NAKORNTHAI STRIP MILL PUBLIC CO LTD, F-1, 1998-06-10

NAKORNTHAI STRIP MILL PUBLIC CO LTD
F-1, 1998-06-10

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1998
REGISTRATION NO.
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON
FORM F-1

UNDER

THE SECURITIES ACT OF 1933

--------------------------

NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
KINGDOM OF THAILAND 3310 N/A
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification code Number) Identification
incorporation or organization) No.)
</TABLE>

--------------------------

ATTN.: SAWASDI HORRUNGRUANG
CHAIRMAN
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
9 RAMKHAMHAENG ROAD
19TH FLOOR, UM TOWER
SUANLUANG, BANGKOK 10250
THAILAND

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

--------------------------

CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 479-8200

(Name and address, including zip code, and telephone number, including
area code, of agent for service)

--------------------------

COPIES TO:

TIMOTHY GOODELL, ESQ.
WHITE & CASE
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036

--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement

--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/*

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED(1) BE REGISTERED PER WARRANT(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Warrants to Purchase Ordinary Shares of
Nakornthai Strip Mill Public Company
Limited................................... $128,834,356 $.25 $32,208,589 $9,502
</TABLE>

(1) In accordance with rule 457(g), the registration fee is calculated based on
the exercise price of the Warrants being registered hereby.

--------------------------

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION DATED, JUNE 10, 1998

PROSPECTUS CONFIDENTIAL

NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED

[LOGO]

WARRANTS TO PURCHASE
128,834,356 ORDINARY SHARES

-------------------

This prospectus relates to the offering of Warrants (the "Warrants") to
purchase 128,834,356 ordinary shares, par value 10 Baht per share (the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"). All
such Ordinary Shares are issuable upon the exercise of Warrants. Each Warrant
entitles the holder thereof to purchase one Ordinary Share at an exercise price
of 10 Baht per share, subject to adjustments. See "Description of the
Warrants--Adjustments." The Warrants are being offered by certain shareholders
of the Company (the "Selling Shareholders"). See "Selling Shareholders."

THE WARRANTS OFFERED HEREBY, ARE BEING OFFERED OR SOLD TO THE PUBLIC BY THE
SELLING SHAREHOLDERS AND NOT BY THE COMPANY. THEREFORE, PROCEEDS FROM ANY SALE
WILL BE RECEIVED BY THE SELLING SHAREHOLDERS AND NOT BY THE COMPANY. THE COMPANY
MAY RECEIVE PROCEEDS UPON THE EXERCISE, IF EVER, OF THE WARRANTS OFFERED HEREBY.

Each Warrant entitles the holder to purchase one share of Ordinary Share at
an exercise price of 10 Baht per share, subject to adjustment upon the
occurrence of certain events, at any time, commencing on March 12, 1999 and
ending on February 1, 2008. See "DESCRIPTION OF SECURITIES--Warrants."

The sale of the Warrants being offered by the Selling Shareholders hereby
may be effected from time to time in one or more transactions directly to third
parties, or through brokers or dealers in negotiated transactions or through
resales pursuant to the provisions of Rule 144 at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company has agreed to pay the costs incurred in
connection with the registration of the Warrants offered hereby, which are
estimated to be $ . The Company has also agreed to indemnify the Selling
Shareholders against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See " PLAN OF
DISTRIBUTION."

The Ordinary Shares of the Company is traded on the Thai Stock Market under
the trading symbol "NSM". On June 9, 1998, the last reported sales price of the
Ordinary Shares on the Thai Stock Market was 8.40 Baht or approximately $.22 per
share. There is currently no market for the Warrants and there can be no
assurance given that a market will develop.
-------------------

THE WARRANTS BEING REGISTERED HEREUNDER INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 9 HEREOF.
-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUECY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is , 1998.
<PAGE>
AVAILABLE INFORMATION

As a result of this Registration Statement and the separately filed
Registration Statement relating to certain debt securities (the "Notes
Offering"), the Company is expected to be subject to the information and
reporting requirements of the United States Securities Exchange Act of 1934, as
amended (the "Exchange Act"), applicable to foreign private issuers, and, in
accordance therewith, to file reports and other information with the Securities
and Exchange Commission ("SEC").

The Company has filed with the SEC a Registration Statement on Form F-1
(including all amendments thereto, the "Registration Statement") under the
United States Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered by this Prospectus. This Prospectus does not
contain all the information set forth in the Registration Statement and the
exhibits thereto. Reference is made to the Registration Statement and to the
exhibits thereto for further information with respect to the Company and the
Offering. Statements contained in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference to such exhibit. The Registration Statement
relates to the securities being offered outside the United States insofar as
they may be resold from time to time in the United States. The registration
Statement, including exhibits and schedules thereto, may be inspected without
charge at the Public Reference Room of the SEC, 450 Fifth Street, Washington, DC
20549 and at the SEC's regional offices at 7 World Trade Center, Suite 1300, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois, 60661. Copies of all or any part thereof may be obtained from the SEC
at its principal offices in Washington, DC after payment of fees prescribed by
the SEC. The Registration Statement and the exhibits thereto are available on
the SEC's Internet website (http://www.sec.gov).

------------------------

ENFORCEABILITY OF CIVIL LIABILITIES

The Company is a public limited company organized under the laws of
Thailand. Certain of the directors and officers of the Company and certain of
the experts named in this Prospectus reside outside the United States, and all
or a substantial portion of the assets of such persons and the Company are
located outside the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon such
persons, including with respect to matters arising under the Securities Act, or
to enforce against any of them or the Company, judgments of courts of the United
States predicated upon the civil liability provisions of the Federal securities
laws of the United States. The Company has been advised by its Thailand legal
counsel, White & Case (Thailand) Limited, that judgments of United States
courts, including judgments predicated upon the civil liability provisions of
the federal securities laws of the United States, are not enforceable in
Thailand, but such judgment or order in the discretion of the courts of Thailand
may be admitted as evidence of an obligation in new proceedings instituted in
the courts of Thailand, which would consider the issue on the evidence before
it.

The Company has appointed CT Corporation System, New York, New York, as its
agent for service of process in the United States in respect of any civil suit
or action brought against or involving the Company in a United States federal or
state court located in the Borough of Manhattan of the City of New York arising
out of, related to or concerning the offering and sale of Securities under this
Prospectus.

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i
<PAGE>
PRESENTATION OF FINANCIAL INFORMATION

The Company maintains its financial books and records in Thai Baht ("Baht")
and presents its financial statements in conformity with generally accepted
accounting principles in Thailand ("Thai GAAP"). This Prospectus contains
translations of certain Baht amounts into U.S. Dollars ("U.S.$") at specified
rates solely for the convenience of the reader. These translations should not be
construed as representations that the Baht amounts actually represent such U.S.$
amounts or could be converted into U.S.$ at the rate indicated or any other
rate. Unless otherwise indicated, such U.S.$ amounts have been translated from
Baht at an exchange rate 43.10 Baht to U.S.$1.00, which was the noon buying rate
in New York City for cable transfers of Baht as certified for customs purposes
published by the Federal Reserve Bank of New York (the "Noon Buying Rate") at
June 5, 1998. As of March 12, the Issue Date, the Noon Buying Rate for Baht was
43.05 Baht to U.S.$1.00. On May 15, 1998, the Noon Buying Rate for Baht was
39.15 Baht to U.S.$1.00.

The following table sets forth, for the periods and dates indicated,
information concerning the rates of exchange of Baht into U.S.$ based on the
Noon Buying Rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York.

<TABLE>
<CAPTION>
AVG. RATE PERIOD END HIGH LOW
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
1993(1)............................................................... 25.33 25.58 25.61 25.11
1994(1)............................................................... 25.16 25.11 25.60 24.89
1995(1)............................................................... 24.92 25.20 25.70 24.47
1996(1)............................................................... 25.36 25.65 25.80 25.17
1997 Month Ended:(2)
January........................................................... 25.73 25.91 25.97 25.60
February.......................................................... 25.96 25.90 26.10 25.89
March............................................................. 25.96 25.97 26.03 25.89
April............................................................. 26.06 26.13 26.13 25.96
May............................................................... 25.75 24.75 26.11 24.75
June.............................................................. 24.53 25.15 25.40 22.75
July (3).......................................................... 30.27 32.30 32.30 24.52
August............................................................ 32.40 34.50 34.50 31.00
September......................................................... 35.26 35.85 36.55 33.55
October........................................................... 37.54 40.50 40.50 35.80
November.......................................................... 39.09 41.00 41.00 37.40
December.......................................................... 44.31 46.80 47.40 41.20
1998 Month Ended:(2)
January........................................................... 52.98 53.10 56.10 48.30
February.......................................................... 45.99 43.00 51.00 43.00
March............................................................. 41.35 39.60 45.00 38.00
April............................................................. 39.65 38.70 41.20 38.55
May............................................................... 39.20 40.44 40.44 38.55
</TABLE>

SOURCE: FEDERAL RESERVE BANK OF NEW YORK

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(1) The average of the exchange rates on the last day of each month during the
year.

(2) The average of the exchange rates on each day of the month.

(3) Prior to July 1997, the Baht/U.S.$ exchange rate was pegged via a
trade-weighted basket of goods and services at approximately 25
Baht/U.S.$1.00. See "Risk Factors--Exchange Rate Risks."

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ii
<PAGE>
METRIC EQUIVALENTS

For the convenience of the reader, the following table sets out the
relationship between metric measures and imperial equivalents:

<TABLE>
<S> <C> <C> <C> <C>
1 Tonne = 2,204.6224 Pounds

1 Tonne = 1.1023 Tons (short)

1 Hectare = 2.4711 Acres

1 Kilometer = 0.6214 Miles

1 Meter = 3.2808 Feet
</TABLE>

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iii
<PAGE>
GLOSSARY

<TABLE>
<S> <C>
ASEAN......................... The Association of Southeast Asian Nations
Bank Credit Facility.......... The Credit Facilities Agreement, dated September 27, 1995,
among the Company and The Industrial Finance Corporation of
Thailand, Thai Farmers Bank Public Company Limited, Siam
City Bank Public Company Limited, The Government Savings
Bank, First Bangkok City Bank Public Company Limited,
Nakornthon Bank Public Company Limited, SCF Finance and
Securities Public Company Limited, Siam City Credit Finance
and Security Public Company Limited, IFCT Finance and
Securities Public Company Limited and First City Investment
Finance and Securities Public Company Limited, as such
agreement may be amended, supplemented or otherwise modified
in writing from time to time
BNP........................... Banque Nationale de Paris
BOI........................... Board of Investment of Thailand
BOOT.......................... Build own operate transfer
Co-Gen Facility............... A co-generation electric power plant to be developed in
conjunction with Enron, subject to the execution of
definitive agreements
Combination Line.............. A combination/multipurpose continuous pickling,
cold-rolling, cleaning, annealing hot-dip galvanizing, skin
pass/tension leveling and oiling line. The Combination Line
is part of the Finishing Facilities
Consteel Process.............. The Consteel continuous charging process
CSP........................... Compact strip production
Debenture Offering............ The private placement of the Debentures completed on the
Issue Date.
Debentures.................... 12 3/4% Subordinated Mortgage Debentures due 2009 issued by
NSM Cayman and NSM Del and guaranteed by the Company.
DRI........................... Direct reduced iron
DRI Facility.................. NSM's facility for the production of DRI, which includes the
Co-Gen Facility
EAF........................... Electric arc furnace
EBITDA........................ Earnings before interest expense, income taxes, depreciation
and amortization
EGAT.......................... Electric Generating Authority of Thailand
Enron......................... One or more affiliates of Enron Corp.
Equity Investments............ The acquisition from NSM of 158,639,864 newly issued shares
(representing 22.1% of NSM's issued and outstanding shares
after giving effect to the Equity Investments) in aggregate
by the Management Investors and the purchasers of the
Private Placement Shares pursuant to the Management Equity
Investment and the issuance of the Private Placement Shares
respectively.
Finishing Facilities.......... NSM's processing facilities for the production of
high-quality pickled and oiled, cold-rolled, galvanized, and
other value-added steel products
Hatch......................... Hatch Associates Ltd.
Heats......................... Successive melting cycles
Hot Mill...................... NSM's CSP thin-slab hot mill
Hylsa......................... Hylsa S.A.
Hylsa Agreement............... The technical assistance and training agreement entered into
between NSM and Hylsa
Klockner...................... Klockner Steel Trading
LIBOR......................... London Inter-Bank Offered Rate
Management Co................. NSM Management Company, LLC
</TABLE>

iv
<PAGE>
<TABLE>
<S> <C>
Management Equity Investment.. The acquisition of newly-issued and outstanding Ordinary
Shares by the Management Investors
Management Investors.......... SDI, Enron and McDonald
McDonald...................... One or more affiliates of McDonald & Company Securities,
Inc.
Mill.......................... NSM's combined DRI facility, Hot Mill and Finishing
Facilities
NSM........................... Nakornthai Strip Mill Public Company Limited
NSM Cayman.................... NSM Steel Company, Ltd., a wholly owned subsidiary of NSM
NSM (Del)..................... NSM Steel (Delaware), Inc., a wholly owned subsidiary of NSM
Cayman
NTS........................... N.T.S. Steel Group Public Company Limited
Notes......................... Collectively, the 12% Senior Notes due 2006 and the 12 1/4%
Senior Subordinated Mortgage Notes due 2008, each issued by
NSM Cayman and NSM (Del) and each guaranteed by the Company.
Nucor......................... Nucor Corporation
Off-Take Agreements........... Eight year off-take agreements entered into by NSM and
Klockner and NSM and Preussag under which NSM may at its
option sell and Preussag and Klockner, in the aggregate,
will be obligated to purchase up to 100% of NSM's production
in 1998, 1999 and 2000, and 25% of the Company's production
in the years 2001 through 2005
PEA........................... Provincial Electricity Authority of Thailand
Preussag...................... Preussag Handel GmbH
Private Placement Shares...... 64,417,180 Ordinary Shares being privately placed by the
Company concurrently with the Debenture Offering
PTT........................... Petroleum Authority of Thailand
Push-Pull Line................ A push-pull pickling/trimming/oiling line that is part of
the Finishing Facilities
Recoil Line................... A recoil/temper rolling/slitting line that is part of the
Finishing Facilities
SDI........................... Steel Dynamics, Inc.
SDI Agreement................. The management advisory and technical assistance agreement
which will be entered into by SDI and Management Co.
SDI License Agreement......... A 10-year reciprocal license and technology sharing
agreement between SDI and NSM
SDI Warrants.................. The Warrants issued to SDI to purchase up to 11,421,480
Ordinary Shares, which will contain exercise provisions that
will protect SDI from dilution of its equity interest in the
event holders of Warrants exercise such Warrants
Securities.................... Collectively, the Notes and the Debentures
SEN........................... Submerged entry nozzle
SET........................... Stock Exchange of Thailand
SIBOR......................... Singapore Inter-Bank Offered Rate
Thai Parties.................. NTS and Mr. Sawasdi Horrungruang
Thailand...................... The Kingdom of Thailand
Transactions.................. The Offerings, the Debenture Offering and the Equity
Investments, and the application of the proceeds therefrom
VOD........................... Vacuum/oxygen/degasser
Working Capital Facility...... The agreement to be entered into between NSM and BNP for the
funding of working capital through the monetizing of NSM's
accounts receivable
</TABLE>

v
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES RELATED THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY BEFORE INVESTING IN THE SECURITIES. UNLESS OTHERWISE
STATED IN THIS PROSPECTUS OR UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES
HEREIN TO THE "COMPANY" OR TO "NSM" ARE TO NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED AND ITS SUBSIDIARIES. THE COMPANY'S FISCAL YEAR ENDS DECEMBER 31, AND
THUS, FOR EXAMPLE, "FISCAL YEAR 1997" REFERS TO THE FISCAL YEAR ENDED DECEMBER
31, 1997. CERTAIN FINANCIAL, OPERATING AND STATISTICAL INFORMATION IS PRESENTED
HEREIN IN ROUNDED AMOUNTS. AS A RESULT, CERTAIN AMOUNTS MAY NOT SUM DUE TO SUCH
ROUNDING.

OVERVIEW

NSM is the owner, developer and operator of one of the most advanced and
lowest cost thin-slab/flat-rolled steel mini-mills in the world. NSM's mini-mill
is located in Chonburi, Thailand, and when completed will combine a
technologically advanced mini-mill steel production facility with a contiguous
direct reduced iron facility and finishing facilities. The mini-mill is managed
and operated by NSM Management Company, LLC ("Management Co.") and an
experienced team of international steel executives employed by NSM. Management
Co. receives technical and advisory services from Steel Dynamics, Inc. ("SDI"),
a leading mini-mill operator in the United States, under a long-term management
advisory and technical assistance agreement (the "SDI Agreement"). In connection
with the execution of a license agreement (the "SDI License Agreement"), which
includes the grant by SDI and NSM of reciprocal license rights to certain
technical and operational know-how, SDI received 74,468,090 Ordinary Shares. NSM
also issued warrants (the "SDI Warrants") to SDI to purchase 11,421,480 Ordinary
Shares, which contain exercise provisions that protect SDI from dilution of its
equity interest in the event holders of certain Warrants exercisable for
Ordinary Shares issued on the Issue Date is conjunction with the Senior
Subordinated Notes exercise such Warrants. In addition to SDI, one or more
affiliates of Enron Corp. (individually and collectively, "Enron"), a U.S.-based
company with energy and project finance expertise throughout the world, and one
or more affiliates of McDonald & Company Securities, Inc. (individually and
collectively, "McDonald", and together with Enron and SDI, the "Management
Investors"), acquired (the "Management Equity Investment") newly issued Ordinary
Shares on the Issue Date. Enron and McDonald, among others, also purchased an
aggregate of 45 million Ordinary Shares in a privately negotiated transaction in
the secondary market for the Company's shares. Enron additionally acquired a
significant portion of the 64,417,180 Ordinary Shares privately placed by the
Company concurrently with the Debenture Offering (the "Private Placement Shares"
and, together with the Management Equity Investment, the "Equity Investments").
Giving effect to the Transactions and the other purchases described above, the
Management Investors in the aggregate hold a 20.56% interest in the Company's
issued and outstanding Ordinary Shares.

Construction and start-up of the Hot Mill (as defined), the core of the
mini-mill, has been completed. The hot mill rolled its first coil of steel
during operational testing in October 1997 and melted, cast and hot-rolled its
first coil of steel in December 1997. The Company began commercial operations in
the first quarter of 1998. The Company's goal is to be the world's most
efficient and lowest cost producer of high-quality flat-rolled steel products,
including hot-rolled, cold-rolled and galvanized steel, as well as other
specialty steel products. The recent devaluation of the Baht has reduced certain
of the Company's current capital expenditure obligations and may lower certain
of its operating costs.

Upon completion, NSM's mini-mill will consist of three facilities: (i) a
compact strip production ("CSP") thin-slab hot mill (the "Hot Mill") for steel
melting, refining, casting and hot-rolling, (ii) a facility (the "DRI Facility")
for the production of direct reduced iron ("DRI"), which includes a
co-generation electric power plant (the "Co-Gen Facility") in the process of
being developed with Enron, and (iii) downstream processing facilities for the
production of high-quality pickled and oiled, cold-rolled, galvanized, and other
value-added steel products (the "Finishing Facilities"). The Hot Mill, DRI
Facility and

1
<PAGE>
Finishing Facilities are referred to collectively as the "Mill." The Company
believes that the Mill's design utilizes a unique combination of the best
commercially proven technologies currently in use in some of the most efficient
and highest quality steel manufacturing facilities in the world.

The Hot Mill has a designed annual production capacity of 1.5 million
tonnes. The Hot Mill utilizes advanced technology steel melting and refining,
CSP casting and hot-rolling processes and equipment. The Finishing Facilities,
which are expected to be operational in the first quarter of 1999, will
incorporate a multi-purpose high-capacity production line and several lower
capacity production units with a combined rated annual production capacity of
1.5 million tonnes. The DRI Facility, which is expected to be operational during
the second quarter of 1999, will have an annual rated production capacity of
500,000 tonnes and will provide the Company with a low-cost substitute for
approximately 30% of the scrap in its melt mix. The Company believes that this
equipment will allow it to produce thinner gauge, higher value steel in
hot-rolled form with consistently better tolerances, uniformity and surface
qualities relative to certain other flat-rolled steel producers. NSM believes
that the resulting increased product breadth and cost advantages produced by
combining the DRI Facility, Hot Mill and Finishing Facilities together in a
continuous process will allow it to become a world class flat-rolled steel
producer based on cost, quality and timeliness of delivery.

The world's flat-rolled steel market is dominated by integrated steel
producers using conventional blast furnaces and eight- to ten-inch slab
production methods. The Company believes that thin-slab/flat-rolled steel
mini-mills can compete favorably against integrated steel producers in terms of
cost, quality and timeliness of delivery, while producing superior financial
results. Thailand has historically been one of the largest importers of
flat-rolled steel in the world, ranking third in 1996 in terms of net steel
imported. Virtually all of the steel products imported into Thailand are
produced by high-cost integrated steel producers with lengthy delivery
schedules.

The demand for flat-rolled products in Thailand results, in part, from the
development over the past 20 years of several industries including the
manufacturing of pipe and tube, containers, furniture, appliances and automotive
parts and vehicles. NSM is the only flat-rolled steel producer in Thailand.
Accordingly, the Company believes that it is well positioned to capture a
significant share of the demand for flat-rolled steel in Thailand by producing a
broad range of high-quality products.

In order to ensure consistent and efficient mill utilization and to mitigate
NSM's exposure to the economic difficulties currently being experienced in
Thailand, the Company has entered into eight-year off-take agreements with
Preussag Handel GmbH ("Preussag") and Klockner Steel Trading ("Klockner")
(collectively, the "Off-Take Agreements"). Preussag and Klockner are two
international steel trading and processing companies which sell high-quality,
high-grade steel products throughout the world. Under the Off-Take Agreements,
Preussag and Klockner will be obligated to purchase, in aggregate, 100% of the
Company's production in 1998 through 2002, and 25% of the Company's production
in the years 2001 through 2005. NSM may, at is option, reduce the percentage of
its production sold under the Off-Take Agreements to as little as 67% in 1998,
50% in 1999 and 25% in 2000, if the Company believes it could maximize sales
revenues through sales to other customers. Under the Indentures, sales by NSM to
customers other than Preussag and Klockner, to the extent that the aggregate of
such sales results in receivables outstanding in excess of U.S.$10 million, must
be supported by letters of credit if the customer does not have an investment
grade credit rating. All sales to Preussag and Klockner and substantially all
other export sales will be U.S.$ denominated.

In addition to the Off-Take Agreements, the Company has entered into a
commercial assistance agreement with the former chief commercial officer of U.S.
Steel to facilitate the Company's introduction to flat-rolled steel customers.
Based on international customer inquiries received by the Company to date, the
Company believes that it could increase the percentage of its annual production
sold under off-take agreements in 2001 through 2005 should economic conditions
in the Asia-Pacific region warrant. The

2
<PAGE>
Company also believes, that as a low-cost producer of high-quality steel
products, it will have the option to
sell its products in either domestic or world markets, including the United
States.

NSM has entered into various arrangements to ensure its access to and
availability of electric power, natural gas, oxygen, coal and iron ore. NSM has
entered into arrangements under which the Provincial Electricity Authority of
Thailand ("PEA") and the Petroleum Authority of Thailand ("PTT") will provide
NSM with electric power and natural gas. PEA and PTT are government entities
charged with providing electricity and natural gas, respectively, to Thailand's
industrial base. NSM will benefit from two new power substations adjacent to the
Mill constructed by Electric Generating Authority of Thailand ("EGAT") and from
two sets of new power lines which run to the Mill site, all recently constructed
by PEA. NSM also has access to a long-term supply of oxygen and other industrial
gases from Bangkok Industrial Gas, which has recently constructed an oxygen
plant adjacent to the Mill. Coal and iron ore, two important raw materials
needed to produce DRI, are being supplied under long-term contracts by SSM Coal
BV ("SSM"), the owner of a Vietnamese coal mine, and MMTC Limited ("MMTC"), an
iron ore trading company based in India.

When complete, the Company estimates that its total investment in the Mill
for property, plant, land, buildings, machinery and equipment will be
approximately U.S.$764 million. The Company's investment in the land, buildings,
machinery and equipment of the Mill as of December 31, 1997 was approximately
U.S.$588 million, including approximately U.S.$514 million in connection with
the construction of the Hot Mill, approximately U.S.$32 million in connection
with the DRI Facility and approximately U.S.$42 million in connection with the
Finishing Facilities.

During 1998, while the DRI Facility and Finishing Facilities are expected to
be under construction, interest on the Notes will be paid from amounts on
deposit in the Notes DSR Account. As of December 31, 1997, after giving pro
forma effect to the Transactions, the Company would have had total shareholders'
equity of U.S.$158 million and total indebtedness of U.S.$771 million, of which
U.S.$336 million would have been secured equally and ratably with the
Guaranties. See "Risk Factors--Risk Related to Projected Information; Forward
Looking Information."

PROJECT ADVANTAGES

NSM believes that it enjoys a number of advantages over other flat-rolled
steel producers and that these advantages will facilitate the implementation of
its business strategy. Through the use of advanced technology throughout the
Mill, the Company believes that its projected cost structure will place it among
the lowest cost producers of flat-rolled steel products in the world.
Complementing the Company's projected low cost structure is its designed
capability to produce a full range of flat-rolled products, including high
value-added products that previously could only be produced by higher cost
integrated steel producers. The Company believes that this ability to produce
high value-added products coupled with its projected low cost structure, will
enable it to compete effectively in selling its products, to the domestic and
world steel markets. Further complementing the Company's projected cost
structure and product capabilities will be its right to obtain certain technical
and operational advice and consultation services from SDI, as well as access to
the strategic expertise of Enron and McDonald.

BUSINESS STRATEGY

NSM's business strategy is to use its advanced Hot Mill, DRI Facility and
Finishing Facilities technologies to produce superior quality flat-rolled steel
in a variety of high value-added forms. The principal elements of the Company's
strategy include:

3
<PAGE>
consumption of consumable inputs and ultimately produce higher quality
steel. By designing and utilizing equipment that is efficient, consumes
fewer raw materials and improves the consistency and reliability of the
steel making process, the Company believes that its per tonne
manufacturing costs will be among the lowest in the steel industry.

- EMPHASIZE VALUE-ADDED PRODUCTS. NSM believes that it will be able to
produce thinner gauge steel in hot-rolled form with consistently better
uniformity, tolerances and surface quality relative to certain other
flat-rolled steel producers. The Company also believes that its
high-quality, thinner gauge hot-rolled products will compete favorably
with certain more expensive cold-rolled (further processed) products,
enabling it to achieve higher margins. The Company believes that thinner
gauge, hot-rolled products, and other value-added products, may be less
susceptible to the price fluctuations commonly found in the spot market
for commodity grade steel. The design of the Finishing Facilities' process
lines is expected to result in higher quality products, significant cost
savings and yield improvements relative to the processing systems used by
certain other flat-rolled steel producers. In addition, the Company
expects to devote a substantial portion of its hot-rolled capacity to the
production of higher margin pickled and oiled, cold-rolled, galvanized,
and other value added steel products. The Company believes that the
resulting increased product breadth and cost advantages will allow it to
compete favorably on a cost and quality basis with any steel producer in
the world.

- SECURE A SOLID BASELOAD OF U.S.$ SALES. In order to ensure consistent and
efficient Mill utilization and to balance U.S.$ revenues with U.S.$ debt
service and expense requirements, the Company has entered into the
Off-Take Agreements. Under the Off-Take Agreements, Preussag and Klockner
will be obligated to purchase, in aggregate, 100% of the Company's
production in 1998 through 2002, and 25% of the Company's production in
the years 2001 through 2005. NSM may, at is option, reduce the percentage
of its production sold under the Off-Take Agreements to as little as 67%
in 1998, 50% in 1999 and 25% in 2000, if the Company believes it could
maximize sales revenues through sales to other customers. Under the
Indentures, sales by NSM to customers other than Preussag and Klockner, to
the extent that the aggregate of such sales results in receivables
outstanding in excess of U.S.$10 million, must be supported by letters of
credit if the customer does not have an investment grade credit rating.
All sales to Preussag and Klockner and substantially all other export
sales will be U.S.$ denominated. Based on international customer
inquiries, the Company believes that it could substantially increase the
percentage of its annual production sold under off-take agreements in 2001
through 2005 should economic conditions in the Asia-Pacific region
warrant. The Company believes that as a low-cost producer of high-quality
steel products, it will have the option to sell all of its products in
either domestic or world markets, including the United States.

- MAXIMIZE MINI-MILL ADVANTAGES. The Company has adopted a combination of
technologies and management techniques which management believes will
provide it with the flexibility to deliver custom ordered, just-in-time,
high-quality products to customers with minimal lead times. NSM has
adopted management and personnel policies designed to take advantage of
the opportunities inherent in the technological revolution in the
flat-rolled steel industry. The Company expects its energy consumption,
man-hours per tonne produced and the environmental impact of the
operations to be among the lowest in the industry. The Company intends to
use its advanced technologies to develop profitable niche market products.

4
<PAGE>
site technical support to Management Co. Hylsa S.A. ("Hylsa"), under a
technical assistance and training agreement (the "Hylsa Agreement"), has
provided training to over 140 NSM employees at its Monterey, Mexico plant,
and will continue to provide training and on-site technical support. Hylsa
is recognized in the world steel making community for producing
high-quality, thin-gauge products utilizing CSP technology. From early
1996 through mid-1997, the Company received certain technical assistance
and employee training for over 170 NSM employees from Nucor Corporation
("Nucor"), currently an operator of eight mini-mills in the United States.

- SECURE RAW MATERIAL SOURCES. The primary raw materials and utilities used
to produce DRI and flat-rolled steel products are coal, iron ore,
electricity and scrap. To secure access to adequate low-cost supplies of
these inputs, NSM has entered into long-term arrangements for the supply
of coal, iron ore and electricity with SSM Coal BV, MMTC Limited, and PEA,
respectively. For scrap, NSM will have access to both the domestic and
global scrap markets. Management believes that due to the recent Baht
devaluation and the logistical and regulatory obstacles to exporting scrap
from Thailand, NSM's near term domestic scrap costs will be U.S.$20-30 per
tonne lower than world market prices.

- EXPLOIT STRATEGIC LOCATION. The Company is the only flat-rolled steel
producer in Thailand, historically one of the world's largest importers of
finished and semi-finished flat-rolled steel. In 1996, Thailand ranked
third in the world in terms of imported steel. The Company believes that
demand in Thailand for steel products will return to historical levels
following improvements in domestic economic conditions. The Company
believes that strong domestic demand combined with import tariffs on
certain steel products would allow the Company to achieve higher profit
margins on the sale of its products in Thailand relative to sales outside
of Thailand.

- UTILIZE THE EXPERTISE OF SDI, ENRON AND MCDONALD. NSM and Management Co.
have contracted to acquire certain strategic and financial expertise that
will enhance NSM's ability to compete both financially and operationally
in the world steel market. By becoming equity owners of NSM and through
their representation on the Company's board of directors, the Company
expects that SDI's, Enron's and McDonald's representatives on the board of
directors will provide the Company with certain know how, expertise and
knowledge.

- PURSUE EXPANSION OPPORTUNITIES. In order to lower production costs through
economies of scale, the Company intends to pursue expansion of the Mill if
market conditions warrant such an expansion. To facilitate expansion of
DRI production capacity, NSM designed the DRI Facility to accommodate a
tripling of capacity. In addition to mitigating NSM's reliance on the
global scrap market, an expanded DRI Facility would produce a significant
amount of additional electric power at economically attractive rates for
use in the Hot Mill. NSM also designed the Hot Mill and Finishing
Facilities to facilitate expansion. In aggregate, the cost of increasing
the capacity of the DRI Facility by 1.0 million tonnes per year, the Hot
Mill by 1.2 million tonnes per year and the Finishing Facilities by
100,000 tonnes per year is estimated by the Company to approximate
U.S.$250 million.

5
<PAGE>
THE WARRANTS OFFERING

WARRANTS:

<TABLE>
<S> <C>
Issuer.................. Nakornthai Strip Mill Public Company Limited

Warrants Offered........ 128,834,356 Warrants which, when exercised, initially will
entitle the holders thereof to acquire an aggregate of
128,834,356 Ordinary Shares of the Company.

Exercise Price.......... 10 Baht per Ordinary Share

Expiration.............. The Warrants are exercisable beginning on March 12, 1999 and
at any time thereafter on or prior to February 1, 2008.

Registration Rights..... Holders of the Warrants and shares of the Company underlying
the Warrants have certain rights to require the Company to
file and have declared effective a registration statement with
respect thereto. See "Description of the
Warrants--Registration Rights."

Voting Rights........... Warrant holders will have no voting rights

Use of Proceeds......... Net proceeds (approximately 1,288,343,560 Baht), if any, which
might be received by the Company from the exercise of all of
the Warrants will be used for general corporate purposes. The
Company will not receive any proceeds from the sale of the
Ordinary Shares underlying the Warrants offered hereby. See
"USE OF PROCEEDS."
</TABLE>

RISK FACTORS

Potential investors in the Warrants should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate the
specific factors set forth under "Risk Factors" for risks involved with an
investment in the Securities.

