DIVESTMENT OF SHARES OF AGROBOHEMIE A.S. AND SYNTHESIA, A.S.
On 12 October 2000, UNIPETROL, a.s. ("Unipetrol") entered with DEZA, a.s., with its registered office at Valašské Meziříčí, Masarykova č.p. 753, Company Id. No.: 00011835 ("Deza"), into two Agreements on Future Transfer of Shares concerning 46,950 shares of AGROBOHEMIE a.s., with its registered office at Prague 4, Chodov, Pyšelská 2327/2, Company Id. No.: 63078121 ("Agrobohemie"), owned by Unipetrol.
On 15 August 2001, Unipetrol further entered with Deza into the Agreement on Future Transfer of Shares concerning 26,447,571 shares of Synthesia, a.s. (with original business name ALIACHEM a.s.), with its registered office at Pardubice, Semtín, Pardubice č.p. 103, Company Id. No.: 60108916 ("Synthesia"), owned by Unipetrol.
The Agreements on Future Transfer of Shares inter alia provided for the contractual penalty in the amount of CZK 1.5 million per calendar day if Unipetrol or Deza does not enter, as per request of the other party, into the Share Purchase Agreements on the sale of 46,950 pieces of shares of Agrobohemie (the "Agrobohemie Shares") and 26,447,571 pieces of shares of Synthesia (the "Synthesia Shares"). Further, the Agreements on Future Transfer provided for a right of the Unipetrol or Deza to ask the other party to enter into the Share Purchase Agreements on sale of Agrobohemie Shares and Synthesia Shares, respectively, if the shareholders structure of the other party significantly changes.
In August and September 2005, Unipetrol was asked by Deza to enter into the Share Purchase Agreements on the sale by Unipetrol to Deza of the Agrobohemie Shares and the Synthesia Shares. Following a thorough analysis, the Board of Directors of Unipetrol decided not to enter into the subject Share Purchase Agreements in a wording set forth in the Agreements on Future Transfer of Shares since, based on a view of the Board of Directos of Unipetrol, the Share Purchase Agreements suffered certain legal defects. In this context, Unipetrol approached Deza with a proposal to modify the Share Purchase Agreements in order to eliminate their legal defects which may have caused their invalidity.
The attempt to mutually agree with Deza on the modification of the wording of the Share Purchase Agreements was not successful and in January 2006 Deza filed against Unipetrol at the Municipal Court in Prague two legal actions seeking (a) payment of the contractual penalty and damage caused by Unipetrol to Deza due to an alleged breach of the duty of Unipetrol to enter into the Share Purchase Agreements, and (b) specification of the content of the Share Purchase Agreements on the sale of the Agrobohemie Shares and Synthesia Shares by the court.
Following a receipt of the legal actions, Unipetrol adopted appropriate measures in order to protect the interest of Unipetrol. At the same time, Unipetrol continued in negotiations with Deza in order to achieve the out-of-court settlement of the mutual disputes. In July 2007, Unipetrol and Deza agreed on temporary suspension of the pending court proceedings started by Deza.
On 31 October 2007, Unipetrol and Deza, following long negotiations, signed the Settlement Agreement on the settlement of their disputes. As a result of the signing of the Settlement Agreement, Unipetrol will not be obliged to pay to Deza any damages and contractual penalties which were sought by Deza and Deza withdraws from all its legal actions against Unipetrol.
Concurrently with the signing of the Settlement Agreement, Unipetrol, as seller, and Deza, as purchaser, entered into (a) the Share Purchase Agreement concerning the sale of Agrobohemie Shares and (b) the Share Purchase Agreement concerning the sale of Synthesia Shares. In these agreements, Unipetrol and Deza agreed that the purchase price for the Agrobohemie Shares and the Synthesia Shares, respectively, shall be determined, based on their fair market value, by the reputable appraiser mutually selected by Unipetrol and Deza.
By entering into the Settlement Agreement and the Share Purchase Agreements, Unipetrol eliminated its financial exposure to high contractual penalties and potential legal defects of the sale of the Agrobohemie Shares and Synthesia Shares. Over a long-time period, Unipetrol has had none or very limited information about business and economic situation of both Agrobohemie and Synthesia. Further, Unipetrol has not have any information on the plans of future business development of both Agrobohemie and Synthesia and influence on the management of both Agrobohemie and Synthesia. Both Agrobohemie and Synthesia do not constitute, from the perspective of the strategy of Unipetrol, its core business or a core business of Unipetrol subsidiaries. As of today, Unipetrol has not received any dividends from Agrobohemie or Synthesia. The proceeds from the sale of the Agrobohemie Shares and the Synthesia Shares will enable Unipetrol to further restructure its debt financing.
Finally, both Deza and Unipetrol agreed on the future cooperation in the area of the purchase and sale of the raw materials produced by the companies controlled by Unipetrol.
Important Notice
Please note that the purchase price for the Agrobohemie Shares and the Synthesia Shares is subject to their determination by a reputable appraiser selected by Unipetrol and Deza. It is agreed that the purchase price shall be determined by the appraiser within a period of six weeks from the signing of the Settlement Agreements and the Share Purchase Agreement concerning the sale of Agrobohemie Shares and Synthesia Shares.
The accounting aspects of the sale of the Agrobohemie Shares and Synthesia Shares shall be communicated by Unipetrol together with the note to the consolidated financial statement for the third quarter of 2007. Further, the sale of the Agrobohemie Shares and the Synthesia Shares is subject to the satisfaction of certain conditions precedents including, inter alia, the approval of the purchase by Deza of the Agrobohemie Shares and the Synthesia Shares by the anti-monopoly authorities.
Finally, please note that simplifying somewhat, the effectiveness of the Settlement Agreement will only occur on a date of the receipt by Deza of the Agrobohemie Shares and the Synthesia Shares and the receipt by Unipetrol of the purchase price for the Agrobohemie Shares and the Synthesia Shares. It is expected that the closing of the transaction occurs by the fall of the first quarter of 2008 but at latest within a period of twenty four months from the signing of the Settlement Agreements and the Share Purchase Agreement concerning the sale of Agrobohemie Shares and Synthesia Shares.
Additional Information
The Agrobohemie Shares represent 50% ownership interest and votes of Unipetrol in Agrobohemie. The nominal value of the Agrobohemie Shares, i.e., 46,950 pieces of ordinary registered certificated shares of Agrobomenie, is CZK 10,800 per share.
The Synthesia Shares represent 38.79% ownership interest and votes of Unipetrol in Synthesia. The nominal value of the Synthesia Shares, i.e., 26,447,571 pieces of ordinary bearer shares of Synthesia, is CZK 40 per share
In Prague on 31 October 2007
Board of Directors of UNIPETROL, a.s.