Rom petrol Rafinare S.A. Corporate Presentation May 2 0 0 5 Table - - PowerPoint PPT Presentation

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Rom petrol Rafinare S.A. Corporate Presentation May 2 0 0 5 Table - - PowerPoint PPT Presentation

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Rom petrol Rafinare S.A. Corporate Presentation May 2 0 0 5 Table of Contents Group Overview Group Overview History History Organizational Structure Structure Corporate Governance Corporate Governance Rom

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SLIDE 1

Rom petrol Rafinare S.A.

Corporate Presentation

May 2 0 0 5

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SLIDE 2

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 2 -

Group Overview

  • History
  • Organizational Structure
  • Corporate Governance

Rom petrol Rafinare

  • Technical
  • Operational

Rom petrol Rafinare Subsidiaries

  • Petrochemicals
  • Wholesale and Retail

Rom petrol Rafinare

  • Strategy
  • Stock Performance
  • Financials 2004 vs. 2003
  • Financials Q1 2005 vs. Q1 2004
  • Hybrid Instrument

Table of Contents

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SLIDE 3

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 3 -

1 9 9 9 – Holding company established as The Rompetrol Group (TRG) in the Netherlands 1 9 9 9 – The first major acquisition; the Vega refinery located in Ploiesti, is bought and doubles its revenues in the first nine months after the take-over 2 0 0 0 - Private equity investment by US-managed Romania & Moldova Direct Fund L.P. 2 0 0 0 - Rompetrol takes over Petros – at that time Romania’s principal oilfield operator. The company has since been renamed Rompetrol Well Services 2 0 0 1 – The Group’s largest acquisition, Petromidia S.A. (later renamed Rompetrol Rafinare), Romania’s largest and most sophisticated oil refinery. 2 0 0 1 – Rompetrol creates Rominserv, Romania’s first Engineering Procurement Construction & Maintenance (EPCM) company focusing on the oil industry 2 0 0 2 – OMV of Austria buys 25.1% of TRG NV, RMDF exits. OMV Chairman Dr. Wolfgang Ruttenstorfer joins TRG Board 2 0 0 2 – Rompetrol opens subsidiaries in neighboring Republic of Moldova (Rompetrol Moldova) and Bulgaria (Rompetrol Bulgaria) 2 0 0 3 – Rompetrol Rafinare reaches an agreement with the Ministry of Public Finance to restructure a historical tax liability 2 0 0 4 – Rompetrol Rafinare (April) is listed on the Bucharest Stock Exchange & becomes 20% of Index (November) 2 0 0 4 – In June both Standard & Poor’s and Fitch rated The Rompetrol Group with B- Outlook Stable 2 0 0 5 – OMV completes Petrom acquisition and exits from TRG 1 9 7 4 - Established as the international operator of the Romanian oil industry 1 9 9 3 - Privatized through a Management and Employee Buy Out (“MEBO”), turnover subsequently reduced to below $6 million by 1998 1 9 9 8 - Control purchased by Dinu Patriciu and a group of local investors