6
<PAGE>
SUMMARY FINANCIAL AND PRO FORMA INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT RATIOS)

The following summary financial information as at December 31, 1994, 1995,
1996, 1997 and for the years ended December 31, 1995, 1996, 1997 have been
derived from, and are qualified in their entirety by reference to, the Company's
Audited Financial Statements and Notes thereto appearing elsewhere in this
Prospectus. Such statements have been audited by Peat Marwick Suthee Limited,
independent public accountants, as of and for each of the years in such period.
The Company's Audited Financial Statements are prepared in conformity with
generally accepted accounting principles in Thailand ("Thai GAAP"), which differ
from generally accepted accounting principles in the United States ("U.S.
GAAP"). The following data should be read in conjunction with the Company's
Audited Financial Statements and the Notes thereto, and Management's Discussion
and Analysis of Financial Condition, which are included elsewhere in this
Prospectus. The unaudited pro forma balance sheet information presents the
financial position of the Company as at December 31, 1997 after giving effect to
the Offerings, the Debenture Offering and the Equity Investments and the
application of the proceeds therefrom as if they occurred on that date. The pro
forma adjustments are based on certain assumptions that the Company believes are
reasonable. The unaudited pro forma balance sheet data should be read in
conjunction with "Capitalization," "Management's Discussion and Analysis of
Financial Condition" and the Company's Audited Financial Statements and the
Notes thereto.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
AS AT DECEMBER 31, AS ADJUSTED
---------------------------------------------------- --------------------
1994 1995 1996 1997 1997(1) 1997 1997(1)
------ --------- ---------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT U.S.$ BAHT U.S.$
BALANCE SHEET DATA:
Thai GAAP
Cash and short-term
investments........ 10 94,588 501,587 17,965 417 12,522,113(2) 290,537(2)
Total current
assets............. 10,064 2,931,914 1,695,602 896,507 20,801 15,833,693 367,371
Deferred charges..... 2,670 60,169 252,202 987,257 22,906 2,997,743 69,553
Property, plant and
equipment, net..... 5,506 2,430,562 9,437,572 24,454,278 567,385 24,454,278 567,385
Notes DSR Account
Non-current
portion............ 643,914 14,940
Total assets......... 18,643 5,423,730 11,387,248 26,344,917 611,251 44,917,198 1,042,162
Current
liabilities........ 8,643 273,730 1,120,328 4,889,573 113,447 4,889,573 113,447
Long term debt....... -- -- 4,156,920 16,639,886 386,076 33,237,222(4) 771,165(4)
Shareholders'
equity............. 10,000 5,150,000 6,110,000 4,815,458 111,728 6,790,404(4) 157,550(4)
U.S. GAAP
Deferred charges..... -- 71,975 90,807 57,580 1,336 1,911,052 44,340
Property, plant and
equipment.......... -- 2,458,269 9,426,805 17,802,722 374,336
Shareholders'
equity............. -- 5,183,665 5,937,838 (2,826,513) (65,580) (1,753,261) (40,679)

YEAR ENDED DECEMBER 31,
--------------------------------------------
1995 1996 1997 1997(1)
--------- ---------- ---------- ---------
BAHT BAHT BAHT U.S.$
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Cash flows used in operating
activities................... (127,293) (247,908) (642,854) (14,916)
Cash flows used in investing
activities................... (4,981,833) (4,420,468) (12,382,690) (287,301)
Cash flows provided by
financing activities......... 5,203,704 5,075,375 12,541,922 290,996

OPERATING DATA:
Thai GAAP
Provision for bad debts...... -- -- 1,294,542 30,036
--------- ---------- ---------- ---------
Net Loss..................... -- -- (1,294,542) (30,036)
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
Net loss per share............... -- -- (2.31) (0.05)
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
U.S. GAAP
Interest income.............. 111,883 202,790 145,001 3,364
Expenses
Provision for bad debts.... -- -- 1,294,542 30,036
Administrative............. 68,630 322,990 879,954 20,417
Depreciation............... 1,277 6,053 12,842 298
Foreign exchange losses.... 143 46,089 6,720,261 155,922
--------- ---------- ---------- ---------
70,050 375,132 8,907,599 206,673
--------- ---------- ---------- ---------
Income (loss) before income
taxes...................... 41,833 (172,342) (8,762,598) (203,309)
Deferred income tax expenses
(benefit).................. 5,848 (5,848) -- --
--------- ---------- ---------- ---------
Net income (loss)............ 35,985 (166,494) (8,762,598) (203,309)
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
Basic and diluted net income
(loss) per share............... 0.12 (0.31) (15.65) (0.33)
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1995 1996 1997 1997(1)
--------- ---------- ---------- ---------
BAHT BAHT BAHT U.S.$
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Thai GAAP
Fixed charges(5)............. 2,409 86,152 1,085,898 25,195
Ratio of earnings to fixed
charges(5)(6).............. --(7) --(7) --(7) --(7)
U.S. GAAP
Fixed charges(5)............. 2,409 93,350 1,093,096 25,362
Ratio of earnings to fixed
charges(5)(6).............. 14.9 --(8) --(8) --(8)
</TABLE>

- ------------------------
(1) The translations of the Baht amounts into U.S.$ are included solely for the
convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of 43.10 Baht to U.S.$1.00. The
convenience translations should not be construed as representations that the
Baht amounts could have been, or could in the future be, converted into
U.S.$ at this or any other rate of exchange.
(2) Adjusted to reflect net cash proceeds of the Offerings, the Debenture
Offering and the Equity Investments, including the current portion of the
Notes DSR Account.
(3) Adjusted to reflect the Transactions and the repayment of U.S.$50 million of
senior debt.
(4) Gives effect to the Warrants which have been valued at U.S.$9.0 million.
(5) Fixed charges for any period consist of interest incurred (including
capitalized interest), one-third of rental payments on operating leases
(such amounts being deemed by the Company to represent the interest portion
of such payments) and amortization of debt expenses for such period.
(6) For purposes of computing the ratios of earnings to fixed charges for any
period, earnings consist of income (loss) before income taxes for such
period plus fixed charges deducted in calculating income for such period.
(7) For 1995, 1996 and 1997, earnings were inadequate to cover fixed charges by
2.4 million Baht, 86.2 million Baht and 2,380.4 million Baht (U.S.$55.2
million), respectively, under Thai GAAP.
(8) For 1996 and 1997, earnings were inadequate to cover fixed charges by 252.6
million Baht and 9,848.4 million Baht (U.S.$228.5 million), respectively,
under U.S. GAAP.

8
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SECURITIES BEING OFFERED BY THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, THE FOLLOWING FACTORS, CERTAIN OF WHICH ARE NOT TYPICALLY ASSOCIATED
WITH INVESTING IN SECURITIES OF COMPANIES LOCATED IN THE UNITED STATES, SHOULD
BE CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN
THE SECURITIES OFFERED HEREBY.

OPERATING AND START-UP RISKS

The Company's only assets are the share capital of NSM (Del) and NSM Cayman
and its interest in the Mill, which has no operating history and, with regard to
the DRI Facility and Finishing Facilities, is still under construction.
Management Co. has a very limited history of operations. The Company will be
subject to all of the risks inherent in the establishment of a new steel mill.
The Mill's commercial viability and profitability are dependent upon, among
other things, its completion and successful operation. No assurance can be given
that the Company and Management Co. will be able to complete the Mill, to
sustain successful operations or that its operations will achieve commercial
viability.

Although the Company believes that any start-up difficulties it experiences
will be typical of those encountered when a new steel mill commences production,
there is no assurance that the Company will not continue to experience
operational difficulties beyond those encountered during the start-up process,
or that it will ultimately achieve or be able to sustain full production. Also,
to the extent the quality of the steel produced by the Mill does not comply with
the requirements of the Off-Take Agreements, the purchasers' obligations to
purchase the Company's steel production under the Off-Take Agreements may be
adversely affected. In addition, the Company could experience construction,
start-up or operational difficulties as it implements the DRI Facility and the
Finishing Facilities. There can be no assurance that the Company and Management
Co. will be able to operate the Mill at full capacity or that the DRI Facility
and the Finishing Facilities will be successfully built, started-up and
integrated with the Company's Hot Mill.

The Company's operation of the Hot Mill and the construction and start-up of
the DRI Facility and the Finishing Facilities may place a strain on the
Company's administrative, operational and financial resources. The failure to
produce at full capacity, coordinate its sales and marketing efforts with
production or manage its future development and growth, or the emergence of
unexpected production difficulties, could adversely affect the Company's
business, results of operations, financial condition or prospects and its
ability to pay its obligations.

In addition, the operation of the Mill may be adversely affected by many
factors, such as production disruptions, industrial accidents, environmental
hazards, technical difficulties or equipment failures, labor disputes, late
delivery of supplies, and periodic or extended interruptions due to inclement or
hazardous weather conditions, fires, explosions or other accidents or acts of
force majeure. Such risks could result in damage to, or destruction of, the
Mill, personal injury, environmental damage, delays in production, losses and
legal liability. Any prolonged downtime or shutdowns of the Hot Mill, DRI
Facility and Finishing Facilities could materially adversely affect the
Company's business, results of operations, financial condition or prospects and
its ability to pay its obligations.

SUBSTANTIAL INDEBTEDNESS; POTENTIAL DILUTION

The degree to which the Company is leveraged could have important
consequences to Warrant holders, including: (i) the Company's ability to obtain
additional financing for working capital, capital expenditures, acquisitions or
general corporate purposes will be limited; (ii) a substantial portion of the
Company's expected cash flow from operations will be required to be dedicated to
the payment of interest, thereby reducing the funds available to the Company for
other purposes, including operation of the Mill and future business
opportunities. See "Description of Certain Indebtedness"; (iii) the Company is
substantially more leveraged than certain of its competitors, which might place
the Company at a

9
<PAGE>
competitive disadvantage; (iv) the Company may be hindered in its ability to
adjust rapidly to changing market conditions; and (v) the Company's substantial
degree of leverage could make it more vulnerable in the event of a downturn in
general economic conditions or in its business.

If additional funds are raised by issuing equity securities, the Company's
stockholders may experience dilution. Further, such equity securities may have
rights, preferences, or privileges senior to those of the Common Stock. To the
extent the Company finances its activities by issuing debt securities, the
Company may become subject to certain financial and other covenants which may
restrict its ability to pursue its strategy of growth through acquisition. There
can be no assurance that adequate equity or debt will be available as needed or
on terms acceptable to the Company. A lack of available funds may require the
Company to delay, scale back or eliminate all or some of its market development
and acquisition projects and could have a material adverse effect on the
Company's business, financial condition and results of operations.

The Company is party to certain indentures and financing documents
(collectively, the "Indentures"). The Indentures contain financial and operating
covenants that limit the discretion of the Company with respect to certain
business matters. These covenants will place significant restrictions on, among
other things, the ability of the Company to incur additional Indebtedness, to
create liens or other encumbrances to pay dividends, to make certain other
payments and investments, and to sell or otherwise dispose of assets and merge
or consolidate with other entities. The Indentures give the lenders broad
latitude in controlling the management of the Company in the event of a breach
of such covenants. A failure to comply with the obligations contained in the
documents evidencing the Company's Indebtedness could result in an event of
default under such Indebtedness which could permit an acceleration of the
repayment of the Indebtedness. A forced repayment of such indebtedness could
result in the bankruptcy of the Company.

POLITICAL AND ECONOMIC FACTORS

The Company's results of operations and financial condition may be
influenced by the political situation in Thailand and by the general state of
the Thai economy. The political situation in Thailand has been unstable from
time to time in recent years and future political and economic instability in
Thailand could have an adverse effect on the Company's business and results of
operations. Any potential investor in the Warrants should pay particular
attention to the fact that the Company is governed in Thailand by a political,
economic, legal and regulatory environment that may differ significantly from
that which prevails in other countries.

Thailand is a constitutional monarchy. Under the constitution, the King is
Head of State, Commander of the Armed Forces and Patron of all Religions.
Executive power is vested in the cabinet while legislative power is exercised by
the elected bicameral National Assembly. Thailand has experienced several
changes of government and changes in its political system since World War II. A
new constitution became effective on October 11, 1997. There can be no assurance
that Thailand's current government or political system will continue unchanged
for the forseeable future. Additionally, there can be no assurance that any
future change in the government will be the result of democratic processes.

Although Thailand's economy has been characterized in the past decade by
high growth rates, in 1996 and particularly in 1997, economic growth slowed
significantly in relation to historical levels. In late 1996 and throughout
1997, Thailand experienced significant economic weakness, resulting primarily
from declines in the property and finance industries, a sharp reduction in
financial liquidity and a general deterioration in investor confidence.
Inflation in Thailand has increased and interest rates have remained among the
highest in the region. In addition, the country has had recurring trade balance
and current account deficits. The government of Thailand also agreed on August
5, 1997, to accept the austerity measures of the International Monetary Fund
("IMF") aimed at rehabilitating and restructuring the economy as a condition to
receipt of IMF-led loans and financial assistance of approximately U.S.$17.2

10
<PAGE>
billion. See "Annex A--The Kingdom of Thailand--IMF-led Financial Assistance"
and "Fiscal Update and Financial Sector Measures." International credit rating
agencies, including Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Corporation ("S&P"), have recently downgraded Thai sovereign as well as
various Thai corporate and financial institutions' debt ratings. Between January
3, 1996 and December 31, 1997, the Stock Exchange of Thailand Index ("SET") fell
from 1,323.43 to 372.69. On December 8, 1997, the government terminated the
operations of 56 of the 91 finance companies in Thailand. The Company expects
that the number of bankruptcies in Thailand and Southeast Asia generally,
including among its potential customers, will increase.

There can be no assurance that: the deteriorating economy in Thailand and in
Southeast Asia generally; the rise in interest rates and inflation in Thailand
and other Southeast Asian countries; the general decline of share prices on the
SET and other regional stock exchanges; the lack of liquidity and stability in
the Thai and other Southeast Asian finance industries; and other factors
including measures taken by the government of Thailand in response to
deteriorating economic conditions, will not adversely affect the Company's
ability to finance its working capital needs, collect on its receivables for
goods shipped, build market share internationally and in Thailand, or otherwise
adversely affect its financial condition, results of operations or cash flows.
Further, there can be no assurance that the deterioration in the economies of
Thailand and Southeast Asia will not continue or materially worsen. In light of
the deteriorating economies of Thailand and Southeast Asia generally, the
Company's ability to sell projected production levels will depend in significant
part on its ability to access export markets worldwide.

THAI EXCHANGE CONTROL RESTRICTIONS; CONSTRAINTS IMPOSED BY MONETARY CONTROLS

On January 6, 1998, the Thai Cabinet approved the issuance of a Ministry of
Finance regulation to limit the U.S.$ holding period for exporters in an effort
to curtail currency speculation and increase the U.S.$ supply in the local
economy. Previously, exporters were required to be paid within 180 days and to
sell or deposit the proceeds in a foreign currency account with an authorized
bank in Thailand within 15 days of receiving such proceeds. However, according
to the January 1998 Regulation, exporters must now be paid within 120 days,
after which they have seven days in which to sell or deposit the proceeds in a
foreign currency account in Thailand. This requirement applies to all export
proceeds earned by a Thai company outside Thailand.

A Thai entity may open a foreign currency account under the following
conditions: (i) the account must be with an authorized bank in Thailand and the
funds must originate from abroad; (ii) remittance abroad of funds deposited in
such an account for payment of ordinary business transactions would require
submission of supporting evidence and approval of the Bank of Thailand; and
(iii) the total amount of daily outstanding balances in such an account must not
exceed U.S.$5 million, otherwise, such excess amount would be required to be
converted to Baht.

An exemption to these regulations allows a depositor to keep deposits in
U.S.$ up to an amount not to exceed the depositor's obligations to foreign
creditors and the international banking facilities of Thailand commercial banks
payable within the next three months. Funds deposited in a foreign currency
account may be withdrawn for, inter alia, payment of interest and principal due
on offshore debt repayments. Proof that the payment of interest is required must
be submitted with the bank in which the currency is deposited each and every
time an application to withdraw and repatriate foreign currency is made. As a
general matter, the outward remittance from Thailand of dividends, interest or
capital gains from the transfer of securities after payment of any applicable
Thai taxes, if any, may be made if the amount does not exceed U.S.$5,000 per
remittance, beyond which amount, a report must be made to the Bank of Thailand.

Parties may apply for an exemption or relaxation from the "strict
observance" of the above requirements. The Company was able to obtain waivers
from the Bank of Thailand which would allow the Company to keep certain U.S.$
amounts of export earnings offshore in certain account for an amount not

11
<PAGE>
to exceed U.S.$130 million each year through the redemption of the Notes and the
Debentures. Additionally, the Company was also granted an approval from the Bank
of Thailand which would allow the Company to keep U.S.$ amounts in excess of
U.S.$5 million in accounts in Thailand for an amount not to exceed the Company's
obligations in foreign currencies payable within three months from the date of
deposit.

Any excess amount of foreign currencies must be converted into Baht. Such
conversion would require the Company to bear exchange rate risks as many of the
Company's obligations are U.S.$ denominated. If the Company is unable to
maintain these waivers and is required to convert such revenue into Baht, any
devaluation of the Baht against the U.S.$ could have an adverse effect on the
Company's financial condition as results of operations and could materially
impair the Company's ability to repay its U.S.$ obligations.

EXCHANGE RATE FLUCTUATIONS

Prior to July 1997, the Bank of Thailand determined the value of the Baht
based on a "basket," the composition of which was not made public but of which
the U.S.$ was the principal component. Prior to July 1997, the Baht had a
history of stability, trading in a narrow range of 24.47 Baht to 25.97 Baht to
the U.S.$1.00, as a result of frequent intervention by the Bank of Thailand
through purchases and sales of U.S.$. However, on July 2, 1997, under
substantial market pressure, the Government floated the Baht and effectively
ceased such intervention, and the value of the Baht, as reflected in the Noon
Buying Rate, declined from 24.520 Baht per U.S.$1.00 on July 1, 1997 to 56.10
Baht per U.S.$1.00 on January 12, 1998 and stood at 39.15 Baht to U.S.$1.00 on
May 15, 1998. There can be no assurance that the value of the Baht will not
decline further, increase or continue to fluctuate widely against other
currencies in the future. Adverse economic conditions in Thailand and the region
incidental to the devaluation of the Baht may also reduce overall demand for the
Company's products and the Company's customers' ability to pay for them, and
there can be no assurance that such reduced demand will not have an adverse
effect on the Company.

The Company's functional currency is the Baht, however, the Company will
have significant U.S.$ denominated assets and liabilities. Therefore,
fluctuations of the value of the Baht relative to the U.S.$ may cause the
Company to recognize material foreign exchange gains or losses which could
adversely affect the Company's results of operations and financial condition.
The Company from time to time may hedge its currency positions to attempt to
avert any adverse consequences of exchange rate fluctuations; however, there can
be no assurance that the Company will be able to successfully hedge its exchange
rate exposure or that it will be able to hedge such exposure at a satisfactory
cost. See "Annex A--The Kingdom of Thailand."

NO CASH DIVIDENDS

The Company anticipates that for the foreseeable future its earnings will be
retained for the operation and expansion of its business and that it will not
pay cash dividends on its Ordinary Shares. In addition, the Company's revolving
credit facility prohibits the payment of cash dividends on the Ordinary Shares
without the consent of the lender.

HISTORICAL LOSSES

The Company had net losses for the year ended December 31, 1997 of $30
million. No assurance can be given that the Company's operations will be
profitable in the future.

POSSIBLE VOLATILITY OF STOCK PRICE

From time to time, there has been and may continue to be significant
volatility in the market price for the Company's Common Stock. Quarterly
operating results of the Company or of other steel companies, changes in general
conditions in the Thailand economy, the Thailand financial markets, natural
disasters

12
<PAGE>
or other developments could cause the market price of the Company's Common Stock
to fluctuate substantially. In addition, in recent years the Thailand stock
market has experienced extreme price and volume fluctuations.

NTS PLEDGE; SUBSTANTIAL OWNERSHIP BY PLEDGEE OR SUCCESSOR

N.T.S. Steel Group Public Company Limited ("NTS"), a steel rebar
manufacturer and an affiliate of the Company, currently holds 31.31% of the
outstanding ordinary shares of the Company. The Thailand Securities Depository
Company Limited, the Company's registry has confirmed that NTS has pledged
30.54% of NSM's outstanding shares (the "Pledged Shares"). The Company believes
that NTS has pledged such shares to certain Thai financial institutions as
security for indebtedness owed to such financial institutions. The Company
believes that NTS is currently in default on its obligations under such
indebtedness.

Under the laws of Thailand, the pledge of the Company's ordinary shares may
be enforced by way of public auction. Alternatively, after the debt is due, the
pledgor and pledgee may agree that the pledgee will become owner of the pledged
shares in full or partial satisfaction of the debt. However, as a condition of
being listed on the SET, the shares held by NTS, as well as certain shares held
by some of the Company's management and major shareholders totaling 55% of NSM's
paid-in capital without giving effect to the Offerings, are subject to SET
restrictions which prevent transfer of the shares during the first year of the
Company's commercial operations. In addition, in the case where the Company
issues and offers new shares for sale to its existing shareholders during the
said first year, those shares subscribed by the Company's management and major
shareholders will also be subject to a transfer restriction. Since the offering
of new shares on the Issue Date was not made to the Company's existing
shareholders, those new shares are not subject to such transfer restriction.
Currently, after giving effect to the Offerings, only 42.86% of NSM's paid-in
capital are subject to transfer restriction for the first year. According to the
SET's regulation, a pledgee which is a financial institution must enter into an
agreement with the shareholder, whose ownership is subject to the SET
restriction, that it will not enforce pledged shares subject to such restriction
during the applicable period. Such pledgee is required to submit a letter to the
SET stating that it has entered into such an agreement with the pledgor. Any of
the Pledged Shares which were pledged to finance companies whose operations were
suspended by the Ministry of Finance may be sold at public auction by the
Financial Restructuring Authority. Persons acquiring the Pledged Shares would
have full rights in such Pledged Shares and would not be restricted in the
exercise of such rights by the Shareholders' Agreement (as defined) to be
entered into by the New Equity Investors and certain Thai parties. See
"Principle Agreements--Shareholders Agreement." Even after giving effect to the
dilution caused by the Warrants, if one person, group or entity were to acquire
all or a substantial portion of the Pledged Shares, such person, group or entity
is likely to be the single largest shareholder in the Company. While management
of the Company will be governed by the Management Agreement, such a shareholder
would, under the laws of Thailand, have the ability to influence the conduct of
business by the Company. For example, such a shareholder would have the ability,
among other things: (i) to require the board of directors of the Company to
convene a shareholders meeting; (ii) to substantially influence the outcome of
any shareholder vote; (iii) to block any action by the Company that would
require the approval of a supermajority (75%) of the Company's shares, present
at the shareholder meeting, under the laws of Thailand; and (iv) to influence an
election of directors to the Company's board of directors. There can be no
assurance that any future acquiror of the Pledged Shares will exercise its
rights with respect to the Pledged Shares in a manner consistent with the
intentions of the Company and the New Equity Investors for the future conduct of
business by the Company as set forth herein. If such an acquiror of the Pledged
Shares exercises its rights with regard to the Pledged Shares in a manner
inconsistent with the intentions of the Company and the New Equity Investors for
the future conduct of business by the Company there can be no assurance that
such inconsistent exercise will not have an adverse effect on the financial
condition and results of operations of the Company or its ability to repay its
indebtedness including the Notes.

13
<PAGE>
FORWARD LOOKING INFORMATION

This Prospectus contains forward-looking statements. These statements are
based upon the current beliefs of the Company as well as assumptions made by the
Company based upon information currently available to it.

These statements are subject to various risks and uncertainties, including
those described above, as well as potential changes in economic or regulatory
conditions which are largely beyond the Company's control. Should one or more of
these risks materialize or changes occur, or should management's assumptions
prove incorrect, the Company's actual results may vary materially and adversely
from those anticipated or projected. These forward-looking statements reflect
the Company's views with respect to future events and financial performance.
Actual results could differ materially from those projected in the
forward-looking statements as a result of many factors, including the risk
factors set forth above. The words, "believe," "expect" and "anticipate" and
similar expressions identify forward-looking statements. Prospective investors
or purchasers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.

14
<PAGE>
CYCLICALITY OF STEEL INDUSTRY AND END USER MARKETS

The steel industry is highly cyclical in nature and sensitive to general
economic conditions. The price of steel and steel products in the future may
fluctuate significantly as a result of general economic conditions and other
factors beyond the Company's control. The demand for steel products and, thus,
the financial performance of companies in the steel industry, including the
Company, are generally affected by macroeconomic fluctuations in domestic
economies in which these companies sell their products as well as in the world
economy. Substantially all of the revenues of the Company are derived from the
sale of steel and related products. Accordingly, any significant decrease in
demand for steel and related products or decline in prices for such products
could have a material adverse effect on the business, financial condition,
results of operations or prospects of the Company. The Company's success will be
influenced by a number of market factors, both international and domestic, which
affect the market for steel products and steel scrap (initially the Company's
principal raw material), and which are beyond the control of the Company. There
can be no assurance that the deterioration in the economies of Thailand and
Southeast Asia will not have an adverse effect on the domestic, regional and
global markets for the Company's products. The Company is particularly sensitive
to trends in the oil and gas, gas transmission, construction, commercial
equipment, automotive, rail transportation, agriculture and durable goods
industries, because these industries are significant markets for the Company's
products and are highly cyclical.

COST OF STEEL SCRAP AND OTHER RAW MATERIALS

The Company requires substantial amounts of raw materials, principally iron
ore fines, iron ore pellets and scrap, in its production process. Until the DRI
Facility is operational, the Company's principal raw material will be steel
scrap. The prices for scrap are subject to market forces largely beyond the
control of the Company, including demand by domestic and international steel
producers, freight costs and speculation. The prices for scrap have varied
significantly and may vary significantly in the future. In addition, the
Company's operations may require substantial amounts of other raw materials and
utilities, including various types of pig iron, DRI, alloys, refractories,
oxygen, natural gas and electricity, the price and availability of which are
also subject to market conditions. Although the Company believes that raw
materials are available in adequate quantities at market prices the availability
and prices of raw materials may be subject to curtailment or changes due to,
among other things, new laws or regulations, suppliers' allocations to other
purchasers, interruptions in production by suppliers, changes in exchange rates
and worldwide price fluctuations. In addition, energy costs, including the cost
of natural gas and electricity, also constitute a substantial portion of the
Company's cash cost of production. The price of some of the Company's production
inputs, particularly energy, have varied significantly and may vary
significantly in the future largely as a result of market conditions and other
factors beyond the control of the Company. Any protracted interruption in the
supply of raw materials or energy, or substantial increases in their costs,
could have a material adverse effect on the business, financial condition,
results of operations or prospects of the Company. The Company may not be able
to adjust its product prices, especially in the short term, to recover any
increases in scrap and other raw material prices. The Company's future
profitability may be adversely affected to the extent that it is unable to pass
on higher raw material and energy costs to its customers. See "Management's
Discussion and Analysis of Financial Condition," "Business--Steel Scrap and
Scrap Substitute Resources" and "Energy Resources."

RISK RELATED TO PROCESS TECHNOLOGY

The Company's process for the production of coal-based DRI is a scale-up
from a commercial steel industries wastes recycling plant, operated by
International Metals Reclamation Company, Inc. ("INMETCO"). The use of coal as a
reductant is made possible by special sulfur removing slag practices in NSM's
ladle metallurgy system. These slag practices and the INMETCO process have each
been used commercially. However, NSM will be the first company to link the two
processes and there can be no assurance that they will perform in accordance
with the Company's expectations.

15
<PAGE>
COMPETITION

The Company has various competitors within the global steel industry.
Generally, the markets in which the Company participates are highly competitive.
The competitive nature of the industry in the future could have an adverse
effect on the business, financial condition, results of operations and prospects
of the Company. The Company competes primarily on the basis of price, quality,
and the ability to meet customers' product specifications and delivery
schedules. Many of the Company's competitors are integrated steel producers
which are larger in terms of steel making capacity, have substantially greater
capital resources and historical operations and, in some cases, have lower raw
material costs than the Company. In addition, competition may increase as a
result of excess capacity created by other producers using mini-mill technology
and traditional steelmakers in order to make their operations more efficient.
For example, several new mini-mills began production in the United States in
1996 and 1997. The highly competitive nature of the global steel industry,
combined with excess production capacity in some products, may in the future
exert downward pressure on prices for the Company's products. The deterioration
in the economies of Southeast Asia may exert further downward pressure on prices
for the Company's products if regional competitors choose to lower their prices
in order to maintain revenues in the face of decreasing regional demand for
steel products. Although the Company believes that it is well-positioned to
compete in the markets where it operates, competitors may develop new products
or production processes that could provide advantages to such competitors to the
detriment of the Company. There can be no assurance that the Company will be
able to compete effectively in the future. In addition, in the case of certain
product applications, steel competes with other materials, including plastics,
aluminum, graphite composites, ceramics, glass, wood and concrete. See
"Business--Competition."

DEPENDENCE ON KEY PERSONNEL AND MANAGEMENT

The Company's success depends on its ability to attract, motivate and retain
highly skilled and qualified management and technical personnel to operate the
Mill. The Company's ability to maintain its competitive position is dependent to
a large degree on the services of its senior management team, particularly Mr.
John W. Schultes, President and Chief Executive Officer. The loss of Mr.
Schultes' services or those of any of the other members of the Company's senior
management team or an inability to attract, retain and maintain additional
senior management personnel could have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Company. There can be no assurance that the Company will be able to retain its
existing senior management personnel or to attract additional qualified senior
management personnel. In addition, there can be no assurance that the Company
will be able to hire qualified persons when needed or on favorable terms or that
new employees will be successfully assimilated into the Mill's operations.

LABOR MATTERS

The Company believes that its relations with its employees are good.
Nevertheless, there can be no assurance that a work stoppage or strike will not
occur. Work stoppages or other labor-related developments affecting the Company,
including the ability to attract and retain additional employees, could have a
material adverse effect on the business, financial condition, results of
operations and prospects of the Company.

RELIANCE ON MAJOR CUSTOMERS

The Company has entered into the Off-Take Agreements with Preussag and
Klockner pursuant to which they have agreed to purchase up to 100% of the
Company's annual production during 1998 through 2002. Under the Off-Take
Agreements, steel will be sold based on quality and description specified by the
purchaser and be fit for the purpose for which such goods are ordinarily used.
Certain orders may also contain express or implied application requirements.
Non-compliance with such specifications could result in rejections and claims
against the seller. Such claims are usually settled between the producer, the
trading company and the end user. Claims may result in financial damage awards
against the Company. As a result, failure to perform under the Off-Take
Agreements by NSM may have a material adverse effect on

16
<PAGE>
the Company's results of operations and financial condition. Additionally,
non-performance by Preussag or Klockner under the Off-Take Agreements could have
a material adverse effect on the Company's results of operations and financial
condition. See "Description of Material Agreements--Off-Take Agreements."

DEPENDENCE UPON A SINGLE PROJECT

Virtually all of the Company's revenue will be derived from the Mill. The
operations of the Mill are subject to the risks normally encountered in steel
production. Such risks include environmental hazards, industrial accidents,
technical difficulties or failures, labor disputes, late delivery of supplies,
and periodic or extended interruptions due to inclement or hazardous weather
conditions, fires, explosions or other accidents or acts of force majeure. Such
risks could result in damage to or destruction of producing facilities, personal
injury, environmental damage, delays in production, losses and possible legal
liability. Any prolonged downtime or shutdowns at the Mill could materially
adversely affect the Company's financial performance and ability to repay the
principal and interest on the Notes.

INSURANCE

The Company maintains insurance coverage within ranges comparable to other
steel producers. There can be no assurance that such insurance will be available
to the Company in the future on commercially reasonable terms or that any
coverage the Company arranges will be adequate and available to cover any or all
claims which arise. Insurance against environmental risks (including potential
liability for pollution or other hazards as a result of disposal of waste
products occurring from steel production) is not generally available to the
Company or to other companies within the steel industry. To the extent that the
Company is subject to environmental liabilities, the payment of such liabilities
would reduce the funds available to the Company to operate the Mill. The Company
cannot reasonably estimate the cost of future compliance or remedial work or
further investments that may be required as a consequence of changes in
environmental regulation. Among other things, the level of such costs will be
dependent upon the nature and extent of the current and future environmental
regulation, the timing and nature of required or remedial work and the
technology available to meet the required standards. Should the Company be
unable to fund fully the cost of remedying an environmental problem, the Company
might be required to suspend operations or enter into interim compliance
measures pending completion of the required remedy.

REDUCTION OF IMPORT TARIFFS

Thailand currently imposes a tariff on steel imports at the rate of 1% on
iron-ore, pig-iron and scrap; 10% on billets and slabs; 15% on hot-rolled coil;
20% on coated products and cold-rolled products. Thailand is a signatory to the
Uruguay Round of Agreements, under which the signatories have agreed to
eliminate import tariffs on many products and significantly reduce non-tariff
barriers to trade. Pursuant to the Uruguay Round of Agreements of the General
Agreement on Tariffs and Trade, certain developed countries have agreed to
eliminate import tariffs on steel products within 10 years. Although Thailand
has not formally agreed to eliminate its import tariff on steel products, it has
agreed not to increase its import tariff on certain steel products, to greater
than 30%. Additionally, the Association of Southeast Asian Nations ("ASEAN") has
stated its goal to reduce tariffs on steel products to 0-5% by the year 2003
under the ASEAN Free Trade Agreement for imports from ASEAN nations. There is no
guarantee that Thailand will not reduce its import tariff on steel products over
the next few years to conform with the trend towards a more open global market.
A significant reduction in or the elimination of the tariffs on the import price
of steel would lead to increased competition from international producers of
steel as well as a decreased pricing advantage for the Company's steel products
in Thailand and could have an adverse effect on the Company's financial
condition and results of operations.

GOVERNMENT APPROVALS AND REGULATION

Government approvals and permits are currently, and may in the future be,
required in connection with the Company's operations. The Company obtained
waivers from the Bank of Thailand which would allow the Company to keep certain
revenues offshore and would prevent certain U.S.$ funds in Thailand

17
<PAGE>
from being converted into Baht. Obtaining the necessary governmental approvals,
permits and waivers is a complex and time consuming process involving numerous
regulatory agencies. To the extent that such approvals or permits are required
and not obtained, operations may be curtailed or limited and such curtailment or
limitation could have an adverse effect on the Company's financial condition and
results of operations.

The Company's business is currently regulated by the laws and regulations of
Thailand relating to the construction, production, marketing, pricing,
transportation and storage of steel products, taxation, environmental and safety
matters. The Company does not believe that environmental regulations will have a
material adverse effect on its capital expenditures, results of operations or
competitive position, and does not anticipate that any material expenditures
will be required to enable it to comply with existing laws and regulations.
However, the modification of existing laws or regulations or the adoption of new
laws or regulations pertaining to steel manufacturing for economic,
environmental or other reasons could have a material adverse effect on the
Company's financial condition and results of operations.

The Company's assets and operations are subject to various political,
economic and other uncertainties, including, among other things, the risks of
war, expropriation, nationalization, renegotiation or nullification of existing
concessions and contracts, taxation policies, foreign exchange and repatriation
restrictions, changing political conditions, fluctuations between the Baht and
the U.S.$, currency controls and foreign governmental regulations. The Company
may also be hindered or prevented from enforcing its rights with respect to a
governmental instrumentality because of the doctrine of sovereign immunity.

