSTMENTS EARNINGS TOTAL
------ --------- ----------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Balance at December 31, 1992.................. $-- $(237,140) $ (828) $ -- $(237,968)
Net income............................... 25,151 25,151
Dividends (Per Share $.49)............... (9,730) (9,730)
Foreign currency translation............. (504) (504)
------ --------- ----------- -------- ---------
Balance at December 31, 1993.................. -- (237,140) (1,332) 15,421 (223,051)
Net income............................... 20,102 20,102
Dividends (Per Share $.70)............... (13,800) (13,800)
Stock split in the form of dividend...... 197 (197) --
Foreign currency translation............. (82) (82)
------ --------- ----------- -------- ---------
Balance at December 31, 1994.................. 197 (237,140) (1,414) 21,526 (216,831)
Net income............................... 21,093 21,093
Dividends (Per Share $1.00).............. (19,650) (19,650)
Foreign currency translation............. 52 52
------ --------- ----------- -------- ---------
Balance at December 31, 1995.................. 197 (237,140) (1,362) 22,969 (215,336)
Net income (unaudited)................... 9,316 9,316
Foreign currency translation
(unaudited)............................ (39) (39)
------ --------- ----------- -------- ---------
Balance at March 31, 1996 (unaudited)......... $197 $(237,140) $(1,401) $ 32,285 $(206,059)
------ --------- ----------- -------- ---------
------ --------- ----------- -------- ---------

See the accompanying notes to the consolidated financial statements.

F-6

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The General Chemical Group Inc. (the 'Company') formerly known as NHO,
Inc., is a Delaware corporation formed in 1988. In January 1989, the Company
acquired New Hampshire Oak, Inc. ('New Hampshire Oak'). Through March 31, 1994,
the Company operated primarily through two wholly-owned subsidiaries, General
Chemical Corporation ('GCC') and Exeter Oak Inc. ('Exeter'). On April 1, 1994,
Exeter contributed certain assets and liabilities to its subsidiaries: Toledo
Technologies, Inc. ('Toledo'), Balcrank Products, Inc. ('Balcrank'), and
Printing Developments, Inc. ('PDI'). Exeter was then merged with its parent
company, New Hampshire Oak.

The Company is a diversified manufacturing company predominantly engaged in
the production of inorganic chemicals, with manufacturing facilities located in
the United States and Canada. Through its Chemical Segment, the Company is a
leading producer of soda ash in North America, and a major North American
supplier of calcium chloride, sulfuric acid regenerative services, fine
chemicals, water treatment chemicals, printing plates and chemicals, and
electronic chemicals to a broad range of industrial and municipal customers. The
Chemical Segment accounted for approximately 87 percent of the Company's
consolidated 1995 net revenues. Through its Manufacturing Segment, the Company
manufactures precision and highly engineered stamped and machined metal products
with an emphasis on automotive engine parts as well as fluid handling equipment,
manual controls and trailer hitches for the automotive market, which combined
accounted for approximately 13 percent of the Company's consolidated 1995 net
revenues.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

The consolidated financial statements include the accounts of the Company
and of all majority owned subsidiaries and General Chemical (Soda Ash) Partners
('GCSAP') of which the Company indirectly owns 51 percent. Minority interests
relate solely to partnerships, primarily GCSAP, for which the Company has a
controlling interest. Intercompany balances and transactions are eliminated in
consolidation.

Inventories are valued at the lower of cost or market, using primarily the
last-in, first-out ('LIFO') method for domestic production inventories and the
first-in, first-out ('FIFO') or average-cost method for all other inventories.
Production inventory costs include material, labor and factory overhead.

Property, plant and equipment are carried at cost. Mines and machinery and
equipment of GCSAP are depreciated using the units-of-production method. All
other plant and equipment are depreciated principally using the straight-line
method, using estimated lives which range from 3 to 35 years. For tax purposes,
depreciation is computed under prescribed methods.

The Company recognizes deferred tax assets and liabilities based on
differences between financial statement and tax bases of assets and liabilities
using presently enacted tax rates.

Accruals for environmental liabilities are recorded based on current
interpretations of environmental laws and regulations when it is probable that a
liability has been incurred and the amount of such a liability can be reasonably
estimated.

The Company provides for the expected costs to be incurred for the eventual
reclamation of mining properties pursuant to local law. Land reclamation costs
are being provided for over the estimated remaining life of the reserves
currently under lease.

The Company does not hold or issue financial instruments for trading
purposes. Amounts to be paid or received under interest rate swap agreements are
recognized as increases or reductions in interest expense in the periods in
which they accrue.

F-7

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

The financial statements of the foreign subsidiaries of the Company have
been translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards No. 52.

For financial statement purposes, all highly liquid instruments purchased
with a maturity of three months or less are considered to be cash equivalents.

The capital deficit at December 31, 1992 of $237,140 arose as a result of
dividends and distributions exceeding accumulated earnings and capital
contributions. Dividends in excess of retained earnings at the time dividends
are declared are charged to the capital deficit component of equity (deficit).

On October 17, 1994, the Board of Directors approved an amendment to the
Company's Certificate of Incorporation to effect a 202,994.4539 per share stock
dividend. All share and per share information has been retroactively restated to
give effect to such stock dividend.

The Company evaluates the carrying value of its long-lived assets whenever
there is a significant change in the use of an asset and adjusts the carrying
value, if necessary, to reflect the amount recoverable through future
operations.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of ('FAS 121'). The Company is required
to adopt FAS 121 in 1996. This statement will require the Company to review and
adjust the carrying amount of long-lived assets and certain intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company does not expect
that the adoption of FAS 121 will have a material effect on the Company's
results of operations or financial condition.

Certain prior period amounts have been reclassified to conform with the
current presentation.

NOTE 2. INCOME TAXES

Income before income taxes and extraordinary item is as follows:

YEARS ENDED DECEMBER 31,
-----------------------------
1993 1994 1995
------- ------- -------

United States....................................................... $29,556 $32,748 $40,644
Foreign............................................................. 13,865 13,950 23,775
------- ------- -------
Total.......................................................... $43,421 $46,698 $64,419
------- ------- -------
------- ------- -------

The income tax provision consists of:

YEARS ENDED DECEMBER 31,
-----------------------------
1993 1994 1995
------- ------- -------

United States:
Current........................................................ $18,144 $14,377 $28,515
Deferred....................................................... (8,387) (2,988) 3,544
Foreign:
Current........................................................ 6,464 7,497 8,867
Deferred....................................................... (1,901) (2,765) (601)
State:
Current........................................................ 3,605 2,914 2,127
Deferred....................................................... (1,740) (642) 874
------- ------- -------
Total..................................................... $16,185 $18,393 $43,326
------- ------- -------
------- ------- -------

F-8

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

Deferred income taxes arise from temporary differences between the tax
basis of assets and liabilities and their reported amounts in the financial
statements. A summary of the components of deferred tax liabilities and assets
are as follows:

DECEMBER 31,
--------------------
1994 1995
-------- --------

Deferred tax assets:
Postretirement benefits................................................... $ 29,798 $ 30,530
Nondeductible accruals.................................................... 46,002 40,204
Foreign operations........................................................ 11,411 10,384
Other..................................................................... -- 1,342
-------- --------
Total deferred tax assets............................................ 87,211 82,460
Valuation allowance.................................................. (15,875) (17,516)
-------- --------
Net deferred tax assets.............................................. 71,336 64,944
-------- --------
Deferred tax liabilities:
Property, plant and equipment............................................. 30,485 30,753
Pensions.................................................................. 7,197 7,448
Inventory................................................................. 3,167 3,143
Other..................................................................... 4,967 1,897
-------- --------
Total deferred tax liabilities....................................... 45,816 43,241
-------- --------
Net deferred tax asset.......................................... $ 25,520 $ 21,703
-------- --------
-------- --------

The Company had deferred tax assets related to foreign tax credits of
$15,875 and $17,516 at December 31, 1994 and 1995, respectively, against which a
full valuation allowance has been recorded. A valuation allowance of $5,403,
$2,133 and $1,641 was provided during 1993, 1994 and 1995, respectively.

