MIRA INFORM REPORT

Report Date :

26.05.2007

IDENTIFICATION DETAILS

Name :	EQUATE PETROCHEMICAL CO KSC (C)

Registered Office :	NBK Building, Ahmadi, PO Box: 4733, Safat 13048, Kuwait

Country :	Kuwait

Date of Incorporation :	04.12.1995

Legal Form :	Sharikat Al Mouasahama Al Kuwaitia Al Mughlaqa (Kuwaiti Shareholding Company Closed – KSC (C)

Line of Business :	Producers of chemical products.

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	US$ 3,500,000

Status :	Good

Payment Behaviour :	Regular

Litigation :	Clear

SUMMARY

Company Name	EQUATE PETROCHEMICAL CO KSC (C)
Country of Origin	Kuwait
Legal Form	Kuwaiti Shareholding Company Closed – KSC (C)
Registration Date	4^th December 1995
Trade Licence Number	63392
Membership Number	48090
Issued Capital	KD 86,000,000
Paid up Capital	KD 86,000,000
Total Workforce	860
Line of Business	Producers of chemical products.
Financial Condition	Good
Payments	Nothing detrimental uncovered
Operating Trend	Steady

COMPANY NAME

EQUATE PETROCHEMICAL CO KSC (C)

ADDRESS

Registered & Physical Address

Building : NBK Building

Area : Ahmadi

PO Box : 4733

Town : Safat 13048

Country : Kuwait

Telephone : (965) 4343666 / 4312568 / 3436661

Facsimile : (965) 4312560 / 4312557 / 4312558

Email : hayatm@shb.equate.com

pemarket@equate.com

Premises

Subject operates from a large suite of offices that are rented and located in the Central Business Area of Safat.

Branch Office (s)

Location Description

· PO Box : 9116 Sales Office

Safat 13048

Tel : (965) 2445655

Fax : (965) 2415121

· Equate Complex Production plant

PO Box : 9729

Ahmadi 61008

Tel : (965) 3260326 / 3725630

· Shuaiba Administrative Office

Tel : (965) 3260238

Fax : (965) 3260302

KEY PRINCIPALS

· Hamad Al Terkait President

· Abdul Baqi Al Nouri Chairman

· Saad A. Al Shweib Vice President

· Fouad Al Khadra Managing Director

· Abdul Karim A. Mubarak Finance Director

· Nizar Z. Al Hamoui Director

· Turki S. Al Athrash Director

· Henry Roth Director

· Khalid Bahamra General Manager

· Yousef Al Ateeqi Technical Manager

· Tom Liles Production Manager

· Travis Spoede Finance Manager

· M. Al Mazeedi Logistics Manager

· Fahd Al Sumaid Public Relations Manager

LEGAL FORM & OWNERS

Date of Establishment : 4^th December 1995 (Production began in November 1997)

Legal Form : Sharikat Al Mouasahama Al Kuwaitia Al Mughlaqa (Kuwaiti Shareholding

Company Closed – KSC (C)

Trade Licence No. : 63392

Industrial Licence No. : 95-449-MM

Membership No. : 48090

Issued Capital : KD 86,000,000

Paid up Capital : KD 86,000,000

Name of Shareholder (s) Share Value Percentage

· Petrochemical Industries Company KSC (PIC) * KD 38,700,000 45%

Shakir Al Kazimi Building

Khalid Ibn Waleed Street

PO Box : 1084

Safat 13011

Kuwait

Tel : (965) 2448280 / 2422141

Fax : (965) 2405791 / 2445913 / 3261544

· Union Carbide Co (UCC) ** KD 38,700,000 45%

Washington DC

United States of America

· Bubiyan Petrochemicals Co KD 8,600,000 10%

Kuwait

* Petrochemical Industries Company was founded with the objective of setting up various types of petrochemical industries to promote and diversify the sources of national income through the exploitation of the natural gas that accompanies crude oil reserves.

** Union Carbide Co (UCC) is now a wholly owned subsidiary of The Dow Chemical Company, USA.

AFFILIATED COMPANIES

Subject is partly owned by Petrochemical Industries Company KSC (PIC) which in turn is wholly owned by Kuwait Petroleum Corporation (KPC), which has overall responsibility for Kuwait’s local and foreign oil industry investments. The following concerns are wholly or partly owned by KPC :