BOARD OF INVESTMENT COMPLIANCE

The Company derives substantial economic benefits from the promotional
considerations granted to it by the Board of Investment ("BOI"). Such benefits
include the permission to bring foreign experts into Thailand and the exemption
from certain import duties and taxes. While the BOI has only granted two
licenses to produce steel in Thailand, there can be no assurance that the BOI
will not grant additional licenses to potential domestic competitors in the
future. The continued availability of these economic benefits for the Company is
conditional upon the on-going satisfaction of certain requirements, including a
limitation on foreign ownership to 49% of the outstanding equity of NSM. The
limitation on foreign ownership is reduced to 39% in connection with the
benefits granted by the BOI in connection with the Finishing Facilities. Failure
to satisfy these requirements may result in the loss of economic benefits which
may have an adverse effect on the Company's financial condition and results of
operations. The granting of licenses for the production of steel products in
Thailand to other potential domestic competitors could also have an adverse
effect on the Company's financial condition and results of operations. See
"Business-- Board of Investment."

POTENTIAL CONFLICTS OF INTEREST; AFFILIATE TRANSACTIONS

Under Thai law, a director of a public company is prohibited from owning,
operating or serving as a director of a business of the same nature as, and
competitive with, the company of which he or she is a director unless he or she
informs the shareholders of the company at a meeting of shareholders prior to
his or her appointment or accession to ownership (if the shareholders do not
approve the director's other activities, they can cause the director to resign
or cause the company to pursue other remedies). A number of the directors of the
Company hold interests in or are officers or directors of companies engaged in
various aspects of the steel industry. The Company believes that such directors'
endeavors have been in compliance with the foregoing provision of Thai law.
However, Thai law may be more limited than that of many other jurisdictions in
limiting directors of a company in pursuing corporate opportunities which might
have been of interest to the company if presented to the company. Therefore, in
light of this provision and the other interests of a number of directors of the
Company (such as the Chairman of the Company and other members of his family who
currently sit on the Company's board of directors and also maintain interests in
other companies), the Company may be limited as to the number and type of
corporate opportunities which are presented to it in the future. See
"Management."

18
<PAGE>
Several of the directors of the companies have direct and/or indirect
investments in affiliated companies. In addition, some of these companies also
have direct and indirect investments in each other. A number of arrangements and
transactions have been entered into from time to time between such companies.
Under corporate law in Thailand, directors of a company are required to act at
all times in the best interests of the shareholders with respect to transactions
entered into by the company. In addition, corporate law in Thailand places
certain limitations on the ability of a public company to enter into related
party transactions. See "Related Party Transactions."

Because of the scope of the relationships that exist between the companies
there can be no assurance that such agreement or transactions entered into, if
considered separately, have been or will be effected on terms no less favorable
to the Company than could have been obtained from non-associated third parties.
Such transactions could have an adverse effect on the Company's financial
condition and results of operations. While any future arrangements are expected
to be subject to approval by the Company's board of directors and, where
appropriate, the approval of shareholders, there can be no assurance that the
future arrangements between the Company and the other associated companies will
not involve conflicts of interest.

ABSENCE OF PUBLIC MARKET FOR THE SECURITIES

The New Securities are new securities for which there currently is no
established trading market. The Initial Purchaser has informed the Company that
it intends to make a market in the New Securities to the extent permitted by
applicable laws and regulations. However, it is not obligated to do so and any
such market making may be discontinued at any time without notice in the sole
discretion of the Initial Purchaser. In addition, such market making activity
may be limited during pendency of the Exchange Offer or the effectiveness of a
shelf registration statement in lieu thereof.

Accordingly, there can be no assurance as to the development or liquidity of
any market for the New Securities. The New Securities are expected to be
eligible for trading by qualified buyers in the PORTAL market. The Company does
not intend to apply for listing of the New Securities on any securities exchange
or for quotation through the National Association of Securities Dealers
Automated Quotation System ("NASDAQ").

The liquidity of, and trading market for, the New Securities also may be
adversely affected by general declines in the market for similar securities.
Such declines may adversely affect such liquidity and trading markets
independently of the financial performance of, and prospects for, the Company.

PRE-OPERATING EXPENSES

During the years ended December 31, 1995, 1996 and 1997, the Mill was under
construction and the Company had no operating revenues. Under Thai GAAP, the
Company capitalizes operating expenses incurred prior to beginning commercial
operations as deferred charges. Deferred charges will be amortized over a
10-year period commencing when revenues are earned from operations which will
result in lower reported earnings in future periods. Deferred charges as
reported under Thai GAAP and operating results as calculated under U.S. GAAP for
the Company from inception to December 31, 1997, are as follows (in thousands):

<TABLE>
<CAPTION>
BAHT U.S.$
----------- ----------
<S> <C> <C>
Deferred charges under Thai GAAP........................................................ 987,257 22,906
Net (loss) under U.S. GAAP.............................................................. (8,895,427) (206,390)
</TABLE>

LACK OF ENFORCEMENT OF FOREIGN JUDGMENTS

The Company and the Note Issuers, pursuant to the Indentures will have to
submit to jurisdiction under the laws of the State of New York. However, the
Company and the Note Issuers have been advised by their Thai legal counsel,
White & Case (Thailand) Limited that any judgment or order obtained in a court
outside Thailand, including the United States, would not be enforced as such by
the courts of Thailand, but such judgment or order in the discretion of the
courts of Thailand may be admitted as

19
<PAGE>
evidence of an obligation in new proceedings instituted in the courts of
Thailand, which would consider the issue on the evidence before it. See
"Enforceability of Civil Liabilities."

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Warrants
offered hereby by the Selling Stockholders. However, assuming that all Warrants
offered hereby are exercised, the gross proceeds to the Company from such
exercise are estimated to be 1,288,343,560 Baht or approximately U.S.$29.6
million. This calculation of gross proceeds is based on the exercise price of 10
Baht per Warrant. There can be no assurance given, however, that any Warrants
will be exercised. The Company expects to use substantially all of the net
proceeds received from exercise of the Warrants for general working capital
purposes. See "Plan of Distribution."

SELLING SHAREHOLDERS

This Prospectus covers the 128,834,356 Warrants being offered by the Selling
Shareholders. The table sets forth (i) the identity of the Selling Shareholders,
(ii) the nature of any position or other material relationship, if any, which
the Selling Shareholders have had with the Company, its predecessors or
affiliates during the past three years, (iii) the number of warrants offered by
the Selling Shareholders prior to the offering, (iv) the amount of Warrants
offered by the Selling Shareholders hereby, and (v) the amount and (if 1% more)
the percentage of outstanding Warrants that will be owned by the Selling
Shareholders after the offering is complete and assuming that all warrants
offered hereby are sold.

<TABLE>
<CAPTION>
AMOUNT OF WARRANTS AMOUNT OF WARRANTS
OWNED PRIOR TO AMOUNT OF WARRANTS TO BE OWNED AFTER
NAME OF SELLING SHAREHOLDER OFFERING OFFERED THE OFFERING(1)
- --------------------------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Moore Capital Management........................... 25,640,253 25,640,253 0
Kemper Investments................................. 18,359,687 18,359,687 0
Farallon Capital Management........................ 14,719,404 14,719,404 0
Miller, Anderson & Sherrerd........................ 11,079,122 11,079,122 0
American Express Financial......................... 11,079,122 11,079,122 0
Turnberry Capital Partners......................... 9,654,663 9,654,663 0
Enron Capital (2).................................. 7,438,839 7,438,839 0
John Hancock Advisors.............................. 7,438,839 7,438,839 0
State Street Research.............................. 6,330,927 6,330,927 0
Swiss Bank Corp.................................... 6,330,927 6,330,927 0
King Capital....................................... 633,092 633,092 0
Lone Wolf Asset Management......................... 316,546 316,546 0
Scudder Investments................................ 316,546 316,546 0
Phoenix Duff & Phelps.............................. 5,539,561 5,539,561 0
Banque Indosuez.................................... 1,424,458 1,424,458 0
Dreyfus Capital Management......................... 1,107,912 1,107,912 0
Windigo Partners................................... 1,107,912 1,107,912 0
EFG Private Bank................................... 316,546 316,546 0
------------------- ------------------- -------------------
Total.......................................... 128,834,356 128,834,356 0
------------------- ------------------- -------------------
------------------- ------------------- -------------------
</TABLE>

- ------------------------
(1) Assumes that all of the Warrants being offered hereby are sold by such
Selling Shareholders unless otherwise indicated. There is no assurance that
the Selling Shareholders will sell any or all of the Warrants offered
pursuant to this Prospectus.

(2) An affiliate of Enron Capital was a co-manager of the placement of the
Warrants. See "Related Party Transactions--Description of Other
Transactions." Additionally, affiliates of Enron Capital hold substantial
equity investments in the Company and under the Shareholders' Agreement have
the right to nominate one director to the Company's board of directors. See
"Description of Material Agreements--Shareholders' Agreement." An affiliate
of Enron is in negotiations with the Company to finance, construct and
operate a plant for the co-generation of electricity on the Company's
property. See "Related Party Transactions--Description of Other
Transactions."

20
<PAGE>
PLAN OF DISTRIBUTION

The sale of the Common Stock and Warrants being offered by the Selling
Shareholders hereby may be effected from time to time in one or more
transactions by such shareholders directly to third parties or through brokers
or dealers in negotiated transactions or otherwise at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company has neither retained in any capacity nor will it
pay compensation to any brokers or dealers in connection with the securities
being distributed or offered hereby.

The distribution will be implemented by the Company, through the Company's
transfer agent. There are no standby commitments or agreements from any person
to purchase all or any part of the securities offered by this Prospectus.

21
<PAGE>
CAPITALIZATION

The following table shows the capitalization of the Company as at December
31, 1997 and as adjusted to give effect to the Offerings, the Debenture Offering
and the Equity Investments and prepayment of U.S.$50 million of existing
indebtedness, in Baht and U.S.$ (in thousands).

<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------------------
<S> <C> <C> <C> <C>
ACTUAL ACTUAL AS ADJUSTED AS ADJUSTED(1)
BAHT U.S.$ BAHT U.S.$
----------- --------- ----------- --------------
Cash and short-term investments.............................. 17,965 417 14,952,326(2) $ 346,922
Non-current portion: Notes DSR Account....................... -- -- 643,914 14,940
----------- --------- ----------- --------------
Total cash............................................... 17,965 417 15,596,240 $ 361,862
----------- --------- ----------- --------------
----------- --------- ----------- --------------
Long-term debt(3)
Bank Credit Facility(4).................................... 16,639,886 386,076 14,484,886 $ 336,076
Senior Notes............................................... -- -- 9,723,101 225,594
Senior Subordinated Notes.................................. -- -- 7,154,385(5) 165,995(5)
Debentures................................................. -- -- 1,874,850 43,500
----------- --------- ----------- --------------
Total long-term debt..................................... 16,639,886 386,076 33,237,222 771,165

Shareholders' equity(6)
Ordinary Shares, 10 baht par value......................... 5,600,000 129,930 7,186,399 166,738
Premium on share capital................................... 510,000 11,833 510,000 11,833
Warrants................................................... -- -- 388,547(5) 9,015(5)
Retained deficit........................................... (1,294,542) (30,036) (1,294,542) (30,036)
----------- --------- ----------- --------------
Total shareholders' equity............................... 4,815,458 111,727 6,790,404 157,550
----------- --------- ----------- --------------
Total capitalization......................................... 21,455,344 497,803 40,027,626 $ 928,715
----------- --------- ----------- --------------
----------- --------- ----------- --------------
</TABLE>

- ------------------------

(1) The translations of the Baht amounts into U.S.$ are included solely for the
convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of 43.10 Baht to U.S.$1.00. The
convenience translations should not be construed as representations that the
Baht amounts could have been, or could in the future be, converted into
U.S.$ at this or any other rate of exchange.

(2) Including U.S.$56.5 million held in the Notes DSR Account to fund the first
two interest payments on each class of the Notes and the Debentures.

(3) In addition to the Notes, a commitment in respect of up to U.S.$150 million
Working Capital Facility will be put in place at the time of closing. This
facility will be collateralized by certain accounts receivable. The Company
does not expect to draw upon the Working Capital Facility at the time of
closing.

(4) For a description of the Company's existing long-term debt, see "Description
of Certain Indebtedness" and Note 14 to the Company's Audited Financial
Statements appearing elsewhere in this Prospectus.

(5) Gives effect to the Warrants which have been valued at U.S.$9 million.

(6) Concurrently with the Old Offerings, the Company issued 158,639,864 Ordinary
Shares representing 22.1% of the issued and outstanding shares of the
Company, with a value of 1.59 billion Baht (U.S.$36.9 million), including
74,468,090 shares with a value of 744,680,090 Baht (U.S.$17.3 million) which
will be issued to SDI in return for technical and advisory assistance in the
form of the SDI License Agreement. The proceeds of the remaining 84,171,774
shares were 841.7 million Baht (U.S.$19.5 million).

22
<PAGE>
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)

The following selected financial data as at December 31, 1994, 1995, 1996,
1997 and for the years ended December 31, 1995, 1996, 1997 have been derived
from, and are qualified in their entirety by reference to, the Company's Audited
Financial Statements and notes thereto appearing elsewhere in this Prospectus.
Such statements have been audited by Peat Marwick Suthee Limited, independent
public accountants, as of and for each of the years in such period. The
Company's Audited Financial Statements are prepared in conformity with Thai GAAP
which differs from U.S. GAAP. The following data should be read in conjunction
with the Company's Audited Financial Statements and the Notes thereto, and
Management's Discussion and Analysis of Financial Condition which are included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS AT DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1997(1)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT U.S.$
BALANCE SHEET DATA:
Thai GAAP
Cash and short term investments........................ 10 94,588 501,587 17,965 417
Total current assets................................... 10,064 2,931,914 1,695,602 896,507 20,801
Deferred charges....................................... 2,670 60,169 252,202 987,257 22,906
Property, plant and equipment, net..................... 5,506 2,430,562 9,437,572 24,454,278 567,385
Total assets........................................... 18,643 5,423,730 11,387,248 26,344,917 611,251
Current liabilities.................................... 8,643 273,730 1,120,328 4,889,573 113,447
Long-term debt......................................... -- -- 4,156,920 16,639,886 386,076
Shareholders' equity................................... 10,000 5,150,000 6,110,000 4,815,458 111,728
U.S. GAAP
Deferred charges......................................... -- 71,975 90,807 57,580 1,336
Property, plant and equipment............................ -- 2,458,269 9,426,805 17,802,722 374,336
Shareholders' equity..................................... -- 5,183,665 5,937,838 (2,826,513) (65,580)
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997 1997(1)
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
BAHT BAHT BAHT U.S.$
OPERATING DATA:
Thai GAAP
Provision for bad debts......................................... -- -- 1,294,542 30,036
--------- --------- ---------- ---------
Net Loss........................................................ -- -- (1,294,542) (30,036)
Net loss per share.............................................. -- -- (2.31) (0.05)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
U.S. GAAP
Interest income................................................... 111,883 202,790 145,001 3,364
Expenses
Provision for bad debts......................................... -- -- 1,294,542 30,036
Administrative.................................................. 68,630 322,990 879,954 20,417
Depreciation.................................................... 1,277 6,053 12,842 298
Foreign exchange losses......................................... 143 46,089 6,720,261 155,922
--------- --------- ---------- ---------
70,050 375,132 8,907,599 206,673
--------- --------- ---------- ---------
Income (loss) before income taxes................................. 41,833 (172,342) (8,762,598) (203,309)
Deferred income tax expense (benefit)............................. 5,848 (5,848) -- --
--------- --------- ---------- ---------
Net income (loss)................................................. 35,985 (166,494) (8,762,598) (203,309)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Basic and diluted net income (loss) per share..................... 0.12 (0.31) (15.65) (0.33)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
CASH FLOW DATA:
Cash flows used in operating activities........................... (127,293) (247,908) (642,854) (14,916)
Cash flows used in investing activities........................... (4,981,833) (4,420,468) (12,382,690) (287,301)
Cash flows provided by financing activities....................... 5,203,704 5,075,375 (12,541,922) 290,996
OTHER FINANCIAL DATA:
Thai GAAP
Fixed charges(2)................................................ 2,409 86,152 1,085,898 25,195
Ratio of earnings to fixed charges(3)(4)........................ -- (4) -- (4) -- (4) -- (4)
U.S. GAAP
Fixed charges(2).................................................. 2,409 93,350 1,093,096 25,362
Ratio of earnings to fixed charges(3)(4) 14.9 -- (5) -- (5) -- (5)
</TABLE>

- ------------------------
(1) The translations of the Baht amounts into U.S.$ are included solely for the
convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of 43.10 Baht to U.S.$1.00. The
convenience translations should not be construed as representations that the
Baht amounts could have been, or could in the future be, converted into
U.S.$ at this or any rate of exchange.
(2) Fixed charges for any period consist of interest incurred (including
capitalized interest), one-third of rental payments on operating leases
(such amounts being deemed by the Company to represent the interest portion
of such payments) and amortization of debt expenses for such period.
(3) For purposes of computing the ratios of earnings to fixed charges for any
period, earnings consist of income (loss) before income taxes for such
period plus fixed charges deducted in calculating income for such period.
(4) For 1995, 1996 and 1997, earnings were inadequate to cover fixed charges by
2.4 million Baht, 86.2 million Baht and 2,380.4 million Baht (U.S.$55.2
million), respectively, under Thai GAAP.
(5) For 1996 and 1997, earnings were inadequate to cover fixed charges by 252.6
million Baht and 9,848.2 million Baht (U.S.$228.5 million), respectively,
under U.S. GAAP.

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
AUDITED FINANCIAL STATEMENTS AND CERTAIN FINANCIAL PROJECTION INFORMATION THAT
APPEAR ELSEWHERE IN THIS PROSPECTUS. SUCH FINANCIAL STATEMENTS HAVE BEEN
PREPARED IN ACCORDANCE WITH THAI GAAP, WHICH DIFFERS IN CERTAIN RESPECTS FROM
U.S. GAAP. SEE "SUMMARY OF CERTAIN DIFFERENCES BETWEEN THAI GAAP AND U.S. GAAP."

OVERVIEW

The Company was formed in 1994 to develop a thin-slab/flat-rolled steel
mini-mill in Thailand to serve the domestic and world steel markets.

Construction of the Hot Mill began in August 1995. Operational testing of
the tunnel furnace and the rolling mill, key components of the Hot Mill, began
in October 1997 when the Company rolled its first coils from purchased slabs.
Operational testing of the EAF and caster began in December 1997 when the
Company produced its first heat of molten steel which was successfully cast into
slabs and passed through the rolling mill to produce the first coil made
entirely in the Hot Mill. Commercial operations of the Hot Mill began in the
first quarter of 1998. Upon completion of the Hot Mill and commencement of
commercial operations, the Company began to depreciate Hot Mill property, plant
and equipment and amortize related deferred charges.

The Company has begun to construct the DRI Facility to provide a reliable
supply of low-cost raw materials to supplement steel scrap in its melt mix. The
Company has begun to construct the Finishing Facilities to produce a wide array
of value-added products such as pickled and oiled, cold-rolled and galvanized
hot-and cold-rolled products. These value-added products are expected to produce
higher profit margins and reduce the Company's exposure to the volatility of
commodity grade steel prices. The Company will capitalize interest and
pre-operating costs related to the DRI Facility and the Financing Facilities
until these facilities commence operations.

The Company generated its first revenue in the first quarter of 1998. Total
production was 20,587 tonnes which is below the Company's expectations. The
primary factors causing production delays have been shortages of raw materials
caused by a lack of funds for working capital and a general slowdown in
construction of the Mill prior to the completion of the Offerings. Also, the
ramp-up of production has been slowed due to inadequate commissioning support
and slowed delivery of spare parts from key equipment vendors. When the proceeds
of the Offerings became available the Company resumed purchasing raw material
and construction and equipment vendors were paid amounts due. As a result, the
pace of the start-up of the Hot Mill and construction of the DRI and Finishing
Facility improved dramatically. Production has been interrupted by liquid steel
breakouts caused by unforeseeable problems with refractory materials. The
Company and its refractory vendors have procured new refractory material and
altered refractory handling practices to prevent these problems from occurring
in the future. The Company expects production to reach planned levels during the
second half of 1998.

Steel prices in Thailand specifically and in East and in Southeast Asia in
general have declined recent months as a result of the economic turbulence in
the region. As a result, the Company may have difficulties in reaching expected
levels of revenue in the near term. The Company expects steel prices to recover
as the economies of East and Southeast Asia nations stabilize.

GENERAL

The Company's financial statements and the notes thereto as included in this
Prospectus reflect the financial condition of the Company as at December 31,
1995, 1996 and 1997.

The majority of the Company's long-term debt and related interest expense is
denominated in U.S.$ (see Note 14 to the Audited Financial Statements and
"Description of Other Indebtedness"). Pursuant to Thai GAAP, the balance of such
debt is translated into Baht at period-end exchange rates. Because the

24
<PAGE>
Company's U.S.$ denominated debt is associated with the construction of the
Mill, any unrealized foreign exchange gains or losses incurred prior to start-up
of the Mill are capitalized as property, plant and equipment. Subsequent to
completion of the Hot Mill unrealized foreign exchange gains and losses incurred
on debt allocated to the Hot Mill will be recognized in the Company's income
statement. The company will continue to capitalize unrealized foreign exchange
gains and losses related to debt which has been allocated to construction of the
DRI Facility and Finishing Facilities.

Although Thailand's economy has been characterized by high growth rates, in
1996 and particularly in 1997 GDP growth slowed significantly in relation to
historical levels. In late 1996 and in 1997 Thailand experienced significant
economic weakness, resulting primarily from declines in the property and finance
industries, a sharp reduction in financial liquidity and a general deterioration
in investor confidence. The deteriorating economy in Thailand is likely to
result in a significant portion of the Company's potential domestic customers
experiencing financial difficulty. Further, the Company expects that the number
of bankruptcies in Thailand and East and Southeast Asia generally, including
among its potential customers, will increase. The Company believes that the
significant devaluation of the Baht and other Asian currencies during the second
half of 1997 will reduce domestic and regional demand for its products.
Specifically the devaluation of the Korean Won and the Japanese Yen will impact
the Company's competitive position. Korea and Japan are the main steel producing
nations in the region.

Changes in exchange rates will affect the Company's results of operations.
Substantially all of the Company's export sales are denominated in U.S.$ and its
domestic prices, which are denominated in Baht, are generally based on
international U.S.$ prices. The Company's operating costs are primarily
denominated in Baht and in U.S.$. As noted above, most of the Company's long
term debt and interest expense is denominated in U.S.$. Therefore, the Company's
financial results may be materially affected by both realized and unrealized
foreign exchange gains and losses.

On July 2, 1997, the Ministry of Finance announced the adoption of a
"managed float" basis for determining the Baht exchange rate, resulting in an
immediate effective devaluation of the Baht. See "Risk Factors--Exchange Rate
Fluctuations". The value of the Baht, as reflected in the Noon Buying Rate,
declined from 24.520 Baht per U.S.$1.00 on July 1, 1997 to 46.80 Baht per
U.S.$1.00 on December 31, 1997. The Noon Buying Rate was 39.60 Baht per
U.S.$1.00 on March 31, 1998. There can be no assurance that the value of the
Baht will not decline further, increase or continue to fluctuate widely against
other currencies in the future. The Company believes that a devaluation of the
Baht, in general, tends to have a beneficial effect on its operating expenses
and capital costs. Adverse economic conditions in Thailand incidental to the
devaluation of the Baht, however, could reduce overall demand for the Company's
products and the Company's customers' ability to pay for them. See "Risk
Factors--Political and Economics Factors." The Company from time to time may
hedge its currency positions to attempt to avert any adverse consequences of
exchange rate exposure at a satisfactory cost.

On January 6, 1998, the Ministry of Finance issued a regulation to limit the
U.S.$ holding period for exports in an effort to curtail currency speculation
and increase the U.S.$ supply in the local economy. According to the ministerial
regulation, exporters must now bring their earnings into Thailand immediately
upon payment, but in no event more than 120 days from the date of export after
which, they have seven days to either sell to or deposit their dollars in a
foreign currency account with an authorized commercial bank in Thailand.
Previously, the Bank of Thailand provided that exporters had 120 days in which
to receive payment for their goods and bring the money into the country, after
which they had a further 15 days to deposit it.

The Company has obtained waivers from the Bank of Thailand which allow the
Company to (i) maintain a portion of the proceeds of export sales in U.S.$ in
bank accounts outside of Thailand; and (ii) maintain U.S.$ in bank accounts in
Thailand in an amount not to exceed the Company's foreign currency obligations
payable within three months. Failure by the Company to maintain these waivers
would force the Company to repatriate a substantial portion of its export
revenue to Thailand and eventually

25
<PAGE>
convert such revenue in Baht. Such conversion would require the Company to bear
exchange rate risks as many of the Company's obligations, including payments on
the Notes, are U.S.$ denominated. If the Company is unable to maintain these
waivers, any devaluation of the Baht against the U.S.$ could have an adverse
effect on the Company's financial condition and results and could materially
impair the Company's ability to repay its U.S.$ obligations, including payments
on the Notes. See "Risk Factors--Currency Regulation."

The economic environment in which NSM operates is affected substantially by
both BOI promotions granted to NSM and protective measures, such as import
tariffs imposed by the Thailand government. See "Business--Competition." These
factors influence the Company's results both directly (such as through
reductions in tax liabilities) and indirectly (such as by reducing the ability
of non-Thai steel producers to compete with the Company for sales in Thailand).
Generally, the benefits derived by the Company from these sources can be
expected to decline over time. However, the Company believes that, as its
operations mature, its reliance on such benefits will also be reduced. See "Risk
Factors--Board of Investment Compliance." The BOI granted the Company an
exemption from all corporate income taxes on income earned on the production of
hot-rolled steel for a period of seven years.

LIQUIDITY AND FINANCIAL CONDITION

The Company's business is capital intensive and requires substantial
expenditures for, among other things, the purchase and maintenance of equipment
used in its steelmaking operations and compliance with environmental laws. The
Company's liquidity needs arise primarily from capital investments, working
capital requirement and principal and interest payments on its indebtedness.
Since its inception, the Company has met these liquidity requirement with cash
provided by equity and long-term borrowings.

In 1994, the Company issued 100,000 ordinary shares at par value of 100 Baht
per share for total gross proceeds of 10.0 million Baht. Later, the Company
changed is par value to 10 Baht per share and correspondingly adjusted the
number of ordinary shares to 1,000,000 ordinary shares. In 1995, the Company
issued 499,000,000 ordinary shares for gross proceeds of 5.14 billion Baht. In
1995, the Company registered itself as a public company and completed an initial
public offering in Thailand of 60,000,000 ordinary shares for gross proceeds of
960 million Baht in 1996.

In September 1995, the Company obtained a senior credit facility from a
consortium of Thai financial institutions secured by all of the fixed the assets
of the Company (See Note 14 to the Audited Financial Statements). The facility
is composed of a 3.3 billion Baht tranche and a U.S.$308 million tranche which,
together with the above mentioned equity offerings, provided sufficient capital
to build and start-up the Hot Mill. The Company repaid U.S.$50 million of
principle on this facility concurrently with the closing of the Offerings.

In early 1996, the Thai financial institutions providing the funding for the
construction of the Hot Mill indicated that, when needed, they would submit a
proposal to fund the construction of the DRI Facility and the Finishing
Facilities. During the first half of 1997, the Company realized that these
financial institutions might not be in a position to submit such a proposal and
began to structure a financing transaction involving U.S. based debt and equity
investors.

Total capital expenditures to construct the Mill is projected to be U.S.$764
million, U.S.$487 million had been paid as of December 31, 1997.

The Company's estimate of costs to complete the Mill is U.S.$277 million,
including approximately U.S.$102 million which was incurred but unpaid as of
December 31, 1997. The Company had to obtain additional financing through the
Offerings and Equity Investments in order to meet the costs of completing
construction and beginning operations of the Mill. Following the Offerings and
the completion of the Equity Investments, the Company had U.S.$288 million
available to fund completion of the Mill.

26
<PAGE>
Concurrently with the Offerings, the Company entered into the Working
Capital Facility, which is secured by certain accounts receivable. The Working
Capital Facility is collateralized separately from the Notes based entirely on
funded accounts receivable and has no claim on the Collateral. The Company
believes this facility, together with its cash flows from operations, will be
sufficient to meet its working capital requirements.

The Issuers consummated a private placement consisting of the Debentures and
the Private Placement Shares. The gross proceeds of the Debentures were
U.S.$43.5 million. The gross proceeds of the Private Placement Shares were 644
million Baht (U.S.$14 million). The Debentures have a cash coupon of 12.75%, a
yield to maturity of 16.36% and a maturity date of February 1, 2009. The funds
from the private placement will be used, together with a portion of the net
proceeds of the Offerings, to finance operating expenses and start-up costs
associated with the Mill. See "Description of Certain Indebtedness--Subordinated
Second Mortgage Debentures."

The Company has entered into a commitment with Banque Nationale de Paris
("BNP") under which BNP, acting as the Company's agent, will pursue a
refinancing through the Export-Import Bank of the United States (the "U.S. Ex-Im
Bank") of up to U.S.$158 million of the Company's indebtedness owed to certain
Thai financial institutions. Such refinancing is subject to final credit
approval of the U.S. Ex-Im Bank, definitive documentation and certain other
conditions being met. It is anticipated that this financing would be in the form
of term loans granted by BNP and supported by the U.S. Exim Bank, with drawdowns
to be made directly to suppliers of goods and services to the Company in the
United States. The financing would require unconditional guarantees from the
Company's existing Thai lenders.

U.S. GAAP RECONCILIATION

The Company prepares its financial statements in accordance with Thai GAAP.
For information concerning certain differences between Thai GAAP and U.S. GAAP
as applied to the Company's financial statements, see Note 22 to the Audited
Financial Statements.

EFFECTS OF INFLATION

The Company does not expect inflation in Thailand, where substantially all
of its operations are located, to have material impact on its results of
operations.

27
<PAGE>
BUSINESS

OVERVIEW

NSM is the owner, developer and operator of one of the most advanced and
lowest cost thin-slab/flat-rolled steel mini-mills in the world. NSM's mini-mill
is located in Chonburi, Thailand, and when completed will combine a
technologically advanced mini-mill steel production facility with a contiguous
direct reduced iron facility and finishing facilities. The mini-mill is managed
and operated by Management Co. and an experienced team of international steel
executives employed by NSM. Management Co. receives technical and advisory
services from SDI, a leading mini-mill operator in the United States, under the
SDI Agreement. Concurrently with the Offerings and in connection with the SDI
License Agreement which included the grant by SDI and NSM of reciprocal license
rights to certain technical and operational know-how, SDI received 74,468,090
Ordinary Shares. NSM also issued the SDI Warrants to SDI to purchase up to
11,421,480 Ordinary Shares, which contain exercise provisions that protect SDI
from dilution of its equity interest in the event holders of Warrants exercise
such Warrants. In addition to SDI, Enron and McDonald acquired newly issued
Ordinary Shares on the Issue Date. Enron and McDonald, among others, also
purchased an aggregate of 45 million Ordinary Shares in a privately negotiated
transaction in the secondary market for the Company's shares. Enron additionally
acquired a significant portion of the 64,417,180 Ordinary Shares privately
placed by the Company concurrently with the Debenture Offering. Giving effect to
the Transactions and the other purchases described below, the Management
Investors in the aggregate hold a 20.56% interest in the Company's issued and
outstanding Ordinary Shares.

Construction and start-up of the Hot Mill, the core of the mini-mill has
been completed. The Hot Mill rolled its first coil of steel during operational
testing in October 1997 and melted, cast, and hot-rolled its first coil of steel
in December 1997. The Company began commercial operations in the first quarter
of 1998. The Company's goal is to be the world's most efficient and lowest cost
producer of high-quality flat-rolled steel products, including hot-rolled,
cold-rolled and galvanized steel, as well as other specialty steel products. The
recent devaluation of the Baht has reduced certain of the Company's current
capital expenditure obligations and may lower certain of its operating costs.
See "Certain Financial Projection Information."

Upon completion, NSM's mini-mill will consist of three facilities: (i) the
Hot Mill for steel melting, refining, casting and hot-rolling, (ii) the DRI
Facility, for the production of DRI, which includes the Co-Gen Facility being
developed in conjunction with Enron, and (iii) the Finishing Facilities. The
Company believes that the Mill's design utilizes a unique combination of the
best commercially proven technologies currently in use in some of the most
efficient and highest quality steel manufacturing facilities in the world.

The Hot Mill has a designed annual production capacity of 1.5 million
tonnes. The Hot Mill utilizes advanced technology steel melting and refining,
CSP casting and hot-rolling processes and equipment. The Finishing Facilities,
which are expected to be operational in the first quarter of 1999, will
incorporate a multi-purpose high-capacity production line and several lower
capacity production units with a combined rated annual production capacity of
1.5 million tonnes. The DRI Facility, which is expected to be operational during
the second quarter of 1999, will have an annual rated production capacity of
500,000 tonnes and will provide the Company with a low-cost substitute for
approximately 30% of the scrap in its melt mix. The Company believes that this
equipment will allow it to produce thinner gauge, higher value steel in
hot-rolled form with consistently better tolerances, uniformity and surface
qualities relative to other flat-rolled steel producers. NSM believes that the
resulting increased product breadth and cost advantages produced by combining
the DRI Facility, Hot Mill and Finishing Facilities together in a continuous
process will allow it to become a world class flat-rolled steel producer based
on cost, quality and timeliness of delivery.

The world's flat-rolled steel market is dominated by integrated steel
producers using conventional blast furnaces and eight-to-ten-inch slab
production methods. The Company believes that thin-slab/flat-rolled steel
mini-mills can compete favorably against integrated steel producers in terms of
cost, quality

28
<PAGE>
and timeliness of delivery, while producing superior financial results. Thailand
is one of the largest importers of flat-rolled steel in the world, ranking third
in 1996 in terms of net steel imported. Virtually all of the steel products
imported into Thailand are produced by high-cost integrated steel producers with
lengthy delivery schedules.

The demand for flat-rolled products in Thailand results, in part, from the
development over the past 20 years of several industries including the
manufacturing of pipe and tube, containers, furniture, appliances, automotive
parts and vehicles. NSM is the only flat-rolled steel producer in Thailand.
Accordingly, the Company believes that it is well positioned to capture a
significant share of the demand for flat-rolled steel in Thailand by producing a
broad range of high-quality products.

