by Bangkok Bank Public Company Limited, Pacesetter Enterprises Loan balance Loan balance Loan Agreement dated 25 Co., Ltd. ("PSE") 455 557 November 1994 (as amended) ETL agrees to lend PSE to draw Interest income Interest income down in the maximum amount 28 35 of Baht 3,000 million at the interest rate of Minimum Loan Rate (MLR) as announced by Bangkok Bank Public Company Limited ExxonMobil Ventures Loan balance Loan balance Revolving Loan Agreement Funding Ltd. 377 0 dated 24 July 2006 (as ("EMVFL") amended) dated July 24, 2005 (ExxonMobil Ventures Interest income Interest income at the interest rate equal to Funding Ltd. 8 9 LIBOR for US$ less a spread (Subsidiary of Exxon ascertained based on Mobil Corporation and comparable spreads of at least 100% held indirectly 3 banks in Thailand by Exxon Mobil Corporation) We provide service similar to centalized treasurer for various subsidiaries. Commitment to financial assistance is in the form of general loan as well as revoling loan facility operated through current account to facilitate the fund transfer. Borrower is charged with interest expense based on outstanding amount taken out. However, if subsidiaries have excess liquidty deposited in this account, lender will be charged with interest expense based on such outstanding deposit. (4) Loans or Financial Assistances Received from Related Companies Related Party Related Party Name / Nature of Agreement Transaction Transaction (Please refer to section for the year for the year "Summary of Material Related Company ending on 31 ending on 31 Contracts" and the Company's December 2006 December 2007 effective prospectus for further (Million Baht) (Million Baht) details) Exxon Overseas Loan amount Loan amount Promisory Notes issued to EOC Corporation ("EOC") 37,953 0 which expires between 2009 (Exxon Overseas and 2012. However, we have Corporation Interest Interest repaid the remaining amount in (Subsidiary of Exxon expense expense 2007. Mobil Corporation and 3,427 2,488 100% held directly by Exxon Mobil Corporation) ExxonMobil Chemical Financial lease Financial lease Financial Lease dated December (Thailand) Limited balance balance 21, 2000 relating to refinery ("EMCTL") 16,658 0 facilities. The agreement is terminated due to EMCTL Entire Interest Interest Business Transfer expense expense 1,592 554 *Amount up to August 31,2007 which is the date before economic of EMCTL business is transferred to ETL (5) Others In addition to the above transactions, ETL also entered into a non-recurring related party transaction with the following details in September 2007 A. Related party transaction related to business transfer agreement On September 6, 2007, we signed a Business Transfer Agreement with ExxonMobil Chemical (Thailand) Limited which was involved in the manufacturer and sale of chemicals products to both overseas and domestic customers. Under the terms of the agreement, we accepted the transfer of the entire business including all fixed and other assets, all rights and obligations, and all debts and liabilities of EMCTL. In return for the non-cash injection of Baht 3,682 million by EMCTL through contribution of its entire business, we issued 368 million of our shares with fair value of Baht 3,682 million. Under the terms of the agreement the closing date of the transfer was September 24, 2007. However, the economic interests associated with the business transfer, which represents the effective date of combination for accounting purposes, were treated as having been transferred as of September 1, 2007. B. Related party transaction related to share purchased from related entity On November 28, 2008, we signed an agreement with ExxonMobil Holding Company Holland LLC ("EMHCH") (formerly Esso Holding Company Holland) which is a subsidiary of Exxon Mobil Corporation to purchase 15,666 shares (15.67% of total issued and paid-up shares) of United Industry Development Co., Ltd. ("UIDC"), related party to us, from EMHCH. UIDC is our consolidated subsidiary for accounting purposes. The transaction is trated as effective from November 30, 2007 and we paid Baht 15,822,660 or Baht 1,010 per shares, which are deemed as fair value of UIDC shares. Following the share transfer, our shareholding in UIDC increased to 48,999 shares or 100% of issued and paid-up shares or 49% of UIDC or 100% of UIDC's ordinary shares Under the terms of the agreement the closing date of the transfer was September 24, 2007. However, the economic interests associated with the business transfer, which represents the effective date of combination for accounting purposes, were treated as having been transferred as of September 1, 2007. Contractual Obligations and Commitments The following table summarizes our contractual cash obligations and other cash commitments as of December 31, 2007. Payments Due by Period Total 2008 2009- 2012 From 2013 onwards (in millions of Baht) Short-term loans ...................................... 23,710 23,710 - - Long-term loans........................................ 11,000 - 11,000 - Operating lease commitment (non-cancelable) ..... 161 22 80 59 Total ................................................. 34,871 23,732 11,080 59 As of December 31, 2007, we had total debt of Baht 34,710 million. Our ability to meet our debt service obligations and to reduce our total indebtedness will be dependent upon our future performance. Some of our obligations are not required to be recorded as liabilities in our Thai GAAP consolidated financial statements, such as bank guarantees. However, these obligations may result in a future cash requirement. As of December 31, 2007, we had contingent liabilities in respect of bank and other guarantees arising in the ordinary course of business of Baht 65 million. We do not have any other off-balance sheet arrangements. Risk Factors An investment in our shares involves risks. You should carefully consider all of the information in this offering circular and, in particular, the risks described below before deciding to invest in our shares. 