Name Percentage Held

· Kuwait Oil Co (KOC) 100%

PO Box : 9758

Ahmadi 61008

Tel : (965) 3989111 / 3984111

Fax : (965) 3982661

· Kuwait National Petroleum Co (KNPC) 100%

PO Box : 70

Safat 13001

Tel : (965) 2420121 / 2449401

Fax : (965) 2442954

· Kuwait Oil Tanker Co (KOTC) 100%

PO Box : 810

Safat 13009

Tel : (965) 2455455

Fax : (965) 2445907

· Kuwait Foreign Petroleum Exploration Co (KUFPEC) 100%

PO Box : 5291

Safat 13053

Tel : (965) 2421677

Fax : (965) 2437985

· Kuwait Santa Fe Braun for Engineering & Petroleum Enterprises KSC 100%

PO Box : 9282

Ahmadi 61003

Tel : (965) 3985011

Fax : (965) 3981030

· Kuwait Aviation Fuelling Co KSC (KAFCO) 100%

PO Box : 1654

Safat 13017

Tel : (965) 4330507 / 4330483

Fax : (965) 4330475

· SFIC Holdings (Cayman) Inc 100%

Cayman Islands

· KPC Holdings (Aruba) AEC 100%

· Petrochemical Industries Holdings NV 100%

· KP North Sea Holdings Ltd 100%

· Gulf Industrial Investment Co EC 100%

· Kuwait Drilling Co KSC 49%

· Equate Marketing Co 49%

Bahrain

· Gulf Petrochemical Industries Co (GPIC) 33%

Bahrain

· Sino Arab Chemical Fertilizer Co (SACF) 30%

China

· Arabian Oil Company 10%

LINE OF BUSINESS

Operations : Engaged in the production of Ethylene, Ethylene Glycol, Polyethylene and Polypropylene.

Production began at the US$ 2 billion Shuaiba complex in November 1997.

Subject has been awarded the ISO 9002 certificate for all its operating units and also

received the ISO 14001 in 2004.

The company is going to build a new ethylene and derivatives complex in Shuaiba, named Olefins II project. Fluor Corporation has signed an MoU to provide engineering, procurement and construction management services for the utilities and infrastructure portion of the project. This scope is in addition to the programme management contract it was awarded in 2004 to perform overall management consultancy and front-end engineering services.

The billion-plus-dollar project is located approximately 40 km, south of Kuwait City in Shuaiba. Olefins II will include construction of an 850,000-tonnes-per-year (tpy) cracker, a 600,000 tpy ethylene glycol unit, a 450,000 tpy ethyl benzene/styrene monomer unit and a debottleneck expansion of an additional 225,000 tpy of polyethylene capacity at the existing complex. Olefins II will be similar in volume to the first project and, consequently, the completed facility will double the capacity at the existing olefins complex. Groundbreaking occurred in March 2005, with completion of the complex expected in the second quarter of 2008.

Production Capacity : Ethylene 800,000 tonnes per annum

Ethylene Glycol 400,000 tonnes per annum

Propylene 600,000 tonnes per annum

Import Countries : Europe and the United States of America.

Operating Trend : Steady

Subject has a workforce of approximately 860 employees.

FINANCIAL HIGHLIGHTS

Financial highlights provided by outside sources are given below :

Currency : United States Dollars (US$)

Net Profits

2002 US$ 107,000,000

2003 US$ 276,000,000

2004 US$ 620,500,000

2005 US$ 588,000,000

Local sources consider subject’s financial condition to be Good.

Equate signs new financing of long-term loan facility

Equate Petrochemical Company signed a new financing facility in November 2001 for the value of US$ 900 million. The original loan facility of US$ 1.2 billion was obtained in 1996 and was structured on a project-loan basis. Due to the company's financial success it is replacing its project loan with a corporate loan.

Equate had jointly mandated Citigroup, National Bank of Kuwait and Kuwait Finance House to arrange the facility. Invitations were sent to a host of banks on 16^th October 2001, all of which have been involved with the company from its beginning. Of the funds raised 60% came from local Kuwaiti banks. The remaining percentage was contributed by both regional and international banking organizations.

BANKERS

· National Bank of Kuwait SAK

Main Branch

Ahmadi

Tel : (965) 3981188 / 3981189

Fax : (965) 3985643

· Bank of Kuwait & the Middle East KSC

Abdullah Al Salem Street

Darwaza Abdul Razzak

PO Box : 71

Safat 13001

Tel : (965) 2459771

Fax : (965) 2461430

PAYMENT HISTORY

No complaints regarding subject’s payments have been reported.

Date of transaction September 2004 March 2005 March 2006

Credit amount 50,000 56,000 340,000

Amount overdue 0 0 0

Payment terms 90 days 90 days 90 days

Payment Method Letters of Credit Letters of Credit Letters of Credit

Paying record No Complaints No Complaints No Complaints

Currency Pounds Sterling Pounds Sterling Pounds Sterling

GENERAL COMMENTS

Equate Petrochemical Co KSC (C) was incorporated in 1995 with production beginning in 1997. It is the largest petrochemical project in Kuwait and is 45% owned by the well known Petrochemical Industries Company KSC (PIC).

During the course of this investigation nothing detrimental was uncovered regarding subject’s operating history or the manner in which payments are fulfilled. As such the company is considered to be a fair trade risk.

Maximum suggested credit figure: US$ 3,500,000

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

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