In order to ensure consistent and efficient mill utilization and to mitigate
NSM's exposure to the economic difficulties currently being experienced in
Thailand, the Company has entered into eight-year off-take agreements with
Preussag and Klockner. Preussag and Klockner are two international steel trading
and processing companies which sell high-quality, high-grade steel products
throughout the world. Under the Off-Take Agreements Preussag and Klockner will
be obligated to purchase, in aggregate, 100% of the Company's production in 1998
through 2002, and 25% of the Company's production in the years 2001 through
2005. NSM may, at is option, reduce the percentage of its production sold under
the Off-Take Agreements to as little as 67% in 1998, 50% in 1999 and 25% in
2000, if the Company believes it could maximize sales revenue through sales to
other customers. Under the Indentures, sales by NSM to customers other than
Preussag and Klockner, to the extent that the aggregate of such sales results in
receivables outstanding in excess of U.S. $10 million, must be supported by
letters of credit if the customer does not have an investment grade credit
rating. All sales to Preussag and Klockner and substantially all other export
sales will be U.S.$ denominated.

NSM has entered into various agreements to ensure its access to and
availability of electric power, natural gas, oxygen, coal and iron ore. NSM has
entered into arrangements under which PEA and PTT will provide NSM with electric
power and natural gas. PEA and PTT are government entities charged with
providing electricity and natural gas, respectively, to Thailand's industrial
base. NSM will benefit from two new power substations adjacent to the Mill
constructed by EGAT and from two sets of new power lines which run to the Mill
site, all recently constructed by PEA. NSM also has access to a long-term supply
of oxygen and other industrial gases from Bangkok Industrial Gas, which has
recently constructed an oxygen plant adjacent to the Mill. Coal and iron ore,
two important raw materials needed to produce DRI, are being supplied under
long-term contracts by SSM and MMTC.

When complete, the Company estimates that its total investment in the Mill
for property, plant, land, buildings, machinery and equipment will to be
approximately U.S.$764 million. The Company's investment in the land, buildings,
machinery and equipment of the Mill as of December 31, 1997 was approximately
U.S.$588 million, including approximately U.S.$514 million in connection with
the construction of the Hot Mill, approximately U.S.$32 million in connection
with the DRI Facility and approximately U.S.$42 million in connection with the
Finishing Facilities.

29
<PAGE>
have been secured equally and ratably with the Guaranties (other than the
Debenture Guaranty). See "Risk Factors--Risk Related to Forward Looking
Information."

PROJECT ADVANTAGES

BUSINESS STRATEGY

- ACHIEVE CONVERSION COSTS AMONG THE LOWEST IN THE STEEL INDUSTRY. The
Company believes that the design of the Mill represents substantial
efficiency improvements over earlier mini-mills using CSP technology.
These improvements are expected to substantially reduce the cost and
production time of the steel-making process, limit electric arc furnace
("EAF") power-off and downtime, reduce consumption of consumable inputs
and ultimately produce higher quality steel. By designing and utilizing
equipment that is efficient, consumes fewer raw materials and improves the
consistency and reliability of the steelmaking process, the Company
believes that its per tonne manufacturing costs will be among the lowest
in the steel industry.

- EMPHASIZE VALUE-ADDED PRODUCTS. NSM believes that it will be able to
produce thinner gauge steel in hot-rolled form with consistently better
uniformity, tolerances and surface quality relative to other flat-rolled
steel producers. The Company also believes that its high-quality, thinner
gauge hot-rolled products will compete favorably with certain more
expensive cold-rolled (further processed) products, enabling it to achieve
higher margins. Thinner gauge, hot-rolled products, and other value-added
products, may be less susceptible to the price fluctuations commonly found
in the spot market for commodity grade steel. The design of the Finishing
Facilities' process lines is expected to result in higher quality
products, significant cost savings and yield improvements relative to the
processing systems used by most other flat-rolled steel producers. In
addition, the Company expects to devote a substantial portion of its
hot-rolled capacity to the production of higher margin pickled and oiled,
cold-rolled, galvanized, and other value added steel products. The Company
believes that the resulting increased product breadth and cost advantages
will allow it to compete favorably on a cost and quality basis with any
steel producer in the world.

30
<PAGE>
through sales to other customers. Under the Indentures, sales by NSM to
customers other that Preussag and Klockner, to the extent that the
aggregate of such sales results in receivables outstanding in excess of
U.S.$10 million, must be supported by letters of credit if the customer
does not have an investment grade credit rating. All sales to Preussag,
Klockner and substantially all other export sales will be U.S.$
denominated. Based on international customer inquiries, the Company
believes that it could substantially increase the percentage of its annual
production sold under off-take agreements in 2001 through 2005 should
economic conditions in the Asia-Pacific region warrant. The Company
believes that as a low-cost producer of high-quality steel products, it
will have the option to sell all of its products in either domestic or
world markets, including the United States.

- UTILIZE LEADING MINI-MILL OPERATIONAL AND MANAGEMENT TECHNIQUES. The
Company has entered into agreements with a number of leading steel
mini-mill developers and operators in order to make available to
Management Co. or the Company certain technical knowhow and business
practices. Under the terms of the SDI Agreement, SDI, a company whose
executives and managers pioneered the development of thin-slab/flat-rolled
technology and directed the construction and operation of the world's
first thin-slab/flat-rolled minimill, will provide management advisory and
periodic on-site technical support to Management Co. Hylsa, under the
Hylsa Agreement, has provided training to over 140 NSM employees at its
Monterey, Mexico plant, and will continue to provide training and on-site
technical support. Hylsa is recognized in the world steel making community
for producing high-quality, thin-gauge products utilizing CSP technology.
From early 1996 through mid-1997, the Company received certain technical
assistance and employee training for over 170 NSM employees from Nucor,
currently an operator of eight mini-mills in the United States.

- SECURE RAW MATERIAL SOURCES. The primary raw materials and utilities used
to produce DRI and flat-rolled steel products are coal, iron ore,
electricity and scrap. To secure access to adequate low-cost supplies of
these inputs, NSM has entered into long-term agreements for the supply of
coal, iron ore and electricity with SSM, MMTC, and PEA, respectively. For
scrap, NSM will have access to both the domestic and global scrap markets.
Management believes that due to the recent Baht devaluation and the
logistical and regulatory obstacles to exporting scrap from Thailand,
NSM's near term domestic scrap costs will be U.S.$20-30 per tonne lower
than world market prices.

- EXPLOIT STRATEGIC LOCATION. The Company is the only flat-rolled steel
producer in Thailand, historically one of the world's largest importers of
finished and semi-finished flat-rolled steel. In 1996, Thailand ranked
sixth in the world in terms of imported steel. The Company believes that
demand in Thailand for steel products will remain strong due in part to
direct foreign investment by steel consuming entities in Thailand. The
Company believes that strong domestic demand combined with import tariffs
on certain steel products would allow the Company to achieve higher profit
margins on the sale of its products in Thailand relative to sales outside
of Thailand.

31
<PAGE>
Enron's and McDonald's representatives on the board of directors will
provide the Company with certain know how, expertise and knowledge.

INDUSTRY OVERVIEW

The world steel industry has historically been and continues to be highly
cyclical, influenced by many factors, including periods of economic growth and
recession, strength and weakness of various currencies, worldwide production
capacity, levels of steel imports and tariffs. The industry as a whole has also
been affected by factors impacting on specific companies, such as failure to
adapt to technological change, plant inefficiency, high inventory and labor
costs. Some lower grades of steel continue to be commodities that respond to
forces of supply and demand, and prices for these grades have been volatile and
have fluctuated in reaction to general and industry specific economic
conditions. However, new technologies, planning and manufacturing practices and
metallurgical know how now allow steel producers to deliver made-to-order
products which are less susceptible to commodity pricing and do not require
large finished good inventories. The Mill is designed to take advantage of such
new technologies, planning, manufacturing practices and metallurgical know how
and, accordingly, the Company believes that it may be less sensitive to business
cycles.

32
<PAGE>
INTEGRATED V. MINI-MILL STEEL PRODUCTION

There are generally two kinds of primary steel producers, "integrated" and
"mini-mill." The following diagram illustrates the differences in production
methodologies between the typical multi-step integrated mill production process
and the typical continuous mini-mill melting-casting-rolling process.

[LOGO]

Steel manufacturing by an integrated producer involves a series of time
consuming and distinct processes, frequently separated by plant geography. This
process generally involves the following chronological steps: ironmaking,
steelmaking, billet or slab making, reheating, multi-step rolling and
flat-rolling. These processes may, in turn, be followed by various finishing
processes, including cold-rolling, annealing, and various coating processes,
including galvanizing. In integrated producer steelmaking, coal is converted to
coke in a coke oven, combined in a blast furnace with iron ore or pellets and
limestone to produce pig iron, and then combined with scrap in a "basic oxygen"
or other furnace to produce liquid raw steel. Once produced, the liquid raw
steel is metallurgically refined in the ladle metallurgy station and then either
poured into ingots for later reheating and processing or transported to a caster
for casting into a billet or slab, which is then further shaped or rolled into
its final form. Typically, whether by design or as a result of downsizing,
re-configuration or changes in technology, many integrated producers perform
these processes in separate and remote facilities resulting in more costly and
less efficient production than mini-mill producers.

33
<PAGE>
In contrast, a mini-mill employs an EAF to directly melt steel scrap or
steel scrap substitutes, including DRI, thus entirely eliminating the blast
furnace, coke ovens and reducing other energy- and capital-intensive and
environmentally harmful processes. A mini-mill incorporates the melt shop, ladle
metallurgical, casting and rolling processes into a unified continuous flow. In
typical mini-mills, the melting process begins with the charging of an EAF with
scrap, carbon and lime, after which the EAF's roof is closed and electrodes are
lowered into the scrap through holes in the top of the EAF. Electricity is then
applied to the electrodes and augmented with oxygen to melt the scrap and
produce liquid raw steel.

The liquid raw steel is then checked for chemistry and the necessary
metallurgical adjustments are made while the steel is still in the EAF or, if
the plant has a separate staging area for that process, the material is
transported by ladle to an area commonly known as a ladle metallurgy station.
From there, the liquid raw steel is transported by ladle to a turret at the
continuous caster, where it is transferred into a reservoir called a tundish.
The tundish controls the flow of the liquid steel into a water-cooled
copper-lined mold from which it is usually sent through a tunnel furnace
directly into the rolling process. Similar to NSM, several other operating
mini-mills have provided for further continuous operation by adding finishing
facilities directly into the production process.

Mini-mills are generally characterized by lower costs of production and
higher productivity than integrated steelmakers. This is due, in part, to the
mini-mill's lower capital costs and operating costs resulting from streamlined
production processes and smaller, more efficient layouts which serves to reduce
or eliminate costly re-handling and re-heating of partially finished product.
Mini-mills are also credited with translating technological advances into
competitive advantages by decreasing costs of production and increasing product
quality.

Mini-mills have been producing steel since the early 1960s, when EAFs and
continuous casting were initially commercialized and technological developments
in the steel industry generated a large surplus of scrap. Historically, due to
the mini-mill's initial quality limitations and early power and capacity
limitations, the mini-mills focused almost exclusively on lower-quality,
lower-priced "long products," including merchant shapes such as rebar, wire,
rod, angles and structural. In 1989, an innovative mini-mill operator began
producing flat-rolled steel products and commercialized the world's first CSP
thin-slab flat-rolled mini-mill. The CSP technology employed was provided by SMS
Schloemann-Siemag AG of Germany ("SMS"), the same provider of NSM's, SDI's and
Hylsa's technology. By employing a mold design that casts a 50 mm slab, which is
only 20% of the thickness of the typical 250 mm slabs cast by most integrated
producers, and by using a raw material mix with a cost structure that is lower
and more flexible, mini-mill operators have enjoyed significantly lower costs
relative to integrated steel producers. Although initially limited to
commodity-grade flat-rolled steel products, the CSP technology was subsequently
refined so that today mini-mill operators can produce a wide variety of
high-quality, flat-rolled steel products. NSM's design further advances the
capabilities of the CSP technology such that it believes it will be able to
produce a full spectrum of high-quality steel products, including those
requiring the most demanding applications and new grades that are not presently
commercially available.

The CSP technology is one of the most significant advances in steel
production in the last 40 years. The ability to produce flat-rolled steel from a
thinner slab greatly reduces costs, as less reduction is necessary in the
rolling mill and there is substantially less reheating required prior to
rolling. Most importantly, the development of thin-slab casting technology, with
its lower capital investment requirement, allowed for the entry of the
mini-mills into the flat-rolled segment of the steel market. The technology has
proved to be extremely flexible and cost effective and is continuously being
further refined. NSM has incorporated this technology in an all-encompassing
metallurgical and product concept which takes full advantage of the inherent
synergies with upstream and downstream technology developments, quality
enhancements and product opportunities.

34
<PAGE>
NSM V. TRADITIONAL MINI-MILLS

Unlike most other mini-mills, NSM designed the Mill to fully incorporate the
advantages inherent in operating a captive DRI Facility. In addition to
mitigating NSM's exposure to the global scrap market, operating the DRI Facility
facilitates its ability to produce the broadest range of flat-rolled steel
products. The consumption of DRI in its melt mix, combined with its
sophisticated ladle metallurgy, will enable NSM to produce ultra clean steel
with significantly lower residual levels and better control of all elements than
steel produced by mini-mills that are 100% scrap and pig iron dependent. The Hot
Mill and Finishing Facilities, which have been designed to produce the highest
quality grades of steel, are expected to enable NSM to compete successfully, in
terms of quality, with not only other mini-mills but integrated steel producers
as well.

Further differentiating NSM from most other flat-rolled mini-mills is the
fact that it has incorporated the ConSteel continuous charging process (the
"ConSteel Process") developed by Intersteel Technology, Inc. into its Hot Mill.
The ConSteel Process eliminates the time and energy losses incurred by other
mini-mills by swinging the roof of the furnace to top charge their meltmix.
Under the Company's Hot Mill design, scrap, which has been preheated by
off-gases from the EAF, will be continuously fed into the molten raw liquid
steel heel in the EAF. The heel is a pool of molten raw liquid steel kept in the
bottom of the EAF which is continuously fed into the mold. The heel, is also
being fed hot DRI on a continuous basis through a gravity controlled feed
system. Thus, NSM will maintain a continuous power-on state and a large heel of
high-quality liquid raw steel. The Company believes that this continuous
operation will drive its steelmaking costs below those typically incurred by
traditional mini-mills. Additionally, NSM's mill has an enhanced
vacuum/oxygen/degasser ("VOD") and a short-coupled coiler. These enhancement
will facilitate NSM's production of ultra-low carbon and other high-quality
steel grades, including thin-gauge, flat-rolled steel products. The initial
production results have already demonstrated the quality benefits of the
advanced meltshop design, resulting in liquid steel quality with nitrogen,
carbon and sulfur levels which are considerably lower than in conventional
mini-mill melt shops.

DESCRIPTION OF FLAT-ROLLED STEEL PRODUCTS

The Company designed the Mill to produce a wide variety of steel products,
including hot-rolled, cold-rolled and ultimately coated products. Each of these
products is described below.

HOT-ROLLED PRODUCTS. All coiled flat-rolled steel is initially hot-rolled,
a process that consists of passing cast steel either directly, as in the case of
NSM, or in reheated slab form through a multi-stand rolling mill to reduce its
thickness to less than 13 mm and, in some mills, including Hylsa and NSM, to
less than 1 mm. Hot-rolled products are traditionally used in the manufacture of
various non-surface critical applications such as automobile suspension arms,
frames, wheels and other unexposed parts in auto and truck bodies, agricultural
equipment, construction products, machinery, tubing, pipe, tools, lawn care
products and guard rails. The addition of the thin-gauge hot-rolling capability
to the CSP process has opened many traditional cold-rolled applications to
thin-gauge hot-rolled steel producers, including SDI and Hylsa. NSM is designed
to capitalize fully on the significant advancement in thin-gauge hot-rolled
steel production.

COLD-ROLLED PRODUCTS. Cold-rolled steel is hot-rolled steel that has been
further processed through a pickling/scale removing line and then through a
rolling mill without reheating until the desired gauge and other physical
properties have been achieved. Cold-rolling reduces gauge and hardens the steel
and, when further processed through an annealing furnace and a temper mill,
improves uniformity, ductility and formability. Cold-rolling and temper/skin
pass rolling also impart various value-added surface finishes and textures.
Cold-rolled steel is used in applications that demand a higher quality finish,
such as exposed automotive parts and appliance panels. As a result, cold-rolled
prices are typically higher than hot-rolled prices.

35
<PAGE>
COATED PRODUCTS. Coated steel products are cold-rolled or hot-rolled steels
that have been coated with a non-ferrous metal and/or organic coating to render
them corrosion-resistant and to improve their appearance. Hot-dipped galvanized,
electro galvanized and aluminized products are all types of metallic coated
steels. Coated items are typically the highest value-added flat-rolled products
because they require the greatest degree of processing and tend to have the
strictest quality requirements. Coated steel is used in automotive, appliance,
furniture, roofing, siding, decking, heating and air-conditioning applications.

Other flat-rolled products which are not in the immediate business plan of
NSM are non-coiled flat plate and ultra-light gauge cold-rolled coil, commonly
referred to as tinplate, (i.e., for tinning and subsequent can making). These
products, especially tinplate, are potential future opportunities for NSM.

THE WORLD STEEL MARKET

Steel consumption throughout the world has increased significantly over the
past several years from 649 million tonnes in 1990 to an estimated 690 million
tonnes in 1997. This growth trend is expected to continue into the next decade
with steel consumption projected by the International Iron and Steel Institute
to approximate 797 million tonnes in 2005. This represents a 148 million tonne
increase over 1990 consumption levels. Driving this growth is the continued
industrialization of many areas around the world, including the Asia-Pacific
region, with strong consumption patterns in China. In fact, the Asia-Pacific
region taken as a whole is projected to consume almost 80 million more tonnes of
steel in 1997 than in 1990, with China accounting for 49 million tonnes of this
increase.

WORLD APPARENT STEEL CONSUMPTION
(MILLION TONNES)

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COUNTRY 1990 1995 1996 1997E 2000E 2005E
- ------------------------------------------- --------- --------- --------- --------- --------- ---------
China...................................... 53.5 87.4 97.3 102.6 120.0 145.0
Japan...................................... 94.0 80.0 80.6 80.5 80.0 80.0
Other Asia................................. 76.4 121.2 125.7 131.5 137.0 165.0
--------- --------- --------- --------- --------- ---------

Total Asia................................. 223.9 288.6 303.6 314.6 337.0 390.0

European Union............................. 121.6 125.6 115.7 122.5 124.0 124.0
Other W. Europe............................ 13.3 14.5 16.3 17.5 16.0 17.0
Eastern Europe............................. 24.1 17.4 17.1 17.5 18.0 21.0
CIS........................................ 116.6 36.3 35.0 35.0 37.0 40.0
NAFTA...................................... 103.9 118.5 127.9 124.5 125.0 125.0
South America.............................. 16.7 22.9 24.2 26.4 31.0 39.0
Middle East................................ 9.8 9.0 9.7 10.2 12.0 15.0
Africa..................................... 13.4 13.8 14.4 14.2 16.0 18.0
Oceania.................................... 5.4 6.5 6.5 6.7 7.0 8.0
--------- --------- --------- --------- --------- ---------
World Total................................ 648.7 653.1 670.4 689.1 723.0 797.0
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>

E=ESTIMATED

SOURCE: INTERNATIONAL IRON AND STEEL INSTITUTE

Underlying fundamentals leading to this growth projection include the
prospects for fairly low interest and inflation rates for many countries,
including the United States, transferability of technology spurring new factory
construction in countries increasing their industrial base and the need for
continued infrastructure additions and improvements throughout the world.

36
<PAGE>
The following chart depicts regional and country specific consumption levels
of steel products and highlights the differences between countries whose
economies are at various stages of development.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
APPARENT TOTAL STEEL CONSUMPTION PER
CAPITA
<S> <C>
1996 Kg per capita per year.
Vietnam 22
Indonesia 37
Philippines 68
Thailand 152
Australia 351
Malaysia 401
United States 402
Japan 643
Taiwan 854
South Korea 863
Singapore 1308
Source: South East Asia Iron and Steel
Institute
</TABLE>

If Thailand's economy recovers, its per capita steel consumption may begin
to increase toward the consumption levels of industrialized countries. If steel
consumption in Thailand does increase, the Company believes that being the first
producer of iron metallics (via the DRI facility) and of flat-rolled steel
products (via the Hot Mill) in Thailand will give the Company an economic
advantage over its competitors and facilitate the Company's expansion plans due
to its early entry into the marketplace and ability to establish customer
relations. The Company believes that this advantage could be significant as
Thailand's overall raw steel production on a per capita basis is only 4.3% of
South Korea's, 4.7% of Japan's, 6.3% of Taiwan's and 9.2% of the United States.

In virtually every industrialized country, flat-rolled steel products make
up the largest steel product group, accounting for well over 50% of the total
steel consumed. As a percent of total world steel consumption, flat-rolled steel
consumption has been, and is expected to continue, rising as industrialization
spreads throughout the world. Given the continuing emphasis on critical
applications and higher value added flat-rolled steel products, NSM, with its
low cost structure and high-quality product capabilities, is well positioned to
capitalize on this increasing demand.

37
<PAGE>
FLAT-ROLLED CONSUMPTION AS A PERCENT OF TOTAL APPARENT STEEL CONSUMPTION

<TABLE>
<CAPTION>
1985 1996
--------- ---------
<S> <C> <C>
Total World.................................................................................... 40.7% 45.7%
Developed World(1)............................................................................. 51.0% 53.3%
Developing World............................................................................... 32.1% 38.5%
</TABLE>

(1) Developed World defined to include the United States, Japan, Western Europe
(including EU-15), Canada, Australia and New Zealand.

SOURCE: INTERNATIONAL IRON & STEEL INSTITUTE

Further demonstrating the increased importance of flat-rolled steel products
is the fact that China's flat-rolled consumption as a percent of its total
apparent steel consumption increased from 23.5% in 1985 to 29.4% in 1996. Thus,
in 1996, China consumed 28.6 million tonnes of flat-rolled steel. By comparison,
the United States' percent of flat-rolled steel consumption increased from 59.2%
in 1985 to 62.9% in 1996. Flat-rolled steel consumption in the United States in
1996 was 67 million tonnes.

The Off-Take Agreements and the commercial assistance agreement that NSM has
entered into with the former chief commercial officer of USSteel will facilitate
its introduction to flat-rolled steel consumers throughout the world. Both
Preussag and Klockner, with their worldwide network of sales offices, will have
opportunities to sell the higher quality and higher priced flat-rolled steel
products produced by NSM.

The consumption of flat-rolled steel products, whether they are hot-rolled,
cold-rolled, coated, plate or tinplate, continues to move towards higher
value-added non-commodity grades as industrialization continues throughout the
world and new steels and new uses for steel are developed. NSM's emphasis on
high-quality products is expected to position it at the forefront of this trend.

FLAT-ROLLED CONSUMPTION IN THAILAND. Unlike other developing countries,
Thailands' percent of flat-rolled steel consumption is extremely high,
accounting for over 55% of Thailand's 1996 steel consumption. This level of
flat-rolled steel consumption reflects the fact that Thailand is home to a large
number of export-oriented, foreign flat-rolled steel consuming companies.

<TABLE>
<CAPTION>
THAILAND'S FLAT-ROLLED STEEL CONSUMPTION
(MILLIONS OF TONNES)
YEAR ENDED DECEMBER 31,
<S> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
Hot-Rolled(1)..................................... 2.28 2.16 2.60 3.74 3.35
Cold-Rolled....................................... 1.10 1.34 1.39 1.03 1.63
Coated(2)......................................... 0.49 0.49 0.71 0.71 0.72
--- --- --- --- ---
Total............................................. 3.87 3.99 4.70 5.48 5.70
--- --- --- --- ---
--- --- --- --- ---
</TABLE>

- ------------------------------

(1) Includes plate in coiled form.

(2) Includes all metallic and organic coated products.

SOURCE: SOUTHEAST ASIAN IRON AND STEEL INSTITUTE

Thailand's large demand for flat-rolled steel made it the third largest net
importer of steel in 1996.

38
<PAGE>
STEEL IMPORTS DURING 1996

<TABLE>
<CAPTION>
NET IMPORTS
TOTAL TONS OF STEEL (IMPORTS MINUS WORLD RANK
IMPORTED (MILLIONS) EXPORTS) NET IMPORTS
--------------------- ----------------- -----------------
<S> <C> <C> <C>
United States.................................................... 26.4 21.9 1
China............................................................ 16.5 9.8 2
Thailand......................................................... 10.0 9.1 3
Middle East...................................................... 9.4 7.3 4
Taiwan........................................................... 10.6 6.8 5
Malaysia......................................................... 6.0 5.1 6
Other S.E. Asia.................................................. 4.4 4.0 7
Philippines...................................................... 4.0 3.9 8
Singapore........................................................ 4.3 3.4 9
Indonesia........................................................ 3.5 2.8 10
South Korea...................................................... 11.1 1.0 11

SOURCE: INTERNATIONAL IRON & STEEL INSTITUTE
</TABLE>

As the only producer of flat-rolled steel in Thailand, the Company believes
that it will displace a portion of the flat-rolled products shipped into
Thailand. This belief is based on the fact that the Mill is designed to be a
low-cost producer of a full range of flat-rolled products, including high
value-added products. The Mill's location close to Thailand's flat-rolled
consumers also provides domestic consumers with significant savings in terms of
freight and timeliness of delivery.

Additionally, Thailand's flat-rolled steel consumers tend to consume a
disproportionate amount of higher grade steels. This is reflected by the fact
that vis-a-vis other countries, the price levels paid for imported steel are
significantly higher in Thailand.

The following table shows average recent price levels paid by Thai customers
for imported flat-rolled products. The Company believes that these prices are
substantially higher than world spot market commodity prices and also higher
than typical world high-grade product prices.

RECENT PRICE LEVELS IN THAILAND
(PER TONNE IN U.S.$)
<TABLE>
<CAPTION>
Hot-Rolled Cold-Rolled Galvanized
---------------- ---------------- ---------
Country of Origin 1996 1st Half 1997 1996 1st Half 1997 1996
- ---------------------------------------------- --- --------------- --- --------------- ---------
<S> <C> <C> <C> <C> <C>
Japan......................................... 620 570 609 623 949
Korea, Taiwan EU & United States.............. 446 460 559 505 845
Russia, CIS, China............................ 332 390 411 401 N/A

Country of Origin 1st Half 1997
- ---------------------------------------------- ---------------
<S> <C>
Japan......................................... 873
Korea, Taiwan EU & United States.............. 783
Russia, CIS, China............................ 572
</TABLE>

PRICES ARE CIF BANGKOK--IMPORT TAXES AND ANTI-DUMPING DUTIES (AS LEVIED ON CIS
PRODUCTS) ARE INCLUDED.

SOURCE: THAILAND CUSTOMS DEPARTMENT

Further facilitating the Company's ability to sell its products
domestically, is the fact that Thailand's flat-rolled consumption base is fairly
diverse, with relatively low dependence on the automotive sector.

39
<PAGE>
THAILAND'S 1996 FLAT-ROLLED STEEL CONSUMPTION

<TABLE>
<CAPTION>
HOT-ROLLED % COLD-ROLLED % COATED %
----------------- ----------------- -----------
<S> <C> <C> <C>
INDUSTRY
Pipe & Tube.............................................................. 36 20 N/A
Construction............................................................. 22 N/A 23
Automotive............................................................... 13 12 7
Vessels/Containers/Cylinders/Cans........................................ 6 31 29
Machinery & Equipment.................................................... 6 10 N/A
Furniture & Appliances................................................... 3 16 13
Others................................................................... 14 11 28
--- --- ---
100 100 100
--- --- ---
--- --- ---
</TABLE>

SOURCES: CHULALONGKORN UNIVERSITY, COMPANY MARKET STUDIES

THE COMPANY'S PRODUCTS AND APPLICATIONS

The Company will use its Hot Mill to produce an array of hot-rolled products
in 900 mm to 1600 mm widths and in thickness from 13 mm to 1 mm. These products
are suitable for the following applications: mechanical and structural tubing;
gas and fluid transmission piping; metal building systems; parts and components
for automobiles, trucks, trailers, and recreational vehicles; rail cars; ships;
barges; marine and agricultural equipment; farm implements; lawn and garden
equipment; industrial machinery and shipping containers. NSM will also sell its
hot-rolled products to entities such as steel service centers that will provide
further processing. The Company believes that the design and operating
innovations made in its Hot Mill will allow its hot-rolled products to have
surface and edge quality characteristics exceeding those of the vast majority of
other steel mills in the world. As demonstrated by SDI and Hylsa, the CSP
technology produces flat-rolled products with unsurpassed metallurgical
uniformity and superior dimensional tolerances, resulting in improved
manufacturability and yield performance.

After completion of the Finishing Facilities, NSM will produce a full range
of hot-rolled, cold-rolled and coated products. At that time, the Company
expects to devote a substantial portion of its hot-rolled steel (down to 1 mm)
to the production of higher-value added products, including galvanized, as well
as thinner gauge cold-rolled products.

MARKETS FOR THE COMPANY'S PRODUCTS

Under the Off-Take Agreements, Preussag and Klockner will be obligated to
purchase, in aggregate, 100% of the Company's production in 1998 through 2002,
and 25% of the Company's production in the years 2001 through 2005. NSM may, at
is option, reduce the percentage of its production sold under the Off-Take
Agreements to as little as 67% in 1998, 50% in 1999 and 25% in 2000, if the
Company believes it could maximize sales revenue through sales to other
customers. Under the Indentures, sales by NSM to customers other than Preussag
and Klockner, to the extent that the aggregate of such sales results in
receivables outstanding in excess of U.S.$10 million, must be supported by
letters of credit if the customer does not have an investment grade credit
rating. All export sales, whether to Preussag, Klockner or other customers will
be U.S.$ denominated. Steel is sold based on internationally accepted product
specifications. Certain orders are anticipated to contain specific application
requirements. Non-compliance with such specifications can result in rejections
and claims against the seller. Such claims are usually settled between the
producer, the trading company and the end user. Claims may result in financial
damage awards against the seller.

Sales outside Thailand are for Preussag's and Klockner's own accounts,
regardless of whether they are purchasing for their own use or for resale. If
the Company receives an unsolicited offer to purchase any products from a
prospective customer outside of Thailand, the Company must notify Preussag and

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Klockner of the terms and Preussag and Klockner will then have a right of first
refusal to effect the purchase.

Preussag and Klockner are large, German-based international steel trading
and processing firms. Preussag's origin dates back to Peine/Salzgitter, an
integrated flat-rolled steel producer that is now part of Preussag AG.
Similarly, Klockner's origin dates back to Klockner Bremen, an integrated
flat-rolled steel producer that is now part of the ARBED/Sidmar group. Both
firms have extensive sales, distribution and steel processing facilities
worldwide. Additionally, they have the in-house metallurgical and product
application expertise to serve the high end of the steel market. The Company's
anticipated ability to produce unique high-quality steel grades including
ferritic hot- and cold-rolled steels have already prompted serious inquiries
from many high-quality users in the transmission pipe, structural tubings and
high-strength re-rolling and parts making industries in Asia, Europe and North
America. The American Petroleum Institute ("API") pipe quality standards are the
worldwide accepted specifications for high-quality pipe products. The Company
believes that it is the only producer in Southeast Asia with the required steel
making and rolling facilities to meet the API's high-quality requirements.

On a global basis, steel trading volume has increased significantly over the
past decade. According to International Iron and Steel Institute statistics, 169
million tonnes of steel were traded in 1985 and 231 million tonnes were traded
in 1996. The Company expects the trend of increasing trading activity to
continue as industrialization continues throughout the world.

Steel consumption in Thailand is expected to be reduced in the near term due
to the economic slowdown in Thailand. Thus, the Company's projections assume 90%
export in 1998 and 50% in 1999. Thailand is undersupplied in terms of steel
production and over time, the Company believes that domestic sales will
increase.

SALES AND MARKETING

The Company employs a 12-person direct sales staff, consisting of a manager
of sales and marketing, four field sales managers, two customer technical
service engineers, a quality assurance engineer, and four inside sales and
administration personnel. Similar to SDI, NSM plans on keeping its end user
sales and support staff small and efficient, reflecting its emphasis on
cost-containment and productivity. The expertise of the Company's employees is
being supplemented by a commercial assistance agreement that it has entered into
with Mr. Reuben L. Perin, the former chief commercial officer of U.S. Steel.
This agreement covers marketing, sales, trade and strategic planning issues. Mr.
Perin has been named a director of NSM.

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The Company's sales team will work in close cooperation with the sales,
metallurgical and product application professionals at Preussag and Klockner to
fully utilize the Company's quality, made-to-order and customer service
capabilities.

THE COMPANY'S PRODUCTION EQUIPMENT AND TECHNOLOGY

The Mill's design and technical capabilities are based on advanced
technology in virtually every process step and embody various advancements and
improvements. Additionally, NSM has benefited from the technical expertise of
its equipment and technology providers including ABB Industry Limited,
Mannesmann Demag AG, Intersteel Technology, Inc., Bricmont, Inc., Inductotherm
Corporation, SMS, Siemens AG, INCO, INMETCO and Datel Engineering Company, Inc.
and General Electric Company. Further technical enhancements were made through
the research efforts of Dillingen Steel Works in Germany, the University of
Aachen in Germany, Chulalongkorn University in Thailand and the University of
Stockholm in Sweden. The Company's existing equipment and technology, as well as
the Mill's process design are intended to improve steelmaking speed, efficiency
and output, result in minimum energy and power usage, produce flat-rolled steel
of better consistency and tolerances and deliver higher surface and edge
qualities.

BACKGROUND OF ALTERNATIVE SCRAP SUBSTITUTE TECHNOLOGIES. DRI is a metallic
product produced from iron ore that is used as an alternative or complementary
feedstock to scrap in the steelmaking process. Of the approximately 30 million
tonnes of DRI produced in 1996, over 90% was produced by methods which utilize
lump form iron ore or pellets that are treated in a direct reduction shaft
furnace with natural gas to reduce the iron oxide to metallic iron. Although
these processes are proven to work commercially, suitable ore grades and iron
ore pellets tend to command a premium over iron ore fines. Additionally, natural
gas is typically more expensive than using coal as the reductant. Consequently,
NSM elected to utilize technology which permits the use of low-cost iron ore
fines and medium-quality, medium sulfur coals which are available in abundance
throughout the Asia-Pacific region. Long-term supply contracts for iron ore
fines and coal are in place.

