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Form 247-7 (Sor Jor. 36/2546) Application for Asking Resolution of Shareholders' Meeting on Acquisition of New Securities with Waiver on Mandatory Tender Offer* 19 September 2005 Dear All shareholders of The Bangchak Petroleum Public Company Limited, We, PTT Public Company Limited (Applicant or PTT), whose office is located at Vibhavadi Rangsit Road, Jatujak, Bangkok, Tel. (02) 537-3985, wish to ask for the resolution of the shareholders' meeting of The Bangchak Petroleum Public Company Limited (the Business or BCP) to approve our acquisition of new securities in the Business with a waiver on a mandatory tender offer for all securities of the Business. The details of which are as follows: 1. Proposed number of securities asking for the resolution from the shareholders Type Series Proposed number Proposed percentage Proposed price Proposed value of shares/ of shares/reserved1 of each unit of securities reserved share shares compared of securities asking for asking for to (a) asking for the the resolution resolution (b) (c) Total Total issue voting of the rights business2 in the business3 1.ordinary not more 22.53 22.53 14-16 3,692,000,000- shares than 4,528,000,000 2,83,000,000 2.convertible debentures - Series = Conversion ratio: 1 unit of convertible debenture (at the value of Baht 10,000) : the price of each new share Conversion period: not more than 10 years Conversion price: Baht 14-16 - Proposed number of shares/reserved shares asking for the resolution = not more than 135,000,000 - Total issued share of the Business = 10.75 - Total voting rights in the Business = 10.75 - Proposed price of each unit of securities asking for the resolution (b)= 10,000 - Proposed value of securities asking for the resolution (c) = not more than 1,890,000,000 Total issued shares of the business (ordinary shares) + (convertible debentures) = 33.28 Total voting rights in the business (ordinary shares) + (convertible debentures) = 33.28 Total of proposed value of securities asking for the resolution (c)= 5,582,000,000-6,148,000,000 Remark: (a) The shareholding proportion is an estimate calculated from the maximum number of shares/reserved shares. The final shareholding proportion may vary depending on the final price of the ordinary shares/convertible debentures. (b) The price of each unit of the securities may be adjusted depending on the investment cost of the PQI Project and the outcome of the financial due diligence. (c) The value of the securities may be adjusted in order to reflect the price per unit of the securities which may vary depending on the investment costs of the PQI Project and the outcome of the financial due diligence. It is anticipated that PTT and BCP will enter into the subscription agreement for ordinary shares and convertible debentures after the shareholders' meeting of BCP has approved its entering into of this transaction, which is expected to be in November 2005. It is anticipated that the subscription for the acquisition of new ordinary shares and convertible debentures by PTT shall be subject to conditions precedent. The major conditions precedent are as follows: * the result of the confirmatory due diligence exercise is satisfactory to PTT; * PTT has obtained a waiver of the mandatory tender offer by way of Whitewash for its acquisition of BCP's new shares both from the private placement and from the conversion of the convertible debentures; * in the event that the Trade Competition Board announces its notification that this investment in BCP by PTT shall be subject to prior approval from the Trade Competition Board, PTT must have obtained such approval without any conditions that may have a negative impact on PTT; * the financing from financial institutions, the EPC contractor and other contracts for the Product Quality Improvement Project (PQI Project) including approval on environmental impact and other licenses for the PQI Project obtained by BCP must be satisfactory to PTT; * the report of the independent engineer is satisfactory to PTT; * BCP has obtained all necessary approvals at its board of directors' meeting and extraordinary meeting of shareholders as required by law, e.g. increase of capital and the amendment of its articles of association to facilitate the nomination of representatives from PTT to be new BCP directors in a number to be mutually agreed; * BCP has obtained consent from its existing lender (i.e. Krung Thai Bank Public Company Limited) to proceed with the PQI Project; * the financing plan of BCP for the PQI Project must be in a structure agreed between PTT and BCP; * PTT and BCP have executed the contracts relating to their business collaboration, e.g. crude supply, product offtake based on the key terms set out in the subscription agreement; * from the execution date of the subscription agreement up to the closing date, there must be no material adverse change on the business operations of BCP except for any change arising from normal volatility in the oil business. 