The difference between the effective income tax rate and the United States
statutory rate is reconciled below:

YEARS ENDED
DECEMBER 31,
-------------------------
1993 1994 1995
---- ---- -----

U.S. federal statutory rate.............................................. 35.0% 35.0% 35.0%
State income taxes, net of federal benefit............................... 3.0 3.2 3.0
Tax effect of foreign operations......................................... 3.2 2.9 6.7
Provision for disputed items............................................. -- -- 26.5
Depletion................................................................ (4.5) (2.8) (4.6)
Other.................................................................... 0.6 1.1 0.6
---- ---- -----
Total............................................................... 37.3% 39.4% 67.2%
---- ---- -----
---- ---- -----

The Internal Revenue Service ('IRS') examinations of the Company's federal
income tax returns resulted in the issuance of a deficiency notice during 1995.
The Company has filed an administrative appeal with the IRS contesting the items
denoted in the deficiency notice. Notwithstanding such appeal, in 1995 the
Company has recorded a provision for disputed items of $17,100 for all years
prior to 1995 in connection with the deficiency notice. Management believes the
total amounts provided at December 31, 1995 are adequate.

F-9

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

NOTE 3. PENSION PLANS

The Company maintains several defined benefit pension plans covering
substantially all employees. A participating employee's annual postretirement
pension benefit is determined by the employee's credited service and, in most
plans, final average annual earnings with the Company. Vesting requirements are
five years in the U.S. and two years in Canada. The Company's funding policy is
to annually contribute the statutorily required minimum amount as actuarially
determined.

The net periodic pension cost for U.S. pension plans included the following
components:

YEARS ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
-------- ------- --------

Service cost (benefits earned during the year)..................... $ 3,638 $ 4,238 $ 3,826
Interest cost on projected benefit obligation...................... 10,674 10,944 12,377
Actual return on assets............................................ (19,454) (276) (24,938)
Net amortization and deferral...................................... 10,353 (9,030) 14,775
-------- ------- --------
Net periodic pension cost..................................... $ 5,211 $ 5,876 $ 6,040
-------- ------- --------
-------- ------- --------

The net periodic pension cost (income) for Canadian pension plans included
the following components:

YEARS ENDED DECEMBER 31,
-----------------------------
1993 1994 1995
------- ------- -------

Service cost (benefits earned during the year)........................ $ 1,109 $ 1,245 $ 1,140
Interest cost on projected benefit obligation......................... 3,662 3,664 3,527
Actual return on assets............................................... (8,654) (1,209) (6,614)
Net amortization and deferral......................................... 3,534 (3,399) 2,457
------- ------- -------
Net periodic pension cost (income)............................... $ (349) $ 301 $ 510
------- ------- -------
------- ------- -------

The funded status and (accrued) prepaid pension cost for all plans are as
follows:

UNITED STATES CANADA
---------------------- --------------------
DECEMBER 31, DECEMBER 31,
---------------------- --------------------
1994 1995 1994 1995
--------- --------- -------- --------

Actuarial present value of benefit obligations:
Vested................................................. $(115,870) $(145,840) $(32,883) $(38,348)
Nonvested.............................................. (11,387) (9,847) (107) (194)
--------- --------- -------- --------
Accumulated benefit obligation......................... $(127,257) $(155,687) $(32,990) $(38,542)
--------- --------- -------- --------
--------- --------- -------- --------
Plan assets at fair value................................... $ 122,293 $ 145,531 $ 51,241 $ 53,799
Projected benefit obligation................................ (149,749) (179,743) (42,934) (48,178)
--------- --------- -------- --------
Projected benefit obligation (in excess of) less than plan
assets.................................................... (27,456) (34,212) 8,307 5,621
Unrecognized prior service cost............................. 8,507 7,738 1,094 1,034
Unrecognized net (gain) loss................................ (3,375) 3,839 9,055 12,690
--------- --------- -------- --------
(Accrued) prepaid pension cost......................... $ (22,324) $ (22,635) $ 18,456 $ 19,345
--------- --------- -------- --------
--------- --------- -------- --------

The Canadian prepaid pension cost is included in other assets on the
balance sheet. At March 31, 1996, this amount totalled $19,061.

F-10

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

The assumptions used in accounting for the plans in 1993, 1994 and 1995
were:

UNITED STATES CANADA
-------------------------------------- ---------------------------------------
1993 1994 1995 1993 1994 1995
---------- ---------- ---------- ---------- ---------- ----------

Estimated discount rate............................ 7 1/4 % 8 1/2 % 7 1/2 % 7 3/4% 9 % 8 %
Estimated long-term rate of return on assets....... 9 9 9 10 9 9
Average rate of increase in employee compensation.. 5 5 5 5 1/4 5 1/4 5 1/4

On January 1, 1994, GCSAP initiated a pension plan covering hourly
employees at GCSAP's manufacturing facility. These employees ceased to be active
participants under the GCC hourly pension plan, resulting in a $1,200
curtailment gain.

The dates used to measure plan assets and liabilities were October 31 for
all plans. Plan assets are invested primarily in stocks, bonds, short-term
securities and cash equivalents.

NOTE 4. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company maintains several plans providing postretirement benefits
covering substantially all hourly and the majority of salaried employees. The
Company funds these benefits on a pay-as-you-go basis. The long-term portion of
accrued postretirement benefit cost of $81,162, $83,470 and $84,299 at December
31, 1994 and 1995 and March 31, 1996, respectively, is included in other
liabilities on the balance sheet.

The net periodic postretirement benefit cost included the following
components:

YEARS ENDED DECEMBER 31,
----------------------------
1993 1994 1995
------ ------- -------

Service cost (benefits earned during the year)......................... $1,774 $ 1,609 $ 1,576
Interest cost on projected postretirement benefit obligation........... 6,125 4,327 4,862
Net amortization and deferral.......................................... (277) (2,005) (2,052)
------ ------- -------
Net periodic postretirement benefit cost.......................... $7,622 $ 3,931 $ 4,386
------ ------- -------
------ ------- -------

The funded status and accrued postretirement benefit obligation are as
follows:

DECEMBER 31,
--------------------
1994 1995
-------- --------

Accumulated postretirement benefit obligation:
Retirees.................................................................. $(37,723) $(39,506)
Fully eligible plan participants.......................................... (9,068) (10,978)
Other active plan participants............................................ (11,380) (15,367)
-------- --------
Accumulated postretirement benefit obligation.................................. (58,171) (65,851)
Plan assets at fair value...................................................... -- --
-------- --------
Accumulated postretirement benefit obligation in excess of plan assets......... (58,171) (65,851)
Unrecognized net reduction in prior service costs.............................. (15,916) (14,343)
Unrecognized net gain.......................................................... (9,002) (5,666)
-------- --------
Accrued postretirement benefit obligation...................................... $(83,089) $(85,860)
-------- --------
-------- --------

The assumptions used in accounting for the plans in 1994 were a 14 percent
health care cost trend rate (decreasing to 8 1/2 percent in the year 2000 and
beyond) and an 8 1/2 percent discount rate for the U.S. plans and an 11 percent
health care cost trend rate (decreasing to 8 1/4 percent in the year 1999 and
beyond), a 9 percent discount rate and a 5 1/4 percent salary scale for the
Canadian plans.

The assumptions used in accounting for the plans in 1995 were a 12 percent
health care cost trend rate (decreasing to 7 1/2 percent in the year 2000 and
beyond) and a 7 1/2 percent discount rate for the U.S. plans and an 11 percent
health care cost trend rate (decreasing to 7 percent in the year

F-11

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

2000 and beyond), an 8 percent discount rate and a 5 1/4 percent salary scale
for the Canadian plans. A 1 percent increase in the health care trend rate would
increase the accumulated postretirement benefit obligation by $6,133 at year end
1995 and the net periodic cost by $613 for the year.

During 1993, GCC negotiated several changes to certain of its retiree
benefit plans that established a maximum annual dollar cap for medical premiums
GCC would pay. These plan amendments resulted in an unrecognized reduction in
prior service cost, which is being amortized over approximately 11 years.