THE DRI FACILITY. The DRI Facility consists of the design, construction,
and operation of a facility for the manufacture of DRI for use by NSM as a scrap
substitute. The Company studied and considered many alternative methods of
securing a low-cost captive source of scrap substitute material. The existing
commercial processes differ from the DRI Facility's design by the type of raw
feedstock they employ and the type of reductant that is used to "reduce" the
feedstock to useable iron units. The Company will use the INCO/Inmetco DRI
process, which uses low-cost iron ore fines that are ultimately reduced to DRI
in a rotary hearth furnace using medium-quality coal as the reductant.

The selection of the INCO/INMETCO coal-based DRI process, was made
commercially feasible for use by NSM through the adoption of the well proven
German technology of desulfurization of liquid steel via strong ladle stirring
and certain slag practices. To produce DRI, the Company will use low-cost iron
ore fines, which will be combined with ground coal, mixed with a bentonite
binder and other fluxes, and then pelletized. The resulting "green" pellets will
be fed into a rotary hearth furnace, where they will be heated to 1,300 DEG.C
for approximately 15 minutes, after which they will be removed by water-cooled
screws to refractory-lined containers. The containers will be transported to the
Hot Mill and the DRI will be hot-charged directly into the EAF at 900 DEG.C.

The DRI Facility is under construction and scheduled to commence operation
in the second quarter of 1999. A waste heat recovery and the Co-Gen Facility
will be constructed alongside the DRI Facility. The Co-Gen Facility will further
improve NSM's operating efficiency by lowering the Mill's net energy
consumption. NSM and Enron International, Inc., a subsidiary of Enron, have
negotiated terms for the LOI contemplating, subject to definitive documentation,
that Enron International will provide either lease financing or a BOOT contract
for the Co-Gen Facility. U.S.$20 million of the construction costs for the
Co-Gen Facility will be funded by Enron. Enron and NSM have agreed to work
together to obtain the

42
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remaining funds necessary to complete construction of the Co-Gen Facility.
Infrastructure and certain process equipment has also been designed into the
Co-Gen Facility to support potential expansion to 1.5 million tonnes of annual
DRI and an additional 60 MW of power from waste heat recovery. If expanded and
when operational, after additional expenditures of approximately U.S.$100
million in the DRI Facility and U.S.$170 million in the Hot Mill, the expanded
DRI and steelmaking capacity is projected to reduce the Company's costs of
production by approximately U.S.$65 per tonne for hot-rolled coil.

THE ELECTRIC ARC FURNACE. The Company's EAF is a 180 metric tonne capacity
tap weight, 325 tonne gross weight, technologically advanced furnace that has
been designed to maintain a hot heel of at least 145 tonnes of raw liquid steel.
The EAF, which is being supplied by Mannesmann Demag, is a ConSteel type
AC-powered 130 MVA high-reactance continuous charging eccentric bottom tap
furnace. It is equipped with a reactor on the primary side of the transformer
and all necessary filters and controls to meet international flicker and
harmonics standards and to minimize peak load on the grid.

NSM's EAF design and the ConSteel Process results in continuous melting and
significantly reduces the tap-to-tap time (I.E., the length of time between
successive melting cycles or "heats"). In a conventional single shell EAF with a
60-minute tap-to-tap time, typically 10 to 15 minutes is taken to tap liquid
steel, insert gun refractories into the side wall of the furnace, re-sand and
repair the tap hole and recharge the vessel with scrap. By eliminating the
requirement to recharge the scrap, and reducing the time needed to perform the
other steps through the use of ConSteel Process, NSM gains an approximately 20%
increase in productivity by reducing the tap-to-tap time to under 50 minutes.

Preheating of scrap will also occur in the ConSteel Process. The source of
energy for the preheating is the latent heat and energy from post combustion
gases exhausted into the containment system from the EAF. No natural gas is used
in the ConSteel Process. A downstream waste heat boiler to be added as part of
the DRI will further reduce NSM's net energy consumption.

Additional attractive features of the ConSteel Process are the significant
reduction of dust generation and emissions as well as a higher production yield
due to continuous "flat bath" melting and stable slag formation.

LADLE METALLURGY. NSM's ladle design with its extra high freeboard,
dolomitic lining and large porous plugs for Argon stirring are unique features
of the Hot Mill. NSM's ladle design allows for the production of a full range of
steel products while achieving very high levels of steel cleanliness, precision
chemistry control and low levels of non-metallic inclusions.

The Company has two separate ladle furnaces, two VOD's with a common vacuum
system, extensive alloy handling and feeding systems and precision wire alloy
feeding units. These attributes make the Hot Mill one of the most
technologically advanced steelmaking operations in the world. Specific
improvements over other steelmaking operations include NSM's ability to maximize
the time that the EAF can be used for scrap and DRI melting, while enabling the
raw liquid steel to continue through metallurgical testing, stirring, alloying
and sulfur, nitrogen, hydrogen, phosphor, oxygen and non-metallic inclusion
removal. In addition to these activities, temperature and other refinements to
the raw liquid steel continue all the way through to the casting deck. Once at
the casting deck, the liquid steel, which is now considered refined, is emptied
into the tundish in a continuous process and then directly poured into the
casting machine mold via a submerged entry nozzle ("SEN").

THE THIN-SLAB CASTER. NSM's thin-slab caster was designed and built by SMS
and is equipped with a hydraulically oscillating mold and an electromagnetic
brake to reduce turbulence in the mold. These features, along with a
metallurgical length of eight meters, facilitate NSM's ability to produce
high-quality steels at casting speeds up to eight meters per minute. The caster
also has liquid core reduction capabilities which enable the caster to cast
slabs in a range of thicknesses from 40 mm to 70 mm. This feature, which was
first implemented by SDI, is designed to enhance steel quality and facilitate a
more diversified product

43
<PAGE>
offering by providing for "soft reduction" on segregation sensitive grades and
improving thin-gauge hot-rolling capabilities.

The caster is also equipped with an SEN designed by SDI and SMS. This design
permits the walls of the SEN to be thicker, which results in longer SEN life
which, in turn enables the Company to run a "string" of 12 heats before the SEN
requires replacement. In contrast, most SENs in operation today require
replacement after 10 heats. These advantages directly increase productivity.
Within the SEN, NSM has also incorporated a new baffle design to modify the
fluid flow of refined liquid steel into the mold cavity. These baffles slow and
more evenly distribute the refined liquid steel into the mold as compared to
previous designs. This results in a quieter top surface, or meniscus, of the
refined liquid steel in the mold, producing a more uniform solidification of the
shell and effectively eliminating sub-surface inclusions.

THE HOT-ROLLING MILL. The Company's rolling mill is a state-of-the-art,
six-stand rolling mill designed and built by SMS with provisions for a seventh
stand. The operating procedures of the rolling mill begin when the
Bricmont-supplied tunnel furnace receives a cut-to-length slab from the CSP
caster at casting speed. The tunnel furnace equalizes the slab's temperature
profile to a differential of plus or minus 10 DEG. C along the slab's length,
through its thickness and across its width. The excellent temperature profile of
the slab provides optimum conditions for the subsequent rolling process and thus
ensures an excellent profile, flatness and metallurgical uniformity of the
hot-rolled steel. The rolling mill is equipped with a specially designed
high-pressure (up to 400 bar) water descaling system to remove mill scale after
the steel emerges from the tunnel furnace just before entering the rolling mill.
This system provides an exceptionally clean surface on the steel slab while
minimizing the cooling of the 1100 DEG.C slab.

Once in the rolling mill, the slab thickness is reduced down to the required
level while at all times maintaining proper temperature control. The rolling
mill is equipped with the latest electronic and hydraulic controls including
hydraulic roll-gap setting systems. For control of the strip profile and
flatness, all mill stands are equipped with the SMS Continuous-Variable-Crown
System, which uses axially shiftable work rolls, in combination with work roll
bending. The run out table, with laminar spray cooling, was especially designed
for precise cooling of extremely thin-gauge steel. The Company's closely-spaced
rolls and advanced guidance system on the run-out table help to prevent the
steel from cobbling when rolling lighter gauges. NSM's Number 1 down-coiler is
located only 20 meters from the last stand of the rolling mill to allow accurate
coiling and temperature control of thin gauge steel. The capability to roll at
low temperature (ferritic rolling) and to coil thin-gauge steel at high coiling
temperatures gives NSM unique product capabilities and is a principal advantage
of NSM's short coupled coiler. The Number 2 down-coiler is located 85 meters
from the last stand to provide full controlled laminar cooling of heavier gauge
steel. The coiled steel is moved by an automated coil handling system to either
the shipping warehouse for conventional cooling before loading onto trucks for
shipment or to the accelerated coil cooling system where they are cooled to
ambient temperature in three hours for further processing in the Finishing
Facilities or for faster delivery to customers.

Throughout the rolling process, laser optical measuring equipment and
multiple x-ray devices measure all dimensions, allowing adjustments to occur
continuously and providing feedback information to the Mill's process controls
and computers. All positioning and control equipment used to adjust the rolling
mill is hydraulically operated and regulated electronically to achieve a high
degree of accuracy and repeatability. The entire production process is monitored
and controlled by both business and process computers. An additional flatness
control system is being installed in the rolling mill which will utilize proven
cold mill technology to improve light gauge flatness control for direct shipment
from the Hot Mill.

Production schedules are created based on order input information and
transmitted to the Mill's computers by the plant business system. Mathematical
models then determine the optimum settings for the tunnel furnace, the
hot-rolling mill and the cooling sprays. This information is then directly
transmitted to the equipment controlling the rolling operations. As the material
is processed, operating and quality data are gathered and stored for analysis of
operating performance and for documentation of product

44
<PAGE>
parameters. The system then coordinates and monitors the shipping process, and
prints all relevant paper work for shipping when the steel leaves the Mill.
NSM's off-take partners Preussag and Klockner, will directly tie-in to NSM's
operating systems to further ensure maximum operating efficiency and customer
service.

THE FINISHING FACILITIES. The Finishing Facilities, which are being
constructed adjacent to the Hot Mill, will consist of: (i) a
combination/multipurpose continuous pickling, cold-rolling, cleaning, annealing,
hot-dip galvanizing, skin pass/tension leveling and oiling line, supplied by SMS
(the "Combination Line"), (ii) a push-pull pickling/trimming/oiling line (the
"Push-Pull Line"), (iii) hydrogen batch annealing furnaces, and (iv) a
recoil/temper rolling/slitting line, also supplied by SMS (the "Recoil Line").

The Combination Line will receive hot-rolled steel from the Hot Mill by a
dedicated coil conveyor. The line consists of three independent yet integrated
sections, the entry section, process section and exit section, each of which is
separated by a storage accumulator to provide continuous operation. The entry
section equipment includes dual pass lines to permit loading of hot-rolled steel
while simultaneously running on the other pass line. The process section
consists of equipment to remove scale, reduce thickness, clean, anneal, coat,
skin pass, correct flatness, side-trim and apply oil. A by-pass allows for
pickling or pickling and cold-rolling without the strip having to pass through
the galvanizing process. The pickling section uses three shallow pickling tanks
containing hydrochloric acid and a multiple stage rinse tank to remove mill
scale. A fume exhaust system is provided to extract fumes from the pickling and
rinse tanks and prevent the escape of fumes into the building. After leaving the
pickling process, the pickled steel passes into the two-stand four-high cold
rolling mill for thickness reduction. Entry and exit thickness gauges, load
cells and other related equipment in combination with a high-precision mass flow
control model provide automatic gauge control to exact tolerances. After leaving
the cold rolling mill, further processing consists of cleaning the cold-rolled
steel in a cascade alkaline cleaning and water rinse to remove any residual
rolling oils and iron fines before entering the heating and annealing furnace.
Next, in the heating and annealing furnace, the cold-rolled steel is heated to
750 DEG.C to recrystallize the cold-rolled grain structure and then cooled to
the galvanizing pot temperature in a protective nitrogen/hydrogen atmosphere. In
the event that the gauge of the steel does not need to be further reduced and
the cold-rolling mill is bypassed, the steel is only heated to the 450 DEG.C
temperature of the galvanizing pot. For galvanizing purposes, an immersion roll,
stabilizing rolls, and air knives and blowers are provided to automatically
control the coating weight of metal on the strip. After passing through a
cooling tower, water quench tank, and strip dryer, the galvanized coated steel
is skin passed on a four-high mill to improve strip luster and surface
smoothness and tension leveled to correct strip flatness suitable for shipping.

The Push-Pull Line will also receive coils from the Hot Mill by a dedicated
coil conveyor. The Push-Pull Line consists of an entry section with a pay-off
reel, a flattening machine, crop shear and a taper shear for preparing the
head-end of the steel. Pickling is carried out in the process section in a
"cascade-type operation" in three stages in which the acid flows counter-current
to the strip pass. The pickled steel leaves the pickling tank via a driven
squeeze roll set and passes into a four-stage counter-current cascade rinse
section and a hot air dryer. Threading is carried out by means of driven squeeze
and transport roll sets. The exit section consists of a loop pit, a pinch roll
set, a side-trimmer, a three-roll bridle, an oiler and a recoiler.

Cold-rolled steel not requiring galvanizing will proceed to the batch
annealing furnaces to reduce the hardness of the steel that is created in the
cold rolling process. The batch annealing furnaces will heat the steel, in order
to soften it, in a hydrogen environment that optimizes the efficiency of the
heating process and produces a product that is superior compared to conventional
annealing furnaces. The batch annealing units heat and then cool the steel in a
controlled batch system for optimum cleanliness and uniformity of metallurgical
properties. Certain grades of cold-rolled steel will be produced in-line on the
Combination Line, by-passing the galvanizing section.

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Product from the annealing furnaces will then be temper-rolled in the Recoil
Line. The Recoil Line is a single stand four-high mill designed for relatively
light reduction. The line includes a slitting/side-trimming and inspection
station as well as an oiling unit. The Recoil Line introduces a small amount of
hardness into the product and further improves the flatness and surface quality
of the product.

In a manner similar to the Hot Mill's process computers, the Combination
Line, Push-Pull Line, annealing furnaces and Recoil Line will be linked by means
of business and process computers. The business systems will be expanded to
include order entry of the additional finished products. All scheduling will be
accomplished in the business computer systems, with schedules transmitted to the
appropriate process related computers. Operating and quality data will also be
collected for analysis and quality control purposes, and for reporting product
data.

STEEL SCRAP AND SCRAP SUBSTITUTE RESOURCES

SCRAP ANALYSIS

Scrap is the most significant raw material in the Company's steelmaking
process representing approximately 32% of the fully loaded cost per tonne of
hot-rolled coil. There are many grades of scrap, but the two main
classifications are obsolete scrap and prompt industrial scrap.

Obsolete scrap is derived from discarded goods including agricultural and
construction equipment, automobiles, construction trash, abandoned military
equipment, appliances, container drums and miscellaneous pieces of steel.
Historically, the collection of obsolete scrap has tended to be a peddler
industry, with collection rates increasing dramatically in periods of economic
distress. This is especially true in developing countries. Collection rate
swings continue based on economic conditions until an efficient collection
system develops. Developed countries such as the United States have efficient
collection systems in place which tend to operate more steadily throughout
economic cycles.

Obsolete scrap comes in many different forms. None are free of metallic
contamination, otherwise known as residual elements. Copper comes from wire
mixed into the scrap or from copper deliberately added to some steels for
corrosion protection. Other residuals include nickel, chromium and molybdenum
contained in various steels for strengthening and toughness purposes, or added
as a coating for decorative or corrosion resistant purposes. The elements
copper, nickel and tin, and to a great extent, chromium and molybdenum cannot be
refined out of steel once they are dissolved into it. The only obsolete scrap
that is relatively low in residuals comes from either old structurals and rails
that were made from Bessemer and open-hearth steel with high iron content or
well sorted and processed shredded scrap from automobiles and other consumer
goods. Unfortunately, the amount of this steel recovered each year is extremely
limited. This is especially true in a country such as Thailand that is in the
early stages of its industrial development. Thus, the value of obsolete scrap in
EAF flat-rolled steelmaking is limited. Unlike most flat-rolled steelmakers
utilizing EAFs, NSM will be able to consume a certain amount of obsolete scrap
in its meltmix due to the fact that the DRI produced in the DRI Facility will be
high in iron content and low in contaminants or residuals.

Prompt industrial scrap is produced as a by-product of various metal working
operations. Steel fabricators, machine shops, stamping plants and auto
production operations, such as those being built and operated in close proximity
to NSM, all generate this type of scrap. Prompt industrial scrap is the most
desirable for EAF steelmaking due to the traceability of its origin.
Approximately 15% of prompt industrial scrap is in the form of turnings.
Unfortunately, most turnings are contaminated with high levels of sulfur oil and
are high in alloy content. Thus, turnings do not represent a source of
low-residual material. Structural and plate scrap generated from fabrication
operations amount to approximately 10% of prompt industrial scrap. Structural
and plate prompt industrial scrap is primarily made from obsolete scrap and, as
such, does not represent a source of low-residual material. The remaining 75% of
prompt industrial scrap is in the form of bundles, clips and bushelings, all of
which are low in residuals. NSM plans to consume initially approximately 25% of
prompt industrial scrap in its melt mix, with the remaining mix consisting of
DRI 20%, pig iron 20% and obsolete scrap 35%. This mix will be adjusted
depending on the price of these materials.

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The table below provides an overview of the typical and range levels of
residuals in various grades of scrap as would be found in a mature industrial
economy such as the United States. EAF flat-rolled steel producers requiring
approximately 0.22% residual level need to melt a significant portion of
bundles, clips and bushelings or supplement their melt mix with DRI, pig iron or
other scrap substitutes. The Company expects that its advanced steel refining
and reduction of sulphur, nitrogen and non-metallic inclusions, combined with
low temperature ferritic rolling, will allow it to tolerate higher residual
concentrations.

TYPICAL AND RANGE OF RESIDUAL LEVELS FOR SCRAP GRADES IN THE USA

<TABLE>
<CAPTION>
% (CU, CR, NI, MO, SN)
-----------------------
<S> <C> <C>
TYPICAL RANGE
----------- ----------
Obsolete Scrap:
No. 1 Heavy Melting................................................. 0.50 0.35-0.50
RR Rails/Wheels..................................................... 0.45 0.40-0.70
Plate and Structural................................................ 0.40 0.20-0.50
Shredded............................................................ 0.55 0.45-0.60
No. 2 Heavy Metal................................................... 0.75 0.45-1.00
No. 2 Bundles....................................................... 0.70 0.35-1.25

Prompt Industrial:
No. 1 Dealer Bundles................................................ 0.15 0.10-0.27
No. 1 Factory Bundles............................................... 0.10 0.05-0.15
Busheling, Clips.................................................... 0.10 0.05-0.15
Cut Structurals..................................................... 0.55 0.40-0.60
Turnings............................................................ 0.75 0.30-1.50

Pig Iron.............................................................. traces

DRI................................................................... traces
</TABLE>

SOURCE: GORDON H. GEIGER, T.P. MCNULTY AND ASSOCIATES, "SCRAP SUPPLY: IS
THERE ENOUGH OF THE RIGHT KIND?", PRESENTED AT THE GORHAM/INTERTECH CONFERENCE
ON "IRON AND STEEL SCRAP SUBSTITUTES," ATLANTA, GA, APRIL 27-29, 1994.

Various studies have shown that the amount of prompt industrial scrap
generated equals approximately 12-20% of steel consumption, depending on scrap
collection and processing practices. For example, in a year when the consumption
of steel equals 10 million tonnes, approximately 1.2 to 2 million tonnes of
prompt industrial scrap will be generated. Of this amount, 75% represents
low-residual tonnes. Thus, the amount of low-residual scrap available in a
country in a year when 10 million tonnes of steel is consumed is 900,000 to 1.5
million tonnes. Thus, in a country such as Thailand where the scrap collection
and processing practices are not fully developed it can be estimated that
900,000 tonnes of low-residual scrap will be available for consumption. The
Company believes that it will be able to purchase approximately 420,000 tonnes
of locally generated low-residual scrap each year during its first years of
operation. This amount is expected to increase over time as Thailand's scrap
collection and processing system matures and the amount of steel consumed in
Thailand increases. Recognizing that Thailand's scrap collection and processing
system is still developing and no efficient export mechanism exists, NSM
believes that locally generated scrap will be available at a U.S.$20-30 per
tonne discount to world market prices.

To supplement the amount of locally generated low-residual scrap available
to it, NSM will purchase scrap on the world market. Many industrialized
countries including the United States, Germany and Japan are net exporters of
scrap. Scrap is a worldwide surplus commodity and its price and availability are
dictated by its supply and demand as well as the price and availibility other
traded metallics, including pig iron, DRI, and others.

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<PAGE>
DRI ANALYSIS

The most commonly used scrap substitute is DRI, with over 33 million tonnes
consumed in 1996. DRI is produced through a direct reduction production process
in which oxygen is removed from iron ore in a solid state leaving a metallic
iron product. DRI, unlike scrap and some other scrap substitutes, contains no
nonferrous residuals such as copper, nickel, tin, chromium or molybdenum. There
are two methods of producing DRI, gas-based DRI production and coal-based DRI
production. The DRI Facility will utilize the coal-based DRI production method.
SDI intends to employ a coal-based DRI production method in its Iron Dynamics,
Inc. project.

Gas-based DRI production, which was first commercialized in the early
1970's, accounted for the vast majority of the world's DRI production in 1996.
Gas-based production methods combine pre-treated iron ore that is fed into the
top of a shaft furnace with reformed natural gas that is injected into the
bottom of the shaft reactor. As the pre-treated iron ore flows down and the
reducing gases that are flowing up come in contact with each other the carbon
monoxide and hydrogen in the gas reduces the iron ore to form metallic iron.

NSM designed its DRI Facility to operate under the coal-based method of
production to take advantage of the potentially significant operating savings
associated with coal-based production and to avoid the capital costs associated
with running a pipeline from Burma or the South China Sea, the nearest natural
gas supply. The DRI Facility is based on the INCO/INMETCO DRI design. INCO, the
world's largest nickel producer headquartered in Toronto, Ontario, through its
wholly-owned subsidiary Inmetco has operated a coal-based direct reduction
facility for recycling purposes since 1979. Utilization of the INCO/Inmetco
design for DRI production was made commercially viable by adding well proven
desulfurization slag practices into the steel making process. These additions
will provide NSM with the ability to significantly reduce the cost of DRI
production through the use of low-cost iron ore and lower cost medium-quality,
medium sulfur coals. With gas-based DRI processes, only the highest grades, and
most expensive, iron ore and special low sulfur coals can be used. To supplement
its DRI production, NSM has entered into a technology and process license with
Inmetco that provides NSM with access to operating enhancements.

ENERGY RESOURCES

NSM has entered into various arrangements to ensure its access to and
availability of electric power, natural gas, oxygen, coal and iron ore. NSM has
entered into arrangements under which PEA and PTT will provide NSM with electric
power and natural gas. Both PEA and PTT are government entities charged with
providing electricity and natural gas, respectively, to Thailand's industrial
base. The Company will benefit from two new power substations adjacent to the
Mill and from two sets of new power lines which run to the Mill site all
recently constructed by PEA. The Company has access to a long-term supply of
oxygen and other industrial gases from Bangkok Industrial Gas which has recently
constructed an oxygen plant adjacent to the Mill. Coal and iron ore, two
important raw materials needed to produce DRI, are being supplied by SSM and
MMTC under long-term contracts.

COMPETITION

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technology and traditional steelmakers who are making their operations more
efficient. For example, several new mini-mills began production in the United
States in 1997. The highly competitive nature of the global steel industry,
combined with excess production capacity in some products, may in the future
exert downward pressure on prices for certain of the Company's products. The
deterioration in the economics of Southeast Asia may exert downward pressure on
prices for the Company's products if regional competitors choose to lower their
prices in order to maintain revenues in the face of decreasing regional demand
for steel products. Although the Company believes that it is well-positioned to
compete in the markets where it operates, competitors may develop new products
or production processes that could provide advantages to such competitors to the
detriment of the Company. There can be no assurance that the Company will be
able to compete effectively in the future. In addition, in the case of certain
product applications, steel competes with other materials, including plastics,
aluminum, graphite composites, ceramics, glass, wood and concrete. There can be
no assurance that the Company will be able to compete effectively in the future.
See "Business--Competition."

NSM is the only flat-rolled steel producer in Thailand. There are however,
two flat-rolled rerolling entities currently in operation in Thailand.
Sahaviriya Steel Industry, a Thai-based company, commissioned a re-rolling mill
in 1994. The Sahaviriya mill has a designed capacity of 2.4 million tonnes per
year, but only rolled 1.2 million tonnes in 1996. LPN Plate Mill, another
Thai-based Company, commissioned a reversing plate mill in 1996. The LPN mill
has a designed capacity of 600,000 tonnes per year. Siam Strip Mill, a
Thai/Japanese joint venture, has announced plans to bring on-line 1.7 million
tonnes per year of hot-rolling capacity in 1999.

FACILITIES

The Mill is situated on a 220-acre site in Chonburi, Thailand, strategically
located in Thailand's Eastern Seaboard, the heart of Thailand's industrial
development. Modern highways connect the plant to domestic customers and the
recently constructed deep seaport of Sriracha Harbor. Two 115,000 volt
transmission lines bring electrical power to the Company's own electrical
sub-station. Water is supplied from a 576,000 m(3) reservoir located adjacent to
the Mill and is supplemented by a 15 m(3)/minute water supply line from the
Chonburi Industrial Estate for backup. Water from this reservoir is pumped to a
service water piping system that links the reservoir to the various water
treatment facilities that support the Mill.

There are three main buildings that comprise the Hot Mill. These are the
melt shop building, the tunnel furnace building and the rolling mill building
which includes the shipping area. Within the Hot Mill, the melt shop building
contains two 350-tonne cranes and two 40-tonne cranes. The tunnel furnace
building contains a 20-tonne crane and the rolling mill building contains two
100-tonne cranes, four 60-tonne cranes and a 20-tonne crane.

The Finishing Facilities and the DRI Facility will both be located adjacent
to the Hot Mill to facilitate efficient steelmaking. Similar to the Hot Mill,
the Finishing Facilities will contain several cranes to maximize the Company's
ability to implement just-in-time delivery schedules.

Office buildings on site will include a general administrative corporate
headquarters building, consisting of 1,100 square meters, a building for the
engineering, management information systems and training personnel, consisting
of 1,100 square meters, and an employee services building consisting of 1,310
square meters which includes shower and locker room facilities, as well as the
plant cafeteria.

Other support facilities include emission control and water treatment
systems. The primary emission control unit is the meltshop bag house which
captures the gasses from the melting operation and cleans them to comply with
U.S. type emissions standards. The bag house is capable of cleaning 50,000
m(3)/minute of these gasses. The water treatment system cleans, cools, and
recirculates the water used by the plant in various processes at the overall
rate of 500 m(3)/minute.

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To reduce the risk of equipment failure, NSM follows comprehensive
predictive and preventative maintenance programs, has on-site maintenance and
repair facilities, and maintains an inventory of spare parts and machinery. For
example, the Company maintains spare caster parts, mechanical parts and
electrical controls for its cranes and other tools. The Company believes that it
maintains adequate property damage insurance to provide for reconstruction of
damaged equipment, as well as business interruption insurance to mitigate losses
resulting from any production shutdown caused by an insured loss.

The Company considers its facilities adequate for its needs.

The Company's executive offices are located at Chonburi Industrial Estate
(Bowin), 358 Moo 6, Highway 331, Sriracha, Chonburi 20230 Thailand and its
telephone number is (66-38) 345-950, facsimile number is (66-38) 345-375.

ENVIRONMENTAL MATTERS

The Company's operations are subject to substantial and still evolving Thai
environmental laws and regulations concerning, among other things, emissions to
the air, discharges to surface and ground water, noise control and the
generation, handling, storage, transportation, treatment and disposal of toxic
and hazardous substances. NSM believes that its facilities are in material
compliance with all provisions of Thailand's environmental laws and does not
believe that future compliance with such provisions will have a material adverse
effect on its financial condition or results of operations. The Company intends
to obtain ISO 14000 environmental certification for its facilities.

EMPLOYEES

The Company's employees are not represented by labor unions. The Company
believes that its relationship with its employees is good.

RESEARCH AND DEVELOPMENT

The Company has agreements with two universities, the Technical University
in Aachen, Germany and Chulalongkorn University in Bangkok for assistance in
research and development activities. Through these agreements, NSM employees
have access to the equipment and considerable knowledge base at both
institutions. It is anticipated that NSM's research will focus on the
development of new steelmaking and DRI processes and value added steel products.
The Company believes that these agreements will help provide a competitive edge
over most other steel producers.

AFFILIATE TRANSACTIONS

The Company is one of a number of affiliated companies which are involved in
various aspects of the steel industry which have directors common to their
respective boards of directors. Several of the directors of the companies have
direct and/or indirect investments in each of these companies. In addition, some
of these companies also have direct and indirect investments in each other. A
number of arrangements and transactions have been entered into from time to time
between such companies. It has been the intention of the affiliated companies
and the respective boards of directors that each of such arrangements or
transactions taken as a whole should accommodate the respective interests of the
relevant affiliated companies in a manner which is fair to both parties and
equitable to the shareholders of each. Under corporate law in Thailand,
directors of a company are required to act at all times in the best interests of
the shareholders with respect to transactions entered into by the company. In
addition, corporate law in Thailand places certain limitations on the ability of
a public company to enter into related party transactions.

Because of the scope of the relationships that exist between the companies,
there can be no assurance that such agreements or transactions entered into, if
considered separately, have been or will be effected

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on terms no less favorable to the Company than could have been obtained from
non-associated third parties. While any future arrangements are expected to be
subject to approval by the Company's Board of Directors and, where appropriate,
the approval of shareholders and Management Co. there can be no assurance that
the future arrangements between the Company and the other associated companies
will not involve conflicts of interest.

CONTINGENCIES AND LEGAL PROCEEDINGS

In August 1996, the Company entered into an agreement with Nucor whereby
Nucor would provide training and data relating to the business processes that
the Company would use in its operations in Thailand (the "1996 Agreement"). As
compensation for these services, Nucor was to be reimbursed its out-of-pocket
expenses and, depending on the Company's financial performance (assisted by
Nucor), was to have received cash of between $5 million and up to $15 million,
and options to purchase (for the lesser of 75% of market or 16 Baht per share) a
minimum of 2 1/2% and up to 5% of the Company's shares outstanding at the date
of exercise.

Nucor delivered a termination notice on October 27, 1997, claiming default
in payment. Nucor reiterated its claim in a subsequent letter asserting rights
to payment of $12.5 million and to stock options in the maximum amount provided
for under the agreement. The Company believes that Nucor's October 27, 1997
notice of termination was invalid.

Disputes under the 1996 Agreement are to be resolved through arbitration. No
arbitral demand has been made by either Nucor or the Company at this time. The
Company does not believe it has any further obligation to Nucor for compensation
and/or stock options. Should an arbitration be commenced, the Company believes
it will prevail and no further compensation would be due Nucor.

The Company and Koch Mineral Services, Inc., ("Koch") have engaged in
certain negotiations concerning Koch's potential equity participation in or
management of Sriracha Harbor, its potential equity participation in NSM and
certain agreements concerning the supply of raw materials or the provision of
transportation services by Koch. Notwithstanding such negotiations, Koch will
not acquire shares of NSM in connection with the Transactions. To date, the
Company has reached no agreement with Koch regarding any potential equity
participation in either NSM or Sriracha Harbor or the supply of raw materials or
the provision of transportation services by Koch, but the Company will continue
to respond to Koch's requests for information. Koch has informed the Company
that it may seek U.S.$500,000 as liquidated damages under a letter regarding
Koch's potential equity participation in NSM or Sriracha Harbor. The Company
does not believe it is liable for such liquidated damages.

Currently and from time to time the Company is involved in litigation
incidental to the conduct of its business, but it is not a party to any other
lawsuit or proceeding that, in the opinion of the Company, is likely to have a
material adverse effect on the Company.

TRANSPORTATION

The Company expects to receive all of its imported raw materials and deliver
most of its finished product by ship. The Company intends to make use of
Sriracha Harbor for the majority of these shipping transactions. Sriracha Harbor
is located approximately 15 miles from the Mill and is owned by Sriracha Harbour
Public Company Limited, an affiliate of NSM. NSM intends to enter agreements
with the management of the harbor to protect access to the harbor for NSM's
shipments.

INSURANCE

In connection with the design, development, supply, installation,
construction, erection, testing, commissioning and maintenance of all Phase II
works of Nakornthai Strip Mill's Direct Reduction Iron (DRI) and Finishing
Facility (the "PROJECT"), the Company maintains the following insurance in form
of cover notes:

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(i) Marine Cargo Insurance with respect to all machinery, equipment,
accessories, materials and supplies covering the voyage from the Suppliers'
premises to the project sites. The total sum insured is USD 135 Million with the
maximum liability at USD 30 Million per one conveyance/location. The period of
coverage is from 1 May 1998 until completion of all shipments in connection with
the Project. (PURSUANT TO MARINE CARGO COVER NOTE NO. 8-330456 DATED MAY 25,
1998 ISSUED BY NEW HAMPSHIRE INSURANCE CO., WHICH IS VALID FOR 45 DAYS FROM MAY
1, 1998.)

(ii) Marine ALOP with respect to the loan interest and all standing charges
related to the interest insured under (i) above. The total sum insured is USD 56
Million with the indemnity period of 18 months. The period of coverage is from 1
May 1998 until completion of all shipments in connection with the Project.
(PURSUANT TO MARINE CARGO COVER NOTE NO. 8-330456 DATED MAY 25, 1998, ISSUED BY
NEW HAMPSHIRE INSURANCE CO., WHICH IS VALID FOR 45 DAYS FROM MAY 1, 1998.)

