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Published on Monday, 21 May 2007

Sale of Rolling Mills - Prudential offer increased to US$13.3M

Sale of Rolling Mills - Prudential offer increased to US$13.3M

A.C.N. 063 656 333
A.B.N. 64 063 656 333
VIETNAM INDUSTRIAL INVESTMENTS LIMITED

18 May 2007

Company Announcements
Australian Stock Exchange Limited
10th Floor
Bond Street
SYDNEY NSW 2000

Dear Sirs

SALE OF ROLLING MILLS – PRUDENTIAL OFFER INCREASED TO US$13.3 MILLION

On 7 May 2007 the Annual General Meeting was adjourned for 14 days so that VII's Independent Directors could consider and take advice on the unsolicited offer from Prudential Vietnam Securities Investment Fund Management Company Limited (“Prudential”) to acquire the Company’s 70% interest in Vinausteel Ltd and 100% interest in Structure Steel Engineering Pte Ltd (“Sale Assets”). The Prudential offer was made as an alternative to the sale of the Sale Assets to NatSteel Asia Pte Ltd ("NatSteel Sale").

On 15 May 2007 the Company released a Supplementary Explanatory Memorandum to the Notice of Meeting and Explanatory Memorandum for the AGM ("Notice of AGM") in which shareholders were advised that VII's Independent Directors:
(a) given the financial position of the Company, are not prepared to recommend the Prudential offer until it offers more certainty and demonstrably better terms than the NatSteel Sale; and
(b) continued to recommend that, in the absence of a superior proposal, shareholders vote in favour of the NatSteel Sale.

On Thursday 17 May 2007, VII’s lawyers received an unsolicited communication from Clayton Utz (lawyers for Prudential) enclosing an amended offer from Prudential which clarified some of the matters raised in the Supplementary Explanatory Memorandum and increased the minimum cash payable to VII to US$13.3 million for the Sale Assets.

The amended Prudential offer for the Sale Assets:
1. Is for US$11.8 million net of all taxes, fees and costs.

2. Has a US$1,000,000 non-refundable deposit payable on VII shareholders approving the amended Prudential offer.

3. Has US$10,800,000 payable on completion of the sale of the Sale Assets to the buyer.

4. Grants VII a 24 month option to acquire an equity interest of up to 20% in the capital of the buyer which may be cancelled for US$1,500,000 within 12 months at the election of VII.

5. Is subject to the NatSteel Sale not being approved by VII shareholders.

6. Is in a form that is immediately and irrevocably binding on Prudential and unconditional and cannot be withdrawn once accepted by VII.

7. Is capable of acceptance by VII signing, dating and returning a copy of the letter dated 17 May 2007 to Clayton Utz.

8. Is not subject to any representations and warranties being provided by VII. Prudential will require VII to provide beneficial and legal title to the Sale Assets and an ability to transfer title to the buyer.

9. States that completion is to be on or before 31 August 2007 at a time and place to be agreed between Prudential and VII. Prudential, Mr Henry Lam and the buyer agree to use best endeavours to assist the buyer in achieving completion on or before 31 July 2007. If completion does not take place on or before 31 August 2007, or any later date agreed between VII and Prudential, Prudential’s offer will automatically lapse or, if accepted, the agreement will automatically terminate.

10. States that Prudential and Mr Henry Lam are not aware of any circumstances that should prevent any approvals, governmental or otherwise, from being obtained, including in regard to the buyer.

Prudential also confirmed that it has funds available to enable the buyer to:
(a) perform its obligations in relation to the amended Prudential offer and any agreement formed pursuant to VII’s acceptance of the amended Prudential offer;
(b) pay US$1,000,000 non-refundable deposit payable upon VII shareholders approving the amended Prudential offer;
(c) pay US$10,800,000 on completion of the sale of the Sale Assets to the buyer;
(d) pay US$1,500,000 on cancellation of the call option; and
(e) release VII from all existing liabilities provided in relation to SSESTEEL Ltd and Vinausteel Ltd.

VII's Independent Directors continue to have no information or basis to value the call option other than at US$1.5 million being the amount payable on cancellation. For this reason, VII's Independent Directors value the amended Prudential offer at US$13.3 million which is US$1.28 million (i.e. approximately 10.6%) more than the consideration VII expects to receive under the NatSteel Sale.

VII’s Independent Directors are of the opinion that the amended Prudential offer has more certainty and demonstrably better terms than the NatSteel Sale.

Given the short period of time between receiving the amended Prudential offer and the holding of the adjourned AGM, VII’s Independent Directors recommend that at the adjourned AGM shareholders:
1. Consider resolutions 1 and 2 in the Notice of AGM to satisfy the Corporation’s Act requirements for holding the AGM prior to the end of May 2007.
2. Adjourn the consideration of resolution 3 in the Notice of AGM.

Yours faithfully

SIMON LEE AO
Chairman

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