Unipetrol, a.s. and Zakłady Azotowe ANWIL S.A. executed share purchase agreement on sale of 81.78 % of shares of Spolana a.s.

Polski Koncern Naftowy ORLEN S.A. ("PKN ORLEN"), Central Europe’s largest downstream oil company, announces that on 27 October 2006 UNIPETROL, a.s., headquartered in Prague, Czech Republic (“Unipetrol”), as seller, and Zaklady Azotowe ANWIL Spolka Akcyjna, headquartered in Wloclawek, Poland (“Anwil”), as purchaser, executed the Share Purchase Agreement (the “Share Purchase Agreement”) on sale of 1 500 ordinary series "A" shares and 6 090 941 ordinary series "B" shares of SPOLANA a.s. (“Purchase Shares”), headquartered in Neratovice, Czech Republic (“Spolana”).

The Purchase Shares represent 81.78% of the initial capital of Spolana with a par value CZK 11 600 of each series “A” share (i.e. approximately PLN 1 588.04 based on CZK/PLN average exchanges rates as of 26 October 2006, stated by National Bank of Poland) and CZK 116 of each series “B” share (i.e. approximately PLN 15.88 based on CZK/PLN average exchanges rates as of 26 October 2006, stated by National Bank of Poland), and represent 81.78% of votes at the General Meeting of shareholders of Spolana. The book value of the Purchase Shares in the Unipetrol books amounted to CZK 986 m (i.e. approximately PLN 135 m based on CZK/PLN average exchanges rates as of 26 October 2006, stated by National Bank of Poland) as of 25 October 2006. The total price for the Purchase Shares amounts to CZK 640 382 956 (i.e. approximately PLN 87 668 427 based on CZK/PLN average exchanges rates as of 26 October 2006, stated by National Bank of Poland) and will be paid for by Anwil in the form of cash contribution from own financial sources.

Under the Share Purchase Agreement, Anwil is obligated to undertake financial restructuring of Spolana via satisfaction in full of the debt owed by Spolana to Unipetrol amounting to CZK 660 million as of 25 October 2006 (i.e. approximately PLN 90 m based on CZK/PLN average exchange rate as of 26 October 2006, stated by National Bank of Poland).

The purchase price may be subject to the following price adjustment on the occurrence of any of the following conditions:
- environmental guarantee provided by the National Property Fund of the Czech Republic (now, the Czech Republic through the Ministry of Finance) for compensation of costs for the environmental damage remediation of the Old Amalgam Electrolysis project will not be sufficient for compensation of costs for remediation of the aforementioned environmental damage and all necessary steps will have been taken by Anwil and Spolana without success for obtaining additional funds for this purpose, Unipetrol will be obligated to financially indemnify Anwil up to 40 % of the Purchase Shares price, or
- other potential obstacles in Spolana’s future operation – Unipetrol will be obligated to financially indemnify Anwil up to 1-3 % of the Purchase Shares price.

Main business activities of Spolana include production and sales of:
- suspension polyvinyl chloride (S-PVC) and granulated polyvinyl chloride (G-PVC)
- caprolactam as raw material for production of polyamide fiber, construction materials and plastics
- soda lye.

Main business activities of Anwil include production and sales of:
- suspension polyvinyl chloride (S-PVC)
- granulated products based on PVC as well as compositions and PVC plates - soda lye and caustic soda
- chemical fertilizers including ammonium nitrate, nitro-chalks.

Main business activities of Unipetrol include production and sales of refining, petrochemical and chemical products.

PKN ORLEN owns 63% of votes at the General Meeting of Unipetrol and 84.48% of votes at the General Meeting of Anwil.

Supervisory Board of Spolana consists of six members, two of them are Anwil’s employees, one of them is PKN ORLEN’s employee. Anwil Supervisory Board consists of five members and four of them are PKN ORLEN’s employees. Management Board of Spolana consists of five members, two of them are Anwil’s employees and one of them is Unipetrol’s employee. Supervisory Board of Unipetrol consists of ten members, seven of them are PKN ORLEN’s employees.

As the Purchase Shares represent more that 20% of the Spolana initial capital, they are significant assets in accordance to the Polish Regulation of the Minister of Finance dated 19 October 2005 on current and periodic information to be published by issuers of securities (Journal of Laws as of 26 October 2005).