NOTE 5. COMMITMENTS AND CONTINGENCIES

Future minimum rental payments for operating leases (primarily for
transportation equipment, offices and warehouses) having initial or remaining
noncancellable lease terms in excess of one year as of December 31, 1995 are as
follows:

YEARS ENDING
DECEMBER 31,
- --------------------------------------------------------------------------------------------

1996..................................................................................... $ 9,510
1997..................................................................................... 7,686
1998..................................................................................... 3,694
1999..................................................................................... 2,782
2000..................................................................................... 636
-------
$24,308
-------
-------

Rental expense for the years ended December 31, 1993, 1994 and 1995 was
$13,821, $13,254 and $13,531, respectively.

Phantom Equity Program. Key employees of GCC participate in a phantom
equity program established by GCC (the 'Plan'). Each equity unit provides a
participant with the opportunity to receive payments, based upon the
appreciation in the value of GCC over a value established in the Plan, in the
event of a sale, merger or public offering involving GCC. A total of 2,740,000
equity units representing the right to receive 5 percent of the total
appreciation in the value of GCC have been awarded. In the event of a sale or
public offering of all of the assets or capital stock of GCC, the total
estimated amount at December 31, 1995 payable to the participants, to be made in
three installments, would range from a low of $5,300 to a high of $14,700. For
the purposes of this estimate, in the absence of a public market for the GCC
share value, a range of price/earnings ratios of publicly traded companies in
similar industries was used to determine the potential appreciation of the value
of GCC.

Parent Guaranty and Transfer Agreement. A restated parent guaranty and
transfer agreement between New Hampshire Oak, ACI International Limited and
TOSOH America, Inc. provides that in the event that either New Hampshire Oak,
ACI International Limited or TOSOH America, Inc. (such entities being referred
to as a 'transferring parent' or 'nontransferring parent' as the context
requires) proposes to sell or otherwise transfer or cause to be sold or
transferred the voting securities of GCC, the Andover Group, Inc. or TOSOH
Wyoming, Inc. (the respective subsidiaries constituting the partners of GCSAP)
as the case may be, the nontransferring parents will have the following options:
(1) to purchase the transferring parent's subsidiary's interest in GCSAP at fair
market value; (2) to require the transferring parent to purchase the
nontransferring parents' subsidiaries' interest in GCSAP at fair market value;
(3) to buy the voting securities to be sold by the transferring parent on the
same terms and conditions and at the same price as the transferring parent
proposes to sell or otherwise transfer or cause to be sold or transferred such
voting securities; or (4) to cause the proposed transferee to purchase the
nontransferring parents' subsidiaries' interest in GCSAP for a price reflecting
the price to be paid by the proposed transferee for such voting securities. In
the event

F-12

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

that New Hampshire Oak ceases to own at least 51 percent of GCC while GCC is a
partner, GCC shall pay to The Andover Group, Inc. $2,833.

Pursuant to the terms of the settlement agreement, the Company, with funds
to be provided by its insurers pursuant to the terms of the insurance policies
described below, has agreed to make available a maximum of $180,000 to implement
the settlement. Various 'funds' and 'pools' are established by the settlement
agreement to compensate claimants in different subclasses who meet certain
requirements. Of this amount, $24,000 has been allocated for punitive damages,
notwithstanding the Company's strong belief that punitive damages are not
warranted. The settlement also makes available a maximum of $23,000 of this
$180,000 for the payment of legal fees and litigation costs to plaintiffs' class
counsel and the plaintiffs' management committee.

The settlement agreement provides, among other things, that while claimants
may 'opt out' of the compensatory damages portion of the settlement and pursue
their own case separate and apart from the class settlement mechanism, they have
no right to opt out of the punitive damages portion of the settlement.
Consequently, under the terms of the settlement, no party may seek punitive
damages from the Company outside of those provided by the settlement. The
deadline for claimants electing to opt out of the compensatory damages portion
of the settlement was October 5, 1995, and fewer than 3,000 claimants, which
constitutes approximately 5 percent of the total number of claimants, have
elected to so opt out. The various settlement pools and funds will be reduced to
fund the Company's defense and/or settlement (if any) of opt-out claims. Except
with respect to compensatory damage claims by claimants electing to opt out, the
settlement fully releases from all claims arising out of the July 26, 1993
incident the Company and all of its related entities, shareholders, directors,
officers and employees, and all other entities who have been or could have been
sued as a result of the July 26, 1993 incident, including all those who have
sought or could seek indemnity from the Company.

F-13

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

insurance policies described below, and further payments will be made as
additional releases are received and reviewed.

Notices of appeal of all or portions of the settlement approved by the
court have been filed by five law firms representing approximately 2,750
claimants, with approximately 2,700 of these claimants represented by the same
law firm. These claimants have not specified the amount of their claims in court
documents, although the Company believes that their alleged injuries are no
different in nature or extent than those alleged by the settling claimants.
Based on papers filed by the appellants in the California Court of Appeals, the
primary grounds for appeal are expected to be that the settlement is not 'fair,
reasonable and adequate' under California law, that the trial court erred in
certifying a class action for purposes of settlement and in certifying a
mandatory punitive damage class, that the trial court awarded excessive
attorneys' fees to the plaintiffs' management committee and plaintiffs' class
counsel, that the trial court exceeded its authority in reducing contingent fees
payable to attorneys for representing individual claimants, and that the trial
court erroneously applied a state statute that governs unclaimed residuals
remaining from class action settlements. If the settlement is upheld on appeal,
the Company believes that any further liability in excess of the amounts made
available under the settlement agreement (such as for opt-outs) will not exceed
the available insurance coverage, if at all, by an amount that could be material
to its financial condition or results of operations.

The settlement also includes terms and conditions designed to protect the
Company in the event that the settlement as approved by the court is overturned
or modified on appeal. If such an overturn or modification occurs, the Company
has the right to terminate the settlement and make no further settlement
payments, and any then unexpended portions of the settlement proceeds
(including, without limitation, the $24,000 punitive damage fund) would be
available to address any expenses and liabilities that might arise from such an
overturn or modification. In addition, as discussed above, in the event that the
settlement as approved by the court is overturned or modified on appeal, the
release document signed by settling claimants contains language which fully
releases the Company from any further claims, either for compensatory or
punitive damages, arising out of the July 26, 1993 incident. The Company
believes that it will have obtained releases from a majority of the remaining
settling claimants prior to any such appeal being ruled on by an appellate
court.

The Company has insurance coverage relating to the July 26, 1993 incident
which totals $200,000. The first two layers of coverage total $25,000 with a
sublimit of $12,000 applicable to the July 26, 1993 incident, and the Company
also has excess insurance policies of $175,000 over the first two layers. In
1993, the Company reached an agreement with the carrier for the first two layers
whereby the carrier paid the Company $16,000 in settlement of all claims the
Company had against that carrier. In the third quarter of 1994, the Company
recorded a $9,000 charge to earnings which represents the Company's estimated
minimum liability (net of the insurance settlement already received) for costs
which the Company believes it will incur related to this matter. The Company's
excess insurance policies, which are written by two Bermuda-based insurers,
provide coverage for

F-14

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

compensatory as well as punitive damages. Both insurers have executed agreements
with the Company confirming their respective commitments to fund the settlement
as required by their insurance policies with the Company and as described in the
settlement agreement. In addition, these same insurers currently continue to
provide substantially the same insurance coverage to the Company.

Environmental Matters. Accruals for environmental liabilities are recorded
based on current interpretations of applicable environmental laws and
regulations when it is probable that a liability has been incurred and the
amount of such liability can be reasonably estimated. Estimates are established
based upon information available to management to date, the nature and extent of
the environmental liability, the Company's experience with similar activities
undertaken, estimates obtained from outside consultants and the legal and
regulatory framework in the jurisdiction in which the liability arose. The
potential costs related to environmental matters and their estimated impact on
future operations are difficult to predict due to the uncertainties regarding
the extent of any required remediation, the complexity and interpretation of
applicable laws and regulations, possible modification of existing laws and
regulations or the adoption of new laws or regulations in the future, and the
numerous alternative remediation methods and their related varying costs. The
material components of the Company's environmental accruals include potential
costs, as applicable, for investigation, monitoring, remediation and ongoing
maintenance activities at any affected site. Accrued liabilities for
environmental matters were $15,875 and $16,628 at December 31, 1994 and 1995,
respectively. These amounts do not include estimated third party recoveries nor
have they been discounted.