Significant Corporate Events

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SLIDE 4

Corporate Structure

The Rompetrol Group N.V. (The Netherlands) 100% 97.28% Rompetrol S.A. (Romania) 60% Rompetrol Well Services SA (Romania) Palplast S.A. (Romania) 90 % Rompetrol Rafinare S.A. (Romania) 70,4% Geopetsa (Ecuador) 60% Rompetrol Upstream International Ltd. (Bahamas) Rompetrol Logistics SA (Romania) 61.81% Ecomaster SA (Romania) 99.52% Rominserv SA (Romania) 99.95% Rompetrol Downstream SA (Romania) Astra Investitii Imobiliare SA (Romania) 83.91% Rom Oil SA (Romania) CET Midia SA (Romania) 43.43% Global Security Sistem SA (Romania) 51% Rompetrol Moldova S.A. (Moldova) 85 % Rompetrol Petrochemicals SRL (Romania) 96% Rominservices Therm SA (Romania) 59% 9,14% Rompetrol Bulgaria JSC (Bulgaria) 72,22% Rompetrol Industrial Parks SA (Romania) 23% 23% 23% Romcalor Oil Services SA (Romania) 60% 100% Eurojet Romania SA (Romania) 99.4% 100 % Rompetrol Quality Control SRL (Romania) 99% 99,99% 23% Rompetrol Financial Group SRL (Romania) 82,36% 27,78% P&G Consulting (Overseas) Ltd. (Cyprus) 50 % 15,86% Vector Energy S.A. (Switzerland) 95 % RP Albania Downstream Sh.A (Albania) RP Albania Wholesale Sh.A (Albania) 51,74% 60% 2,61% 0,1% Dinu Patriciu Phil Stephenson 80% Rompetrol Holding S.A. (Switzerland) 20%

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SLIDE 5

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 5 -

Corporate Governance & Controls

  • The Board of Directors of TRG N.V. (the parent company) approves all

major transactions and operations such as business acquisitions/ disposals, fundamental business policy strategy, capital expenditure above certain limits, credit facilities above certain limits, long-term agreements above certain limits

  • All the Group companies have established (by the Board of Directors)

certain authority limits for the general managers acquisitions (divided in

  • il related/ investments/ other acquisitions)
  • Annual audited IAS financials (consolidated and for each major

subsidiary) by Deloitte & Touche (Netherlands and Romania/ Bulgaria for subsidiaries); annual Management letter as well

  • Group legal department advice on each major contract/ operation is

required

  • All the Group companies credit facilities are negotiated by the Group

Treasury

  • IT (based on Oracle Platform implemented for all operating subsidiaries)

has been a major factor in improving control functions by enabling management to access real time data, both operating and financial

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SLIDE 6

Rom petrol Rafinare - Petrom idia

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SLIDE 7

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 7 -

Shareholders

Nam e No.

  • No. of shares ( * )

%

The Rompetrol Group N.V. and Affiliates 5 16,765,605,321 79.46% Legal Entities 281 2,468,378,470 11.70% Individuals 33,000 1,865,292,211 8.84%

Total 3 3 ,2 8 6 2 1 ,0 9 9 ,2 7 6 ,0 0 2 1 0 0 .0 %

As of April 19, 2005

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SLIDE 8

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 8 -

AROMATIC EXTRACTION 430 000 BTX SEPARATION 240 000

  • -XYLENE &

ETHYLBENZENE SEPARATION 90 000

NAPHTHA HYDROTREATER 833 000 CRUDE UNIT 4 800 000 JET FUEL HYDROTREATER 340 000

DIESEL HYDROTREATER 720 000 FCC FEED HYDROTREATER 1 200 000 m-XYLENE IZOMERIZATION 270 000

AMINE TREATERS AND CLAUS UNITS 32 000 LIGHT ENDS SEPARATION 200 000

FCC 1 100 000 MTBE 35 000 TEL ADDITION 350 000 p-XYLENE SEPARATION 310 000

UNLEADED GASOLINE PROPYLENE

C4 CUT LEADED GASOLINE COKE METHANE

OILFIELD CONDENSATE

CRUDE

TOLUENE JET FUEL ETHYLBENZENE

  • -XYLENE

DIESEL

SULPHUR

PROPANE

n-BUTANE RAFFINATE LPG

FUEL OIL BENZENE p-XYLENE HYDROGEN NETWORK REFINERY FUEL GAS

PLATFORMER 500 000 DELAYED COKER 1 170 000 HYDROGEN PLANTS 3x1700

All capacities are in mt/y * All marked installations have been upgraded or otherwise modernized following investments

Refinery Layout

Refinery layout

Refinery Technical Layout

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SLIDE 9

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 9 -

Licensors

  • Petromidia is the most sophisticated of all Romanian

refineries

  • Was designed and built between 1975-1977 using

Romanian and foreign technology:

