SET Announcements

foreign refineries and hence become a complex refinery. The Company expects that the project will be started up in the forth quarter of 2008 and will increase EBITDA from average Baht 2,000-4,000 million to approximately Baht 6,000 - 8,000 million after the project reach its completion subject to oil price at the period. The project cost (included contingency reserve) totaling Baht 15,369 million or equivalent to USD 378 million. The Company has appointed CTCI Overseas Corporation Limited and CTCI (Thailand) Co., Ltd. to be contractors of the PQI under fixed price, date certain and performance guaranteed arrangement. The Company has achieved its financial closure for sources of funds for the project since May 16, 2006. The overall project progress as of June 2008 was 92.7%. The Company has closely supervised and made utmost cooperation with the contractor and the Company confident that the construction completion is achievable within 2008. Foreign Exchange Another factor which may have effect on the Company's performance is the foreign exchange fluctuation (mostly Baht and USD). The Company purchases oil on US dollar term and sell its product on US dollar related basis and records transactions as trade payable and trade receivable respectively. Since the Company has assets greater than liabilities, the appreciation of Thai Baht will cause the decrease in net assets and vise versa. However, the Company has had the policy to leveling differences of US dollar assets and liabilities whenever it becomes appropriate. In the mean time, the Company has partly mitigated this risk by utilizing some financial instruments in the market. After the Company has completed the loan refinancing, it would have achieved more ability and flexibility to manage the risk from foreign exchange. Loan Refinancing. On July 2, 2008, the Company has successfully reached the refinancing of 23,734 Million Baht with four local and two international banks. The refinancing comprises of the long-term loan of Baht 16,500 Million to cover refinancing the previous KTB and PQI loans, funding for EURO IV and other energy related projects, as well as the short-term loan facility of Baht 7,234 Million as a normal working capital. Having refinanced, the Company has to pay the prepayment and cancellation fee total of Baht 174 Million in addition to the refinancing fee of Baht 128 Million, yet there are several benefits from the refinancing as follow: 1. The increase of the Company's financial capability for future investment on top of raising flexibility for normal operation due to the repayment schedule has been extended from 7 to 9 years with lower repayment amount during the first 5 years. 2. The saving from lower interest rate as interest basis was changed to, THBFIX link, which is lower compared to the previous one - MLR link, however, there is still risk of that THBFIX moves higher than MLR. 3. The Company's financial risk management capability is significantly improved in view of the fact that the THBFIX allows the Company to perform both Interest Rate Swap and Cross Currency Swap at appropriated rates. 4. As the basis of unsecured loan along with appropriated terms and conditions, the Company has more financial flexibility to support any future investment or any additional funding to broaden business opportunities. Diesel Price Discount The resolutions of the Board of Directors meeting No.6/2008, held on May 29, 2008, approved the granting the diesel price discount to 3 groups, specifically, public transportation operators, fishing boats and farmers, to alleviate their suffering from the problem of high oil price and to have continuing domestic consumptions without cessation that may cause an effect on the Company's long term production, in the rate of no more than 3 Baht per liter within a period of no more than 6 months (June-November 2008), total amount no exceeding Baht 261 million. However if at any time within the 6-month period, the Company suffers loses or is in default of its debt payment obligation and/or in breach of contract with the creditors under the loan agreements, debentures or debt instruments, the Company can stop this alleviation program.