In 1990, the Environmental Protection Agency (the 'EPA') released a
proposed rule, parts of which were finalized in 1993, that establishes standards
for the implementation of a corrective action program under the Resource
Conservation and Recovery Act ('RCRA'). Corrective action programs require
facilities that are operating under a permit, or are seeking to treat, store or
dispose of hazardous wastes, or to investigate and remediate environmental
contamination. During the third quarter of 1995, the Company conducted a
facility investigation at its Pittsburgh, California, manufacturing facility,
pursuant to RCRA and the terms of the Hazardous Waste Facility Permit for the
site, and submitted the report of such investigation to the California
Environmental Protection Agency. Additional work relating to the study is
currently ongoing. The Company estimates that the potential costs for
implementing corrective action at such facility will be less than $2,000 payable
over the next several years and has provided for the estimated costs in its
accrual for environmental liabilities.

In 1989, groundwater contamination in municipal drinking water wells
located in the town of Weaverville, North Carolina was identified near the
Weaverville plant of the Company's Balcrank subsidiary. The contaminants,
primarily perchloroethylene ('PCE'), were present as a result of discharges
which took place during the tenure of the former property owner. The North
Carolina Department of Environmental Management ('NCDEM') notified the EPA of
the PCE contamination, which notification resulted in the placement of the site
on the CERCLA Information System ('CERCLIS'), a list of sites identified for
further investigation under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980. ('CERCLA') At the same time, under NCDEM
supervision, Balcrank voluntarily commenced remedial activities, including
installation of a shallow groundwater remediation system. Results demonstrating
that substantial containment of the contaminants had been achieved using the
system were submitted to NCDEM and to the EPA in October, 1993. Currently,
Balcrank, NCDEM and the EPA are involved in discussions pursuant to which
Balcrank, again under NCDEM supervision, will voluntarily conduct additional
investigative activities with respect to a deeper bedrock aquifier, including
remedial feasibility studies and activities as appropriate. The Company
estimates that the potential cost for any such activities will not exceed $4,300
payable over the next several years, and has provided for the estimated costs in
its accrual for environmental liabilities.

F-15

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

In addition, under the authority of the Canadian Environmental Protection
Act, on February 14, 1995, The Ministry of Environment and Energy of the
Province of Ontario published final regulations implementing the
Municipal-Industrial Strategic Abatement program ('MISA') relative to effluent
discharges into Ontario waterways, including certain limitations on the toxicity
and alkalinity of such effluent. The new regulations and their impact on the
operation of GC Canada's Amherstburg facility, which discharges effluent into
the Detroit River is now estimated to require capital expenditures which will
not exceed $1,700 payable over the next five years and annual operating expenses
in connection with operating and maintaining the equipment necessary to meet the
proposed regulations which will not exceed $500 per year.

Following a period of voluntary testing and investigation performed by the
Company at its Marrero, Louisiana, aluminum sulfate manufacturing facility, the
Company executed a Cooperative Agreement with the Louisiana Department of
Environmental Quality-Inactive and Abandoned Sites Division on October 20, 1995.
This agreement formalizes the Company's willingness to voluntarily remediate
certain contamination at the facility which occurred during the tenure of a
former owner. The Company estimates that the potential cost to remediate such
contamination will be less than $1,500 payable over the next several years and
has provided for the estimated cost of such remediation plan in its accrual for
environmental liabilities.

By letter dated March 22, 1990 from the EPA, the Company received a Notice
of Potential Liability pursuant to Section 107(a) of CERCLA with respect to a
site located in Front Royal, Virginia, owned at the time by Avtex Fibers, Inc.
(the 'Avtex Site'), which has filed for bankruptcy. A sulfuric acid plant
adjacent to the main Avtex Site was previously owned and operated by the Company
(the 'acid plant'). The letter requested that the Company perform certain
activities at the acid plant including providing site security, preventing
discharges, removing certain specific residue and sludges from two storage
vessels and the transfer line to the main Avtex facility and determining the
extent of contamination at the site, if any. In April 1991, the Company
submitted a draft work plan with respect to the acid plant including each of the
activities requested by the EPA discussed above. The Company has provided for
the estimated costs of $1,600 for these activities in its accrual for
environmental liabilities. The EPA has not yet responded to this work plan, nor
has it requested that an initial investigation and feasibility study for the
acid plant be performed. As a result, the extent of remediation required, if
any, is unknown. The Company believes that the acid plant is separate and
divisible from the main Avtex Site and, as a result, is not subject to any
liability for costs related thereto. The Company will continue to vigorously
assert this position with the EPA. There has been very limited contact by the
EPA with the Company over the past two years, as it appears that the EPA is
focused on remediation activities at the main Avtex Site.

In addition to the matters discussed above, the Company is involved in
other claims, litigation, administrative proceedings and investigations and
remediation relative to environmental matters. Although the amount of any
ultimate liability which could arise with respect to these matters cannot be
accurately predicted, it is the opinion of management, based upon currently
available information and the accruals established, that any such ultimate
liability will have no material adverse effect on the Company's financial
position.

NOTE 6. RELATED PARTY TRANSACTIONS

Management Agreement

Upon its formation, the Company entered into a management agreement with a
company (the 'Management Company') owned by the then shareholders of the Company
under which the Company received corporate supervisory and administrative
services and strategic guidance for a quarterly fee. The quarterly fees were
$1,275 and $1,475 in 1993 and 1994, respectively. The Company also paid special
fees of $725 and $250 in 1993 and 1994, respectively, to the Management Company
for services rendered in connection with restructuring, financing and tax

F-16

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

research. The management agreement was terminated on December 29, 1994. On
December 30, 1994, the Company purchased all of the outstanding common stock of
the Management Company for $50, which approximated the net book value of the
Management Company on the purchase date. On January 1, 1995, the Company entered
into a new management agreement with Latona Associates (which is controlled by a
stockholder of the Company) under which the Company receives corporate
supervisory and administrative services and strategic guidance for a quarterly
fee of $1,375. In addition, in connection with any acquisition or business
combination with respect to which Latona Associates advises the Company, the
Company has agreed to pay Latona Associates additional fees comparable with fees
received by investment banking firms for such services. This agreement expires
on December 31, 2004.

Notes Receivable

On April 25, 1994, Toledo and PDI advanced $5,000 and $9,000, respectively,
to a stockholder of the Company and a former stockholder of the Company in the
form of unsecured promissory notes which remain outstanding at December 31,
1995. The notes bear interest at 7.25 percent per annum and are payable in
installments through December 31, 2000. The non-current portions of the notes at
December 31, 1994 and 1995 were $14,000 and $11,200, respectively, and are
included in other assets on the balance sheet. On March 15, 1996 a stockholder
of the Company prepaid a $2,000 unsecured promissory note to Toledo.

NOTE 7. GEOGRAPHIC AND INDUSTRY SEGMENT INFORMATION

Geographic area information is summarized as follows:

UNITED STATES (1) FOREIGN (2) ELIMINATIONS (3) TOTAL
----------------- ----------- ---------------- --------

Net revenues:
1993................................ $ 437,908 $ 120,004 $(39,194) $518,718
1994................................ 450,284 118,920 (43,292) 525,912
1995................................ 472,157 122,659 (43,945) 550,871
Operating profit:
1993................................ $ 70,967 $ 26,153 -- $ 97,120
1994................................ 72,746 25,495 -- 98,241
1995................................ 80,390 26,607 -- 106,997
Identifiable assets at December 31:
1993................................ $ 327,512 $ 98,432 -- $425,944
1994................................ 338,729 94,898 -- 433,627
1995................................ 331,237 100,088 -- 431,325

- ------------------------------

(1) Includes export sales amounting to $54,220, $47,726 and $59,320 for the
years ended December 31, 1993, 1994 and 1995, respectively.