  • UOP
  • Mitsui
  • Snam Progetti
  • Heat Research
  • Was modernized in the early 1990s and can process a

wide variety of crude oils, with different sulfur content and API

  • It is the only Romanian refinery producing Jet A-1 fuel

and plans to become the prime supplier of jet fuel for aviation companies operating in Romania and the Republic of Moldova

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SLIDE 10

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 10 -

Logistical I nfrastructure

The refinery general logistical fram ew ork includes:

  • Pipelines
  • Maritim e berths for loading

– unloading

  • Railw ay loading-unloading

facilities

  • Autom otive loading-

unloading facilities The pipeline system

The oil pipeline connecting Oil Terminal Constanta used for crude

  • il imports

The gasoline pipeline connecting the refinery to Oil Terminal

Constanta, used for gasoline exports

The diesel pipeline connecting the refinery to Oil Terminal

Constanta, used for diesel exports. 13

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SLIDE 11

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 11 -

Com petitive Advantages

  • Has the highest (81% ) white products yield in the

region

  • Strategic location near the Constanta Oil Terminal, on

the Black Sea coast

  • Direct access to the Danube-Black Sea Channel, the

Midia port, and Constanta port (one of largest harbors

  • n the Black Sea)
  • Close vicinity to crude oil pipelines
  • Its own railway yard
  • Facilities allowing crude oil reception and shipment of

liquid products by railway tankers

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SLIDE 12

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 12 -

Consideration on Crude supply

  • Petromidia refinery benefit from processing only Ural crude (strategic

decision taken in 2001) improved in 2004 as a result of increased differential between Brent and Ural

  • Average differential in 2004 was approx. 3.76 USD/ bbl while the

average on the last 5 years was less than 2 USD/ bbl

  • The trend is expected to continue in the next years
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SLIDE 13

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 13 -

Production figures

thousands tones 2 0 0 4 2 0 0 3 % Feedstock processed 3,301 3,045 2.56 Gasoline produced 919 988

  • 7.0

Diesel & Petrols produced 1,172 1.161 0.9

  • High prices of crude and domestic market margins

evolutions caused refinery optimization to occur at lower Urals crude throughputs.

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SLIDE 14

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 14 -

Trading Environm ent

thousands tones 2 0 0 4 2 0 0 3 % Export 991 1,105

  • 10.3

Sales gasoline,diesel, jet 2 ,0 5 0 2 ,1 0 5

  • 2 .6

Export (% ) 48% 52% Domestic market 1,059 1,000 5.9 Domestic market (% ) 52% 48%

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SLIDE 15

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 15 -

Petrochem icals

  • Rompetrol Petrochemicals has a standard output:
  • 200,000 mt/ year of ethylene (currently in

conservation)

  • 80,000 mt/ year of polypropylene (operating at

capacity)

  • In 2004 products produced or purchased from third

parties and sold under the Rompetrol Petrochemicals brand (special grades of polypropylene, HDPE, LDPE, PET). The offer covers the domestic and the regional markets (Black Sea, Mediterranean Sea, Central & Eastern European)

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SLIDE 16

W holesale and Retail

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SLIDE 17

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 17 -

W holesale

  • Capacity of over 62,000 m3 of storage in all 6 modern depots

in Romania owned by Rom Oil

  • Major clients include own network, MOL Romania, and Agip

Romania

  • Other clients include transportation, agricultural and small

retail companies

  • Logistics is assured by a modern fleet of trucks for oil products

transportation, four locomotives for unloading of railway tankers

  • All depots have facilities for loading and unloading products (for

both railway and road vehicles)

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SLIDE 18

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 18 -

W holesale Map

Bucharest Craiova Sim leul Silvaniei Zarnesti Arad Vatra Dornei Constanta

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SLIDE 19

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 19 -

Retail

Today: Strategy:

