Debt to Equity Conversion Scheme - The Stock Exchange of Thailand

(Additional Financial Statement Q1/2011)
Debt to Equity Conversion Scheme
1. Procedures, Objectives and Policy of Debt to Equity Conversion
1.1 Objective and policy of Debt to Equity Conversion
According that G Steel Public Company Limited (“GSTEEL”), a parent company of the Company which holds
43.9% of the total shares sold of the Company, has the plan to issue and offer 11,920,000,000 newly issued
ordinary shares with the par value of Baht one per share (“GSTEEL New Shares”) to ArcelorMittal
Netherland B.V. (“AM”) at the offering price of not lower than Baht 0.63 per share. This price is not lower
than 90% of the weighted average of GSTEEL’s share price as measured by the trading on the SET
during the period from February 7, 2011 through February 28, 2011. This period represents fifteen
consecutive business days prior to the date on which the Board of Directors of the Company passed the
resolution to propose the agenda to issue the GSTEEL New Shares to the meeting of shareholders for
approval. The total subscription proceeds from the GSTEEL New Shares has a total value of up to Baht
7,509,600,000 (the “AM Transaction”). A significant restructuring and reduction of GSTEEL’s liabilities is a
required condition of the AM Transaction. Therefore, the following Debt to equity conversion shall take
place; amongst other restructuring:
(i)
(ii)
the debt to equity conversion in GSTEEL, a major shareholder of the Company, for the
amounts owed to Kwang Sogo Investment Company Limited and Pacific Harbor
Advisors Pte. Ltd.; and
the debt to equity conversion in the Company for the amounts owed to GSTEEL and
Oriental Access Co., Ltd (“OA”) (the “Debt to Equity Conversion Program”).
Given the debt reduction conditions required by the AM Transaction, the Company is required to
carry out the debt to equity conversion for the debt owed to GSTEEL and OA (a subsidiary in which 99.98% of
the total shares are owned by GSTEEL), therefore, the Company is accordingly required to issue and offer the
newly issued ordinary shares to GSTEEL and OA in accordance with the said debt to equity conversion
(hereinafter referred to as “the Transaction”)
1.2 Procedures of Debt to Equity Conversion
To allocate 6,854,166,667 newly issued ordinary shares, with a par value of sixty-nine satang per share,
to the creditors, GSTEEL and OA, in accordance with the Debt to Equity Conversion Program at the price
of Baht 0.24 per share, being the price not lower than 90% of the Market Price.
“Market Price” means the weighted average of the Company’s share price trading on the SET, fifteen
consecutive business days prior to the date on which the Board of Directors passes the resolution to

(Additional Financial Statement Q1/2011)
propose the agenda in offering to sell the Company’s newly issued ordinary shares to the meeting of
shareholders for approval, which is the period during February 7, 2011, and February 28, 2011, equaling
to Baht 0.26 (Information from SETSMART in www.setsmart.com of the SET).
Such offering price is lower than the par value of the Company’s shares so the Company is required to
comply with Section 52 of the Public Limited Company Act B.E. 2535 (as amended) (“PLCA”), and obtain
approval from the meeting of shareholders.
1.3 Rationale, advantage and disadvantage and benefits which the Company will obtain from Debt
to Equity Conversion Program
In the second half of 2008, the world economic crisis caused significant fluctuations in steel
product and raw material pricing. As a result, the Company and GSTEEL have suffered repeated losses
since 2008 whereby the Company’s liquidity and working capital position has been significantly
challenged. Also, the Company and GSTEEL defaulted on their debt payment to certain major creditors
together with defaulted on the payment to financial institution. Moreover, the Company’s general lack of
liquidity has caused the Company to make an allowance for assets reflecting the uncertainty and lack of
liquidity which such allowance has a significant impact on the Company’s shareholders.
As a result of the aforementioned circumstances, the Company and GSTEEL’s auditor, KPMG
Phoomchai Audit Limited, has rendered its disclaimer opinion to the Company’s financial statement for
the year ending 31 December 2009 and GSTEEL’s financial statement for the year ending 31 December
2008 and 2009 whereby, according to the rules and regulations of the Stock Exchange of Thailand
(“SET”), if the Company and GSTEEL failed to rectify the qualified audit opinion for 3 consecutive years,
then the Company and GSTEEL may be delisted from the listed company under the SET.
In this regard, the Company is required to seek the best alternative solution to help
strengthening the Company’s financial situation whereby there are several possible solutions that were
explored as a remedial package for the Company’s current challenged financial position including debt
to equity conversions, capital increase via right offering or public offering, sourcing the financial support
form new financial institutions and attracting a strategic investor.
Nevertheless, with the current financial circumstances of the Company, sourcing the financial
support form new financial institutions together with the capital increase via right offering or public
offering can be extremely difficult and even if the Company can attract new fund, the current financial
circumstances of the Company cannot be completely resolved.