1. Risks Relating to Our Business 1.1 Margins in the refining and aromatics industries are volatile. Our financial results are primarily affected by the difference, or margin, between the price at which our refined petroleum and paraxylene products are sold and the cost to acquire crude oil and other feedstocks. Historically, refining and paraxylene margins have been volatile, and they are likely to continue to be volatile in the future. Future volatility may negatively affect our results of operations, since the margin between the price of products we sell and crude oil and other feedstock prices may decrease, and may even decrease below the amount needed for us to generate net cash flow sufficient for our needs, including servicing our debt. 1.2 Market prices for crude oil and other feedstocks, refined petroleum products and aromatics and other chemical products are volatile and cyclical and often influenced by global factors that are not easily predictable. The prices at which we purchase our crude oil and other feedstocks and the prices that we charge for our refined petroleum and aromatics and other chemical products are set based on market prices. These market prices have been and are expected to continue to be volatile and are subject to a variety of factors that are beyond our control. Although increases or decreases in the price of crude oil or other feedstock may result in corresponding increases or decreases in the price of refined petroleum products, there can be no assurance that such prices will correspond in the same proportion, or at all. Any inability to pass on increases in the market price of crude oil and other feedstocks to our customers may have a material adverse effect on our business, cash flow, financial condition, results of operations and prospects. 1.3 We are highly dependent on ExxonMobil for numerous support services and certain of our senior personnel. We are highly dependent on ExxonMobil with respect to several aspects of our operations. We cannot assure you that ExxonMobil will continue to provide support to us. If we were to lose the support of ExxonMobil, or if any of our material agreements with ExxonMobil were terminated, and we were unable to secure alternate sources for such services or recruit additional key personnel, our business, cash flow, financial condition, results of operations and prospects could be materially adversely affected. Many of the agreements we have with ExxonMobil for services, technology, trademarks and other support services contain automatic termination clauses in the event Exxon Mobil Corporation directly or indirectly ceases to own or control more than 50% of the ownership interest in our Company. See "Related Party Transactions." Certain preemption rights and government approvals apply if ExxonMobil shareholders wish to reduce their aggregate shareholdings in our Company to below 50%. However, our ExxonMobil shareholders are not bound to retain any minimum interest in our Company and may, after the specified lock-up period associated with the combined offering, reduce their shareholdings in our Company. 1.4 There may be conflicts of interest between our principal shareholders and ourselves or between our majority and minority shareholders. Prior to the combined offering, Exxon Mobil Corporation, through its affiliates, owned an aggregate of 87.5% of our share capital and will continue to own a majority of our share capital immediately following the combined offering. Circumstances may arise in which ExxonMobil's interests may be at variance with our interests, and our management may face potential conflicts of interest in fulfilling their responsibilities as directors and executive officers. Although we intend to take all reasonable measures to resolve any such conflicts of interest while protecting our own interests, we cannot assure you that ExxonMobil's interests and ours will always be aligned. ExxonMobil's interests also may not coincide with the interests of our other shareholders. ExxonMobil, through its affiliates, may exercise its voting rights and effect shareholder actions that could conflict with and may be prejudicial to the interests of our other shareholders, such as payment of dividends or other distributions. 1.5 We are dependent on foreign sources for our supply of crude oil and other feedstocks. The main raw material used in our production process is crude oil and we are dependent on crude oil being readily available to satisfy substantially all of our production needs. The supply of imported crude oil and other feedstocks is subject to a variety of factors that are beyond our control, including political developments and instability in petroleum producing regions, in particular those in the Middle East, government regulations with respect to oil and energy industries in those regions, weather conditions and overall economic conditions in those regions. Although we have not experienced any significant difficulties in obtaining crude oil and other feedstocks to satisfy our production requirements to date, there can be no assurance that we will continue to have an adequate supply of feedstocks, primarily crude oil, available to sustain our current level of refining operations at acceptable prices and on satisfactory terms or at all. If we are unable to obtain an adequate supply of crude oil and other feedstocks or are only able to obtain such volumes at unfavorable prices, our business, cash flow, financial condition, results of operations and prospects may be materially adversely affected. 1.6 A significant interruption in the operations of our refinery and aromatics plant could reduce our production. All of our production facilities are located in Sriracha, Chonburi province, Thailand. Refining, transporting and storing crude oil and other feedstocks, refined petroleum products and aromatics and other chemical products involve many significant hazards that could result in fires, explosions, spills and other unexpected or dangerous conditions or accidents. Any significant interruption to our operations (directly or indirectly) as a result of industrial accidents, severe weather or natural disasters could materially and adversely affect our business, financial condition, results of operations and prospects. The various components of our production facilities are shut down for routine maintenance or unscheduled shutdowns from time to time. During such shutdowns, the shutdown component and other components that rely on such shutdown component may not be producing product or may be operating at lower production levels. Any prolonged shutdown, even for routine or scheduled maintenance, could have a material adverse effect on our business, results of operations, financial condition and prospects. 