Prague, 19 July 2007 – The sale of shares of Kaučuk owned by Unipetrol to Dwory was agreed in the share purchase agreement entered into between Unipetrol and Dwory on 30 January 2007. Today, all agreed contractual conditions for the closing of the sale of shares were satisfied and the shares of Kaučuk were handed over to Dwory against the payment of the purchase price for the shares by Dwory to Unipetrol. The following events occurred within the past six-month period from the signing of the share purchase agreement:
Joint Venture Agreement for Purposes of Operation of Butadiene Unit
On 10 July 2007, Unipetrol, Kaučuk and Dwory executed the joint venture agreement for purposes of the development and operation of the new butadiene unit in the industrial area in Kralupy nad Vltavou. Pursuant to the agreement of the contractual parties, the construction of the new butadiene unit will be realized through the company Butadien Kralupy a.s., in which 51% of shares is owned by Unipetrol and 49% of shares is owned by Kaučuk. The foregoing will satisfy one of the conditions of the sale of Kaučuk outside the Unipetrol Group, i.e., the securing of uninterrupted operation of the butadiene extraction unit as a basic point of the chain steam cracker (CHEMOPETROL, a.s. in Litvínov) – butadiene extraction unit (Butadien Kralupy a.s. in Kralupy nad Vltavou) – refinery.
Before the shares of Kaučuk were transferred to Dwory, CHEMOPETROL, a.s., UNIPETROL RAFINÉRIE a.s., Kaučuk and Butadien Kralupy a.s. entered into several business agreements concerning the supply of C4 Fraction, raffinate 1, ethylene, benzene and heating oil between Kaučuk and Butadien Kralupy a.s., respectively, on one part and CHEMOPETROL, a.s. and UNIPETROL RAFINÉRIE a.s. on the second part and on supply of 1.3-butadiene between Butadien Kralupy a.s. and Kaučuk.
Consents of Anti-monopoly Authorities
The sale of Kaučuk to Dwory and execution of the joint venture agreement for purposes of the construction and operation of the new butadiene unit were approved by the anti monopoly authorities in the Czech Republic, Poland, Germany, Ukraine, Slovakia, Lithuania and Austria.
Determination of Liability for Impacts of Operation of Kaučuk on Environment
The environmental audit of plots of land owned by Unipetrol and used by Kaučuk was performed for purposes of determination of liability of contractual parties arising from existing or future impacts of Kaučuk operation on the environment. Simplifying somewhat, the share purchase agreement provides that liability for the environmental conditions originating prior to the closing of the transaction lies with Unipetrol and liability for the environmental conditions originating after the closing of the transaction lies with Dwory (for details please see the inside information of Unipetrol of 30 January 2007 titled Unipetrol and Dwory signed the share purchase agreement on sale of 100% shares of Kaučuk owned by Unipetrol). Liability of the contractual parties for the environmental conditions is limited up to 10% of the purchase price for the shares (and by 5 years).
Execution of Agreement on Pre-emptive Right to Plots of Land Owned by Unipetrol and Used by Kaučuk for Its Operations
On 10 July 2007, Unipetrol and Kaučuk executed the agreement pursuant to which Unipetrol undertook to create in favor of Kaučuk the pre-emptive right in rem and other rights to certain plots of land owned by Unipetrol in industrial area in Kralupy nad Vltavou which are used by Kaučuk for its operations. The share purchase agreement anticipates that the sale of the subject plots of land will be realized after satisfaction of all administrative, operational and legal issues necessary for a split of parts of industrial area in Kralupy nad Vltavou.
Apart from the foregoing, the sale of shares of Kaučuk owned by Unipetrol to Dwory was based on the following major principles, among others:
- uninterrupted operation of the present butadiene unit;
- contractual satisfaction of supplies of energies, steam, water and other services within the industrial area in Kralupy nad Vltavou which are, at present, provided by Kaučuk to ČESKÁ RAFINÉRSKÁ, a.s.; and
- continuation of all important agreements with the companies of the Unipetrol Group and further operation of the energy unit.
The future undisturbed operation of the companies of Unipetrol Group is secured in the share purchase agreement, including an agreed mechanism of contractual penalties which, if triggered, will represent relatively material financial exposure for Dwory.
“All the conditions precedent for the closing of the transaction were successfully satisfied. Also, our expectations that the sale will be finalized in the third quarter of 2007 was confirmed. I believe that Dwory will grow Kaučuk’s value,” said François Vleugels, CEO of Unipetrol.
The process of the sale of shares of Kaučuk was commenced pursuant to the Equity Story 2005 presented to all shareholders of Unipetrol and the key strategic objectives and tasks of the long-term business plan of Unipetrol which were presented at the Shareholders’ General Meeting of Unipetrol in April 2006. As follows from the strategy, for the future, the company will concentrate on its core business, in particular on operations in the area of refineries, petrochemicals, and retail sales of fuels. From this perspective, Kaučuk is not a strategic company for Unipetrol.
The proceeds from the Kaučuk sale will enable Unipetrol to invest into the development of the key areas of its business.
UNIPETROL is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 UNIPETROL became part of the PKN ORLEN Group, the largest downstream oil company in Central Europe. UNIPETROL primarily focuses on crude oil processing, fuels distribution and petrochemical production. In all these areas UNIPETROL group is one of leading players in both the Czech and Central European markets. In 2006 UNIPETROL recorded revenues amounting to CZK 95 billion and a net profit of CZK 1.6 billion.
Contact:
Michaela Lagronová
Spokesperson
UNIPETROL, a.s.
GSM: + 420 602 304 708
E-mail: michaela.lagronova@unipetrol.cz