(Additional Financial Statement Q1/2011)
As a result of the aforementioned rationale and upon the careful and thorough consideration of
the management team, the capital increase by a new strategic investor is the most suitable solution for
the Company because apart from the new capital injection by the strategic investor, the Company will
procure certain benefit from the strategic investor that can help the Company with the turnaround of its
operation such as management, purchasing, production technology, sales and marketing and etc. The
support from the strategic investor will not only improve the Company’s operation, but also enhance the
plant’s production capability. As aforementioned, this solution will help improving the Company’s
operation and turning around the Company’s profitability which will benefit the Company’s shareholders.
Other supports under this Transaction include the provision of USD 500 million credit facilities by AM to
the Company and GSTEEL for working capital, capital expenditure and debt restructuring.
Furthermore, AM will further assist the ongoing operations of GSTEEL and the Company by
entering into a business assistance agreement with GSTEEL and the Company pursuant to which AM will
provide management, procurement, commercial, technical and operations-related services to GSTEEL
and the Company. These services will include commercial integration and best practices such as advice
on sales and purchase integration, profit optimization, competitive raw material purchasing, developing
strategic, operational and financial plans and marketing by leveraging on AM’s distribution network.
Production related services will include operational and technical advice and assistance that will seek to
improve production targets and engineering standards to bring them on par with market leading
international standards.
2. Source of Debt
The debt claims in the Company that will be subject to the Debt to Equity Conversion Program are as
follows:
2.1 GSTEEL is owed approximately Baht 1,069 million by the Company as at 31 December
2010. The principal claims are primarily a result of an offset agreement between GSTEEL, the
Company and GSTEEL’s customer (the “Counterparty”) in which the Counterparty was a debtor
to GSTEEL and agreed to offset the amounts owed to GSTEEL with the amounts owed by the
Company to the Counterparty. The debts owed to GSTEEL by the Counterparty and the debts
owed by the Company to the Counterparty were both separately incurred in the ordinary course
business. The offset agreement was properly approved by the Board of Directors of both
GSTEEL and the Company. The proposed conversion price per share for this debt conversion
is subject to the pricing determined at the closing of the transaction based on the prevailing
debt levels of the Company at that time. The price per share will be the same price per share

(Additional Financial Statement Q1/2011)
paid by the private placement cash subscription by GSTEEL contemplated by this
Transaction. GSTEEL currently holds 22.33% of the total share sold of the Company. Assuming
the same above-referenced parameters, GSTEEL’s ownership stake in the Company will be
increased to approximately 28.58% of the total shares sold following the conversion before
giving effect to the above-referenced cash investment by GSTEEL. Assuming the above-level
cash subscription by GSTEEL and the parameters noted above, GSTEEL’s ownership following
all transactions would be approximately 45.93% of the total shares sold and when consolidated
with OA’s ownership, approximately 63.75% of the total shares sold.
“The Counterparty” who entered into the tri-party agreement with GSTEEL as debtor and the
Company as creditor is a steel industry trading company that had purchased goods from
GSTEEL (and had an unpaid receivable) and sold downstream expansion equipment to the
Company (and had a payable owed to them by the Company). As the relationship became
more tenuous following the collapse of the steel market and all parties deteriorated financial
position as a result, GSTEEL, the Company and the Counterparty agreed to offset the
Company’s debt owed to the Counterparty against the debts owed by the Counterparty to
GSTEEL. This transaction made GSTEEL a direct creditor to the Company for the amounts
originally owed by the Company to the Counterparty.
2.2 OA is a subsidiary of GSTEEL who has been assisting in the management of the Company
under a management agreement for the last 4 years. In recognition of the Company’s liquidity
and financial challenges, OA has frequently agreed to accrue the fees owed to it by the
Company during the last several years. In fact, OA has never assessed any late payment or
interest charges on the significant amounts owed to OA by the Company even though these
amounts have been outstanding for a long period of time. As at 31 December 2010, OA is owed
Baht 576 million in accrued and unpaid fees for services under the management
agreement. These debt claims are in no way related to the debt claims in the Company at one
time owed to OA under the Company’s Master Restructuring Agreement (MRA) from several
years ago. Those amounts were entirely converted to equity per the terms of the Company’s
MRA. The proposed conversion price per share for this debt conversion is subject to the pricing
determined at the closing of the transaction based on the prevailing debt levels at the Company
at that time. The price per share will be the same price per share paid by the private placement
cash subscription by GSTEEL contemplated by this transaction. OA currently owns 21.57% of
the total shares sold of the Company. Assuming a purchase price of Baht 0.24 per share,
coupled with an assumed Baht 3,600 million cash investment made by GSTEEL in the Company

