Enhanced Subscription Agreement and Debt Restructuring Proposal with Guangdong Zhenrong

More Compelling Long Term Solution For All Titan Shareholders and Creditors

HONG KONG, Oct. 8, 2012 /PRNewswire/ -- Titan Petrochemicals Group Limited (HK: 1192, "Titan" or "the Company") announced on 3 October 2012 that it has entered into a supplemental agreement with Guangdong Zhenrong Energy Co., Ltd ("Guangdong Zhenrong") on 10 September 2012 in relation to the Subscription Agreement announced by the Company on 7 August 2012. Under the amended and new terms, Guangdong Zhenrong has enhanced its initial Subscription Agreement and agreed to a revised debt restructuring proposal in order to match with the Company's long term development plan as well as for the benefit of all Titan creditors and shareholders by committing to invest HK$928.2 million of capital (HK$175 million under the original terms) and pledging to restructure all debt.

This supplemental agreement follows the Company's announcement on 31 August 2012, which disclosed that Fame Dragon International Investment Limited, a wholly-owned subsidiary of Guangdong Zhenrong, had entered into agreements with Mr. Tsoi Tin Chun, Titan's former chairman, to acquire his 45.47% stake in Titan for an aggregate cash consideration of approximately HK$8.9 million.  Subsequent to the completion of these agreements, Guangdong Zhenrong will become the single largest shareholder in Titan.

Patrick Wong Siu Hung, Executive Director of Titan, commented: "The new board has made significant progress over the past three months. It received Guangdong Zhenrong's intention to restructure Titan's debt and take over the Company in July and concluded the Subscription Agreement with Guangdong Zhenrong in August. Subsequently, it gained approval from Guangdong Zhenrong's shareholders for its plans for Titan. In addition, Guangdong Zhenrong made a further move by acquiring Mr. Tsoi Tin Chun's remaining 45.47% stake in Titan to become the single largest shareholder in Titan. We believe the supplemental agreement is by far and away the most compelling option, of all those that have been disclosed, for Titan creditors and shareholders. By working with a strong partner in Guangdong Zhenrong, Titan's recently strengthened senior management team is confident that today's news is a defining moment as Titan seeks to establish a solid foundation for its long term development."

Key highlights of the enhanced offer and debt restructuring proposal are as follows:

Instead of subscribing for 7,000,000,000 new Adjusted Shares for a total price of HK$175 million, the Subscription is now to comprise a subscription by Guangdong Zhenrong of 3,461,093,248 Preferred Share A for a total consideration of HK$538.2 million (or HK$0.1555 per Preferred Share A);

• In addition, Guangdong Zhenrong agreed to provide an Equity Line of up to HK$390 million by the subscription of (or to procure its wholly-owned subsidiary to subscribe) a maximum of 780,000,000 Preferred Shares B at HK$0.50 per Preferred Share B, in tranches of HK$10 million each, during a period of 5 years from the completion of the Subscription;
• Guangdong Zhenrong agreed in principal to the terms of the Titan Debt Restructuring Proposal, which contemplates the issue of five-year 2% notes by reference to principal amounts of debts owing to scheme creditors, by way of scheme of arrangement, and the Company making available up to US$20 million (or such greater amount as the Company and Guangdong Zhenrong may agree) to purchase at a discount to face value such new notes issued through a reverse dutch auction process ;  and
• Guangdong Zhenrong agreed to provide interim financing on request of the Company of up to HK$39 million. The repayment obligations and interest payment obligations of the Company can be satisfied by offset on a dollar for dollar basis against subscription monies payable for the issue of Preferred Shares B pursuant to the Equity Line.

The supplemental agreement represents a significant improvement over previously announced terms:

Use of proceeds under the Subscription Agreement

The gross proceeds from the issue of the Preferred Shares by the Company is up to approximately US$119 million (approximately HK$928 million). Based on the latest in principle terms of the Titan Debt Restructuring, the Company expects to use approximately US$20 million (HK$156 million) to settle the cash element of the Titan Debt Restructuring Proposal, with the remaining funds to be used to meet working capital (including debt servicing) needs of the Group.

Update on StorageCo

As announced by the Company on 7 August 2012,   in addition to offering financial support to enable Titan to ride-out the current turbulent market conditions, Guangdong Zhenrong made its intention clear to re-inject the highly attractive StorageCo assets back into the listed company and to provide interim funding to the PRC Storage subsidiaries, subject to agreement by the liquidators of StorageCo.

The Company received notice that, Guangdong Zhenrong has entered into an agreement with Saturn Storage Limited ("SSL") / Saturn Petrochemical Holdings Limited ("SPHL") and its associates. According to the agreement, Guangdong Zhenrong has withdrawn a bid it had earlier submitted to the liquidators of the StorageCo; SSL/SPHL and associates will acquire the assets of StorageCo. Guangdong Zhenrong will further implement the terms and conditions with SSL/SPHL and associates on the reacquisition of the StorageCo assets with respect to the mutual agreement.

Guangdong Zhenrong is also in discussion with SSL/ SPHL and their associates with a view to settle possibly all rights and claims attaching to and in connection with the Listco Preferred Shares in respect of which a notice of redemption has been given, and other legal actions brought by SPHL and SSL respectively against the Company, including the legal action that has two Directors joined as co-defendants.

If Guangdong Zhenrong or its associates is successful in acquiring the assets of the StorageCo, and to the extent practicable under the Listing Rules, sells to the Company part or all its interests in the PRC Storage Companies so acquired, the consideration will be settled with the issue of New Convertible Bonds. The Company will issue a further announcement in respect of the Reacquisition.

Guangdong Zhenrong Energy's spokesperson said: "The increased offer and improved debt restructuring proposal underscore our total commitment to investing in Titan. At this stage, our immediate focus is on supporting a creditors' restructuring and ensuring a favourable resolution of the key outstanding litigation against Titan, and to fully support Titan's development."

"Looking ahead, we will take appropriate steps, and together with our significant financial strength, powerful industry contacts and experienced management team, to enable Titan to realise its full potential and deliver the best possible returns to all stakeholders."

About Titan

Titan Petrochemicals Group Limited, listed on the Hong Kong Stock Exchange (Stock Code: 1192), is a provider of oil logistic and marine services in the Asia Pacific region, in particular, in China. The Group operates the strategically located onshore and offshore storage facilities and a multi-functional ship-repair and shipbuilding yard, which is one of the largest in Asia. Titan operates in mainland China, Hong Kong, Singapore and Malaysia.

About Guangdong Zhenrong

Guangdong Zhenrong Energy Co. Ltd is a bulk commodities, energy and resources trading company, principally involved in the trading of oil products, non-ferrous metal materials, coal, chemical products among other products or services. It is a registered trader of crude oil, refined oil, coal and other chemical products, and is also involved in PRC and overseas with products in oil refineries and, storage facilities, together with logistics and other resources related thereto.

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