(2) Principally of General Chemical Canada Holding Inc., a wholly owned
subsidiary of GCC.

(3) Sales between geographic areas are recorded at prices comparable to market
prices charged to third party customers and are eliminated in consolidation.

F-17

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

Industry segment information is summarized as follows:

CHEMICAL MANUFACTURING CORPORATE TOTAL
-------- ------------- -------- --------

Net revenues:
1993....................................... $463,441 $55,277 $ -- $518,718
1994....................................... 464,452 61,460 -- 525,912
1995....................................... 480,926 69,945 -- 550,871
Operating profit:
1993....................................... $ 99,926 $ 2,029 $ (4,835) $ 97,120
1994....................................... 98,950 4,737 (5,446) 98,241
1995....................................... 105,186 4,337 (2,526) 106,997
Identifiable assets at December 31:
1993....................................... $383,328 $31,628 $ 10,988 $425,944
1994....................................... 378,958 45,112 9,557 433,627
1995....................................... 377,014 49,833 4,478 431,325
Capital expenditures:
1993....................................... $ 17,633 $ 2,205 $ 383 $ 20,221
1994....................................... 20,873 7,630 -- 28,503
1995....................................... 29,099 4,994 -- 34,093
Depreciation and amortization:
1993....................................... $ 26,546 $ 1,627 $ 146 $ 28,319
1994....................................... 25,074 1,479 147 26,700
1995....................................... 26,188 2,020 50 28,258

NOTE 8. ADDITIONAL FINANCIAL INFORMATION

The following are summaries of selected balance sheet items:

Receivables

DECEMBER 31, MARCH 31,
------------------ -----------
1994 1995 1996
------- ------- -----------
(UNAUDITED)

Trade................................................... $92,436 $92,281 $ 102,086
Other................................................... 3,558 6,624 7,061
Allowance for doubtful accounts......................... (5,960) (5,674) (5,756)
------- ------- -----------
$90,034 $93,231 $ 103,391
------- ------- -----------
------- ------- -----------

Inventories

DECEMBER 31, MARCH 31,
------------------ -----------
1994 1995 1996
------- ------- -----------
(UNAUDITED)

Raw materials........................................... $ 8,532 $10,447 $10,184
Work in process......................................... 3,722 4,602 7,097
Finished products....................................... 16,782 19,061 18,252
Supplies and containers................................. 7,209 7,860 8,082
------- ------- -----------
$36,245 $41,970 $43,615
------- ------- -----------
------- ------- -----------

Inventories valued at LIFO amounted to $16,972 and $21,485 at December 31,
1994 and 1995, respectively, which were below estimated replacement cost by
$2,237 and $3,437, respectively. The impact of LIFO liquidations in 1994, 1995
and for the three months ended March 31, 1996 was not significant.

F-18

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

Property, Plant and Equipment

DECEMBER 31,
----------------------
1994 1995
--------- ---------

Land and improvements............................................. $ 21,935 $ 23,223
Machinery and equipment........................................... 251,840 274,930
Buildings and leasehold improvements.............................. 37,840 41,660
Construction in progress.......................................... 17,074 13,541
Mines and quarries................................................ 10,349 12,964
--------- ---------
339,038 366,318
Less accumulated depreciation and amortization.................... (129,972) (150,761)
--------- ---------
$ 209,066 $ 215,557
--------- ---------
--------- ---------

Accumulated depreciation and amortization at March 31, 1996 was $157,934.

Accrued Liabilities

DECEMBER 31,
------------------
1994 1995
------- -------

Wages, salaries and benefits.......................................... $23,178 $23,359
Richmond incident..................................................... 4,387 10,823
Interest.............................................................. 5,902 6,146
Taxes, other than income taxes........................................ 11,101 10,652
Other................................................................. 33,911 32,038
------- -------
$78,479 $83,018
------- -------
------- -------

NOTE 9. LONG-TERM DEBT

Long-term debt consisted of the following:

MARCH 31,
DECEMBER 31, -----------
-------------------- 1996
MATURITIES 1994 1995 -----------
---------- -------- -------- (UNAUDITED)

GCC Debt:
Bank Term Loan -- floating rate............. 1996-2001 $100,000 $100,000 $ 95,652
Senior Subordinated Notes -- 9.25%.......... 2003 100,000 100,000 100,000
Canada Senior Notes -- 9.09%................ 1999 52,000 52,000 52,000
U.S. Revolving Credit Facility -- floating
rate...................................... 1999 33,000 21,000 26,000
Toledo Debt:
Bank Term Loan -- floating rate............. 1996-1998 9,500 8,250 6,250
Revolving Credit Facility -- floating
rate...................................... 1998 1,000 3,300 2,500
PDI Debt:
Bank Term Loan -- floating rate............. 1996-1998 9,250 6,945 5,675
-------- -------- -----------
Total Debt............................. 304,750 291,495 288,077
Less: Current Portion.................. (3,000) (21,892) (19,892)
-------- -------- -----------
Net Long-Term Debt..................... $301,750 $269,603 $ 268,185
-------- -------- -----------
-------- -------- -----------

Aggregate maturities of long-term debt for each of the years in the five
year period ending December 31, 2000 are $21,892 $22,642, $26,137, $90,392 and
$17,392, respectively.

The U.S. Revolving Credit Facility allows GCC to borrow up to $130,000,
including letters of credit of up to $30,000, through March 31, 1999. The unused
letter of credit balance was $21,066 at each of December 31, 1994 and 1995 and
March 31, 1996. This facility bears interest at a rate equal to a spread over a
reference rate chosen by the Company from various options. The rates in effect
at each

F-19

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

of December 31, 1994 and 1995 and March 31, 1996, were 6.9 percent, 6.8 percent
and 6.2 percent, respectively.

General Chemical Canada Limited has a $15,000 (Canadian Dollar) Revolving
Credit Facility maturing June 22, 1997, subject to one-year extensions at the
lender's discretion. This facility bears interest at a rate equal to a spread
over a reference rate chosen by General Chemical Canada Limited from various
options. At each of December 31, 1994 and 1995 and March 31, 1996, there were no
outstanding borrowings under this facility.

Commitment fees paid for the above-mentioned facilities were $86, $354 and
$350 for 1993, 1994 and 1995, respectively.

The Bank Term Loan bears interest at a rate equal to a spread over a
reference rate chosen by GCC from various options. The rates in effect at each
of December 31, 1994 and 1995 and March 31, 1996, including effects of interest
rate swap agreements (see Note 10), were 7.2 percent, 7.4 percent and 7.4
percent, respectively.

The U.S. Revolving Credit Facility and the Bank Term Loan are secured by
(1) substantially all of the assets of GCC, (2) 65 percent of the capital stock
of General Chemical Canada Holding Inc., (3) GCC's 51 percent general
partnership interest in GCSAP, and (4) all of the stock of the other direct and
indirect subsidiaries of GCC.

During 1993 and 1994, GCC recorded extraordinary losses of $2,085 (net of a
tax benefit of $1,356) and $8,203 (net of a tax benefit of $5,367),
respectively, related to the retirement of certain indebtedness.

The Toledo and PDI term loans bear interest at a rate equal to a spread
over a reference rate chosen by the respective companies from various options.
The rates in effect for the Toledo term loan were 8.2 percent at December 31,
1994 and 1995 and 7.7 percent at March 31, 1996. The rates in effect for the PDI
term loan were 8.2 percent, 7.7 percent and 7.7 percent at December 31, 1994,
1995 and March 31, 1996, respectively.

