SET Announcements

1600 / 118 / 2003 July 8, 2003 The Stock Exchange of Thailand 62, Ratchadapisek Road, Klongtoey Bangkok 10110 Attention : President of The Stock Exchange of Thailand Subject : Filing the summary of the cabinet resolution for the Bangchak Petroleum Public Company Limited (BCP)'s business operation problem Dear sir , As the State Enterprise Policy Committee had proposed the solution in the Bangchak Petroleum Public Company Limited (BCP)'s business operation problem to cabinet meeting on July 8, 2003 so as to approve the solutions of the Business and Financial restructuring: At present, the Cabinet Meeting already completed and has come up with the following resolutions : Acknowledgement of the results of the Corporate Due Diligence and the Business and Financial restructuring study, Approval of the Business and Financial restructuring plan as well as the additional Government supports following the State Enterprise Policy Committee proposed, Assigns BCP to perform in accordance with the financial restructuring plan and to complete all restructuring process within 6 months, and assigns Ministry of Finance to guarantee for the capital protected or do any other measures to protect the initial capital issued by the mutual fund or SPV, in case necessity. Deputy Prime Minister (Mr. Somkid Jatusripitak), the chairman of the State Enterprise Policy Committee, had reported the cabinet as follow : 1. The Ad-Hoc Committee chaired by Chai-Anan Samudavanija, and BCP has hired a consultant,Turnaround Co.,Ltd., to study the Company's business and financial restructuring plan and verify the corporate and financial status. These study and verification were proposed to the State Enterprise Policy Committee Meeting No. 2/2003 on June 2, 2003. The details are as follows: 1.1 The accounting verification (Accounting Due Diligence) confirms that the Company's accounting record is in accordance with the accounting standard and the generally accepted accounting principles. In addition, the Company can generate approximately Baht 1,389 million of earning before interest, tax, depreciation and amortization (EBITDA) per year during the year 1998 - 2002, as well as, Baht 1,887 million of EBITDA per year during the year 2003 - 2007. 1.2 BCP has a potential to operate in the long run, if the Company receives the corporate and financial restructuring and Government supports as following: 1) Business Restructuring : the Company should clearly separate its financial statement into refining and marketing businesses in order to monitor the performance of each business effectively. The Company should also separate those 2 businesses into the different entities in the next 2 - 3 years by forming the marketing business as a listed company and the refining business as subsidiary. In addition, the Company should control the policy of the Bangchak Greennet Co., Ltd., who operates the Company's service stations, in line with its marketing policy, as well as, consolidate the financial statements. The Company should sell off the non- core assets so as to reduce its debt and set up the strategic alliance among Thaioil Co., Ltd., PTT Plc., and BCP. 2) Financial Restructuring:the Company has a potential to acquire Baht 12,500 - 14,500 million of loans from financial institutions by utilizing the projected Company's EBITDA, the valuation of Company's assets, and the extension of the lease term for the site occupied by Bangchak refinery. Such financial restructuring will reschedule its debt in line with the Company's cash flow, as well as, shall not increase the guarantee debt burden for the Government. For the deficit fund of Baht 5,000 - 7,000 million, the establishment of the Mutual Fund or Special Purpose Vehicle (SPV) worth Baht 7,000 million will invest in Baht 4,000 million of the Company's convertible bonds and Baht 3,000 million of the Company's common shares with the condition that MOF guarantee for the capital protected or do any other measures to protect the initial capital issued by the mutual fund or SPV. All restructuring process shall be done simultaneously and completed with in 6 months. 3) Additional Government Supports : in order to achieve the business and financial restructuring, Government should give the supports for some matters, for example, the extension of lease term for the site occupied by Bangchak refinery from 12 years to 30 years to increase the confidence of the creditors, relaxing the Security and Exchange Commission's regulation concerning the tender offer in the process of capital injection, signing formal agreement with Thaioil Co., Ltd. and PTT Plc. for business co-operations and increase volume of Phet crude refined at Bangchak refinery, etc. 2. The State Enterprise Policy Committee has concluded that the BCP has the potential to further operate in the future, if the Company receives the business and financial restructuring and the supports from related parties. These restructuring plan proposed by the Ad-Hoc Committee shall increase the confidence that BCP can generate the positive EBTIDA in the future, as well as, shall not increase the guarantee debt burden for the Government (at present, MOF guarantees Baht 8,100 million of BCP's debt). Therefore, the Committee has agreed to the solution in the Bangchak Petroleum Public Company Limited (BCP)'s business operation problem as the Company's consultant proposed. Please inform accordingly Yours sincerely, (Kiatchai Maitriwong) Assistant Vice President Corporate Planning Office Corporate Planning Office Tel: 0-2335-4583