Samsung Gen. Chemical notice

RNS Number:8600M
Samsung Electronics Co. Ld
27 June 2003

                                                                  June 26, 2003

                     Samsung General Chemical announcement


We would like to inform you of developments at Samsung General Chemicals
Co. Ltd, an affiliated company of Samsung Electronics (SEC) engaged in the
NAPTHA cracking business. Samsung General Chemicals Co. Ltd. (SGC)
produces ethylene, propylene, butadiene and styrene monomer. Recently,
the shareholders of SGC have approved a deal whereby 50% of the
underlying petrochemical business will be sold to Total Holdings UK Ltd (Total),
the worlds fourth largest gas and oil company whose subsidiaries include
Atofina of France. Total will pay to SGC U$390 million, or 465 billion won,
for the acquisition of its 50% interest.

We have provided the details of this sale in the Appendix. In short, SGC will
become a holding company by transferring all assets and debt associated with
the petrochemical business to a newly formed company. At the outset,
SGC will own 100% of this enterprise, of which 50% will then be sold to Total.
This sequence of events effectively creates a new joint venture enterprise
between SGC and Total. With the sale to Total, SGC will use half of the
proceeds to eliminate what debt remains on its balance sheet, and the other
half as a cash payment to its shareholders.

As many of you know, the petrochemical industry has weathered through
tough operating conditions over the last few years. SGC has faced
its share of challenges dating back to the Asian Financial Crisis. SEC,
along with the other shareholders and the management of SGC, believe
that the long term strategic interests of SGC will be best served by
a partnership with Total, a major global player.

SEC currently owns 3.8% of SGC. A list of eight SGC shareholders is provided in
the Appendix. As a necessary condition of the sale by SGC to Total, the eight
shareholders of SGC will be obligated to guarantee contingent liabilities that
may arise from the use of assets after their sale. The contingent liability of
SGCs shareholders will not exceed U$200 million. SECs share of the total
liability will be relative to its ownership among the eight shareholders, or
U$8.2 millionif calculated using the current proportions in the Appendix. All
warranties and representations have a finite expiration as described in the
Appendix. Meanwhile, SGC will pay shareholders a prorated percentage of the
proceeds from the sale. As a result, SEC will receive a cash payment of U$7.3
million, or 8.8 billion won. This payment will serve as a provision to cover
contingent liability obligations.

In summary, we would like to emphasize the following points:

* A contingent liability obligation is a typical practice used in joint
venture deals such as this.

* SECs contingent liability obligation serves as a means to meet the conditions
of an agreement between SGC and Total Group that is in the best long term
interests of SGC.

* The newly formed joint venture will be more competitive both financially and
operationally. The new company will have less debt. The active participation of
a strong global franchise will bolster the business.

* The joint venture and investment by Total Group allows SEC to reduce
its risk exposure and paves the way for SEC to decrease its stake in SGC.

* SECs contingent liability obligation is matched by a cash payment from
SGC.



Appendix



1. Samsung General Chemicals (SGC) New Company Formation Process

* Phase I : SGC will set up a company by transferring its assets and
liabilities, and acquire 100% of the new companys stake.
  - The new company will take over SGCs debt up to a debt ratio of 100%.

* Phase II : SGC will sell 50% of its stake to Total Group for $390
million (KRW465 billion)
  - The new company will have a valuation of $1.55 billion
    : (KRW1.86 trillion: excluding KRW0.14 trillion in working capital)
    multiply1/2 (debt ratio of 100%) multiply 1/2 (stake of 50%) = $390
    million
    * The new companys assets of KRW2 trillion include working capital of
    KRW140 billion.

* Phase III : SGC will pay back the proceeds of the sale to shareholders
SGC will pay its debt of KRW233 billion with the sale amount of KRW465 billion,
then pay back the remaining KRW232 billion to its shareholders.

2. Samsung Groups Current Holdings

               SGC Ownership Structure

        Samsung Corporation             37.5%
        Samsung Techwin                 25.6%
        Samsung SDI                     10.3%
        Samsung Electromechanics        10.2%
        Samsung Electronics              3.8%
        Samsung Fine Chemicals           3.4%
        Cheil Industries                 0.9%
        Cheil Communications             0.3%


3. Representations and warrantee expiration periods

* All general representations and warranties made by SGC and its
shareholders in this share purchase agreement or any other
agreements related to this transaction will be in tact until 1.5 years
after the closing date of the agreement. Other specific representations
and warranties mentioned below are subject to different expiration periods.

* Representations and warranties regarding taxes and labor will survive
until the expiration of relevant statute of limitations applicable to
Government charges or labor related matters.

* Representations and warranties regarding environmental matters and
liability for job related diseases will last 5 years.

* Representations and warranties regarding ownership of transferred
assets will last 10 years.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

MSCGGGZVZNFGFZG