1.7 We face risks associated with contamination of our products or the sale of off-specification products. The delivery of products that are considered outside the normal specifications, or "off- specification", or the contamination or deterioration of our products, whether actual or alleged, deliberate or accidental, could harm our reputation and business. Any delivery of off- specification, contaminated or deteriorated product could result in a recall of our products and/or criminal or civil liability and restrict our ability to sell our products, which, in turn, could have a material adverse effect on our business, financial condition, results of operations and prospects. 1.8 Our insurance coverage may not adequately protect us against possible risk of loss. Although we believe that our insurance coverage is adequate; however, in the case that any or all of the production facilities are damaged in whole or in part and our operations are interrupted for a sustained period, there can be no assurance that our insurance policies will be adequate to cover the losses that may be incurred as a result of such interruption or the costs of repairing or replacing the damaged facilities. We do not carry business interruption insurance. If we suffer a large uninsured loss or if any insured loss suffered by us significantly exceeds our insurance coverage, our business, cash flow, financial condition, results of operations and prospects may be materially adversely affected. In addition, our insurance policies do not cover any penalties or fines or other payments payable to the Government as a result of any of these risks. 1.9 Compliance with, and changes in, environmental laws and regulations could require us to incur significant expenditures. Due to the nature of our business, we are subject to extensive and increasingly stringent environmental laws, regulations and standards. In addition, the adoption of new environmental laws and regulations, new interpretations of or repeal of existing laws, increased governmental requirements or other developments in the future may require that we make additional capital expenditures or incur additional operating expenses in order to maintain our current operations, curtail our production activities or take other actions that could have a material adverse effect on our financial condition, results of operations and cash flow. For example, the Government recently promulgated new standards for fuels that require lower sulfur and benzene levels in gasoline and lower sulfur levels in diesel fuel which we must meet by January 1, 2012. We are currently evaluating our options on how to meet these new fuel specifications. In order to continue selling our gasoline and diesel fuel production in the domestic market, we will likely need to make a substantial capital investment prior to January 1, 2012. Based on preliminary estimates, we expect such capital investment to amount to approximately Baht 15,000 million, although the final project cost is subject to significant uncertainties, depending on the project scope that has yet to be finalized and the market conditions during project implementation. Although we will seek to recover the capital costs for these investments from our customers, there can be no assurance that we will be able to do so. We have not been subject to material litigation or material fines and penalties or, to our knowledge, investigations with respect to environmental and related matters. However, there can be no assurance that we will not become involved in future litigation or other proceedings or be held responsible in any such future litigation or proceedings, the costs of which could be material. Environmental clean-up and remediation costs of our sites and environmental litigation may materially adversely affect our business, cash flow, financial condition, results of operations and prospects. 1.10 We may not be able to complete future projects within our expected schedule and budget. We will likely need to make a substantial capital investment to comply with new regulations that require lower sulfur and benzene levels in gasoline and lower sulfur levels in diesel fuel, described above. If we are unable to generate sufficient cash flow from operations, we may have to finance a portion of the investment cost for the project through bank debt or sale of securities, but we cannot assure you that we will be able to obtain sufficient financing on commercially acceptable terms or at all. The timing and completion of this and other projects may be adversely affected by factors commonly associated with large construction and expansion projects. These factors include shortages, or changes in prices of equipment or materials, defects in design or construction, adverse weather conditions, natural disasters, accidents and unforeseen circumstances. Any of these factors may cause delays in completion of all or part of such projects, increasing our financing costs associated with such projects and potentially preventing us from achieving compliance by the relevant deadlines, which may materially adversely affect our business, cash flow, financial condition, results of operations and prospects. 1.11 Government intervention in pricing decisions and other Government laws and regulations may adversely affect our results of operations and our financial condition. We and other petroleum companies in Thailand operate in a heavily regulated environment under the supervision of the Government. Our business could be directly affected by Government policy or any changes thereof. In particular, the Government may intervene in pricing decisions of refineries and retailers in order to pursue Thailand's macroeconomic and social objectives. In addition, the Government regulates the wholesale price of LPG, which is largely used by households for cooking gas. The controlled wholesale LPG prices typically lag behind world LPG prices. Moreover, the Government also regulates the export of LPG by producers. Our ability to operate as a petroleum refining company in Thailand is subject to the Government issuing us a factory operating permit which is renewed every five years, and is governed by an agreement we entered into with the Ministry of Industry and which was subsequently transferred to the Ministry of Energy. If this permit is not renewed for any (more)