Press Release Berli Jucker's Thai Scandic Steel suspends operations amid bureaucratic inaction on steel import regulations - hundreds of jobs at risk. Berli Jucker Public Co. Ltd. announced today that its steel tower manufacturing subsidiary, Thai Scandic Steel, has been forced to suspend operations. The suspension is due to Government regulations restricting steel imports. Commenting on the situation, Berli Jucker's President and CEO, David Nicol, said: "The Company (Thai Scandic Steel) is idle but has orders on hand and thousands of tons of steel which it is not permitted to use to fulfil these orders. All parties involved have been notified and petitions raised to all relevant authorities but to no avail. Thai Scandic Steel is not alone in this predicament but has literally run out of work it can perform legally. The root cause of this issue appears to be perceived protection of vested interests in the steel industry." Thai Scandic Steel's General Manager, Ennio Castelli, explained the position in more detail: "In May this year, the Government announced new legislation aimed at protecting the local steel production industry, by restricting standards and introducing a new 10% duty on imported steel to be used for local fabrication. Unfortunately, this legislation went beyond the logical point and now prevents the import and use of certain types of steel shapes and qualities which are not even produced or only tentatively scheduled for production in Thailand, but which are specified as essential by our end customers such as EGAT. There are isolated instances involving a very small proportion of pieces where the steel can be acquired locally but only at a premium as high as 40% over the international price and the price at which the same companies are exporting these products from Thailand! .../2 We face both short and medium term issues. In the short term we have suspended operations because we are not allowed to use the steel already imported, paid for (including duty) and necessary to complete a high priority 500kv transmission line project for EGAT. Ridiculous but true. In the event our business survives in the short term, we will then face competitive problems with finished steel towers from countries such as India and China. This is because the duty rates on the imported finished towers are only 5% whereas the duty on components imported for local fabrication is, respectively 10% for steel, 11% plus for zinc and 22% for bolts and nuts. Sadly this is likely to result in extensive job losses in Thailand." David Nicol added: "Berli Jucker has supported Thai Scandic Steel through many difficult years. Recently, additional support has been needed to complete loss making contracts which were entered into before the collapse of the Baht. These contracts were completed with the aim of protecting the Company's good name and helping our ultimate customers, such as EGAT, complete projects in progress. Unfortunately this all appears to have been for nothing as the current regulatory tangle has managed to bring operations to a halt. If the matter is not resolved soon (within days rather than weeks) with the help of the Thai Federation of Industries and the Ministry of Industry, Thai Scandic Steel will be closed permanently. The immediate cash cost of such a closure would not be material to the Berli Jucker Group although a provision for diminution in asset values would be required. The worst part of this closure would of course be the loss of hundreds of jobs." October 20, 1998 For further information please contact: David J. Nicol: Ennio Castelli: Tel 367-1024 Tel: 038 683 066-70 E-mail: davidnicol@berlijucker.co.th