Toledo has a $5,000 (reduced from $7,500 on February 13, 1996) revolving
credit facility, including letters of credit up to $2,000, available through
December 31, 1998. The unused letter of credit balance was $1,724 at each of
December 31, 1994 and 1995 and March 31, 1996. The revolving credit facility
bears interest at a rate equal to a spread over a reference rate chosen by
Toledo from various options. The rates in effect were 9.0 percent, 8.3 percent
and 7.7 percent at each of December 31, 1994 and 1995 and March 31, 1996,
respectively. Commitment fees paid were $16 and $8 for 1994 and 1995,
respectively.

PDI has a $3,000 revolving credit facility, including letters of credit of
up to $1,500, available through December 31, 1998. No amounts were outstanding
under the revolving credit facility at each of December 31, 1994 and 1995 and
March 31, 1996. The unused letter of credit balance was $1,209 at each of
December 31, 1994 and 1995 and March 31, 1996. The revolving credit facility
bears interest at a rate equal to a spread over a reference rate chosen by PDI
from various options. Commitment fees paid were $9 and $10 for 1994 and 1995,
respectively.

The Toledo and PDI term loans and revolving credit facilities are secured
by all inventory, equipment, fixtures, receivables and trademarks of the
respective companies and by pledges of their respective capital stock.

Balcrank has a $1,000 revolving loan facility which expires April 30, 1997.
No amounts were outstanding under this facility at December 31, 1994 and 1995.
At each of December 31, 1994 and 1995 and March 31, 1996, Balcrank had unused
letters of credit of $145 under the $500 letter of credit portion of this
facility. Balcrank's credit facility is secured by substantially all the assets
of Balcrank. Borrowings under the credit agreement bear interest at a rate equal
to a spread over a

F-20

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

reference rate chosen by Balcrank from various options. Commitment fees paid
were $4 and $2 for 1994 and 1995, respectively.

While certain of the Company's subsidiaries debt facilities are
outstanding, the Company's subsidiaries must meet specific financial tests, on
an ongoing basis, which are customary for these types of facilities. Except as
provided by applicable corporate law, there are no restrictions on the Company's
ability to pay dividends from retained earnings. However, the payment of cash
dividends by the Company's subsidiaries to the Company is subject to certain
restrictions under the terms of various agreements covering the Company's
subsidiaries' long-term debt. Toledo, PDI and Balcrank are not permitted under
each subsidiary's respective debt agreements to pay cash dividends. Assuming
certain financial covenants are met, General Chemical is permitted to pay cash
dividends of up to 50 percent of the net income (subject to certain adjustments)
of General Chemical for the applicable period. Consequently, the Company's
ability to pay cash dividends on Common Stock may effectively be limited by such
agreements.

NOTE 10. FINANCIAL INSTRUMENTS

Interest Rate Swap Agreements

The Company periodically enters into interest rate swap agreements to
effectively convert all or a portion of its floating-rate debt to fixed-rate
debt in order to reduce the Company's risk to movements in interest rates. Such
agreements involve the exchange of fixed and floating interest rate payments
over the life of the agreement without the exchange of the underlying principal
amounts. Accordingly, the impact of fluctuations in interest rates on these
interest rate swap agreements is fully offset by the opposite impact on the
related debt. Swap agreements are only entered into with strong creditworthy
counterparties. The swap agreements in effect were as follows:

INTEREST RATE
NOTIONAL --------------------
DECEMBER 31, AMOUNT MATURITIES RECEIVE(1) PAY(2)
- -------------------------------------------------------- -------- ---------- ---------- ------

1994.................................................... $ 30,000 1998 5.7% 7.7%
1995.................................................... 75,000 1998-1999 5.9 6.8

- ------------------------------

(1) Three-month LIBOR.

(2) Represents the weighted average rate.

In addition to the swap agreements described above, the Company has entered
into a forward swap agreement, which will begin in 1998 and mature in 2002,
which has a notional amount of $30,000 and a fixed payment rate of 6.6 percent.

Fair Value of Financial Instruments

The estimated fair values of the Company's financial instruments are as
follows:

DECEMBER 31, 1994 DECEMBER 31, 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------

Long-term debt..................................... $304,750 $295,000 $291,495 $295,495
Unrealized gain/(loss) on interest rate swap
agreements....................................... -- 200 -- (3,600)

The fair values of cash and cash equivalents and receivables approximate
their carrying values due to the short-term nature of the instruments.

At December 31, 1995 the Company held $14,000 of unsecured promissory notes
receivable from a stockholder of the Company and a former stockholder of the
Company. The notes bear interest at 7.25 percent per annum and are payable in
installments through December 31, 2000. It is not practicable for the Company to
estimate the fair value of these notes due to the related party nature of

F-21

THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 IS UNAUDITED)
(DOLLARS IN THOUSANDS)

the transactions. However, on March 15, 1996, a stockholder of the Company
prepaid $2,000 of these unsecured promissory notes in full.

The fair value of the Company's long-term debt was based on quoted market
prices for publicly traded notes and discounted cash flow analyses on its
nontraded debt. The fair value of the Company's interest rate swap agreements is
the estimated amount the Company would have to pay or receive to terminate the
swap agreements based upon quoted market prices as provided by financial
institutions which are counterparties to the swap agreements.

NOTE 11. OTHER INFORMATION

The consolidated financial statements and the notes thereto as of March 31,
1996 and for the three month periods ended March 31, 1995 and 1996 are
unaudited. In the opinion of management, the unaudited consolidated financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of the Company
at March 31, 1996 and its results of operations and cash flows for the three
months ended March 31, 1995 and 1996. The unaudited results of operations for
the three months ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1996.

F-22

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.

------------------------------

TABLE OF CONTENTS

PAGE
----

Additional Information.............................................................................................. 2
Prospectus Summary.................................................................................................. 3
Risk Factors........................................................................................................ 8
Use of Proceeds..................................................................................................... 15
Dividend Policy..................................................................................................... 15
Dilution............................................................................................................ 16
Capitalization...................................................................................................... 17
Selected Consolidated Financial Data................................................................................ 18
Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 19
Business............................................................................................................ 28
Management.......................................................................................................... 47
Principal and Selling Stockholders.................................................................................. 58
Certain Relationships and Transactions.............................................................................. 59
Description of Indebtedness......................................................................................... 60
Description of Capital Stock........................................................................................ 63
Shares Eligible for Future Sale..................................................................................... 67
Underwriting........................................................................................................ 68
Legal Matters....................................................................................................... 71
Experts............................................................................................................. 71
Index to Financial Statements....................................................................................... F-1

------------------------------

UNTIL JUNE 9, 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

7,500,000 SHARES
THE GENERAL CHEMICAL
GROUP INC.

COMMON STOCK
($.01 PAR VALUE)

[LOGO]
SALOMON BROTHERS INC

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

LAZARD FRERES & CO. LLC

MORGAN STANLEY & CO.
INCORPORATED

PROSPECTUS
DATED MAY 15, 1996

[ALTERNATE PROSPECTUS COVER PAGE, FOR INTERNATIONAL PROSPECTUS]

PROSPECTUS

7,500,000 SHARES

[LOGO]

COMMON STOCK
($.01 PAR VALUE)

SEE 'RISK FACTORS' BEGINNING ON PAGE 8 FOR CERTAIN RISK AND OTHER FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT COMPANY(1) STOCKHOLDER(1)(2)

Per Share................................. $17.50 $1.09 $16.41 $16.41
Total(2).................................. $131,250,000 $8,175,000 $41,025,000 $82,050,000

(1) Before deducting estimated expenses of $1,275,000 of which $425,000 is
payable by the Company and $850,000 is payable by the Selling Stockholder.

(2) The Company and the Selling Stockholder have granted the Underwriters 30-day
options to purchase up to 375,000 and 750,000 additional shares of Common
Stock, respectively, on the same terms and conditions as set forth above
solely to cover over-allotments, if any. If such options are exercised in
full, the total Price to Public, Underwriting Discount, Proceeds to Company
and Proceeds to Selling Stockholders will be $150,937,500, $9,401,250,
$47,178,750 and $94,357,500, respectively. The Selling Stockholder has the
right to assume any or all of the Company's option to the Underwriters. If
such option is fully assumed, and such option and the Selling Stockholder's
option to the Underwriters are exercised in full, the total Price to Public,
Underwriting Discount, Proceeds to Company and Proceeds to Selling
Stockholder will be $150,937,500, $9,401,250, $41,025,000 and $100,511,250,
respectively. See 'Underwriting.'

