Mohammed H Al Amoudi, the Chairman and ultimate shareholder of <strong>Preem</strong> and <strong>Corral</strong> <strong>Petroleum</strong> <strong>Holdings</strong>, is theprincipal shareholder of Constellation <strong>Holdings</strong> LLC. <strong>Preem</strong> and <strong>Corral</strong> <strong>Petroleum</strong> <strong>Holdings</strong> believe that the foregoingtransactions were entered into on terms no less favorable to it or to its subsidiaries than those that could have been obtainedfrom an unrelated third party.Our ultimate shareholderIn connection with the interest payments due April 15, 2009, July 15, 2009, October 15, 2009 and January 15, 2010under the Existing Notes, our ultimate shareholder, Mr. Al-Amoudi, made equity contributions of $2.4 million and€3.9 million in April 2009, $2.5 million and €2.8 million in July 2009, $2.0 million and €2.5 million in October 2009 and$2.0 million and €2.2 million in January 2010. In connection with the refinancing of the Existing Notes in May 2010, ourultimate shareholder, Mr. Al-Amoudi, made equity contributions of SEK 2,582 million (€282 million). Total contributionsin 2010 were SEK 2,619 (€286 million), which includes the aforementioned contributions in January 2010 in connection withthe January 15, 2010 interest payment on the Existing Notes and the aforementioned contributions related to the refinancingof the Existing Notes. In connection with interest payments on Existing Notes, we received shareholder loans of $1.2 milliondue December 31, 2010, $1.6 million and €1.2 million due March 31, 2011 and €2.8 million due June 30, 2011, from ourultimate shareholder Mr. Al-Amoudi, who also owns Subordinated Notes in an aggregate amount of approximately€90 million and $40 million as of June 30, 2011.Conflicts of InterestExcept as described above, and in the “Management” section above, as at the date of this <strong>Business</strong> <strong>Update</strong>, ourdirectors and principal executive officers do not have any potential conflicts of interest between any duties to us and theirprivate interests or other duties.54
DESCRIPTION OF CERTAIN INDEBTEDNESSThe following is a summary of the material terms of certain financing arrangements to which we are a party. The followingsummary is not complete and is subject to the full text of the documents described below.Existing Notes<strong>Corral</strong> <strong>Petroleum</strong> <strong>Holdings</strong> issued the Existing Notes on May 6, 2010. As of June 30, 2011, approximately€252 million and $285 million of Existing Notes were outstanding. The Existing Notes will mature on September 18, 2011.The Existing Notes are senior debt of <strong>Corral</strong> <strong>Petroleum</strong> <strong>Holdings</strong> and are secured by a pledge of all the shares of <strong>Corral</strong><strong>Petroleum</strong> <strong>Holdings</strong> granted by Moroncha <strong>Holdings</strong>.Subordinated Notes<strong>Corral</strong> <strong>Petroleum</strong> <strong>Holdings</strong> issued the Subordinated Notes on May 6, 2010. As of June 30, 2011, approximately €90million and $40 million of Subordinated Notes were outstanding. The Subordinated Notes will mature on December 31,2015. The Subordinated Notes are unsecured obligations of the Issuer and are junior in right of payment to all existing andfuture senior debt of the Issuer, including the Existing Notes. As part of a refinancing, we expect to extend the maturity ofthe Subordinated Notes to December 31, 2019.New Credit Facility<strong>Preem</strong> entered into a 2008 Credit Facility pursuant to a facilities agreement dated September 17, 2008, among <strong>Preem</strong>as borrower, Former <strong>Corral</strong> <strong>Petroleum</strong> <strong>Holdings</strong> as borrower and guarantor, Merchant Banking, Skandinaviska EnskildaBanken <strong>AB</strong> (<strong>publ</strong>) and Handelsbanken Capital Markets, Svenska Handelsbanken (<strong>AB</strong>) (<strong>publ</strong>), as mandated lead arrangers,certain financial institutions as lenders, Merchant Banking, Skandinaviska Enskilda Banken <strong>AB</strong> (<strong>publ</strong>), as facility andsecurity agent, Skandinaviska Enskilda Banken <strong>AB</strong> (<strong>publ</strong>) as factoring bank and Svenska Handelsbanken (<strong>AB</strong>) (<strong>publ</strong>), asissuing bank. As of June 30, 2011, the total drawn commitments (including the term loan facilities and the multi-currencyrevolving facility) under the 2008 Credit Facility were SEK 11,615 million (€1,270 million). <strong>Preem</strong> must repay any loansoutstanding under the term loan facilities and the multi-currency revolving credit facility by September 17, 2011.As part of a refinancing, all loans outstanding under the 2008 Credit Facility will be repaid from the proceeds of the$1,850 million (equivalent) revolving credit facilities, $73 million (equivalent) of which is uncommitted working capitalfacilities, and $650 million (equivalent) million term loan facilities for <strong>Preem</strong> pursuant to a facilities agreement dated on priorto the Closing Date among <strong>Preem</strong>, as borrower, Danske Bank A/S Danmark, Sweden Branch, DnB NOR Bank ASA, NordeaBank <strong>AB</strong> (<strong>publ</strong>), Skandinaviska Enskilda Banken <strong>AB</strong> (<strong>publ</strong>), Svenska Handelsbanken <strong>AB</strong> (<strong>publ</strong>) and Swedbank <strong>AB</strong> (<strong>publ</strong>) ascoordinating mandated lead arrangers and lenders, Skandinaviska Enskilda Banken <strong>AB</strong> (<strong>publ</strong>), as facility agent,Skandinaviska Enskilda Banken <strong>AB</strong> (<strong>publ</strong>) as factoring bank and Svenska Handelsbanken <strong>AB</strong> (<strong>publ</strong>) as fronting bank (the“New Credit Facility”).The lenders under the 2008 Credit Facility have entered into a supplemental agreement to the 2008 CreditAgreement (the “Seventh Supplemental Agreement”) to defer excess cash payment (the “Excess Cash Payment”) under the2008 Credit Facility until the earlier of (i) September 19, 2011 and (ii) the date of application to the English Court to convenethe creditors meeting required for the Scheme (the “Scheme Launch Date”). Pursuant to the terms of the SeventhSupplemental Agreement, the Excess Cash Payment is permanently waived upon completion of the exchange offer andconsent solicitation and entry into the New Credit Facility. In addition, the Seventh Supplemental Agreement provides forcertain further amendments to the 2008 Credit Facility to allow <strong>Preem</strong> the flexibility to continue to utilize the facilities andletters of credit under the 2008 Credit Facility until September 16, 2011 while the exchange offer and consent solicitation isongoing. The Seventh Supplemental Agreement also provides for certain additional events of default under the 2008 CreditFacility if the lock-up agreement with certain bondholders is terminated or amended or the exchange offer and consentsolicitation is terminated or withdrawn.The commitment of the six Nordic banks to enter into the New Credit Facility will expire, together with the waiverunder the terms of the Seventh Supplemental Agreement, on the earlier of (i) September 19, 2011 and (ii) the Scheme LaunchDate and will be automatically terminated if the lock-up agreement with certain bondholders is terminated or amended or theexchange offer and consent solicitation is terminated or withdrawn.The effectiveness of the New Credit Facility is currently subject to certain customary conditions precedent and otherconditions including the refinancing of the Existing Notes and evidence of $300 million of contribution by the UltimateShareholder having been made to partially refinance the 2008 Credit Facility and to pay certain fees, costs and expensesincurred in connection with the refinancing.55
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