(iii) Construction & Erection All Risks, Third Party Liability and Advance
Loss of Profits Insurance covering all risks on physical loss or damage other
than those specifically excluded in the Specimen Policy Form dated March 20,
1998. The total sums insured are (a) with respect to Material Damage:
USD249,400,000, (b) with respect to Third Party Legal Liability: USD5,000,000 in
respect of any one occurrence and unlimited aggregate amount, and (c) with
respect to Advance Loss of Profits: USD 56,000,000 on loan interest and all
standing charges with the indemnity period of 18 months. The period of coverage
is from 1 May 1998 until the date of Provisional Acceptance or Production of
Specification Products following successful testing and commissioning, followed
by 12 months of Defects Liability Period. (PURSUANT TO COVER NOTE NO. 003/98
DATED MAY 25, 1998 ISSUED BY NEW HAMPSHIRE INSURANCE CO. AND CIGNA PROPERTY &
CASUALTY INSURANCE CO., LTD, WHICH IS VALID FOR 45 DAYS FROM MAY 1, 1998.)

(iv) Property All Risks Insurance with respect to all risks of physical loss
of or damage to the Real and Personal Property of every kind and description of
or in the control of Nakornthai Strip Mill Public Co., Ltd. and/or NSM Steel
(Delaware), Inc. and/or NSM Steel Company, Ltd. located at 358 Moo 6, Cholburi
Industrial Estate (Bo-win) Highway 331, Amphur Sriracha, Cholburi Province. The
total limit of indemnity is USD823,553,000, being USD560,595,000 for the
property and USD262,958,000 for gross profit (with the indemnity period of 18
months). (PURSUANT TO COVER NOTE NO. 051/98 DATED MAY 26, 1998 ISSUED BY NEW
HAMPSHIRE INSURANCE CO. AND CIGNA PROPERTY & CASUALTY INSURANCE CO., LTD., WHICH
IS VALID FOR 60 DAYS FROM MAY 1, 1998.)

(v) General Liability including Products & Completed Operations and
Employer's Liability Insurance with respect to the liability of Nakornthai Strip
Mill Public Co., Ltd, and/or NSM Steel (Delaware), Inc. and/or NSM Steel
Company, Ltd. The total limit of liability is USD5,000,000 per occurrence and
unlimited aggregate amount (except USD5,000,000 in the aggregate for Products
and/or Completed Operations). (PURSUANT TO COVER NOTE DATED MAY 26, 1998 ISSUED
BY NEW HAMPSHIRE INSURANCE CO., WHICH IS VALID FOR 30 DAYS FROM MAY 26, 1998.)

BOARD OF INVESTMENT

The Company derives substantial economic benefits from the promotional
considerations granted to it by the Board of Investment. Such benefits include
the permission to bring foreign experts into Thailand and the exemption from
certain import duties and taxes. Additionally, the BOI has only granted two
licenses for the production of steel products in Thailand. The continued
availability of these economic benefits for the Company is conditional upon the
on-going satisfaction of certain requirements. Failure to satisfy these
requirements may result in the loss of economic benefits. The tax advantages
granted by the BOI, as well as certain limitations on foreign ownership, expire
seven years following the start of commercial operations for the hot iron plate
and DRI, and eight years for the finishing facilities. The Company agreed in the
Warrant Agreement that the Company will not issue any Ordinary Shares or other
equity interests to any holders if the Company is aware (taking into account its
ability to access relevant information) that the effect of such issuance would
be, assuming the immediate exercise of all then outstanding Warrants, to cause
the Company to exceed the Foreign Ownership Percentage (as defined). See "Risk
Factors--BOI Compliance."

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DESCRIPTION OF PROJECT PARTICIPANTS

SDI

SDI owns and operates a new, thin-slab/flat-rolled steel mini-mill, which
commenced operations in January 1996. SDI was founded by executives and managers
who pioneered the development of thin-slab/ flat-rolled technology and directed
the construction and operation of the world's first CSP thin-slab/flat-rolled
mini-mill. Building upon their past experience with thin-slab/flat-rolled steel
technology, management founded SDI with the intention of combining a
state-of-the-art CSP thin-slab hot mill with a coal-based DRI facility and
certain downstream finishing facilities. Employing SMS designed technology
similar to that employed by the Hot Mill and utilizing many of the same training
programs and compensation incentive systems implemented by NSM, SDI successfully
completed start-up and ramp-up of its hot mill. SDI's finishing facilities are
currently in the start-up phase and its coal-based DRI facility is under
construction with a scheduled start-up date in the third quarter of 1998. SDI
has consistently produced high-quality flat-rolled steel products, including
low-carbon thin-gauge steel products. Additionally, SDI is among the lowest cost
producers of flat-rolled products. In the third quarter of 1997, SDI's seventh
quarter of operation, SDI's operating profit (pre-tax income before interest and
start-up costs) was U.S.$67 per short ton. SDI has sold a certain amount of its
flat-rolled production under long-term off-take contracts to several steel
consumers and trading companies, including Preussag.

ENRON

Enron, an Oregon corporation organized in 1930, is an integrated natural
gas, electricity and finance company with headquarters in Houston, Texas. Enron
is engaged in a number of businesses throughout the world including the
transportation and wholesale marketing of natural gas, the exploration for and
production of natural gas and crude oil, the production, purchase,
transportation and marketing of natural gas liquids and refined petroleum
products, the independent (i.e., non-utility) development, promotion,
construction and operation of power plants, natural gas liquids facilities and
pipelines, and the non-price regulated purchasing and marketing of electricity.
Enron employs approximately 11,700 persons worldwide. Enron's financing and
funding activities support independent exploration and production companies and
other energy-related businesses seeking equity financing. Enron's finance
operations provide a variety of capital products including volumetric production
payments, loans and equity investments. Financings arranged and production
payments purchased totaled U.S.$755 million in 1996. In addition to capital,
Enron also provides marketing and risk management services.

Enron's international operations and development activities principally
involve the development, acquisition, financing, promotion, and operation of
natural gas and power projects in emerging markets and the marketing of natural
gas liquids and other liquid fuels. Enron has expanded its traditional
international asset and infrastructure development business by also offering
merchant, finance and risk management products and services to third parties in
emerging markets.

SMS

SMS, a German-based equipment manufacturing and design firm, is 51% owned by
MAN Aktiengsellschaft, a Deutsche Mark ("DM") 21 billion revenue company, and
49% owned by Siemag Weiss Stiftung and Co. KG, a company with steel mill
equipment manufacturing and design expertise dating back to 1856. SMS is a
leader in providing CSP thin-slab/flat-rolled mini-mills to the steel making
community. With turnover in excess of DM2.7 billion, SMS has sold and helped
commission 11 CSP thin-slab/flat-rolled mini-mills. Included among this group
are Hylsa's mini-mill and SDI's mini-mill. SMS commercialized the world's first
CSP thin-slab/flat-rolled mini-mill in 1989 when SMS's proprietary technology
successfully proved that flat-rolled products could be produced using a mold
design that cast a 50 mm slab rather than the 250 mm slab commonly produced.
SMS's revolutionary technological breakthrough was the culmination of over four
decades of research and paved the way for the modernization of the world's flat-
rolled steel making community. Since 1989, SMS has continually developed
technological enhancements so that today SMS's CSP thin-slab/flat-rolled
mini-mills are capable of producing a full range of high-

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quality flat-rolled products. NSM's Mill is considered by SMS to be among the
most advanced CSP thin-slab/flat-rolled mini-mills ever built.

PREUSSAG

Preussag is the steel trading subsidiary of Preussag AG, a German-based
conglomerate with over 66,000 employees worldwide and annual revenue in excess
of DM25 billion. According to FORTUNE MAGAZINE, Preussag AG is one of the 200
largest industrial companies in the world. Preussag maintains offices in 17
countries, through which it trades and sells approximately 5 million tonnes of
steel each year. Preussag has a large presence in Southeast Asia, where it
operates steel trading offices in Hong Kong and Singapore. Other areas of the
world of significant steel trading activity for Preussag include the Middle
East, Africa and the United States. On a worldwide basis, Preussag had revenue
of approximately DM4 billion for the year ended December 31, 1996 with over
DM2.8 billion of this amount related to steel trading. The remaining portion was
related to steel service center activities in North America, which include the
off-take agreement entered into between Preussag and SDI. An important component
of Preussag's business strategy is the establishment of off-take arrangements
with high-quality, low-cost producers of flat-rolled steel. Building on this
strategy, Preussag has entered into an eight-year off-take agreement with NSM.

KLOCKNER

Klockner is the steel trading operation of Klockner & Co. AG, an
international metal and steel company and a wholly owned subsidiary of VIAG
Aktiengesellschaft. VIAG Aktiengesellschaft is an international holding company
with estimated 1997 annual revenue in excess of DM50 billion. VIAG
Aktiengesellschaft is one of the 100 largest industrial companies in the world.
Klockner and Co. AG is the largest subsidiary in the VIAG Aktiengesellschaft
group of companies with revenue in excess of DM15 billion. Similarly, Klockner
is the largest subsidiary of Klockner and Co. AG with revenue in excess of DM2
billion. With branch offices in more than 50 countries, including offices in
China, Singapore, Japan, Thailand, India and the United States, Klockner traded,
warehoused and processed, in aggregate, over 10 million tonnes of steel during
the year ended December 31, 1996. As a recognized leader in steel trading
volume, Klockner is consistently ranked as one of the dominant steel trading
firms in Europe and Southeast Asia.

MCDONALD

McDonald is a U.S.-based investment banking firm with extensive experience
in the steel industry. Throughout its 75-year history, McDonald has provided
corporate finance advisory, underwriting and brokerage services to its clients.
McDonald structured and arranged the financing for the development, start-up and
operation of SDI's CSP thin-slab hot mill and the subsequent financing for the
development and construction of SDI's coal-based DRI facility and finishing
facilities. McDonald also co-managed SDI's initial public offering and follow-on
public equity offering. McDonald has been serving as a financial advisor to NSM
since September 1997.

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DESCRIPTION OF MATERIAL AGREEMENTS

MANAGEMENT AGREEMENT

NSM entered into a 10-year contract (the "Management Agreement") with
Management Co. to conduct and manage the business affairs of NSM. Pursuant to
the Management Agreement, NSM assigned and delegated to Management Co. the sole
and exclusive right and obligation to control, possess and manage all business
affairs of NSM. Management Co. has the power to: (i) cause NSM to receive all
cash and cash equivalents paid or available to NSM; PROVIDED, HOWEVER, that,
subject to any applicable exchange control regulations in Thailand and the terms
of the Securities and Indentures, all income received, and all amounts available
for purposes of paying costs or debt service payable, in U.S.$ shall be received
and held in, and paid from, U.S.$ accounts outside of Thailand; (ii) hire
employees and confirm employment of personnel presently employed by NSM
reasonably required for the proper conduct of the business of NSM and, in
connection therewith, determine the terms of employment for, and the
compensation and benefits payable to, each such employee; (iii) terminate
employees, with or without cause, subject only to applicable law and the terms
and conditions of any applicable employment agreement; (iv) cause NSM to enter
into contracts for the purchase of raw materials, including scrap steel and
other consumables and for the purchase of freight services for the delivery of
such raw materials; (v) where permitted by applicable law, cause NSM to appoint
a firm of independent public accountants of international standing nominated by
Management Co., which accounting firm shall (a) perform periodic audits of the
financial statements of NSM with full and complete access to its books and
records, all in accordance with generally accepted accounting principles in
effect in Thailand, and (b) from time to time, respond to special or ad hoc
requests of Management Co., in the exercise of its sole discretion, for
accounting services or reports; (vi) conduct on behalf of NSM all marketing and
sales of products and enter into contracts relating thereto; (vii) coordinate
all research and development undertaken by NSM and enter into contracts relating
thereto; (viii) coordinate all corporate finance activities, financial analyses
and investor relations of NSM in accordance with applicable law and enter into
contracts relating thereto; (ix) liaise with Thai government officials in
cooperation with and with the personal involvement of, NSM's Chairman (x)
develop, maintain and monitor income and expense budgets for NSM; (xi) develop,
implement and enforce proper controls over cash receipts and disbursements,
including limitations on check-signing authority and the timing, duration and
amount of monetary and other commitments of NSM for the purchase or sale of
goods and services; PROVIDED that the authorization/signature of both NSM's
Chairman and Management Co. shall be required on contracts with any governmental
entity in Thailand; (xii) control and analyze the availability and pricing of
all raw materials, including, scrap and other metal feedstock, for NSM; (xiii)
develop and analyze the market for the purchase of products, including the
specifications for, and the mix of, and the periodic demand for, such products
and enter into contracts relating thereto; and (xiv) take such other action as
shall be required from time to time to (a) increase the efficiency of the Mill,
(b) improve the efficiency and profitability of NSM, and (c) maximize NSM's
shareholder value.

NSM and its board of directors reserve the right under the Management
Agreement to: (i) approve the construction of any new steel mills proposed to be
owned or operated by NSM; (ii) approve the issuance of new equity shares; (iii)
incur any indebtedness of NSM for borrowed money other than working capital
loans in amounts not exceeding U.S.$10 million (or the Baht equivalent thereof)
outstanding on the date of each such borrowing; (iv) approve the execution of
any contract by or on behalf of NSM other than contracts within Management Co.'s
responsibilities and contracts of less than one year's duration and arising in
the normal course of business; (v) perform any acts and things which, under
applicable law or the Articles of Association of NSM require the approval of the
board of directors and/or the general meeting of shareholders of NSM; and (vi)
if, notwithstanding NSM's request that Management Co. do so, Management Co.
shall fail or decline to enforce its rights against SDI under the Management and
Technical Assistance Agreement and the SDI License Agreement, enforce such
rights of NSM under such agreements; PROVIDED, HOWEVER, that if a Change of
Control shall occur, then, forthwith, those rights referred to in the preceding
clauses (i), (iii) and (iv) shall cease to be reserved to NSM and its Board of

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Directors. In addition, Management Co. has agreed under the Management Agreement
to share with the Company the benefits of, and expertise available under, the
SDI Agreement, including but not limited to arranging for certain of the
Company's personnel to visit and receive technical training at SDI's facilities
in the United States and elsewhere and to cause SDI to furnish technical experts
to the Company in order to render technical assistance in connection with the
manufacture of the Company's products.

Management Co. will not be entitled to any fees or other compensation under
the Management Agreement. However, the Company will be responsible for (1) all
fees incurred by Management Co. in connection with the SDI Agreement and (ii)
all reasonable and necessary out-of-pocket expenses incurred by Management Co.
in the performance of its obligations under the Management Agreement, including,
but not limited to, all commercially reasonable costs of directors and officers
errors and omissions insurance. The Management Agreement is governed by the laws
of the State of New York and requires all disputes or claims to be settled under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce.

SDI AGREEMENT

NSM entered into an agreement with SDI under which SDI agreed to provide
Management Co. with consultation and technical and advisory services under a
10-year management advisory and technical assistance agreement. Under the terms
of the SDI Agreement, SDI granted Management Co. the right to have and use SDI's
technical information, manufacturing data, formulae, process management methods
and know-how and information concerning SDI's commissioning, start-up, and
operation of its thin-slab/ flat rolled steel mini-mill, including its hot mill,
coal-based DRI facility (subject to the consent of an exclusive licensee of the
DRI process) and finishing facilities. SDI will also (i) advise Management Co.
to the best of its ability in relation to the manufacturing of flat-rolled
products and DRI, (ii) provide Management Co. with reasonable assistance in
relation to the practical application of SDI's technology, (iii) provide
Management Co. with advice and counsel regarding SDI's own management
techniques, methodologies and culture, including employee relations and
incentivization, (iv) assign personnel to render advice and consultation to
Management Co., and (v) provide training to NSM, and, subject to Management
Co.'s control, supervision, and direction, to NSM's supervisory and managerial
personnel and, initially and from time to time, to a reasonable number of
operating personnel in connection with the application of SDI's technology and
management techniques. Where appropriate, NSM will on a reciprocal basis provide
SDI with the services described in (i), (ii), and (v) above.

To implement the SDI Agreement and comply with various conditions therein,
SDI has and will continue to furnish to NSM SDI employees, on a short-term
temporary basis, and to train certain NSM employees so that such NSM employees
will be better qualified to construct, start-up and operate the Mill and train
other NSM employees in such activities.

With the assistance of SDI, Management Co. will cause NSM to model the NSM
operations and operating procedures to approximate SDI's techniques and
methodologies and to produce flat-rolled products and DRI of a quality that are
similar to SDI's. SDI, will have free access to the Mill for the inspection,
testing, and/or review of NSM's operations and quality control.

SDI and Management Co. have also agreed to share information with respect to
improvements made to the production of flat-rolled products and DRI (subject to
the consent of an exclusive licensee of the DRI process) and the experiences and
findings related thereto.

Management Co. will direct NSM to pay SDI an annual fee of U.S.$2 million
during the term of the SDI Agreement and a one-time incentive fee of U.S.$1.3
million.

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<PAGE>
SHAREHOLDERS' AGREEMENT

SDI, Enron, McDonald, Sawasdi Horrungruang and NTS (NTS and Mr.
Horrungruang, collectively, the "Thai Parties") and the Company, entered into an
agreement (the "Shareholders' Agreement") whereby the Thai Parties and other
parties caused NSM to issue new equity on a private placement basis to the
Management Investors. As of the Closing Date, new equity represented 14.8% of
all issued shares of NSM. Enron and McDonald received their shares pursuant to
the Shareholders' Agreement, while SDI received its shares pursuant to the SDI
License Agreement and in consideration for the SDI License. The new equity was
issued to the Management Investors at a price of 10 Baht per share. Certain
Management Investors purchased additional equity in privately negotiated
transactions in the secondary market for the Ordinary Shares. This issuance
occured concurrently with the Offerings and the execution and delivery by the
Thai banks of the Bank Credit Facility amendment (the "CFA Amendment").

Pursuant to the Shareholders' Agreement, NSM's governing body is a board of
14 directors. The Management Investors have the right to elect four directors,
one of whom shall be elected by each Management Investor. In addition, McDonald
has the right to elect one additional director of the four, which initially
shall be Mr. John W. Schultes. The Thai Parties have the right to elect six
directors, one of whom shall be Mr. Sawasdi Horrungruang. One director was
nominated by the Thai lenders under the Bank Credit Facility and the parties
have mutually agreed to nominate three independent directors as required by law,
one of whom is Mr. Reuben Perin. These three independent directors will comprise
the audit committee. Additionally, the holders of the Debentures have the right
to elect one director. NSM's board of directors is headed by a Chairman
nominated by the parties to the Shareholders Agreement and elected by a majority
of the board. It was agreed that, initially, the chairman shall be Mr. Sawasdi
Horrungruang.

The Shareholders Agreement provides that, unless otherwise agreed by
Management Co., none of the following actions may be taken by NSM except upon
the adoption of a resolution authorizing such action by (i) the shareholders
(with at least a majority of the shares held by the New Equity Investors voting
in the affirmative), when shareholder action is required under applicable law,
or (ii) the board of directors (with at least a majority of the directors
nominated by the Management Investors voting in the affirmative): (a) any
agreement between NSM and any of its shareholders or any relative or affiliate
of any of its shareholders, or any person if such person's compensation or other
benefits thereunder will directly or indirectly benefit such shareholder or any
of its affiliates (other than as an investor in NSM) and any amendment,
modification or termination of any agreement theretofore executed and
distributed in accordance with this paragraph (a); (b) any equity investment in
any other entity, any purchase of assets of any other entity, any reorganization
of NSM or any merger or consolidation of NSM with or into another entity; (c)
any increase or decrease in the authorized or issued share capital of NSM by
more than the Baht equivalent of U.S.$15 million; (d) any amendment or
modification of the Articles of Association of NSM; (e) any early termination of
any of the Implementing Agreements otherwise than in accordance with the
respective terms thereof; (f) any voluntary dissolution, liquidation, or
winding-up of NSM; (g) entry into any joint venture, partnership, or other
profit-sharing arrangements with any person if the capital invested by NSM in
one transaction or a series of related transactions shall be equal to or greater
than U.S.$10 million; (h) any acquisition, disposal, assignment, transfer,
licensing, or sublicensing of any know-how, trademarks, trade names, trade
secrets, or similar intellectual property rights of any person other than in the
ordinary course of business; (i) any purchase, sale, assignment, transfer, or
disposal of any assets of NSM other than in the ordinary course of business; and
(j) any ordinary course business transaction involving an amount in excess of
U.S.$10 million.

The Shareholders' Agreement restricts the transfer of NSM shares by any of
the parties thereto, except with respect to 3,667,750 newly issued shares
purchased by McDonald which may be transferred to an investor in the Debentures.
The Agreement provides that (i) prior to the first anniversary of the closing
date of the Shareholders' Agreement (the "Closing Date"), no party to the
Shareholders' Agreement may transfer any shares of NSM (except pursuant to any
pledge of such shares in effect on the date the

58
<PAGE>
Shareholders' Agreement is signed) except that the Thai Parties may collectively
transfer certain shares; PROVIDED that, after giving effect to the aggregate of
all such transfers, the New Equity Investors and the Thai Parties shall, in the
aggregate, hold at least 51% of all issued shares in NSM; and PROVIDED FURTHER
that if the Thai Parties shall transfer any of the shares to a single person or
group of persons acting in concert, (i) such transfer shall be pursuant to a
good faith offer on arms length terms and conditions and be subject to the
rights of the Management Investors under the Shareholders' Agreement (including
the right of first refusal) and (ii) the transferee shall be required to
subscribe to the Shareholders' Agreement and become a party thereto. Before
transferring any shares of NSM pursuant to the preceeding proviso, the
Management Investors, pro rata, shall have the right to purchase such shares at
the same price and on the same terms and conditions offered to the person
referred to above and such offer shall remain outstanding for a certain number
of days. After the first anniversary of the Closing Date, each party to the
Shareholders' Agreement may (a) transfer up to 66% of its shares in NSM during
the period from the first anniversary through the fourth anniversary of the
Closing Date; and (b) transfer up to an additional 9% of its shares in NSM
during the period from the fourth anniversary through the date which is six
months following the payment in full of the Notes, or such longer period as
shall be agreed upon by the parties; and (c) transfer its remaining shares of
NSM freely, without regard to any restriction contained in the Shareholders'
Agreement, after the date which is six months following the payment in full of
the Notes. Notwithstanding the foregoing restrictions, any Management Investor
may transfer all or any part of its NSM shares to one or more of its affiliates.
If any Management Investor shall sell shares of NSM in excess of the amounts
indicated above, or cease to hold at least 33% of its original shares, any
agreement to which it is a party may, if so directed by Management Co., will be
terminated by NSM. Notwithstanding the foregoing, SDI shall agree to hold at
least 25% of its original shares, in addition to the shares it acquires through
the exercise of the SDI Warrants, through 2008. In addition, in connection with
any transfer of NSM shares by a party to the Shareholders' Agreement, each party
(other than the transferring party) will have a right of first offer to purchase
its pro rata share of such shares.

The Shareholders' Agreement has a term of 10 years and is governed by the
laws of Thailand. All disputes arising under the Shareholders' Agreement will be
settled by arbitration in Paris, France under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce.

AGENCY AGREEMENT

NSM Cayman and NSM (Del) have entered into an agency agreement (the "Agency
Agreement"). Under the Agency Agreement, NSM (Del) acted as the agent of NSM
Cayman in connection with the issuance of the Securities. NSM (Del) agreed to,
from time to time, (i) issue the Securities and undertake subsequent borrowings,
and make payments thereunder, solely as the agent of NSM Cayman; (ii) to
transfer the proceeds of such Securities and subsequent borrowings to NSM
Cayman; and (iii) to receive payments from NSM Cayman or such affiliates and
apply such payments to pay principal and interest when due under the Securities
and subsequent borrowings on behalf of NSM Cayman.

To compensate NSM (Del) for its services in acting as the agent of NSM
Cayman with respect to the issuance of the Notes, NSM Cayman agreed to pay NSM
(Del) a fee equal to U.S.$20,000 per annum for each year in which any of the
Securities have been issued by NSM (Del) or in which year any of the Securities
remain outstanding.

Each of NSM Cayman and NSM (Del) agreed not to treat the Securities and
subsequent borrowings as obligations of NSM (Del) for United States federal,
state and local income tax purposes.

SDI LICENSE AGREEMENT

NSM and SDI, entered into a 10-year reciprocal license and technology
sharing agreement, through which they will have access to and the right to use
the other party's flat-rolled and, subject to the consent of an exclusive
licensee of the DRI process, DRI production, operation and product technology.
The consent

59
<PAGE>
of the exclusive licensee has not been obtained and there can be no assurance
that such consent will be obtained. In entering into the SDI License Agreement,
NSM expects to maximize the development and advancement of certain operating
procedures to enhance the development of new high-quality flat-rolled steel
products.

In return for entering into the SDI License Agreement, SDI received
74,468,090 Ordinary Shares and the SDI Warrants which contain exercise
provisions that protect SDI from dilution of its equity interest in NSM in the
event holders of Warrants exercise such Warrants. SDI will be reimbursed for the
exercise price of the SDI Warrants as it exercises the SDI Warrants. SDI will be
responsible for all U.S. taxes on any amounts payable or shares issuable under
the SDI License Agreement.

OFF-TAKE AGREEMENTS

NSM has entered into separate, but substantially identical eight year
Off-Take Agreements with Klockner and Preussag for the purchase and resale of
products from the NSM Mill. Under the Off-Take Agreements, Preussag and Klockner
will be obligated to purchase, in aggregate, 100% of NSM's production in 1998
through 2002, and 25% of the Company's production in the years 2001 through
2005. NSM may, at is option, reduce the percentage of its production sold under
the Off-Take Agreements to as little as 67% in 1998, 50% in 1999 and 25% in
2000, if the Company believes it could maximize sales revenues through sales to
other customers. Under the Indentures, sales by NSM to customers other than
Preussag and Klockner, to the extent that the aggregate of such sales results in
receivables outstanding in excess of U.S.$10 million, must be supported by
letters of credit if the customer does not have an investment grade credit
rating.

All sales to Preussag, Klockner and substantially all other export sales
will be U.S.$ denominated.

Under the Off-Take Agreements, NSM must deliver products which are of the
quantity, quality and description required; the products must be fit for the
purposes for which the goods of the same description would ordinarily be used;
and goods will not comply with an individual order if they are not fit for any
particular purpose expressly or implied made known to NSM in writing at the time
the order was placed. If a product purchased under the Off-Take Agreements fails
to meet the requirements of the order, the purchaser shall notify NSM of the
defect in writing. The purchaser may require NSM to take the product back and
deliver substitute products or require NSM to remedy the lack of conformity by
repair, unless this is unreasonable with respect to all circumstances. NSM will
reimburse the purchaser's reasonable inspection costs. If NSM fails to deliver
substitute products or repair the defective products within a reasonable period
of time despite the purchaser's request, the purchaser may remedy the lack of
conformity on its own or have it remedied by third parties at NSM's cost. This
also applies if NSM's remedies are not satisfactory. Alternatively, the
purchaser may reduce the price in the same proportion as the value that the
goods actually delivered had at the time of the delivery bears to the value that
conforming goods would have had at that time. The purchaser may forsake these
remedies and declare the order void in case of non-delivery or late delivery.

EMPLOYMENT AGREEMENT

Upon the consummation of the Offering, the Company and Mr. John W. Schultes,
President and CEO of NSM, entered into an eight-year employment agreement (the
"New Employment Agreement"). Under the New Employment Agreement, Mr. Schultes
will receive a base salary of U.S.$240,000 per annum with increases of 5% per
annum (calculated on a cumulative, compounded basis) during the term of the New
Employment Agreement. At the discretion of Management Co., Mr. Schultes will
also be eligible for an annual bonus based on the Company's return on equity,
profitability, operating efficiency and adherence to capital expenditure budgets
and construction timetables. It is also the Company's intention, based on
Management Co.'s decision to institute a share option plan within twelve months
of the Offerings, to grant Mr. Schultes options to acquire shares in NSM in an
amount such that upon the expiration of the term of

60
<PAGE>
his employment such options can reasonably be expected to produce a U.S.$2
million gain; PROVIDED, HOWEVER, that the financial results set forth in the
Projection are substantially achieved. The New Employment Agreement will contain
provisions limiting Mr. Schultes' ability to compete against NSM should he no
longer be employed by the Company. Under these provisions, Mr. Schultes will be
restricted in his activities with regard to DRI throughout the world and with
regard to flat-rolled steel production in the countries that currently make up
the ASEAN.

COAL SUPPLY AGREEMENT

The Company and SSM have entered into a 10 year contract for the supply of
Vietnamese anthracite coal. This agreement went into effect on April 1, 1997 and
requires the Company to purchase a fixed amount of coal in each of the 10
contract years. By mutual consent, the parties have agreed to delay the start of
deliveries under this contract. The Company retains the option to purchase an
additional set amount in each contract year. The amounts of coal to be purchased
vary over the life of the contract. SSM is penalized if the coal it delivers
fails to meet certain quality standards.

Prices for the coal are set through negotiation between the parties before
the beginning of each contract year. Prices are set in U.S.$ and include
delivery to Sriracha Harbor. Payment is at sight by means of an irrevocable
letter of credit. The Company is separately responsible for demurrage, unloading
and delay. Risk of loss passes from SSM to the Company when the goods are loaded
onto the ship, while ownership passes from SSM upon full payment of all money
due. The agreement is governed by the laws of England and subject to
jurisdiction in the first instance by a competent court in Rotterdam, The
Netherlands.

IRON ORE FINES SUPPLY AGREEMENT

The Company has entered into a five-year contract with MMTC for the supply
of iron ore fines. The Agreement went into effect on February 6, 1997. Price and
tonnage for each contract year is determined through negotiations between the
parties at the start of each year. The price is subject to bonuses and penalties
depending on the quality of the iron ore fines supplied. Payment is in U.S.$ by
a commercial letter of credit. Alternatively, the Company may wire transfer 100%
of the sale value in advance.

Vessels to carry ore under the contract will be chartered by the Company or
MMTC depending on competitiveness. The Company assumes risk of loss once the ore
is loaded onto the vessel and has responsibility for insurance as of that time.
MMTC relinquishes title when it receives reimbursement. The contract is subject
to an arbitration clause where the arbitrator is appointed in accordance with
the provisions of the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Venue for the arbitration is Singapore.

61
<PAGE>
MANAGEMENT

DIRECTORS

The following individuals comprise the board of directors of NSM.

<TABLE>
<CAPTION>
NAME AGE PRIMARY POSITION
- ---------------------------------------------------- --------- ----------------------------------------------------
<S> <C> <C>
Sawasdi Horrungruang(1)............................. 56 Chairman of the Board of Directors of NSM

Keith Busse(2)...................................... 52 President and CEO of Steel Dynamics, Inc.

John Schultes(3).................................... 49 President and CEO of NSM
David Stickler(4)................................... 37 Managing Director of McDonald & Company Securities,
Inc.
Kevin McConville(5)................................. 40 Vice President of Enron Capital and Trade Resources
Reuben Perin(6)..................................... 58 Former Executive Vice-President of USSteel
Amornrat Leevarapakul(7)............................ 48 Senior Vice President, Corporate Finance Department
1, Industrial Finance Corporation of Thailand

Chamni Janchai...................................... 42 Vice-Chairman of the Board of Directors of NSM
Sunthorn Chailaemlak................................ 56 Senior Deputy Managing Director of NTS Steel Group
(Plc.) Co., Ltd.
Chan Bulakul........................................ 49 President of MCL Co., Ltd.
Anutin Charnvirakul................................. 32 President of Sino-Thai Engineering & Construction
Public Co. Ltd.
Pattama Horrungruang................................ 36 Deputy Managing Director of N.T.S. Steel Group
(Plc.) Co., Ltd.
Chatchai Somsiri.................................... 42 Head of Faculty, Metal Engineering Department,
Chulalongkorn University
Raveewan Peyayopanakul(8)........................... 50 Assistant Professor, Faculty of Business and
Accounting, Thammasert University
Sandeep Alva(9)..................................... 37 President of Hancock Mezzanine Investments.
</TABLE>

- ------------------------

(1) Mr. Sawasdi Horrungruang was nominated by the Thai Parties pursuant to the
Shareholders' Agreement.

(2) Mr. Busse will be nominated by the Management Investors pursuant to the
Shareholders' Agreement.

(3) Mr. Schultes was nominated by the Management Investors pursuant to the
Shareholders' Agreement.

(4) Mr. Stickler was nominated by the Management Investors pursuant to the
Shareholders' Agreement.

(5) Mr. McConville was nominated by the Management Investors pursuant to the
Shareholders' Agreement.

(6) Mr. Perin was nominated as an independent director pursuant to the
Shareholders' Agreement.

(7) Mrs. Amonrat was nominated by the lenders under the Bank Credit Facility in
accordance with its terms.

(8) Ms. Raveewan was nominated as an independent director pursuant to the
Shareholders' Agreement.

(9) Mr. Alva was nominated by the holders of the Debentures.

SAWASDI HORRUNGRUANG (56)--Mr. Horrungruang has been Chairman of the Board
of Directors of NSM since its incorporation. Mr. Horrungruang is also Chairman
of the Executive Board of N.T.S. Steel Group (Plc.) Co., Ltd. and Chairman of
the Board of Sriracha Harbour (Plc.) Co., Ltd. He also serves as Vice Chairman
of the Board of Hemraj Land and Development (Plc.) Co., Ltd., Executive Director
of Thai Hong Kong Real Estate Co., Ltd., Executive Director of Ban Chang Group
(Plc.) Co., Ltd., Executive Director of Suntech Group (Plc.) Co., Ltd.,
Executive Director of Bangkok Expressway (Plc.) Co., Ltd., and as Chairman of
the Thai Industrial Estate Association. Mr. Horrungruang is a Senator in the
National Assembly and Vice-Chairman of Thailand's Committee for Industry.

62
<PAGE>
KEITH BUSSE (52)--Mr. Busse is President and CEO of Steel Dynamics, Inc. and
a Director of Qualitech Steel Corporation.

JOHN SCHULTES (49)--Mr. Schultes is President and CEO of NSM; a Director of
NSM Cayman and a Director of NSM (Del).

DAVID L. STICKLER (37)--Mr. Stickler is a Managing Director of McDonald &
Company Securities, Inc. and a Director of Qualitech Steel Corporation.

KEVIN MCCONVILLE (40)--Mr. McConville is a Vice President of Enron Capital
and Trade Resources Corp. and a Director of Qualitech Steel Corporation.

REUBEN L. PERIN (58)--Mr. Perin retired in 1997 from his post as Executive
Vice President of U.S. Steel after over 30 years of commercial and operations
management and as Chairman of the Products Applications Committee of the
International Iron & Steel Institute in Brussels, Belgium.

