75 million refinancing proposal

5 April 2007
$75 MILLION REFINANCING PROPOSAL
Chemeq Limited (ASX: CMQ) has received a refinancing proposal from International Finance
Corporation of Australasia Pty Ltd (IFCA) which Chemeq has today executed.
The IFCA proposal is in the form of a subscription agreement that provides for IFCA to subscribe
for up to $75 million in new equity capital in Chemeq in two stages.
In the first stage, IFCA has offered to subscribe for approximately 310.08 million Chemeq fully
paid ordinary shares at 19.35 cents per share to raise $60 million. Following this stage, IFCA
would hold approximately 75% of the issued capital of Chemeq.
As soon as possible after completion of the first stage, IFCA has also offered to fully-underwrite a
non-renounceable rights issue to all Chemeq shareholders to raise a further $15 million at 19.35
cents per share.
The IFCA proposal, a full copy of which is attached, is subject to a number of conditions
precedent. The conditions precedent include (among other conditions):
• Chemeq shareholder approval to the subscription for shares by IFCA in stage 1;
• IFCA being satisfied on or before 30 April 2007 with the results of its due diligence
investigations in relation to Chemeq;
• the convertible bond holders agreeing to accept A$60,000,000 in return for redemption of all
of the convertible bonds in full and final satisfaction of all obligations of Chemeq in respect of
the convertible bonds and as full and final satisfaction of all their claims against Chemeq; and
• Chemeq’s appeal of the decision of Justice Templeman on 1 February 2007 not being decided
on or before 31 May 2007.
The Board of Chemeq has considered the IFCA proposal today.
The Board notes that some of the conditions precedent to the IFCA proposal are outside of the
control of Chemeq. On this basis, and given the ongoing dispute with the bond holders, the
Board of Chemeq is unable to form a view as to whether the IFCA proposal can be implemented.
However, the Board is also of the view that the proposal has sufficient merit for it to be pursued
by Chemeq and for the proposal to be put to shareholders.
Chemeq Chairman John Hopkins said that despite the uncertainty as to whether the refinancing
package can be implemented, the Board felt that it was in the best interests of shareholders to
sign the subscription agreement and to put the proposal to Chemeq shareholders.
“If this equity refinancing package with IFCA is completed, it will herald in a new era for
Chemeq,” Mr Hopkins said.
“The Board has always placed the interests of Chemeq shareholders at the top of its priorities.”

“For that reason, the Board has decided to put the proposal to shareholders and to use its best
endeavours to implement the proposal.”
“We recognise that there is no certainty that we will be able to complete the deal, but we believe
that this should not deter us from proceeding and doing our very best to ensure that this
transaction is presented as an option for shareholders.”
Chemeq Chief Executive Officer David Williams said that if the transaction was successful, the
funds would allow Chemeq to repay the $60 million in convertible bond debt and end the
distracting dispute with Chemeq’s bond holders.
“Put together with Chemeq’s existing cash resources, the fresh equity will give the Company the
opportunity to pursue the new strategy outlined by the Board back in July,” Mr Williams said.
“I strongly believe our new strategy has the potential to see Chemeq become a profitable licensor
of its world-class polymeric antimicrobial technology across a range of industries including
industrial, chemical, pharmaceutical and human health applications.”
“In addition, we believe this can be achieved without significant capital commitment and years of
long lead times to market by selectively choosing target markets and strategic partners to allow
us to get product to market quickly and efficiently.”
IFCA is a private investment company based in Perth managed by Chairman David Petersen and
Managing Director Cyril D’Silva.
Chemeq has been advised that IFCA has substantial funding facilities in place with a major North
American bank. IFCA uses these facilities to facilitate transactions between the private sector
and international financial institutions.
To allow Chemeq to implement the equity subscription agreement with IFCA, Chemeq will seek a
variation of the orders whereby Chemeq gave certain undertakings to the Supreme Court and the
convertible bond holders to allow its appeal against an earlier Supreme Court decision that it had
not met the terms of the final milestone covenant set out in the Convertible Bonds Deed Poll to
proceed. The subscription agreement does not take effect unless the consent of the Supreme
Court is obtained.
If appropriate court orders are obtained, Chemeq will proceed to prepare a notice of meeting
with an independent expert’s report to be sent to shareholders of Chemeq as soon as possible to
seek approval of the issue of shares to IFCA. The shareholder meeting is expected to be held in
May.
A full copy of the subscription agreement is attached.
FOR FURTHER INFORMATION CONTACT:
David Williams
Chief Executive Officer
Tel: 08 9528 0200
Tony Veitch
Castle Gates Australia
Tel: 08 9386 1025