2. Current shareholding Name Type of shares Number of Percentage of Percentage of the shares held the shareholding voting rights compared to the compared to the total issued total voting shares of the rights in the Business4 Business5 I.Applicant ordinary shares - - - Common stock 52,240,000 7.71 7.71 depository receipts of the Business II.Person(s) in the same group of the Applicant - - - - III.Person(s) referred to in Section 258 of the SEC Act, of the persons in I.and II. - - - - Total 52,240,000 7.71 7.71 3. Expected number of securities and expected maximum voting rights after completion of the acquisition in Item 1. I. Applicant Type of secrities = Ordinary shares - Number of shares/reserved shares held before asking for the resolution6 = - - Proposed number of shares/reserved shares7 askingnot for the resolution = not more than 283,000,000 - securities to be held after completion of the acquisition of securities according to 1 (a) (Number of shares/reserved shares8) = 22.53 and (percentage of the shares/reserved shares compared to the total voting rights in the business9) = 22.53 Type of securities = Preferred shares - Number of shares/reserved shares held before asking for the resolution6 = - - Proposed number of shares/reserved shares7 askingnot for the resolution = - - securities to be held after completion of the acquisition of securities according to 1 (a) (Number of shares/reserved shares8) and (percentage of the shares/reserved shares compared to the total voting rights in the business9) = - Type of securities = Share warrants - Number of shares/reserved shares held before asking for the resolution6 = - - Proposed number of shares/reserved shares7 askingnot for the resolution = - - securities to be held after completion of the acquisition of securities according to 1 (a) (Number of shares/reserved shares8) and (percentage of the shares/reserved shares compared to the total voting rights in the business9) = - Type of securities = Convertible debentures - Number of shares/reserved shares held before asking for the resolution6 = - - Proposed number of shares/reserved shares7 askingnot for the resolution = not more than 135,000,000 - securities to be held after completion of the acquisition of securities according to 1 (a) (Number of shares/reserved shares8) = 10.75 and (percentage of the shares/reserved shares compared to the total voting rights in the business9) = 10.75 Type of securities = Common stock depository receipts of the Business - Number of shares/reserved shares held before asking for the resolution6 = 52,240,000 - Proposed number of shares/reserved shares7 askingnot for the resolution = - - securities to be held after completion of the acquisition of securities according to 1 (a) (Number of shares/reserved shares8) = 4.16 and (percentage of the shares/reserved shares compared to the total voting rights in the business9) = 4.16 Type of securities = Other (if any) = - II. Person(s) in the same group of the Applicant = - III.Person(s) referred to in Section 258 of the SEC Act, of the persons in I. and II. = - Total of securities to be held after completion of the acquisition of securities according to 1 (a) of Number of shares/reserved shares8 = 37.44 and of percentage of the shares/reserved shares compared to the total voting rights in the business9 = 37.44 Remark: (a) The shareholding proportion is an estimate calculated from the maximum number of shares/reserved shares. The final shareholding proportion may vary depending on the final price of the ordinary shares/ convertible debentures. 4. Convertible securities held in the Business or a party to any agreement which enables them to acquire additional shares or convertible securities in the Business. Currently, the Applicant and the persons referred to in Section 258 of the SEC Act of the Applicant and the persons in the same group as the Applicant neither hold convertible securities in the Business nor are a party to any agreement which enables them to acquire additional shares or convertible securities in the Business. 