(Additional Financial Statement Q1/2011)
concurrent with this conversion, OA’s ownership stake in the Company following the conversion
will be reduced to approximately 17.82% of the total of shares sold.
Share proportion prior to and after the newly-issued shares
Major Shareholders
Prior to the newly-issued shares After the newly-issued shares
Number of shares % Number of shares %
GSTEEL 8,911,266,071 22.33 28,365,432,738 45.93
OA 8,606,434,586 21.57 11,006,434,586 17.82
Total 17,517,700,657 43.90 39,371,867,324 63.75
3. Summary of financial statements of the Company
Item 2008 2009
(restated)
Income Statement
(Unit: Million Baht)
2010 Q1/ 2011
Total revenues 26,890 14,276 16,165 4,744
Cost of selling 25,066 17,281 14,845 4,370
Gross profit 1,049 -4,967 313 359
Expenses 5,153 3,105 4,580 430
Interest expenses 269 299 412 147
Net profit (loss) -3,598 -6,408 -3,672 -203
Balance Sheets
Current Assets 6,773 1,455 1,966 1,513
Property, plant and equipment-net 22,073 24,530 21,070 20,842
Total non-current assets 23,392 25,209 21,725 21,510
Total assets 30,165 26,664 23,692 23,023
Current liabilities 6,357 8,284 9,257 6,023
Total liabilities 6,752 9,666 10,215 9,699
Shareholders Equity 23,413 16,998 13,477 13,324
Statements of Cash Flows
Cash flows from (to) operating activities 229 1,696 125 67
Cash flows from investing activities (251) (238) (87) (11)

(Additional Financial Statement Q1/2011)
Item 2008 2009
(restated)
2010 Q1/ 2011
Cash flows from financing activities;
Finance costs paid (762) (186) (174) (60)
Net proceed (repayment) of
short- term loans
516 (1,310) 67 (47)
Repayment of payable from offsetting of
machinery purchased
- - (68) (5)
Liabilities under rehabilitation plan (10) - - -
Proceed from warrants issued - - 150 -
Proceeds from ordinary shares issued - 50
Net cash flows from financing activities (256) (1,496) (25) (62)
Effect of exchange rate changed (3)
Net increase (decrease) in cash and
cash equivalents (277) (41) 14 (6)
Cash and cash equivalent at the beginning 361 84 43 57
Cash and cash equivalent at the ending 84 43 57 51
4. Names, addresses and number of creditors to receive newly-issued shares subject to the Debt to
Equity Conversion Program
Name
Address
1. GSTEEL 88 Paso Tower, 18th Floor, Silom
Road, Bangrak, Bangkok
2. OA 88 Paso Tower, 18th Floor, Silom
Road, Bangrak, Bangkok
* 1) the evidence of such debts as at 31 December 2010.
Amount of Debt*
(Million Baht)
Amount of Debt
Converted into Equity
(Million Baht)
1,069 1,069
576 576
2) in the case that the creditor is the Company’s directors or managing director or deputy
managing director or the shareholders who held the Company’s shares more than 10% of the total voting
rights of the Company or the spouse or minor child of the said persons, please clearly specify the status
of such creditors.

(Additional Financial Statement Q1/2011)
5. Other creditors except those mentioned in Item 4 (please show the ten largest other creditors)
Name
Amount of Debt
(Million Baht)
Type of Creditor
1. STENA METAL INC.* 1,224.89 Trade creditor
2. METAL INTER CO.,LTD* 1,030.67 Trade creditor
3. INTERGATE AG* 610.78 Creditor related to performance
guarantee
4. MASTER STEEL CO., LTD.* 325.31 Advance from customer
5.STEMCOR (S.E.A.) PTE LTD.* 188.75 Trade creditor
6. MILL CON STEEL INDUSTRIES PLC 122.96 Advance from customer
7. JAKKANIN CO.,LTD.* 117.33 Advance from customer
8. VESUVIUS CORPORATION S.A.* 114.00 Trade creditor
9. SCHNITZER STEEL INDUSTRIES, INC.* 109.53 Trade creditor
10. MAX METAL CORPORATION PLC* 101.16 Advance from customer
*These parties are not the connected parties under SEC rule on connected parties transaction.
6. Type and number of shares to be issued for debt settlement subject to the Debt to Equity Conversion
Program
To allocate 6,854,166,667 newly issued ordinary shares, with a par value of sixty-nine satang per share,
to the creditors, GSTEEL in the amount not exceeding 4,454,166,667 newly issued ordinary shares and
OA in the amount not exceeding 2,400,000,000 newly issued ordinary shares, in accordance with the
Debt to Equity Conversion Program at the price of Baht 0.24 per share, being the price not lower than
90% of the Market Price.
“Market Price” means the weighted average of the Company’s share price trading on the SET, fifteen
consecutive business days prior to the date on which the Board of Directors passes the resolution to
propose the agenda in offering to sell the Company’s newly issued ordinary shares to the meeting of
shareholders for approval, which is the period during February 7, 2011, and February 28, 2011, equaling
to Baht 0.26 (Information from SETSMART in www.setsmart.com of the SET).
Such offering price is lower than the par value of the Company’s shares so the Company is required to
comply with Section 52 of PLCA, and obtain approval from the meeting of shareholders.
7. Newly-issued share price and criteria of setting the share price
The newly-issued share price is Baht 0.24 per share which is not lower than 90% of the Market Price.

(Additional Financial Statement Q1/2011)
“Market Price” means the weighted average of the Company’s share price trading on the SET, fifteen
consecutive business days prior to the date on which the Board of Directors passes the resolution to
propose the agenda in offering to sell the Company’s newly issued ordinary shares to the meeting of
shareholders for approval, which is the period during February 7, 2011, and February 28, 2011, equaling
to Baht 0.26 (Information from SETSMART in www.setsmart.com of the SET).