SALOMON BROTHERS INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

LAZARD CAPITAL MARKETS
MORGAN STANLEY & CO.
THE DATE OF THIS PROSPECTUS IS MAY 15, 1996. INTERNATIONAL

[Alternate Underwriting section for International Prospectus]

CERTAIN UNITED STATES TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS

The following is a discussion of certain anticipated United States income
and estate tax consequences of the ownership and disposition of the Common Stock
by a 'Non-United States Holder.' For the purpose of this discussion, a
'Non-United States Holder' is any person or entity that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust as such
terms are defined in the Code. This discussion does not deal with all aspects of
United States income and estate taxation and does not address foreign, state and
local tax consequences that may be relevant to Non-United States Holders in
light of their personal circumstances. Furthermore, the following discussion is
based on current provisions of the Code and administrative and judicial
interpretations as of the date hereof, all of which are subject to change.
Prospective foreign investors are urged to consult their tax advisors regarding
the United States federal, state, local and non-United States income and other
tax consequences of owning and disposing of Common Stock.

DIVIDENDS

Generally, any dividend paid to a Non-United States Holder of Common Stock
will be subject to United States withholding tax either at a rate of 30% of the
gross amount of the dividend or at a lesser applicable treaty rate. Under
current United States Treasury regulations, dividends paid to an address in a
country other than the United States are presumed to be paid to a resident of
such country for purposes of the withholding discussed above (unless the payor
has knowledge to the contrary) and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. However, under proposed United States Treasury regulations not
currently in effect, a Non-United States Holder of Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements. Dividends received by a
Non-United States Holder that are effectively connected with a United States
trade or business conducted by such Non-United States Holder are exempt from
such withholding tax. However, such effectively connected dividends, net of
certain deductions and credits, are taxed at the same graduated rates applicable
to United States persons. A Non-United States Holder may claim exemption from
withholding under the effectively connected income exception by filing Form 4224
(Statement Claiming Exemption from Withholding of Tax on Income Effectively
Connected With the Conduct of Business in the United States) with the Company or
its paying agent.

In addition to the graduated tax described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a United
States trade or business of the corporate Non-United States Holder may also be
subject to a branch profits tax at a rate of 30% or at a lesser applicable
treaty rate.

DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax on any gain realized upon the sale or other dispositions of
Common Stock unless (i) such gain is effectively connected with a United States
trade or business of the Non-United States Holder, (ii) in the case of certain
Non-United States Holders who are non-resident alien individuals and hold the
Common Stock as a capital asset, such individuals are present in the United
States for 183 or more days in the taxable year of disposition and certain other
conditions are met, or (iii) the Company is or has been a 'United States real
property holding corporation' ('USRPHC') for federal income tax purposes at any
time within the shorter of the five-year period preceding such disposition or
such holder's holding period and, provided that the Common Stock continues to be
'regularly traded on an established securities market' for tax purposes, the
Non-United States Holder held, directly or indirectly, at any time during the
five-year period ending on the date of disposition, more than 5% of the
outstanding Common Stock. The Company has determined that it is not and does not
believe that it will become a USRPHC for federal income tax purposes. Although
the Company believes that the Common Stock will be treated as 'regularly traded
on an established securities market,' if the Common Stock were not so treated,
on a sale or other disposition of such stock, the transferee of

[Alternate Underwriting section for International Prospectus]
such stock would be required to withhold 10% of the proceeds of such
disposition, unless either the Company were to provide a certification that it
is not (and has not been during a specific period) a USRPHC or another exemption
applied. If a Non-United States Holder falls under clause (i) above, the holder
will be taxed on the net gain derived from the sale under regular graduated
United States federal income tax rates (and, with respect to corporate
Non-United States Holders, may also be subject to the branch profits tax
described above). If an individual Non-United States Holder falls under clause
(ii) above, the holder generally will be subject to a 30% tax on the gain
derived from the sale, which gain may be offset by U.S. capital losses
recognized within the same taxable year of such sale.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Generally, the Company must report to the U.S. Internal Revenue Service the
amount of dividends paid, the name and address of the recipient, and the amount,
if any, of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or other agreements, the U.S. Internal Revenue Service may make its
reports available to tax authorities in the recipient's country of residence.

Dividends paid to a Non-United States Holder at an address within the
United States may be subject to backup withholding at a rate of 31% if the
Non-United States Holder fails to establish that it is entitled to an exemption
or to provide a correct taxpayer identification number and other information to
the payor.

The payment of the proceeds of the disposition of Common Stock to or
through the United States office of a broker is subject to information reporting
and backup withholding at a rate of 31% unless the holder certifies its
non-United States status under penalties of perjury or otherwise establishes an
exemption. Generally, U.S. information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the
United States through a non-U.S. office of a non-U.S. broker. However,
information reporting requirements (but not backup withholding) will apply to a
payment of disposition proceeds outside the United States through an office
outside the United States of a broker that is (a) a United States person, (b) a
United States controlled foreign corporation or (c) a foreign person 50% or more
of whose gross income for certain periods is from a United States trade or
business unless such broker has documentary evidence in its files of the owner's
foreign status and has no actual knowledge to the contrary.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained provided that the required information is furnished to the U.S.
Internal Revenue Service.

UNITED STATES ESTATE TAX

An individual Non-United States Holder who owns Common Stock at the time of
his death or has made certain lifetime transfers of an interest in Common Stock
will be required to include the value of such Common Stock in his gross estate
for United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

[Alternate Underwriting section for International Prospectus]

UNDERWRITING

Subject to the terms and conditions set forth in the International
Underwriting Agreement, the Company and the Selling Stockholder have agreed to
sell to each of the International Underwriters named below, and each of the
International Underwriters, for whom Salomon Brothers International Limited,
Donaldson, Lufkin & Jenrette Securities Corporation, Lazard Capital Markets and
Morgan Stanley & Co. International Limited are acting as representatives (the
'International Representatives'), has severally agreed to purchase from the
Company and the Selling Stockholder the respective number of Shares set forth
opposite its name below:

NUMBER OF
INTERNATIONAL UNDERWRITERS SHARES
- -------------------------------------------------------------------------------- ---------

Salomon Brothers International Limited.......................................... 275,000
Donaldson, Lufkin & Jenrette Securities Corporation............................. 275,000
Lazard Capital Markets.......................................................... 275,000
Morgan Stanley & Co. International Limited...................................... 275,000
---------
Total........................................................................... 1,100,000
---------
---------

In the International Underwriting Agreement, the several International
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all of the 1,100,000 of the Shares offered hereby (other than Shares
covered by the over-allotment option described below) if any such Shares are
purchased. In the event of a default by any International Underwriter, the
International Underwriting Agreement provides that, in certain circumstances,
purchase commitments of the nondefaulting International Underwriters may be
increased or the International Underwriting Agreement may be terminated.

The International Underwriters have agreed to purchase such Shares from the
Company and the Selling Stockholder at the public offering price set forth on
the cover page of this Prospectus and the Company and the Selling Stockholder
have agreed to pay the International Underwriters the underwriting discount set
forth on the cover page of this Prospectus for each so purchased. The Company
and the Selling Stockholder have been advised by the International
Representatives that the several International Underwriters propose initially to
offer such Shares at the public offering price set forth on the cover page of
this Prospectus, and to certain dealers at such price, less a concession not in
excess of $.65, per Share. The International Underwriters may allow, and such
dealers may reallow, a concession not in excess of $.10 per share. After these
Offerings, the public offering price and such concessions may be changed. The
International Underwriters do not intend to confirm sales to any accounts over
which they exercise discretionary authority.

To the extent that the International Underwriters exercise such option,
each International Underwriter will have a firm commitment, subject to certain
conditions, to purchase the same proportion of the option Shares as the number
of Shares to be purchased and offered by such International Underwriter in the
above table bears to the total number of Shares initially offered by the
International Underwriters.