5. Information about the Applicant (1) Nature of business/occupation PTT is a public limited company duly registered on 1 October 2001 as a result of the privatisation of the Petroleum Authority of Thailand under the State Enterprise Capital Act B.E. 2542 (1999). PTT is currently a listed company on the Stock Exchange of Thailand. PTT is mainly engaged in petroleum businesses.PTT also makes investments in the subsidiary companies, associated companies and joint ventures which conduct the businesses in relation to petroleum and natural gas exploration and production, oil refinery, oil marketing and trading at the international level and petrochemical business. (2) Registered and paid-up capital As at 30 June 2005, PTT has the paid-up capital of Baht 27,972,457,250, divided into 2,797,245,725 ordinary shares at the par value of Baht 10 per share. (3) List of the top ten shareholders10, 11 of the Applicant based on the information as at 20 July 2005 are as follows: Name of shareholder Number of Shareholding Voting right shares held percentage12 percentage13 The Ministry of Finance 1,467,750,743 52.48 52.48 Vayupak Fund I under the management of Krung Thai Bank Pcl. 435,800,000 15.58 15.58 State Street Bank and Trust Company 41,357,392 1.48 1.48 Barclays Bank PLC 35,125,000 1.26 1.26 HSBC (SINGAPORE) NOMINEES PTE. LTD. 32,616,368 1.17 1.17 NORTRUST NOMINEES LTD. 26,832,736 0.96 0.96 SOCIAL SECURITY OFFICE 25,041,900 0.90 0.90 STATE STREET BANK AND TRUST COMPANY, FOR 24,652,899 0.88 0.88 GOVERNMENT OF SINGAPORE INVESTMENT CORP. 21,658,100 0.77 0.77 GOVERNMENT PENSION FUND 21,220,550 0.76 0.76 HSBC BANK PLC - CLIENTS GENERAL A/C 20,877,700 0.75 0.75 (4) List of the Applicant's Board of Directors as at 19 September 2005 are as follows: Name Title 1. Mr. Cherdpong Siriwit Chairman 2. Mr. Prasert Bunsumpun1 President 3. Mr. Pala Sookawesh Director 4. Mr. Somchai Wongsawat Director 5. Gen.Dr.Chaisuk Ketudat Director 6. Mr. Metta Banturngsuk Director 7. Mr. Chakramon Phasukavanich Director 8. Mr. Suparut Kawatkul Director 9. Dr. Ampon Kittiampon Director 10.Mrs.Pannee Sathavarodom Director 11.Dr. Pisanu Sunthraraks Independent Director 12.Dr. Olarn Chaipravat Chairman of the Audit Committee 13.Asso.Prof.Dr.Suchart Thada-Thamrongvech Audit Committee 14.Dr. Phadhadej Dhamcharee Audit Committee 15.Mr. Prapun Naigowit Audit Committee Remark: (1) The director who is the executive and responsible for management roles in PTT. 6. Relationship between the Applicant and the Business, its management, controlling persons or major shareholders. At present, there is a connected transaction between PTT and BCP concerning the sale and purchase of feedstock. PTT is the supplier of both domestic and offshore feedstock for sales to industrial operators. The supply of feedstock by PTT to BCP has been made under normal business terms and conditions. Furthermore, PTT and BCP have entered into the transaction of sale and purchase of oil products, by which PTT will give 6-month prior notice of oil demand to BCP. Notwithstanding the above notice, the discussion on oil demand and supply is usually made between them on a monthly basis. The price is based on the market price and normal business terms and conditions. On the date of this application, the Applicant is a shareholder of the Business representing 7.71% of the paid-up capital of the Business (through the common stock depository receipts of the Business). The Applicant has also designated its two representatives to act as directors of the Business, namely: Title in the Applicant/Title in the Business 1) Mr.Apisit Rujikeatkamjorn Senior Executive Vice President/Director 2) Mr.Pichai Chunhavajira Senior Executive Vice President/Director The Ministry of Finance, the major shareholder of PTT and BCP, has not entered into any agreement with PTT in relation the management of BCP. The disclosure on material connected transactions between the Ministry of Finance and PTT can be found in Form 56-1 of PTT. 7. List of persons referred to in Section 258 of the SEC Act of the Applicant who are the shareholders of the Business as at the closing date of the share register book, in order to determine the shareholders who are entitled to attend the shareholders' meeting, i.e. 19 September 2005. The persons referred to in Section 258 of the SEC Act of the Applicant do not hold shares in the Business on 19 September 2005. 8. List of the Board of Directors of the Business as at 19 September 2005 and the expected Board of Directors after the acquisition in Item 1. are as follows: Before the date of this application Name Title 1. Gen. Thawat Ket-angoor Chairman and Independent Director 2. Mr. Anusorn Sangnimnuan2 President 3. Mr. Songpope Polachan1 Director 4. Mr. Apisit Rujikeatkamjorn Director 5. Mr. Pichai Chunhavajira2 Director 6. Mr. Sayan Satangmongkol Director 7. Miss Chularat Sutheethorn1 Director 8. Prof. Dr. Chai-anan Samudavanija Independent Director 9. Mr. Anusorn Tamajai Independent Director and Chairman of the Audit Committee 10. Mr. Nipon Surapongrukchareon Independent Director and Audit Committee 11. Mr. Wirat Iam-Ua-Yut Independent Director and Audit Committee Remark: (1) Directors who are the representatives of the Ministry of Finance. (2) The Directors who are the executives and responsible for management roles in the Business. After the acquisition in Item 1 If the Applicant acquires the securities as set out in Item 1 to the extent that the Applicant holds more than 25% of the total issued shares in the Business, the Applicant will consider increasing its representatives to act as directors of the Business in proportion to its shareholding after the acquisition in Item 1. The Applicant's designated representatives may be new directors or directors replacing the resigning directors which will be appointed in compliance with the Business' articles of association and applicable laws and subject to BCP's shareholders' approval. The Applicant anticipates that there will be 2 additional directors from the Applicant, being 4 directors from the Applicant in total. 