AMORNRAT LEEVARAPAKUL (48)--Mrs. Leeverapakul is a Senior Vice President of
the Corporate Finance Department 1 at the Industrial Finance Corporation of
Thailand. Mrs. Leevarapakul also serves as a director of N.T.S. Steel Group
(Plc) Co., Ltd., Patra Porcelain Co., Ltd., Jibuhin (Thailand) Co., Ltd. and
Prachin Traffic Products Co., Ltd.

CHAMNI JANCHAI (42)--Mr. Janchai is Chairman of the Executive Board of
Sriracha Harbour (Plc.) Co., Ltd., Director and Senior Vice Managing Director of
Administration N.T.S. Steel Group (Plc.) Co., Ltd., Executive Director of
Management and Finance, Suntech Group (Plc.) Co., Ltd., and Director of Thai
Theparos Food (Plc.) Co., Ltd.

SUNTHORN CHAILAEMLAK (56)--Mr. Chaelaemlak is Executive Director of
Nakornthai Steel Work Co., Ltd. Mr. Chailaemlak also serves as Director and
Senior Deputy Managing Director of N.T.S. Steel Group (Plc.) Co., Ltd. and as a
Director of Sriracha Harbour (Plc.) Co., Ltd. and as a Director of Metal Star
Company Limited.

CHAN BULAKUL (49)--Mr. Bulakul is President of MCL Co., Ltd. and Chairman of
MCL Research, Ltd. and MCL Management Services, Ltd.

ANUTIN CHARNVIRAKUL (32)--Mr. Charnvirakul is President of Sino-Thai
Engineering & Construction Public Co. Ltd.

PATTAMA HORRUNGRUANG (36)--Ms. Horrungruang is a Director and Deputy
Managing Director of N.T.S. Steel Group (Plc.) Co., Ltd.

CHATCHAI SOMSIRI (42)--Mr. Somsiri was a lecturer of the Faculty of
Engineering's Metal Engineering Department, Chulalongkorn University from 1979
to 1995 and is currently Head of the Metal Engineering Faculty at Chulalongkorn
University.

RAVEEWAN PEYAYOPANAKUL (50)--Ms. Peyayopanakul is an Assistant Professor at
the Faculty of Business and Accounting, Thammasart University. Ms. Peyayopanakul
serves as an independent director of N.T.S. Steel Group (Plc.)

SANDEEP ALVA (37)--Mr. Alva is a President of Hancock Mezzanine Investments
and a senior investment officer of John Hancock Mutual Life Insurance Company.

No family relationship exists between any of the executive officers and
directors, with the exception that Mr. Sawasdi Horrungruang is an uncle of Ms.
Pattama Horrungruang.

EXECUTIVE MANAGEMENT

The Company's management team is comprised of highly experienced and
internationally recognized professionals many of whom have been involved with
NSM since the commencement of the construction phase of the Mill. In addition to
the persons listed, 30 expatriate professionals are employed by NSM and work
together with a team of carefully selected and highly trained Thai
professionals, supervisors and

63
<PAGE>
hourly employees in operations, maintenance, marketing and sales, engineering,
accounting and human resources activities.

JOHN W. SCHULTES (49)--President and Chief Executive Officer of NSM. Mr.
Schultes has over twenty-five years of experience in the engineering and
equipment design fields. Mr. Schultes was with Andritz-Ruthner, an Austrian
equipment and technology firm, as Design Engineer from 1975 until 1980 in
Vienna, Austria. Mr. Schultes moved to Pittsburgh, PA in 1980 and became
Technical Director of Joint Ventures from 1980 until 1981; Manager, Chemical
Plants from 1981-1984; and Director of Engineering from 1984 until 1986. In
1986, Mr. Schultes joined U.S. Steel and from 1986 to 1992, Mr. Schultes served
as Chief Development Engineer--Sheet, Strip and Tin Products, and as Project
Manager of the U.S. Steel Mini-Mill Study Team from 1992 to 1995. Mr. Schultes
has been working at NSM since October 1995.

WIKROM VAJRAGUPTA (44), Executive Vice President. Mr. Vajragupta has 20
years experience in the steel industry including time as metallurgist and
operations manager of an EAF bar mill, and as an adviser to Thai Tinplate
Manufacturing Co., a Kawasaki Steel affiliate. Mr. Vajragupta also served as
Assistant Professor of the Department of Metallurgical Engineering at
Chulalongkorn University, Bangkok. He has also been an advisor to the Thai
government and a member of the Thailand National Committee for the Southeast
Asian Iron and Steel Institute. Mr. Vajragupta has been working at NSM since
January 1994.

WOLFGANG LANDT (58), Manager of DRI, Steelmaking and Casting. Mr. Landt has
over 30 years experience in steelmaking, casting, general management and
international consulting, including extensive integrated steel making and
mini-mill steel making experience. Mr. Landt spent 6 years as General Manager of
Thyssen Hattingen, a German integrated steel mill, where he chaired Thyssen's
Corporate Continuous Casting Committee which developed the CSP thin-slab mold
concept. Mr. Landt has been working at NSM since June 1996.

ROGER BROWN (58), Manager of Hot Rolling and Finishing. Mr. Brown has 30
years experience as Superintendent of Armco Steel Ashland Work's hot mill, cold
mill and finishing operations. He was also the Armco Representative on the
Association of Iron & Steel Engineer's Rolling and Finishing Division. For 4
years he was Site Manager for SMS at Essar Steel, India with responsibility for
implementation and start-up of a new hot strip mill. Mr. Brown has been working
at NSM since October 1996.

KANOKPONG LAOHAJINDA (44), Manager, Finishing Facilities. Mr. Laohajinda has
14 years experience in engineering, maintenance and operations management at
Thai Tinplate Manufacturing Co., a Kawasaki Steel affiliate. Mr. Laohajinda has
been working at NSM since April 1995.

WILLIAM L. HOSICK (60), Manager Commercial. Mr. Hosick has over 30 years
experience in the steel industry with Armco Steel, U.S. Steel and UEC, the
consultancy group of USX Corporation. His experiences include research and
development, purchasing, corporate planning, management, international
consulting, and market, product and process assessment for flat-rolled steel
producers in developing countries. Mr. Hosick has been working at NSM since
September 1996.

HANS H. HARTMANN (61), Manager Technical Services and Continuous
Improvement. Mr. Hartmann has over 30 years of experience with SMS including
extensive experience in steel mill equipment design, project management,
implementation and start-up activities. Mr. Hartmann holds numerous patents and
has extensive knowledge in steel mill equipment design, continuous casting, hot
rolling and steel mill controls. Mr. Hartmann has been working at NSM since
February 1996.

GARY HEASLEY (33), Vice President and Chief Financial Officer, Certified
Public Accountant. Mr. Heasley has 10 years experience in the accounting,
finance and management sectors, including experience at Ernst & Young LLP and
McDonald & Company Securities, Inc. Mr. Heasley became an employee of NSM
subsequent to the Offerings.

SERGE DELISLE (38), Manager of Computer Systems and Accounting. Mr. Delisle
has 15 years experience with CGI, a Canadian management consulting firm. As Vice
President of SPC, the U.S. subsidiary of CGI, Mr. Delisle had responsibility for
development, sales and implementation of the most widely used

64
<PAGE>
integrated business system used by flat-rolled mini-mills, including Hylsa and
SDI. Mr. Delisle has been working at NSM since April 1996.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The amount of compensation paid by NSM to its directors and executive
officers for the fiscal year ended December 31, 1997 and 1996 was 39,824,297
Bahts and 18,705,600 Baht, respectively.

Compensation paid for the fiscal year ended December 31, 1997, was as follows
(figures in Baht)

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------------------------------------------------------- --------- ------------ --------- ------------------
<S> <C> <C> <C> <C>
Mr. Sawasdi Horrungruang................................................... 1997 3,000,000 -- 1,317,980(1)
-Chairman
Mr. Chamni Janchai......................................................... 1997 3,600,000 -- 1,506,020(2)
-Vice Chairman
Mr. Wikrom Vajragupta...................................................... 1997 3,240,000 -- 20,000(3)
-Executive Vice President
Mr. John W. Schultes....................................................... 1997 6,000,000 -- 3,133,555(4)
-President and CEO
Mr. William L. Hosick...................................................... 1997 5,445,911 -- 3,843,961(5)
-Commercial Manager
Mr. Serge Delisle.......................................................... 1997 6,664,506 -- 2,052,364(6)
-Manager of Computer Systems and Accounting
</TABLE>

- --------------------------

Note

(1) Tax gross up by NSM of 1,297,980 Baht and Board meeting remuneration of
20,000 Baht.

(2) Tax gross up by NSM of 1,486,020 Baht and Board meeting remuneration of
20,000 Baht.

(3) Board meeting remuneration of 20,000 Baht.

(4) Amount paid for housing of 1,218,826 Baht, tuition fee for children of
650,100 Baht, air fare of 355,060 Baht, insurance premium of 156,658 Baht,
relocation expenses of 153,739 Baht and tax gross up for housing by NSM of
599,171 Baht.

(5) Amount paid for housing of 922,986 Baht, air fare of 314,389 Baht, tax gross
up for housing by NSM of 467,158 Baht, insurance premium of 139,427 Baht and
reimbursement for the loss of his USX pension of 2,000,000 Baht.

(6) Amount paid for housing of 944,020 Baht, tuition fee for children of 374,000
Baht, air fare of 130,181 Baht, insurance premium of 124,007 Baht and tax
gross up for housing by NSM of 480,155 Baht.

REMUNERATION OF DIRECTORS

Unless renounced by any directors, directors of NSM receive remuneration of
20,000 Baht for each meeting of the board of directors of NSM that they attend.

EMPLOYMENT AGREEMENTS

The employment agreements of Wikrom Vajragupta and Kanokpong Laohajinda were
initially in the forms of letters of appointment. Under these letters of
appointment each of them went through a 120-day probation period. Upon
satisfactory completion of such probation, NSM issued letters of confirmation of
employment.

Mr. Vajragupta and Laohajirda may not: (i) engage in acts which may deter
NSM's progress or adversely affect NSM's business or reputation; (ii) work or
hold any position in any organization of suppliers, customers or competitors of
NSM nor accept any compensation therefrom; (iii) disclose any confidential
information, methods, processes or techniques related to the business of NSM or
any of its affiliates; or (iv) retain any copies or reproductions of documents
relating to the affairs of NSM or its affiliates, or any property of NSM, upon
their termination.

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Under the New Employment Agreement, Mr. Schultes will receive a base salary
of U.S.$240,000 per annum with increases of 5% per annum (calculated on a
cumulative, compounded basis) during the 8-year term of the New Employment
Agreement. At the discretion of Management Co., Mr. Schultes will also be
eligible for an annual bonus based on the Company's return on equity,
profitability, operating efficiency and adherence to capital expenditure budgets
and construction timetables. It is also the Company's intention, based on
Management Co.'s decision to institute a share option plan within twelve months
of the Offerings, to grant Mr. Schultes options to acquire shares in NSM in
amount such that upon the expiration of the term of his employment such options
can reasonably be expected to produce a U.S.$2 million gain. The New Agreement
will contain provisions limiting Mr. Schultes' ability to compete against NSM
should he no longer be employed by the Company. Under these provisions, Mr.
Schultes will be restricted in his activities with regard to DRI throughout the
world and with regard to flat-rolled steel production in the countries that
currently make up the ASEAN.

Mr. Delisle's employment agreement provides that NSM will pay Mr. Delisle a
monthly salary of Baht 520,000. If NSM terminates the agreement within the first
2 years, NSM will pay the full salary of the initial 3 years. Thereafter, if NSM
terminates the agreement NSM will pay one year of salary. An annual review of
performance and compensation will be conducted. Additionally, NSM agrees to
provide a car and a driver for business use and certain other benefits to Mr.
Delisle, his wife and his children. This employment agreement runs until March
31, 2001 and will be renewed automatically unless there has been notification at
least one year prior to the agreement's expiration. Each party will provide the
other with at least 6 months prior written notice of termination.

Mr. Hosick's employment agreement provides that NSM will pay Mr. Hosick a
monthly salary of Baht 425,000, with a severance payment of 2 months if NSM
terminates the agreement prior to the expiration date. An additional quarterly
payment of Baht 500,000 will be made for 3 years (12 payments) to reimburse Mr.
Hosick for the loss in his USX pension as a result of accepting an early
retirement. Additionally, NSM agrees to provide a car and a driver for business
use and certain other benefits to Mr. Hosick and his wife. This employment
agreement runs until September 15, 2001. Each party will provide the other with
at least 6 months prior written notice of termination.

EMPLOYEE COMPENSATION

NSM has established certain incentive compensation programs for its
employees that are designed to encourage productivity by paying bonuses to
groups of employees, based on various measures of productivity. These programs
are patterned after incentive programs in place at SDI. The programs are
designed to reward employees for productivity, quality and efficiency efforts.
It is not unusual for a significant amount of an employee's total compensation
to consist of such bonuses.

Productivity is measured by focusing on groups of employees and not
individual performance. Three groups of employees participate in the bonus
program: production, administrative and department managers. Each group of
employees has its own bonus program or programs.

Production employees, consisting of those directly involved in the melting,
casting and rolling processes, are eligible to participate in two cash bonus
programs: the production bonus and the profit sharing bonus. The production
bonus, if any, is based upon the quantity of quality product produced each week.
The amount of the production bonus is determined for and allocated to each shift
of employees. Depending upon the amount of quality product produced, the bonus
may be equal to or greater than the base hourly wage paid to an employee. A
profit sharing bonus is determined and paid to production employees on an annual
basis based on the Company's profits.

NSM has also established a cash bonus plan for administrative employees,
including accountants, engineers, secretaries, accounting clerks and
receptionists. Bonuses under the plan are based upon the Company's return on
assets and on Company profitability.

NSM's managerial employees are compensated based on return on assets and
profit sharing.

Additionally, the Company will invest a portion of its yearly profits in a
Company sponsored employee savings plan. These programs are intended to
encourage employees to be efficient in the performance of their jobs and to
assist the Company in developing and retaining a loyal, enthusiastic workforce.

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PRINCIPAL SHAREHOLDERS

The following table sets forth after giving effect to the issuance and
exercise of the Warrants and the SDI Warrants, the number of ordinary shares of
NSM to be held by (i) those persons who own(1) more than 10% of NSM's ordinary
shares and (ii) those persons who are NSM's directors.

<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDER'S NAME ORDINARY SHARES TOTAL ISSUED
- ---------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
N.T.S. Steel Group (Plc.) Co., Ltd................................................ 225,000,000 26.2%
Thailand Securities Depository Center Co., Ltd.................................... 60,666,812 7.0
Sawasdi Horrungruang(2)........................................................... 228,707,000 26.6
Steel Dynamics, Inc.(3)........................................................... 85,889,570 10.0
Keith Busse(4).................................................................... 85,889,570 10.0
John Schultes..................................................................... 80,000 *
McDonald & Company Securities, Inc.(5)............................................ 20,084,344 2.3
David Stickler(6)................................................................. 20,084,344 2.3
Enron Capital Trade Resources(7).................................................. 51,913,882 6.0
Kevin McConville(8)............................................................... 51,913,882 6.0
Chamni Janchai.................................................................... 1,000,000 *
Sunthorn Chailaemlak.............................................................. 1,000,000 *
Chan Bulakul...................................................................... 24,000,000 2.8
Anutin Charnvirakul(9)............................................................ 10,000,000 1.2
Amornrat Leevarapakul(10)......................................................... 3,905,504 *
Sandeep Alva(11).................................................................. 27,551,239 3.2
Directors and executive officers as a group................................... 454,131,539 52.1%
</TABLE>

- ------------------------

* Less than 1%

(1) As used herein, the term beneficial ownership with respect to a security is
defined by Rule 13d-3 under the Exchange Act as consisting of sole or shared
voting power (including the power to vote or director the vote) and/or sole
or shared investment power (including the power to dispose or direct the
disposition) with respect to the security through any contract, arrangement,
understanding, relationship, or otherwise, including a right to acquire such
power(s) during the next 60 days. Unless otherwise noted, beneficial
ownership by the persons above consists of sole ownership, voting, and
investment power with respect to all Ordinary Shares shown as beneficially
owned by them.

(2) Mr. Horrungruang is Chairman of the Executive Board of N.T.S. Steel Group
(Plc.) Co., Ltd., which owns 225,000,000 Ordinary Shares. Mr. Horrungruang
disclaims beneficial ownership of such shares.

(3) Steel Dynamics, Inc. owns 74,468,090 Ordinary Shares as of the closing of
the Offerings (representing a 8.8% interest in NSM after giving effect to
the issuance and exercise of the Warrants but excluding the issuance and
exercise of the SDI Warrants). In addition to the 74,468,090 Ordinary Shares
acquired by Steel Dynamics, Inc. as part of the Management Equity
Investment, SDI will be issued the 11,421,480 SDI Warrants, each to purchase
one Ordinary Share of NSM. The SDI Warrants will allow Steel Dynamics, Inc.
to exercise such warrants in order to protect its equity investment from
dilution in the event holders of the Warrants exercise such Warrants.

(4) Mr. Busse is President and CEO of Steel Dynamics, Inc., which owns
74,468,090 Ordinary Shares and 11,421,480 SDI Warrants. Mr. Busse disclaims
beneficial ownership of such Ordinary Shares and SDI Warrants.

(5) McDonald & Company Securities, Inc., or its affiliate acquired 3,667,750
newly issued Ordinary Shares as part of the Management Equity Investment
which has been subsequently transferred to an investor of the Private
Placement Shares and acquired 20,084,344 Ordinary Shares in a privately

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<PAGE>
negotiated transaction in the secondary market for the Ordinary Shares. As a
result, after giving effect to the Equity Investments, McDonald owns an
aggregate of 20,084,344 Ordinary Shares (representing a 2.2% interest in NSM
after giving effect to the issuance of Warrants).

(6) Mr. Stickler is a Managing Director of McDonald & Company Securities, Inc.,
which directly owns or is affiliated with an owner of 20,084,344 Ordinary
Shares. Mr. Stickler disclaims beneficial ownership of such shares.

(7) Enron Capital & Trade Resources or its affiliate acquired 16,086,844
Ordinary Shares from the Company as part of the Management Equity Investment
and 10,911,382 Ordinary Shares as part of the offering and sale of the
Private Placement Shares. Enron also acquired 24,915,656 Ordinary Shares in
a privately negotiated transaction in the secondary market for the Ordinary
Shares. Enron will acquire 7,438,839 Warrants as a result of its acquisition
of Units. As a result, Enron owns an aggregate of 51,913,882 Ordinary Shares
and 7,361,543 Warrants.

(8) Mr. McConville is Vice President of Enron Capital Trade Resources, which
directly owns or is affiliated with an owner of 51,913,882 Ordinary Shares,
and 7,361,543 Warrants. Mr. McConville disclaims beneficial ownership of
such shares and Warrants.

(9) Mr. Charnvirakul is President of Sino-Thai Engineering & Construction Public
Co. Ltd, which owns 10,000,000 Ordinary Shares. Mr. Charnvirakul disclaims
beneficial ownership of such shares.

(10) Mrs. Leevarapakul is a Senior Vice President at the Industrial Finance
Corporation of Thailand, which owns 3,905,504 Ordinary Shares. Mrs.
Leevarapakul disclaims beneficial ownership of such shares.

(11) Mr. Alva is a Senior Investment Officer of John Hancock Mutual Life
Insurance Company which owns 27,551,239 Ordinary Shares. Mr. Alva disclaims
beneficial ownership of such shares.

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<PAGE>
RELATED PARTY TRANSACTIONS

NO DIRECTOR, OFFICER, PRINCIPAL SHAREHOLDER OR OTHER INSIDER, OR ANY
ASSOCIATE OR AFFILIATE OF SUCH PERSONS HAS OR HAD ANY MATERIAL INTEREST, DIRECT
OR INDIRECT, IN ANY TRANSACTION OR PROPOSED TRANSACTION THAT HAS MATERIALLY
AFFECTED OR WILL MATERIALLY AFFECT THE COMPANY, EXCEPT AS OTHERWISE DISCLOSED
HEREIN AND EXCEPT AS DESCRIBED BELOW:

DESCRIPTION OF TRANSACTIONS INVOLVING NSM AND ITS AFFILIATES

The Company engaged in a series of related party transactions in which it
used money deposited at various Thai financial institutions to set-off the debts
owed by affiliated companies to those same financial institutions. These
transactions are described below. The Company's deposits were in the form of
purchases of promissory notes issued by the financial institutions. The Company
pledged, and/or transferred its right to receive deposits on, the promissory
notes back to the financial institutions to secure the debts of the affiliated
companies. Later, the Company agreed to allow the financial institutions to
set-off the promissory notes against the debts of the affiliated companies.
These transactions resulted in the financial institutions taking the money NSM
had on deposit and NSM accepting the obligations of its affiliated companies.
The activities of these finance companies were suspended in June and August of
1997 by order of the Ministry of Finance and closed down on December 8, 1997.
This order was not directed at these specific transactions, but rather reflected
macro-economic issues in Thailand. The Ministry of Finance ordered that all
promissory notes issued by these finance companies would have to be exchanged
for obligations of Krung Thai Bank Public Company Limited or Krung Thai Thanakit
Finance and Securities Public Company Limited. Furthermore, the Ministry of
Finance ordered that repayment on promissory notes of the finance companies of
over 10 million Baht would be delayed for five years.

Rather than continue to hold illiquid and the potentially uncollectible
promissory notes, in a series of transactions starting in September 1997, the
Company has to date transferred, pledged or secured amounts under these
promissory notes for the benefit of certain affiliates of the company including:
NTS which operates a nearby steel rebar manufacturer plant; Trakkapol Company
Limited ("Trak"); Nakornthai Integrated Steel Company Limited, ("NIS") and Metal
Star Company Limited ("Metal Star") which operate steel re-rolling and
processing plants (Trak, NIS and Metal Star are collectively referred to herein
as the "Affiliates"). NTS has used these promissory notes to set-off loans it
owes to various finance companies. In turn, NTS has agreed to repay NSM for the
value of the set-off, plus interest within 3 years. A finance company owed money
by the Affilates is similarly attempting to set-off their debts. NSM is
challenging the ability of this finance company to set-off the Affiliates' debts
against promissory notes owned by NSM.

The transaction between NSM and NTS was approved by the Extraordinary
Meeting of NSM Shareholders No. 1/2450 held on October 22, 1997. As a result:
(a) the obligation of NTS to NSM is payable prior to the five year maturity of
the finance company promissory notes, (b) NSM has the ability to negotiate with
NTS regarding repayment, whereas repayment from the closed finance companies is
subject to the government liquidation of those finance companies, and (c) NTS
has the ability to pay interest and principal to NSM through cash, steel
deliveries and water deliveries from NTS's reservoir. NSM intends to exchange
the promissory notes issued by the Affiliates' creditor for obligations of Krung
Thai Bank Public Company Limited.

The status of these transactions is unclear due to the December 8, 1997
closure of these financial institutions by the Ministry of Finance. See "Annex
A--Kingdom of Thailand." Under the Audited Financial Statements of the Company,
these obligations of affiliated companies have been fully reserved as
uncollectible debts. Although the Company does not expect to recover on these
obligations, it reserves its right to do so in the future.

The Company used approximately 535,518,313 Baht worth of promissory notes in
a series of related party transactions. On December 27, 1996, the Company
purchased a promissory note from Thai Financial

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Trust Public Company Limited ("TFT") in the amount of 60,000,000 Baht. On March
26, 1997, the Company purchased a promissory note in the amount of 150,000,000
Baht from the Pacific Finance & Securities Public Company Limited ("Pacific").
This note was due on June 26, 1997 and was replaced on December 1, 1997 with
another 150,000,000 Baht promissory note. On August 8, 1996, the Company
purchased a promissory note worth 190,000,000 Baht from the Cathay Finance &
Securities Public Company Limited ("Cathay"). On September 26, 1996, NSM
purchased two promissory notes from the Finance One Public Company Limited worth
an aggregate of 100,000,000 Baht ("Fin-One"). Additionally, the Company owns
three promissory notes in the amount of 224,008,706.83 Baht issued by the Thai
Rung Reung Finance & Securities Company Limited ("Thai Rung").

The Company used the principal amount and interest on the promissory notes
of TFT, Cathay, Fin-One and Pacific to set-off debts owed by NTS. In Letters of
Consent dated November 19, 1997, NSM agreed to use the TFT promissory notes to
set-off debts owed by NTS to TFT. Including interest, this set-off was valued at
67,158,920.54 Baht. On March 26, 1997, NSM agreed to use the promissory note
issued by Pacific to secure the debts of NTS. Including interest, this set-off
was valued at 161,468,568 Baht. On August 8, 1996, NSM pledged its Cathay
promissory notes as security for the debts owed by NTS to Cathay. On October 29,
1997, NSM issued a letter to Cathay stating its intention to use the Cathay
promissory notes to repay the debts owed by NTS to Cathay. Including interest,
this set-off was valued at 201,161,029.45 Baht. On September 26, 1996, NSM
pledged its Fin-One promissory notes as security for the debts owed by NTS to
Fin-One. NSM also entered into a separate Pledge Agreement on the same day. This
Pledge Agreement made NSM liable for the full amount of debts owed by NTS to
Fin-One. However, this agreement was superseded by a Letter of Consent dated
November 13, 1997 under which NSM agreed to use its Fin-One promissory notes to
set-off the debt owed by NTS to Fin-One. Including interest, this set-off was
valued at 105,729,794.50. NSM is no longer liable for the full debt owed by NTS
to Fin-One.

Excluding interest, NTS had debts of approximately: 260,000,000 Baht to TFT;
163,000,000 Baht to Pacific; 190,000,000 Baht to Cathay; and 100,000,000 Baht to
Fin-One.

NSM agreed to use its promissory notes to set-off 500,000,000 Baht worth
(excluding interest) of NTS's debt. So far, NSM has set-off approximately
535,518,313 Baht worth of NTS's debts including accrued interest. NTS agreed to
repay NSM for the value of the set-offs within 3 years at an interest rate of
14.8% per annum. The loan may be repaid in a combination of cash, steel
deliveries to NSM and/or NSM's use of water from NTS's reservoir. The Company
may extend the repayment period of the loan. These transactions were approved by
the NSM Extraordinary Meeting of NSM Shareholders No. 1/2540 held on October 22,
1997.

Without giving effect to the Transactions, NTS owns 31.31% of the Company's
total issued shares. Mr. Sawasdi Horrungruang, the Chairman of the Board of
Directors of NSM, owns 15.44% of NTS and is Chairman of the Executive Board of
Directors of NTS. Ms. Siriporn Horrungruang, a sister of Mr. Sawasdi
Horrungruang, owns 8.16% of NTS. Mr. Sawasdi Horrungruang is executor of the
estate of his late brother, Mr. Sawai Horrungruang, which owns 7.46% of NTS.
Additionally, Mr. Sawasdi Horrungruang, Ms. Raveewan Peyayopanakul, Mr. Sunthorn
Chailaemluk, Mr. Chamni Janchai and Ms. Pattama Horrungruang were members of
both the NSM and NTS boards of directors at the time of the transactions
described above.

On March 10, 1997, NSM agreed to use two promissory notes worth, in
aggregate, 210,572,125.78 Baht, from Thai Rung, to secure the obligations of the
following debtors: Trak, NIS and Metal Star. Metal Star and NIS are affiliated
companies of NSM. NSM agreed to secure the debts owed by Trak, NIS and Metal
Star in the amount of 60,000,000 Baht, 70,000,000 Baht and 70,000,000 Baht,
respectively. On October 17, 1997, Thai Rung informed NSM that it would exercise
its rights to set-off these debts because the debtors were in default. Thai Rung
consolidated NSM's promissory notes into one note on October 17, 1997. On
October 28, 1997, NSM requested that this option be delayed until NSM
shareholders resolutions concerning the set-offs were passed. The NSM
shareholders did not approve the Thai Rung set-off. Thai

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Rung subsequently verbally informed NSM that the set-off had already been made.
NSM is considering its options in this matter. It is likely that the outcome of
this transaction will be determined by the FRA.

The Company also made a loan to Metal Star in January 1997 for the amount of
approximately 350,000,000 Baht. This loan matured on December 31, 1997. The rate
of interest on the loan to Metal Star is 16% per annum. This transaction was
approved and ratified by the Extraordinary Meeting of Shareholders No. 1/2540
held on October 22, 1997.

The estate of Mr. Sawai Horrungruang owns 25% of NIS. Mr. Sawai Horrungruang
was a brother of Mr. Sawasdi Horrungruang. Mr. Sawasdi Horrungruang is an
executor of Mr. Sawai Horrungruang's estate. Mr. Sunthorn Chailamlak, a director
of NSM, NTS and Metal Star, owns 25% of NIS. Mr. Sawasdi Horrungruang owns 20%
of NIS. Mr. Sakda Horrungruang, a brother of Mr. Sawasdi Horrungruang, owns 5%
of NIS.

Mr. Sunthorn Chailaemlak, a director of NSM and NTS, owns 30% of Metal Star.
Mr. Sakda Horrungruang, a brother of Mr. Sawasdi Horrungruang, owns 30% of Metal
Star. Mr. Suraphol Jirabut, a brother-in-law of Mr. Sawasdi Horrungruang, owns
19.6% of Metal Star. Mr. Chaiyapol Horrungruang, a nephew of Mr. Sawasdi
Horrungruang owns 8% of Metal Star. Ms. Nuchanart Horrungruang, a niece of Mr.
Sawasdi Horrungruang, owns 6% of Metal Star. Mr. Pravit Horrungruang, a nephew
of Mr. Sawasdi Horrungruang, owns 6% of Metal Star.

The only connection between NSM and Trak is that the wife of one of Mr.
Sawasdi Horrungruang's nephews, Mrs. Siriwan Horrungruang, is on the Trak board
of directors. Thai Rung requested that NSM guarantee Trak's debts. NSM agreed to
guarantee Trak's debts as it did not want to jeopardize its ongoing relationship
with Thai Rung.

The Company has entered into a commercial assistance agreement with Mr.
Reuben L. Perin. Under the terms of the agreement, Mr. Perin will be paid
U.S.$6,000 per month plus expenses. Mr. Perin will spend at least four days each
month assisting the Company in all aspects of sales, marketing and international
trade issues. Mr. Perin was named a director of NSM.

In addition, Mr. Sawasdi Horrungruang and Mr. Chamni Janchai provided
personal guarantees for interim financing from First-Bangkok City Bank to NSM.
The Company used proceeds from the Offerings to repay the lenders of these loans
and the lenders have released the guarantees provided by Mr. Horrungruang and
Mr. Janchai. The amount of the financing is approximately 400 million Baht. See
"Description of Certain Indebtedness--Interim Financing."

DESCRIPTION OF OTHER TRANSACTIONS

The Company entered into a credit agreement with the Industrial Finance
Corporation of Thailand ("IFCT") for financing in the amount of U.S.$10 million.
Under the agreement, Mr. Sawasdi Horrungruang and Mr. Chamni Janchai provided
personal guarantees for the credit to NSM. NSM used a portion of the proceeds of
the Offerings and Debenture Offering to repay money under the IFCT financing.
The IFCT released Mr. Horrungruang and Mr. Janchai from their liabilities under
their guarantees.

NSM has entered into various agreements with SDI, Enron, and McDonald. SDI
is a Management Investor and received 10% of the outstanding shares on a fully
diluted basis of the Company in return for licensing certain rights to NSM
pursuant to the SDI Agreement. SDI received this percentage through a
combination of Ordinary Shares and the SDI Warrants. The exercise price of the
SDI Warrants will be reimbursed by the Company upon the exercise of the SDI
Warrants. Enron acquired 16,086,844 Ordinary Shares from the Company as part of
the Management Equity Investment and 10,911,382 as part of the offering and sale
of the Private Placement Shares. In addition, Enron acquired 24,915,656 Ordinary
Shares and McDonald acquired 20,084,344 Ordinary Shares, in a privately
negotiated transaction in the secondary market for Ordinary Shares. The sellers
included relatives of Mr. Sawasdi Horrungruang, the Chairman of NSM. Enron has
agreed to work with NSM to obtain all funds (in addition to the U.S.$20 million

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subordinated financing it has committed to date) necessary to complete
construction of the Co-Gen Facility. ECT Securities Corp., an affiliate of
Enron, is a co-manager of the Offering. McDonald is a Management Investor and is
providing investment banking services to NSM. McDonald is also a co-manager of
the Offerings.

In addition to related party transactions involving NSM, SDI, Enron,
McDonald and Mr. Stickler have previously entered into transactions with each
other. Enron is a lender to SDI and Enron and SDI are each investors in
Qualitech Steel Corporation, a U.S.-based minimill and DRI producer. McDonald
and Mr. Stickler are both investors in SDI and Qualitech Steel Corporation.
McDonald has previously and is currently providing investment banking services
to SDI. In satisfaction of fees due for advisory and underwriting services
provided to the Company, McDonald received approximately U.S.$18 million from
the proceeds of the Transactions.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The following is a brief description of the basic terms of the Company's
Bank Credit Facility and other Indebtedness. The following discussion does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to the instruments governing the indebtedness.

THE BANK CREDIT FACILITY

The Bank Credit Facility provides for (i) a U.S.$308 million term loan
facility (the "U.S.$ Facility") and (ii) a 3.3 billion Baht term loan facility
(the "Baht Facility") (collectively, the "Facilities"). As of December 8, 1997,
U.S.$1.186 million is held as a reserve in case the Deutsche Mark appreciates
compared to the U.S.$.

Interest under the Bank Credit Facility is payable quarterly, on March 1,
June 1, September 1, and December 1 of each year, in arrears at the rate of
either LIBOR plus 2.5 percent per annum or SIBOR plus 2.5 percent per annum for
the U.S.$ Facility and the lower of MLR (Minimum Lender Rate) plus one-half
(0.5) percent per annum or MRR (Minimum Retail Rate) for the Baht Facility.
Payments of principal under the Bank Credit Facility are to be made in 12
semi-annual installments and, in any event, the last repayment shall be made
before the maturity of the Notes and Debentures. Thus, the 12th installment will
be made on the same day as the 11th installment. The first principal repayment
shall be made on the interest payment date which falls four years from the first
drawdown or two years from the commencement of commercial operations of the Hot
Mill, whichever is earlier. The Company used U.S.$50 million from the proceeds
of the Offerings to prepay a portion of the Facilities and U.S.$17 million of
accrued interest payable. Each of the Thai lenders was entitled to prepayment in
accordance with the proportion of (a) loans already advanced by it to the
Company under the Bank Credit Facility and still outstanding to (b) the
aggregate loans already advanced by the Thai lenders to the Company under the
Bank Credit Facility. In connection with any lender who extends the Facilities,
the prepayment shall be used (i) first to settle loans outstanding under the
Baht Facility advanced by such lender and (ii) second, if there is any sum
remaining, to settle loans outstanding under the U.S.$ Facility advanced by such
lender.

