Debt to Equity Conversion Scheme - The Stock Exchange of Thailand

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(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)
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Debt to Equity Conversion Scheme - The Stock Exchange of Thailand

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