  • 8 6 filling stations owned and 7 under construction by Rompetrol

Downstream

  • 1 5 2 filling stations operated through allied clients distribution contracts
  • Currently second largest downstream company in Romania (by

volumes) behind Petrom

  • Romania’s first gas station network to sell only Euro standard fuels
  • Rompetrol network to be fully

extended in Romania by 2006 to 200 owned filling stations

  • Planning regional expansion to

Moldova, Bulgaria, Serbia and Turkey

  • Continue with the allied client

distribution program and acquire sole suppliership position with

  • ther Romanian retailers
  • Bring all Rompetrol stations to

European standards

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SLIDE 20

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 20 -

Retail Netw ork

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SLIDE 21

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 21 -

Rom petrol Rafinare Strategy

  • Rompetrol Rafinare strives to become, through organic growth and sensible low-cost

acquisitions that integrate with its existing operations, the leading low-cost provider

  • f petroleum products in the Balkans
  • The strategy will be executed by:

– Refining: Increasing the quantitative and qualitative performance of the Petromidia platform while upgrading to continue to meet EU quality standards – Downstream: Maintaining an approximate 50-50 balance between internal and external markets, while establishing direct selling operations in regional countries and building the retail brand in Romania – Petrochemicals: Restarting of the Ethylene Plant and the related Polyethylene plants and becoming a middle size player in the Balkans – Services: Using services companies synergistically with the group (Rominserv), with third parties (Rompetrol Logistics) or divesting them as “non-core”

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SLIDE 22

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 22 -

RRC - Stock Perform ance

2004 May June July August September October November December2005 February March April May Jun 5000 10000 15000 20000

x100000

5000 10000 15000 20000

x100000

Volume (8,791,500) 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250 1300 1350 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250 1300 1350 RRC

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SLIDE 23

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 23 -

I AS Financials ’0 4 vs ’0 3 I ncom e Statem ent

USD Million – Standalone - Audited

2 0 0 4 2 0 0 3 % Gross Revenues 1,445 1,138 27 Sales Taxes (399) (317) 26 Net Revenues 1 ,0 4 6 8 2 1 2 7 Gross Margin 9 0 3 2 1 8 3 Selling, General and Admin (49) (56)

  • 13

EBI T 4 1 ( 2 4 ) N/ A Exceptional Item

  • 415

N/ A EBI TDA 8 6 1 6 4 3 7 Finance, net (30) (103) N/ A Net profit / ( loss) 1 1 2 8 8 N/ A

slide-24
SLIDE 24

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 24 -

Consolidated vs. Standalone 2 0 0 4 I ncom e Statem ent

USD Million

Consolidated Standalone Diff. Gross Revenues 1,534 1,445 + 89 Sales Taxes (399) (399)

  • Net Revenues

1 ,1 3 5 1 ,0 4 6 + 8 9 Gross Margin 1 3 3 9 0 + 4 3 Selling, General and Admin (94) (49) (45) EBI T 3 9 4 1 ( 2 ) Income tax (2) (2) Net profit / ( loss) 6 1 1 ( 5 ) EBI TDA 9 8 8 6 1 2 Finance, net (31) (30) (1)

slide-25
SLIDE 25

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 25 -

Key Figures 2 0 0 4

2 0 0 4 2 0 0 3 Diff. Throughput (million mt) 3.3 3.04 + 2.5% Average Brent – Ural differential (USD/ bbl) 3.76 1.79 + 110% RRC Refining Margin (USD/ bbl) 7.56 4.66 + 63% Benchmark Refining Margin (Ural Cracking) 5.71 3.67 + 56% Net cash refining margin/ bbl (USD/ bbl ) 3.48 0.72 + 384% Consolidated EBITDA (million USD) 98 22 346% Average yearly liter per retail station (million liter/ year) 2.8 2.3 + 22% Petrochemicals sold (k mt) 105 78 + 35%

slide-26
SLIDE 26

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 26 -

I AS Financials Q1 ’0 5 vs. Q1 ’0 4 I ncom e Statem ent

USD Million – Standalone

Q1 ’ 0 5 Q1 ’ 0 4 % Gross Revenues 448 292 + 53% Sales Taxes (101) (73) + 38% Net Revenues 3 4 7 2 1 9 + 5 8 % Gross Margin 4 9 1 3 + 2 7 7 % Selling, General and Admin (11) (10) + 10% EBI T 3 8 3 + 1 ,1 6 7 % Forex 11