The Company and the Selling Stockholder have entered into a U.S.
Underwriting Agreement with the U.S. Underwriters named therein, for whom
Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities Corporation,
Lazard Freres & Co. LLC and Morgan Stanley & Co. Incorporated are acting as
representatives (the 'U.S. Representatives'), providing for the concurrent offer
and sale of 6,400,000 Shares in the United States and Canada.

[Alternate Underwriting section for International Prospectus]

The Selling Stockholder and the Company have granted to the U.S.
Underwriters options, exercisable during the 30-day period after the date of
this Prospectus, to purchase up to 640,000 and 320,000 additional Shares,
respectively, at the same public offering price per Share to cover over-
allotments, if any. The Selling Stockholder has the right to assume all, or any
part of the Company's portion of the Over-allotment Option. The Selling
Stockholder and the Company have agreed to pay the U.S. Underwriters the
underwriting discount set forth on the cover page of this Prospectus for each
additional Share so purchased. To the extent that the U.S. Underwriters exercise
such options, each U.S. Underwriter will have a firm commitment, subject to
certain conditions, to purchase the same proportion of the option Shares as the
number of Shares to be purchased and offered by such U.S. Underwriter bears to
the total number of Shares initially offered by the U.S. Underwriters.

The offering price and underwriting discount for the International Offering
and the U.S. Offering will be identical. The closing of each of the Offerings is
conditioned on the closing of the other Offering.

The International Underwriters and the U.S. Underwriters have entered into
an Agreement Between Underwriters and Managers (the 'Agreement Between')
pursuant to which each International Underwriter has severally agreed that, as
part of the distribution of the 1,100,000 Shares offered by the International
Underwriters (a) it is not purchasing any Shares for the account of any United
States or Canadian Person, (b) it has not offered or sold, and will not offer or
sell, directly or indirectly, any Shares or distribute any Prospectus relating
to the International Offering to any person within the United States or Canada
or to any United States or Canadian Person and (c) any dealer to whom it may
sell any of the Shares will represent and agree that it will comply with the
restrictions set forth in (a) and (b) and will not offer, sell, resell or
deliver, directly or indirectly, any of the Shares or distribute any prospectus
relating to the Shares to any other dealer who does not so represent and agree.
Each U.S. Underwriter has severally agreed that, as part of the distribution of
the 6,400,000 Shares offered by the U.S. Underwriters (i) it is not purchasing
any Shares for the account of anyone other than a United States or Canadian
Person, (ii) it has not offered or sold, and will not offer or sell, directly or
indirectly, any Ordinary Shares or distribute this Prospectus to any person
outside the United States or Canada or to anyone other than a United States or
Canadian Person and (iii) any dealer to whom it may sell any of the Shares will
represent and agree that it will comply with the restrictions set forth in (i)
and (ii) and will not offer, sell, resell or deliver, directly or indirectly,
any of the Shares or distribute any prospectus relating to the Shares to any
other dealer who does not so represent and agree.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between. As used in the
Agreement Between, 'United States' means the United States of America (including
the District of Columbia) and its territories, possessions and other areas
subject to its jurisdiction, 'Canada' means Canada, its provinces, territories,
possessions and other areas subject to its jurisdiction and `United States or
Canadian Person' means any person who is a national or resident of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada, or any political
subdivision thereof, any estate or trust the income of which is subject to
United States or Canadian federal income taxation, regardless of the source of
its income (other than a foreign branch of any United States or Canadian
Person), and includes any United States or Canadian branch of a person other
than a United States or Canadian Person.

Pursuant to the Agreement Between, each International Underwriter and each
U.S. Underwriter has represented that (i) it has not offered or sold and during
the period of six months from the closing date of the Offerings will not offer
or sell any Shares to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of

[Alternate Underwriting section for International Prospectus]

investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which do not constitute an offer to the public in the
United Kingdom for the purposes of the Public Offers of Securities Regulations
1995; (ii) it has complied and will comply with all applicable provisions of the
Financial Services Act of 1986 of Great Britain with respect to anything done by
it in relation to the Shares in, from or otherwise involving the United Kingdom;
and (iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of
Shares to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 of Great
Britain or is a person to whom such document may otherwise lawfully be issued or
passed on.

Pursuant to the Lock-Up Agreement, the Company, the Selling Stockholder and
certain other parties have agreed, subject to certain limited exceptions, not to
sell, or otherwise dispose of, or announce the offerings of, any Shares, or any
securities convertible into, or exchangeable for, or exercisable into, Shares
for a period of 180 days from the date hereof without the prior written consent
of Salomon Brothers Inc. See 'Shares Eligible for Future Sale.'

The International and U.S. Underwriting Agreements provide that the Company
and the Selling Stockholder will indemnify the several International
Underwriters and U.S. Underwriters against certain liabilities, including
liabilities under the Securities Act, or contribute to payments the
International Underwriters and the U.S. Underwriters may be required to make in
respect thereof.

The U.S. Underwriters have reserved for sale, at the initial public
offering price, approximately 160,000 of the Shares offered in the U.S. Offering
to directors, officers and employees of the Company, their business affiliates
and related parties, in each case as such persons have expressed an interest in
purchasing such Shares in the Offerings. The number of Shares available for sale
to the general public will be reduced to the extent such persons purchase such
reserved Shares. Any reserved Shares not so purchased will be offered by the
U.S. Underwriters to the general public on the same basis as the other Shares
offered in the U.S. Offering.

Prior to the Offerings, there has been no public market for the Shares.
Accordingly, the initial public offering price for the Shares has been
determined by negotiation among the Company, the Selling Stockholder, the
International Representatives and the U.S. Representatives. Among the factors to
be considered in determining the initial public offering price will be the
Company's record of operations, its current financial condition, its future
prospects, the market for its products, the experience of management, the
economic conditions of the Company's industry in general, the general condition
of the equity securities market, the demand for similar securities of companies
considered comparable to the Company and other relevant factors. There can be no
assurance, however, that the prices at which Shares will sell in the public
market after the Offerings will not be lower than the price at which they are
sold by the International Underwriters and the U.S. Underwriters.

[Alternate Underwriting section for International Prospectus]

LEGAL MATTERS

EXPERTS

[Alternate Cover for International Prospectus]

THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF SHARES OFFERED HEREBY IN THE
UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERVICES ACT 1986 AND
THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995 WITH RESPECT TO ANYTHING DONE
BY ANY PERSON IN RELATION TO THE COMMON STOCK IN, FROM OR OTHERWISE INVOLVING
THE UNITED KINGDOM MUST BE COMPLIED WITH. SEE 'UNDERWRITING.'
------------------------------

TABLE OF CONTENTS

PAGE
----

Additional Information.............................................................................................. 2
Prospectus Summary.................................................................................................. 3
Risk Factors........................................................................................................ 8
Use of Proceeds..................................................................................................... 15
Dividend Policy..................................................................................................... 15
Dilution............................................................................................................ 16
Capitalization...................................................................................................... 17
Selected Consolidated Financial Data................................................................................ 18
Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 19
Business............................................................................................................ 28
Management.......................................................................................................... 47
Principal and Selling Stockholders.................................................................................. 58
Certain Relationships and Transactions.............................................................................. 59
Description of Indebtedness......................................................................................... 60
Description of Capital Stock........................................................................................ 63
Shares Eligible for Future Sale..................................................................................... 67
Certain United States Tax Consequences
to Non-United States Holders...................................................................................... 68
Underwriting........................................................................................................ 70
Legal Matters....................................................................................................... 73
Experts............................................................................................................. 73
Index to Financial Statements....................................................................................... F-1

------------------------------

7,500,000 SHARES
THE GENERAL CHEMICAL
GROUP INC.

COMMON STOCK
($.01 PAR VALUE)

[LOGO]
SALOMON BROTHERS
INTERNATIONAL LIMITED

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

LAZARD CAPITAL MARKETS

MORGAN STANLEY & CO.
INTERNATIONAL

PROSPECTUS
DATED MAY 15, 1996