Bangkok--15 May--Fitch Ratings Fitch Ratings (Thailand) Limited has today assigned National Long-term ratings of ‘AA-(tha)’ (AA minus(tha)) to Thai Oil Public Company Limited’s (TOP) upcoming unsecured and unsubordinated debentures with the issue size of up to THB3.0 billion and up to 5-year maturity. The Outlook on the ratings is Stable. The ratings reflect TOP’s strategic importance to PTT Public Company Limited (PTT) as the group’s major refinery, and its high operational inter-dependence with PTT, as well as its large scale, highly complex production capacity and cost competitiveness. TOP has maintained strong cost competitiveness relative to its peers in the region. In addition, TOP’s forward integration into aromatics and lube-base oil production has increased its oil value chain and reduced refining margin volatility. Meanwhile, its diversification into the power business may help partially offset earnings volatility from the refining business, although EBITDA contribution, so far, is small. The ratings are also underpinned by TOP’s strong financial position, with low financial leverage and high coverage ratios, and its plan to maintain low leverage in the future. TOP reported strong EBITDAR of THB28.4 billion in 2007, up 20% yoy, thanks to a strong gross refinery margin (GRM), but its EBITDAR declined 30% yoy in Q108 to THB5.8bn due mainly to weak performance of its aromatic and lube-base oil units as a result of a 75-day shutdown of its paraxylene unit for maintenance and new capacity tie-in, as well as increasing feedstock costs. Nevertheless, TOP’s overall financial profile remains strong. The company’s total debt and net debt were THB30.6bn and THB25.9bn, respectively, at end-March 2008. Its last-twelve-month (LTM) funds from operations (FFO) adjusted net leverage and net adjusted debt/LTM EBITDAR slightly increased to 1.1x and 1.0x, respectively, in Q108, while FFO/fixed charges was 14.6x, and EBITDA/gross interest was 14.9x. TOP’s credit profile is tempered by its high vulnerability to oil prices and GRM fluctuations, as well as the cyclicality of the petrochemicals business. TOP is also exposed to supply risks owing to its high dependence on foreign oil supplies. Other credit concerns relate to its high customer concentration and its exposure to both a single production site and single market, although customer concentration is partly mitigated by the fact that PTT, the largest offtaker, is the main player in oil marketing and trading in Thailand, and highly rated at ‘AA+(tha)’. The Stable Outlook reflects TOP’s strong market position, supported by its cost competitiveness and a conservative financial policy. As TOP is highly exposed to the cyclical nature of oil refining and petrochemicals businesses, its ratings could be affected should the company fail to maintain its net debt/EBITDA at around 1.0x on a sustained basis. Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Contacts: Lertchai Kochareonrattanakul, Bangkok, +662 655 4760; Wasant Polcharoen, Bangkok, +662 655 4763; Vincent Milton, Bangkok, +662 655 4759.