  • N/ A

EBI TDA 4 7 1 4 + 2 3 6 % Finance, net (8) (6) + 33% Net profit / ( loss) 4 1 ( 3 ) N/ A

slide-27
SLIDE 27

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 27 -

Consolidated vs. Standalone Q1 ’ 0 5 I ncom e Statem ent

USD Million

Consolidated Standalone Diff. Gross Revenues 469 448 + 21 Sales Taxes (99) (101) + 2 Net Revenues 3 7 0 3 4 7 2 3 Gross Margin 6 3 4 9 + 1 4 Selling, General and Admin (23) (11) (12) EBI T 4 0 3 8 2 Forex 10 11 + 1 EBI TDA 5 2 4 7 + 5 Finance, net (9) (8) (1) Net profit / ( loss) 4 1 4 1

slide-28
SLIDE 28

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 28 -

Hybrid I nstrum ent – Background

  • Following Petromidia’s privatization, numerous negotiations were held

with government bodies to settle the historical tax liabilities. Those included the undisclosed amount of $52mm that was not mentioned during the privatization process. Highly onerous penalty rates for late payment to state budget that run as high as 0.5% per day increased the amount of historical tax liabilities from $182mm as of 26 January 2001 to $661mm (€571mm) as of 30 September 2003

  • On 24 October 2003, the Romanian government approved the

restructuring of Rompetrol Rafinare’s historical tax liabilities as per attached term sheet. In reaching this decision the Government took into consideration – Company’s track record in meeting its current tax obligations, – Investment program, and – Observance of workforce contracts

  • As part of the restructuring of the historical tax liabilities, Rompetrol

Rafinare issued a hybrid financial instrument with a nominal value of €571mm. The instrument was fully subscribed by the Ministry of Finance and paid by canceling the historical tax liabilities

slide-29
SLIDE 29

Group Overview

  • History
  • Structure
  • Corporate Governance

Rom petrol Rafinare ( “RRC”)

  • Shareholders
  • Technical
  • Operational

RRC’s Subsidiaries

  • Petrochemicals
  • Wholesale and retail

RRC

  • Strategy
  • Capital Structure
  • Financials
  • Hybrid Instrument
  • 29 -
  • Analysis of the hybrid instrument’s cash

flows allows its value to be split in – Debt component (annual “interest” payments due under the agreement), and – Equity component of future shares in Rompetrol Rafinare SA

  • Based on estimated market levels for

Rompetrol Rafinares’s debt and equity the fair market value of those components is: – $128mm for debt, and – $176mm for equity

  • As the difference between the market and

nominal value of the instrument is more than 10% , the $416mm is considered as extinguishment of debt and was charged to the 2003 income statement

Hybrid I nstrum ent – Term Sheet

  • Issuer:

– Rompetrol Rafinare S.A.

  • Issuance date:

– September 30, 2003

  • Amount:

– ROL 21,776,998,718,567 (equivalent

  • f €571mm denominated in

22,645,452 bonds of €25 each

  • Tenor:

– 7 years

  • Interest:

– 12 month EURIBOR + 1.5% (+ 2.0% if net profit margin is greater than 10% )

  • Prepayment:

– Allowed anytime at issuer option with no restrictions

  • Conversion:

– At maturity each bond will mandatorily convert into 4.4562832601 shares of RRC multiplied with splitting ratio 214.22

  • Other:

– Until conversion, the bondholders are not entitled to any shareholder rights – If the State continues to hold the bond it has the right to appoint a non- voting representative to the Board of Directors