Sale of Fixed Assets & Land Use Rights of Subsidiary Company

BackMay 25, 2007

-TRANSLATION-

RPC/HO-SET/ELCID-013/07

May 25th, 2007

Subject: Sale of Fixed Assets and Land Use Rights of Subsidiary Company

To President The Stock Exchange of Thailand

Rayong Purifier (Public) Co. Ltd. (RPC) would like to report the Resolution made in the Board of Directors' Meeting No. 6/2007 held on Thursday 24th May 2007 at 15.30-17.30 hrs. as follows:

VTN-P Petrochemical Joint Venture Co., Ltd. (VTN-P), Subsidiary Company of RPC, holding the Investment License to establish a small sized petrochemical plant in the Socialist Republic of Vietnam, would like to sell their Fixed Assets and Land Use Rights at 8,350,000 USD to an interested entity which requires Shareholders' Approval.

The Board of Directors of RPC 60% Shareholder of VTN-P which increase to 100% by The Board's Resolution on April 27th, 2007 during theshareholder purchasing process. therefore, passed the consent for VTN-P to propose the Sales of Assets and Land Use Rights to the interested entity, to sign the Sales Agreement(s) and proceed with this transaction.

The details of the transaction will be as follows:

1. Date of Transaction: Within May 2007
2. Parties Involved:
  Seller: VTN-P Petrochemical Joint Venture Company Limited
  Buyer: Vinashin Petroleum Investment & Transportation Joint Stock Company
  Seller & Buyer Relationship: Non-Related & Non-Connected
3. Characteristics of Transaction:
  - Category of Transaction: Sales of VTN-P's Fixed Assets and Land Use Rights
  - Sales Price: 8,350,000 USD (Approx. 288,075,000 Baht)
  - Rules of Information Concerned: Total Value of the Considerations
(288.08 Million Baht/2,852 Million Baht)x100=10.10%
4. VTN-P Information:
  - Nature of Business: Processing and Trading of Petrochemical Products in Vietnam, Production Capacity 2,500 Barrels/day
  - Registered & Paid-up Capital: 3,500,000 USD (Approx. 120,750,000 Baht)
  - Total Assets: 6,804,398 USD (Approx. 251,966,861 Baht)
  - Use of Proceeds from Sales: Debts & Loan Repayments and Deposits in Banks
  - Relationship with RPC: RPC's 60% Shareholder of VTN-P which increase to 100% by The Board's Resolution on April 27th, 2007 during theshareholder purchasing process.
5. The Details of Assets to be Sold:
  - Assets to be Sold: Production Plant, Tank Farm, Jetty and Land Use Rights
  - Net Book Value: 6,208,690.83 USD (Approx. 219,911,829.26 Baht)
  - Total Value of Considerations: 8,350,000 USD Cash to be received in 2007-2008

6. Financial Status of VTN-P:
The Separated Financial Status of VTN-P for the years 2005, 2006 and 1Q2007 (as per Financial Statements reviewed by the Auditor) are as follows:

Unit (Million Baht)
Balance Sheets
as of 31-3-07
2006
2005
Current Assets
5.70
6.41
76.61
Property, Plant & Equipment (net)
229.91
233.86
232.38
Total Assets
251.96
258.68
328.58
Current Liabilities
65.63
62.36
105.46
Non-Current Liabilities
124.06
124.06
102.21
Capital
125.08
125.08
125.08
Retained Earnings (Losses)
(62.80)
(52.82)
(4.17)

 

Income Statements
1Q2007
2006
2005
Sales Income
0
37.16
6.63
Cost of Sales
0
45.07
6.95
Selling & Administrative Expenses
9.98
41.02
3.57
Net Profit (Loss)
(9.98)
(48.92)
(3.89)

7. Expected Benefits from the Transaction:
From the proceeds of this transaction, VTN-P will repay all outstanding debts, including approx. 2 Million USD of debts to RPC. This amount will contribute to Company's Cash Flow and Liquidity.

VTN-P will also use the proceeds from the Sales of Assets to fully repay Long Term Loan that was fully guaranteed by RPC. After the repayment, RPC will be released from all obligations. The long term Debt-to-Equity (D/E) Ratio of the Company will become zero and the capability and flexibility for the Company to acquire new loan be increased.

This transaction will end the prolonged business difficulties arisen from changing environment of Vietnamese Local Government policies. The burden to record approx. 2 Million Baht/month as Loss from Investment in VTN-P in the Company's Books of Accounts will end. The Company will consider the future strategy towards Vietnam.

Please be so informed.

 

Sincerely Yours,

 

Ms.Siraporn Krishnakan
Assistant Managing Director

 

Investor Relations / Corporate Administration Office
Tel: 0 2515-8600
E-mail : ir@rpcthai.com