9. Operation plan after the acquisition in Item 1 9.1 Business plan and policy Policy for the PQI Project and the business collaboration PTT wishes to make additional investments in BCP's shares and convertible debentures in order for BCP to use as its capital investment in the PQI Project. The PQI Project will enable BCP to convert its fuel oil, which currently amounts to 30% - 35% of its whole productivity, to diesel and gasoline which will be in greater demand in the future and, at present, the price between fuel oil and diesel and gasoline are much different. That means BCP's products will have high potential to generate more value. The PQI Project will also enhance the production capacity for diesel and gasoline which may be shortage in the future and must be imported. It also reduces the production of fuel oil for which supply is more than demand and must be exported due to its replacement by natural gas. In addition to the investment in new shares and convertible debentures of BCP, PTT finds it necessary to establish effective business collaboration with BCP in order to maximise the overall benefits for both PTT and BCP, a summary of which is as follows: * PTT will manage the supply and transportation of feedstock to BCP. By this method, the cost for the procurement of feedback incurred by BCP will be reduced because the increased volume of PTT's feedstock procurement will lead to economies of scale; * PTT and BCP will jointly re-organise the oil distribution channel by having BCP be the centre for the distribution of oil products in Bangkok and the Greater Bangkok.In this event, PTT will fully swap the oil products for the central and regional areas with BCP. This means BCP need not transport the oil to the regional areas.This strategy will support the government's policy to enhance the capacity of BCP's depot and PTT's Prakanong depots as the oil distribution hub of Bangkok and the Greater Bangkok. Finally, the oil transportation and distribution costs and expenses will be significantly lessened in the interest of PTT, BCP and the country in overall; and * It is to solve the problem on the business operation of BCP in the long run by converting fuel oil with the installation of hydro cracker to help production of high quality diesel and gasoline to serve market demand in the future. Investment policies of PTT in the refinery business: With regard to the investment policies of PTT in the refinery business both for new investment and the expansion or enhancement of the existing capacity, PTT will take into account various factors for the acquisition of shares or the business, i.e. trends in the business growth of the targeted investment, whether it can generate the value and economic profit. The enhancement of the competitive capacity of PTT by way of investment may be made directly by PTT or through a company in PTT's group depending mainly on the appropriateness and efficiency of such company. The investment in BCP is part of the investment in the refinery business of PTT made on an arm's length basis. From the shareholding structure within the group, PTT has established a business strategy and policy which attempts to eliminate any conflict of interest, which will be the way to create precision and to prevent the conflict of interest that may arise. This strategy can be summarised as follows: * The price of the feedstock and petroleum products will be treated as a commodity where the price references prices from other sources. Therefore, it will be a sale and purchase based on a price from the market generally accepted in the world. * The business conduct of PTT in the refinery business is based on transparency with a long term commitment and under its normal business terms and conditions. * The supervisory policy is set up with transparent administration and will be considered by the Audit Committee of each company. In order to balance it with the power of the management, the board of directors of each company will approve the investment and the independent directors will look after and take care of the benefits of the minority shareholders. * The structure of each company in relation to the business operations is set up clearly. Policy and business administration plan in the next 12 months The Applicant has no intention to, within the next 12 months, significantly change the business plan of BCP including any reorganisation of the (more)