On the Issue Date and upon receipt of the prepayment amount plus past due
interest, the Lenders under the Bank Credit Facility released the mortgages and
other security interests on the collateral thereunder and, pursuant to the Bank
Credit Facility and the Security Sharing Agreement, now share equally and
ratably in the Collateral (other than the Offshore Reserve Account and the Notes
DSR Account) with the holders of the Senior Notes and the Senior Subordinated
Notes. See "Security Arrangements--Security Sharing Agreement".

The Lenders also agreed that the holders of the Debentures will share in the
Collateral on a second priority basis.

Pursuant to the Bank Credit Facility, the Company has agreed that, other
than in connection with the enforcement of the security interests granted in the
Collateral, in the event there are insufficient funds available at any time to
make all payments of principal or interest then due under the Bank Credit
Facility and the Notes and the Debentures, the Company will pay 100% of any
interest and 50% of any principal then due under the Bank Credit Facility prior
to paying any interest then due on the Notes and the Debentures. In exchange for
this agreement, the lenders under the Bank Credit Facility have agreed, in such
case that failure to pay the additional 50% (or part thereof) of any scheduled
principal payment due to such lenders will not be a default under the Bank
Credit Facility, and such amount will be paid out pro rata over the then
remaining scheduled principal payments under the Bank Credit Facility. The Bank
Credit Facility also provides that the Company will repay additional principal
each year in an amount equal to 50% of the Company's EBITDA for the immediately
preceeding fiscal year after deducting interest expense, principal payments,
taxation and maintenance capital expenditures, commencing from a fiscal year
after December 31, 1999. For purposes of this provision, "EBITDA" is defined as
earnings before interest expense, taxation, depreciation and amortization.

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The Bank Credit Facility provides for the waiver by the lenders thereunder
of any events of default in connection therewith occurring prior to the Issue
Date.

The Bank Credit Facility contains certain restrictive covenants which impose
restrictions and/or limitations on the operations and activities of the Company
including, among other things: limitations on the payment of dividends in the
years that the Company's obligations have not been fully paid; limitations on
the amendment of the Company's Memorandum or Articles of Association and the
change of the management of the Company and limitations on the execution of
encumbrances (mortgage or otherwise) on, the Company's real property, machinery
or rights, except those that have been made relating to the Offerings, the
Equity Investments and the Working Capital Facility.

WORKING CAPITAL FACILITY

BNP has provided the Company with working capital financing through (i) a
U.S.$150 million offshore revolving receivable discounting facility (the
"Offshore Facility") and (ii) an onshore revolving receivable discounting
facility (the "Onshore Facility" and together with the Offshore Facility, the
"Working Capital Facility") with a U.S.$15 million tranche and a 400 million
Baht tranche. Both the Offshore Facility and the Onshore Facility have final
maturity dates of December 31, 2000.

The Offshore Facility is used to finance offshore receivables generated
through the Company's sales under the Off-Take Agreements. The Onshore Facility
is used to finance domestic sales paid in either Baht or U.S.$.

Advances correspond in amount to accepted receivables, discounted by
reference to LIBOR and the applicable margin. Each advance under the Working
Capital Facility is secured by a guarantee of the underlying receivable from the
relevant offtaker. All amounts payable in respect of such receivables are paid
directly into a collection account maintained with BNP prior to disbursement to
the Revenue Account.

Prior to BNP being obligated to provide funds under the Onshore Facility,
the Company is required to provide evidence that it has requested a Thai bank,
acceptable to BNP, to provide such funding and that such bank declined to do so.

Under the Offshore Facility, BNP will require Preussag's and Klockner's
respective credit quality to meet certain standards in order for receivables
from either of them to qualify as an eligible receivable.

The Working Capital Facility contains certain restrictive covenants which
impose restrictions and/or limitations on the operations and activities of the
Company, including, among other things, compliance with applicable law
limitations on transactions with affiliates, limitations on changes in the
nature of the Company's business, and certain financial reporting requirements.

INTERIM FINANCING

The First Bangkok City Bank provided the Company interim financing in the
form of a letter of credit, a trust receipt, a guaranty and an acceptance or an
aval of notes, in both Thai Baht and foreign currency for the amount of
approximately 400 million Baht (based upon the exchange rate as of October 11,
1997). The credit was granted to finance the Company's purchase of raw
materials. The Company provided The First Bangkok City Bank and the Industrial
Finance Corporation of Thailand with a second mortgage over the land and
buildings comprising the Mill pursuant to Thailand Ex-Im Credit. The mortgage
amount was 600 million Baht with each institution. On the Issue Date, the First
Bangkok City Bank released the mortgage after the Company arranged to deposit an
amount equal to the outstanding amount of the credit and pledge the same with
The First Bangkok City Bank. The Company has also agreed that The First Bangkok
may deduct, hold or set-off the deposit against the Company's obligations
thereunder without further notice.

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Mr. Sawasdi Horrungruang and Mr. Chamni Janchai, two directors of the
Company, who had provided personal guarantees for the financing which guarantees
were released on the Issue Date.

THAILAND EX-IM CREDIT

The Industrial Finance Corporation of Thailand ("IFCT") granted the
Company's application for financing credit for the amount of U.S.$10 million, in
the form of a packing credit pursuant to an agreement dated as of February 13,
1998. The credit has been granted to finance the Company's import and export
activities. The financing period shall not exceed 180 days from the date of each
letter of credit. The interest rate has not been fixed. The Company provided
IFCT, along with the First Bangkok City Bank a second mortgage over the land and
buildings of the Mill. The mortgage amount is 600 million Baht to each
institution.

On the Issue Date, IFCT released the mortgage after, the Company arranged to
deposit the amount equal to the outstanding amount under each letter of credit
with the IFCT of approximately U.S.$2.5 million, and pledge the same, or a bank
acceptable to IFCT to secure the Company's obligation under the credit.

Mr. Sawasdi Horrungruang and Mr. Chamni Janchai, two directors of the
Company, provided personal guarantees which were released on the Issue Date.

Under the agreement, IFCT had levied the following conditions: (i) the
letters of credit to be packed must be made available and must contain
specification on product size, quality, price, volume and definite delivery;
(ii) the products must meet the specifications in the letters of credit before
packing, (iii) the Company must arrange for the issuer of the letter of credit
to confirm that the quality and size of the products meet with the required
specifications and be accepted by the customer (the issuer of a letter of
credit), and (iv) the Company must comply with the terms and conditions of the
export and import credit facilities levied by the Thai Export-Import Bank.

THE SECURITIES

On March 12, 1998 the Notes Issuers issued two classes of long-term notes
and one class of debentures for total proceeds of approximately U.S.$444 million
(the "Notes Offering"). The securities issued under the Notes Offering are
guaranteed by the Company. The Notes Issuers loaned the proceeds from the Notes
Offering to the Company. As the long-term notes and debentures were issued at a
discount, the aggregate principal amount due at maturity by the Note Issuers and
guaranteed by the Company is approximately U.S.$505,633,016. Of this amount,
U.S.$249 million is due on February 1, 2006, U.S.$203,500,000 is due on February
1, 2008 and U.S.$53,133,016 is due on February 1, 2008. The Note Issuers and the
Company are required to pay interest semi-annually on the notes and debentures.

Each class of notes and the debentures are governed by indentures. These
indentures limit the Company's ability to, among other things, make certain
types of payments, create liens, incur indebtedness, merge and pay dividends.
These indentures may materially restrict the Company's ability to exploit
business opportunities and respond to changing business conditions.

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DESCRIPTION OF THE WARRANTS

The Warrants were issued pursuant to a warrant agreement, dated as of March
12, 1998 (the "Warrant Agreement"), between the Company and American Stock
Transfer & Trust Company, as warrant agent (the "Warrant Agent"). The following
summary of certain provisions of the Warrant Agreement does not purport to be
complete and is qualified in its entirety by reference to all of the provisions
of the Warrant Agreement, including the definitions therein of certain terms.
Capitalized terms in this "Description of the Warrants" not defined in this
Prospectus have the meanings ascribed to them in the Warrant Agreement.

GENERAL

Each Warrant, when exercised, will entitle the holder thereof to purchase
one Ordinary Share from the Company at a price (the "Exercise Price") of 10 Baht
per share. The Exercise Price and the number of Ordinary Shares issuable upon
exercise of a Warrant (the "Warrant Shares") are both subject to adjustment in
certain cases. See "--Adjustments" below. The Warrants will initially entitle
the holders thereof to acquire, in the aggregate, 128,834,356 Ordinary Shares.

The Warrants may be exercised at any time after the first anniversary of the
Issue Date; PROVIDED, HOWEVER, that holders of Warrants will be able to exercise
their Warrants only if a shelf registration statement relating to the Warrant
Shares has been declared effective by the Commission or the exercise of such
Warrants is exempt from the registration requirements of the Securities Act, and
such securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
holders reside. Unless earlier exercised, and subject to the obligation of the
Company to make cash payments pursuant to the provisions described below under
"--Certain Terms-- Foreign Shareholders", the Warrants will expire on February
1, 2008 (the "Expiration Date"). The Company will give notice of expiration not
less than 90 nor more than 120 days prior to the Expiration Date to the
registered holders of the then outstanding Warrants. If the Company fails to
give such notice, the Warrants will nevertheless expire and become void on the
Expiration Date.

At the Company's option, fractional shares of Ordinary Shares may not be
issued upon exercise of the Warrants (or specified portion thereof). If any
fraction of an Ordinary Share would, except for the foregoing provision, be
issuable upon the exercise of any such Warrants (or specified portion thereof),
the Company will pay an amount in cash equal to the Current Market Value (as
defined) per Ordinary Share, as determined on the day immediately preceding the
date the Warrant is presented for exercise, multiplied by such fraction,
computed to the nearest whole cent.

The Company has agreed in the Warrant Agreement that, in the event the
Company establishes a facility for the deposit of Ordinary Shares and the
issuance of American Depositary Receipts ("ADRs"), the Company shall, subject to
applicable law, take all reasonable steps in connection with establishing such
facility to provide for the deposit of Warrant Shares therein and shall take
such action as is required to amend the Warrant Agreement to provide holders of
Warrants with the right, at their election, to exercise their Warrants for ADRs.

Certificates for Warrants have been issued in fully registered form only. No
service charge will be made for registration of transfer or exchange upon
surrender of any Warrant Certificate at the office of the Warrant Agent
maintained for that purpose. The Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Warrant Certificates.

Under Thai securities law, the Warrants have been issued by the Company in
reliance on a private placement exemption according to which sales to certain
qualified institutional investors provide an exemption from the requirement to
file a registration statement with the Office of the Thai Securities and
Exchange Commission (the "Thai SEC"). The Company has agreed in the Warrant
Agreement that, if

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required by applicable law, in the event the Company loses its eligibility for
the above private placement exemption, it shall cause a registration statement
to be filed with the Thai SEC.

CERTAIN TERMS

EXERCISE

In order to exercise all or any of the Warrants, the holder thereof is
required to surrender to the Warrant Agent the related Warrant Certificate and
pay in full the Exercise Price for each Ordinary Share. The Exercise Price must
be paid in cash or by certified or official bank check or by wire transfer to an
account designated by the Company for such purpose.

FOREIGN SHAREHOLDERS

A holder of Warrants that requests that the Warrant Shares be issued in the
name of a natural person who is not a citizen of Thailand or is a company the
majority of whose share capital is owned by persons who are not citizens of
Thailand or is any other legal or natural person not entitled under prevailing
Thai laws and regulations to acquire Ordinary Shares on the same basis as
natural persons who are citizens of Thailand (together, "non-Thai persons") may,
but need not, also designate a person who is not a non-Thai person (the
"Designated Purchaser") to whom some or all of the holder's entitlement to
Warrant Shares can be transferred (for such consideration as may be agreed
between the transferor and the Designated Purchaser) and to whom the relevant
Warrant Shares may be issued in the circumstances set out herein. The Company
will issue Warrant Shares issuable on conversion in the name of the Designated
Purchaser save to the extent that as a result of such issuance more than 49
percent of the Ordinary Shares (or such other percentage of outstanding Ordinary
Shares as the Company is from time to time permitted to register in the name of
non-Thai persons and whether higher or lower (such applicable percentage being
the "Foreign Ownership Percentage")) would be held by non-Thai persons in which
event the Company shall issue the excess shares in the name of the Designated
Purchaser or, if no such Designated Purchaser is so designated, will pay the
Cash Amount (as defined below).

If the Company is unable (or reasonably believes that it is unable, in
accordance with the conditions set forth in the preceding paragraph) to issue or
deliver any of the Warrant Shares issuable on conversion of any Warrant and
(unless a Designated Purchaser has been registered in the name of a non-Thai
person in accordance with such conditions), it shall issue such Warrant Shares
as it is so able to issue and register and will, no later than the 45th business
day in Bangkok after the relevant Exercise Date, pay to the relevant holder of
Warrants an amount (the "Cash Amount") equal to (i) the aggregate Market Price
(as hereinafter defined) of the number of remaining Warrant Shares to which the
holder of Warrants would have been entitled on the Exercise Date (converted into
U.S.$ at the middle rate quoted by the Bank of Thailand for the purchase of
U.S.$ with Baht on such date) less (ii) the per share Exercise Price times the
number of such remaining Warrant Shares. If a Market Price based on the foreign
board of the Securities Exchange of Thailand ("SET") is not available on that
second trading day, the latest available Market Price based on the foreign board
for the next three preceding trading days will be taken, or if none is available
the Market Price based on the domestic board of the SET on the second trading
day preceding the Exercise Date will be taken, failing which the Market Price
will be taken for the most recent trading day before then for which a Market
Price is available. The Cash Amount will be paid in accordance with instructions
specified in writing to the Warrant Agent.

The Company has agreed in the Warrant Agreement that the Company will not
issue any Ordinary Shares or other equity interests to any holders if the
Company is aware (taking into account its ability to access relevant
information) that the effect of such issuance would be, assuming the immediate
edxercise of all then outstanding Warrants, to cause the Company to exceed the
Foreign Ownership Percentage.

The term "Market Price" for any trading day means the average transaction
price for the Company's Ordinary Shares on that day, or, if no transaction takes
place on such day, the average of the closing bid

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and offered prices on such day, in either case as reported by the SET on the
foreign board or, as the case may be, the domestic board of the SET.

If with respect to any Exercise Date more than one holder of Warrants has
exercised its Warrants and the Company is not able to issue and deliver any
Warrant Shares as provided above, the Company shall treat all such holders of
Warrants on a pro-rata basis to their respective entitlements and shall issue
such Warrant Shares as it is able (rounded down, if necessary, to the nearest
whole share) and pay the relevant Cash Amounts on a proportionate basis among
such holders of Warrants.

Notwithstanding the foregoing, the Company shall not pay the Cash Amount in
accordance with the foregoing provisions (but shall instead issue the relevant
Shares) if the Warrants may be converted into Warrant Shares which may, to the
satisfaction of the Warrant Agent, be issued to a person or entity for the
benefit of non-Thai persons, all in accordance with any relevant Thai law and
the Articles of Association of the Company provided that this paragraph shall
not apply with respect to any holder of Warrants which specifies in writing to
the Warrant Agent that such Warrant Shares are not to be issued to such a person
or entity.

NO RIGHTS AS SHAREHOLDERS

Unless otherwise required by law, the holders of unexercised Warrants are
not entitled, by virtue of being such holders, to receive dividends, to vote, to
consent, to exercise any preemptive rights or to receive notice as shareholders
of the Company in respect of any shareholders meeting for the election of
directors of the Company or any other purpose, or to exercise any other rights
whatsoever as shareholders of the Company.

MERGERS, CONSOLIDATIONS, ETC.

In the event that the Company consolidates with, merges with or into, or
sells all or substantially all of its assets to, another Person, each Warrant
thereafter shall entitle the holder thereof to receive upon exercise thereof,
per Ordinary Share for which such Warrant is exercisable, the number of Ordinary
Shares or other securities or property which the holder of an Ordinary Share is
entitled to receive upon completion of such consolidation, merger or sale of
assets. However, if (i) the Company consolidates with, merges with or into, or
sells all or substantially all of its assets to, another Person and, in
connection therewith, the consideration payable to the holders of Ordinary
Shares in exchange for their shares is payable solely in cash or (ii) there is a
dissolution, liquidation or winding-up of the Company, then the holders of the
Warrants will be entitled to receive distributions on an equal basis with the
holders of Ordinary Shares or other securities issuable upon exercise of the
Warrants, as if the Warrants had been exercised immediately prior to such event,
less the Exercise Price. Upon receipt of such payment, if any, the Warrants will
expire and the rights of the holders thereof will cease. In the case of any such
merger, consolidation or sale of assets, the surviving or acquiring person and,
in the event of any dissolution, liquidation or winding-up of the Company, the
Company must deposit promptly with the Warrant Agent the funds, if any, required
to pay to the holders of the Warrants. After such funds and the surrendered
Warrant Certificates are received, the Warrant Agent is required to deliver a
check in such amount as is appropriate (or, in the case of consideration other
than cash, such other consideration as is appropriate) to such Persons as it may
be directed in writing by the holders surrendering such Warrants.

ADJUSTMENTS

The number of Warrant Shares issuable upon the exercise of the Warrants and
the Exercise Price will be subject to adjustment in certain events including:
(i) the payment by the Company of dividends on the Warrant Shares payable,
whether in whole or in part, in newly-issued Ordinary Shares, (ii) subdivisions,
splits, combinations and certain reclassifications of the Ordinary Shares, (iii)
the issuance to all holders of Ordinary Shares of rights, options or warrants
entitling them to subscribe for Ordinary Shares, or of

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securities convertible into or exchangeable or exercisable for Ordinary Shares,
for a consideration per share which is less than the Current Market Value per
Ordinary Share, (iv) the issuance of Ordinary Shares for a consideration per
share which is less than the Current Market Value per Ordinary Share, (v) the
distribution to all holders of the Ordinary Shares of any of the Company's
assets, debt securities or any rights or warrants to purchase securities
(excluding those rights and warrants referred to in clause (iii) above, any
rights which may be issued under a shareholder rights plan and cash dividends
(other than Extraordinary Dividends) and other cash distributions from current
or retained earnings) and (vi) other events similar to items (i)-(v) above
which, in the judgment of the Board of Directors of the Company, adversely
affect the rights of the holders of the Warrants. No adjustment to the number of
Ordinary Shares issuable upon the exercise of the Warrants and the Exercise
Price will be required in certain events including: (i) the issuance of Ordinary
Shares in bona fide public offerings that are underwritten or in which a
placement agent is retained by the Company, (ii) the issuance of options or
Ordinary Shares pursuant to any option or employee benefit plans approved by the
Board of Directors and (iii) the issuance of Ordinary Shares in connection with
acquisitions of products, technologies and businesses other than to affiliates
of the Company.

In the event of a distribution to holders of Ordinary Shares which results
in an adjustment to the number of Warrant Shares or other consideration for
which a Warrant may be exercised, the holders of the Warrants may, in certain
circumstances, be deemed to have received a distribution subject to United
States Federal income tax as a dividend. See "Tax Considerations".

No adjustment in the Exercise Price will be required unless such adjustment
would require an increase or decrease of at least one percent in the Exercise
Price; PROVIDED, HOWEVER, that any adjustment which is not made as a result of
this paragraph will be carried forward and taken into account in any subsequent
adjustment.

AMENDMENT

From time to time, the Company and the Warrant Agent, without the consent of
the holders of the Warrants, may amend or supplement the Warrant Agreement for
certain purposes, including curing defects or inconsistencies or making any
change that does not adversely affect the rights of any holder (including
providing the right to holders of Warrants to exercise their Warrants for ADRs).
Any amendment or supplement to the Warrant Agreement that has an adverse effect
on the interests of the holders of the Warrants shall require the written
consent of the holders of a majority of the then outstanding Warrants. The
consent of each holder of the Warrants affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares issuable upon exercise of Warrants would be decreased (other
than pursuant to adjustments provided for in the Warrant Agreement).

REGISTRATION RIGHTS

REGISTRATION OF WARRANTS

The Company is required under the Warrant Agreement to file a shelf
registration statement under the Securities Act covering the resale of the
Warrants by the holders thereof (the "Warrant Shelf Registration Statement")
within 90 days after the date of original issuance of the Warrants and to use
its reasonable best efforts to cause the Warrant Shelf Registration Statement to
be declared effective under the Securities Act within 180 days after the date of
original issuance of the Warrants and to remain effective until the earliest of
(i) such time as all of the Warrants have been sold thereunder, (ii) three years
after its effective date and (iii) such time as the Warrants can be sold without
restriction under the Securities Act.

Each holder of Warrants that sells such Warrants pursuant to the Warrant
Shelf Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and

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to deliver a prospectus to the purchaser, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales and will be bound by certain provisions of the Warrant Agreement which are
applicable to such holder (including certain indemnification obligations). In
addition, each holder of Warrants will be required to deliver information to be
used in connection with the Warrant Shelf Registration Statement in order to
have its Warrants included in the Warrant Shelf Registration Statement.

REGISTRATION OF UNDERLYING ORDINARY SHARES

The Company is required under the Warrant Agreement to file a shelf
registration statement under the Securities Act covering the issuance of Warrant
Shares to the holders of the Warrants upon exercise of the Warrants by the
holders thereof (the "Common Shelf Registration Statement") and to use its
reasonable best efforts to cause the Common Shelf Registration Statement to be
declared effective on or before 365 days after the Issue Date and to remain
effective until the earlier of (i) such time as all Warrants have been exercised
and (ii) the Expiration Date.

During any consecutive 365-day period, the Company shall be entitled to
suspend the availability of each of the Warrant Shelf Registration Statement and
the Common Shelf Registration Statement for up to two 45 consecutive-day periods
(except for the 45 consecutive-day period immediately prior to the Expiration
Date) if the Board of Directors determines in the exercise of its reasonable
judgment that there is a valid business purpose for such suspension and provides
notice that such determination was made to the holders of the Warrants;
PROVIDED, HOWEVER, that in no event shall the Company be required to disclose
the business purpose for such suspension if the Company determines in good faith
that such business purpose must remain confidential. There can be no assurance
that the Company will be able to file, cause to be declared effective, or keep a
registration statement continuously effective until all of the Warrants have
been exercised or have expired.

CERTAIN DEFINITIONS

The Warrant Agreement contains, among others, the following definitions:

"CURRENT MARKET VALUE" per Ordinary Share at any Trading Date (as defined)
means the average transaction price for the Ordinary Shares on that date or, if
no transaction takes place on such day, the average of the closing bid and
offered prices on such day, in either case as reported by the SET on the foreign
board.

"ISSUE DATE" means the date on which the Warrants are initially issued.

"ORDINARY SHARES" means ordinary shares of the Company with a nominal value
of 10 Baht or shares of any class or classes resulting from any subdivision,
consolidation or reclassification of those shares, which as between themselves
have no preference in respect of dividends or of amount payable in the event of
liquidation or dissolution of the Company.

"PERSON" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

"WARRANT CERTIFICATES" mean the registered certificates (including the
Global Warrants (as defined below)) issued by the Company under the Warrant
Agreement representing the Warrants.

"TRADING DATE" means a date on which the Ordinary Shares trade publicly on
the SET in Bangkok.

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DESCRIPTION OF SHARE CAPITAL

There are 718,639,864 Ordinary Shares outstanding. As of such date, although
authorized by the Company's articles of association, no preference shares have
been issued. The following summary of certain provisions of the Company's share
capital describes all material provisions of, but does not purport to be
complete and is subject to, and qualified in its entirety by, the Company's
certificate of incorporation, articles of association and memorandum of
association and by the provisions of applicable law.

ORDINARY SHARES

The Company is authorized to issue up to 860,000,000 Ordinary Shares, 10
Baht par value. Holders of Ordinary Shares are entitled to one vote for each
share held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the Ordinary
Shares entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of Ordinary Shares are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors and/or approved at shareholders' meetings out of net profits available
therefor. Upon the liquidation, dissolution or winding up of the Company, the
holders of Ordinary Shares are entitled to receive ratably the net assets of the
Company available after the payment of all debts and other liabilities. Holders
of Ordinary Shares have no redemption or conversion rights. The outstanding
Ordinary Shares are, and the shares subject to Warrants issued by the Company on
the Issue Date and the shares subject to SDI Warrants to be issued to SDI will
be, when issued and paid for, fully-paid and nonassessable. See "Description of
the Warrants" and "Description of Material Agreements--SDI License Agreement."
The rights, preferences and privileges of holders of Ordinary Shares are subject
to, and may be adversely affected by, the rights of the holders of Preference
Shares which the Company may designate and issue in the future. At present, the
Company has no plans to issue any Preference Shares.

SDI WARRANTS

In connection with the execution of the SDI License, on the Issue Date the
Company issued 11,421,480 warrants to SDI. Each SDI Warrant will, upon exercise,
entitle SDI to acquire one Ordinary Share at an exercise price of 10 Baht. The
SDI Warrants will be exercisable following an exercise of Warrants by holders of
such Warrants in amounts such that SDI will be able to maintain its equity
interest in NSM in the event holders of Warrants exercise such Warrants. The
Company will pay SDI as royalties under the SDI License Agreement, for the
exercise price of SDI Warrants upon the exercise of SDI Warrants. The SDI
Warrants were issued pursuant to a warrant agreement that will contain
provisions regarding exercise (excluding the limitations described above),
adjustments, amendment, shareholder's rights and mergers.

SHARE REGISTRAR

The shares registrar for the Company's Ordinary Shares is Thailand
Securities Depositary Company Limited.

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TAX CONSIDERATIONS

THAI TAXATION

This summary assumes that an investor is not a resident of or doing business
in Thailand for tax purposes.

THAI TAXATION OF ORDINARY SHARES

Upon exercise of a Warrant, if the Investor holding the underlying Ordinary
Share is a non-resident individual or a corporation or registered partnership
established outside of Thailand, does not conduct business in Thailand and
receives dividends or capital gains from or in Thailand, such holder shall have
the tax obligations described below. In considering whether an individual holder
is a resident of Thailand, the nationality is irrelevant. Rather, the holder
will be deemed to be a resident of Thailand for tax purposes if the holder has
been in Thailand for more than 180 days during a tax (calendar) year, with one
or more aggregate periods.

(i) any dividends received will be subject to withholding tax, withheld by
the Company at the rate of 10%. Dividends paid during the corporate tax
exemption period under the BO privileges will however, be exempt from
withholding tax; and

(ii) a capital gain arising from the transfer of an Ordinary Share will be
subject to withholding tax withheld by the relevant purchaser at the rate of
15%. Capital gains arising from the transfer on the SET by an individual will
however, be exempt from income tax. Such holder may be exempt from such
withholding tax pursuant to the terms of an applicable tax treaty between
Thailand and the holder's resident country. The Tax Treaty between Thailand and
the United States, however, provides no such exemption.

No withholding tax applies at the time of exercise notwithstanding the
market price of the underlying Ordinary Share.

THAI STAMP DUTY

The transfer of an Ordinary Share is subject to stamp duty at the rate of 1
Baht for every 1,000 Baht or fraction thereof on the Ordinary Share transferred,
payable within 15 days if the transfer is executed in Thailand. If it is
executed outside of Thailand and the instrument has been brought into Thailand,
stamp duty is payable within 30 days from the date it has been brought in.
However, no stamp duty will be payable on the transfer of Ordinary Shares as
long as the SET acts as the registrar of the Company in relation to the
transfer.

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LEGAL MATTERS

Certain legal matters with respect to the warrants will be passed upon for
the Company by White & Case LLP, New York, New York, United States counsel for
the Company and White & Case (Thailand) Limited, Thailand counsel for the
Company.

EXPERTS

The financial statements of the Company as of December 31, 1995, 1996, 1997
and for each of the years then ended, have been included herein and in the
registration statement in reliance upon the report of Peat Marwick Suthee
Limited, independent certified public accountants, appearing elsewhere herein
and upon the authority of said firm as experts in accounting and auditing.

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NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report............................................................................... F-2

Balance Sheets as of December 31, 1995, 1996 and 1997...................................................... F-3

Statements of Income for the Years Ended December 31, 1995, 1996 and 1997.................................. F-5

Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1995, 1996 and 1997......... F-6

Statements of Cash Flows for the Years Ended December 31, 1995, 1996 and 1997.............................. F-7

Notes to Financial Statements for the Years Ended December 31, 1995, 1996 and 1997......................... F-8
</TABLE>

F-1
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INDEPENDENT AUDITORS' REPORT

To the Shareholders of Nakornthai Strip Mill Public Company Limited:

We have audited the accompanying balance sheets of Nakornthai Strip Mill
Public Company Limited as of December 31, 1995, 1996 and 1997 and the related
statements of income, changes in shareholders' equity and cash flows for the
years then ended all expressed in Thai Baht. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in Thailand, which are substantially similar with those in the United
States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

We draw attention to Note 2 to the financial statements. The operations of
the Company have been affected and will continue to be affected for the
foreseeable future by the economic conditions in Thailand and Asia Pacific
Region in general.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nakornthai Strip Mill Public
Company Limited as of December 31, 1995, 1996 and 1997 and the results of its
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles in Thailand.

Generally accepted accounting principles in Thailand vary in certain
significant respects from generally accepted accounting principles in the United
States of America. Application of generally accepted accounting principles in
the United States would have affected shareholders' equity as of December 31,
1995, 1996 and 1997 and results of operations for the years then ended to the
extent summarized in Note 22 to the financial statements.

Nirand Lilamethwat
Certified Public Accountant

Peat Marwick Suthee Limited
Bangkok, February 14, 1998, except as
to Note 21, which is
as of May 12, 1998

F-2
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

BALANCE SHEETS AS AT DECEMBER 31, 1995, 1996 AND 1997

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995 1996 1997 1997
ASSETS BAHT BAHT BAHT U.S.$
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
CURRENT ASSETS
Cash on hand and at banks................................. 60,001 492,693 15,140 351
Short-term investments
Fixed deposits.......................................... 34,587 8,894 2,825 60
Promissory notes-finance companies...................... 2,719,443 864,116 -- --
---------- ------------ ------------ -----------
Total Short-term investments.......................... 2,754,030 873,010 2,825 66
Inventories............................................... -- -- 459,497 10,661
Loan to related company................................... -- 5,610 750,413 17,411
Less allowance for bad debts............................ -- -- (750,413) (17,411)
---------- ------------ ------------ -----------
Loan to related company--net.......................... -- 5,610 -- --
---------- ------------ ------------ -----------
Other current assets
Deposits and advance payments
- others.............................................. 82,634 49,241 13,663 317
- related party....................................... -- 63,000 60,000 1,392
Insurance claim......................................... -- -- 60,738 1,409
Value added tax recoverable............................. 27,448 145,704 186,662 4,331
Other receivables from related parties.................. -- 1,748 2,648 61
Other................................................... 7,801 64,596 95,334 2,212
---------- ------------ ------------ -----------
Total Other Current Assets............................ 117,883 324,289 419,045 9,722
---------- ------------ ------------ -----------
Total Current Assets.................................. 2,931,914 1,695,602 896,507 20,800
LONG-TERM INVESTMENTS (Note 10)............................. -- -- 544,129 12,625
Less allowance for bad debts.............................. -- -- (544,129) (12,625)
---------- ------------ ------------ -----------
Long-term investments--net................................ -- -- -- --
---------- ------------ ------------ -----------
PROPERTY, PLANT AND EQUIPMENT--NET (Note 11)................ 2,430,562 9,437,572 24,454,278 567,385
OTHER ASSETS
Deferred charges.......................................... 60,169 252,202 987,257 22,906
Deposits.................................................. 1,085 1,872 6,875 160
---------- ------------ ------------ -----------
Total Other Assets.................................... 61,254 254,074 994,132 23,066
---------- ------------ ------------ -----------
Total Assets.......................................... 5,423,730 11,387,248 26,344,917 611,251
---------- ------------ ------------ -----------
---------- ------------ ------------ -----------
</TABLE>

See notes to financial statements

F-3
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

BALANCE SHEETS AS AT DECEMBER 31, 1995, 1996 AND 1997

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995 1996 1997 1997
LIABILITIES AND SHAREHOLDERS' EQUITY BAHT BAHT BAHT U.S.$
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
CURRENT LIABILITIES
Bank overdrafts and loan from financial
institutions............................................ 339 30,752 162,976 3,781
Short-term loans (Note 13)................................ -- -- 24,700 573
Accounts payable
- other................................................. 199,178 922,262 3,912,926 90,787
- related parties....................................... 385 -- 4,273 99
---------- ------------ ------------ -----------
Total................................................... 199,563 922,262 3,917,199 90,886
Notes payable and advances from related party............. 71,958 -- -- --
Others current liabilities
Accrued expenses
- other............................................... 907 89,312 637,774 14,798
- related parties..................................... -- -- 20,705 480
Retention payables...................................... -- 73,131 111,247 2,581
Other................................................... 963 4,871 14,972 347
---------- ------------ ------------ -----------
Total Other Current Liabilities....................... 1,870 167,314 784,698 18,206
---------- ------------ ------------ -----------
Total Current Liabilities............................. 273,730 1,120,328 4,889,573 113,447
LONG-TERM DEBT (Note 14).................................... -- 4,156,920 16,639,886 386,076
---------- ------------ ------------ -----------
Total Liabilities..................................... 273,730 5,277,248 21,529,459 499,523
SHAREHOLDERS' EQUITY
Share capital (Note 15)
Authorized 650,000,000 shares in 1995 and 1996 and
860,000,000 shares in 1997 Baht 10 par value.......... 6,500,000 6,500,000 8,600,000 199,536
---------- ------------ ------------ -----------
---------- ------------ ------------ -----------
Issued 500,000,000 shares in 1995 and 560,000,000 shares
in 1996 and 1997,
fully paid............................................ 5,000,000 5,600,000 5,600,000 129,931
Premium on share capital.................................. 150,000 510,000 510,000 11,833
Deficit................................................... -- -- (1,294,542) (30,036)
---------- ------------ ------------ -----------
Total Shareholders' Equity............................ 5,150,000 6,110,000 4,815,458 111,728
---------- ------------ ------------ -----------
Total Liabilities and Shareholders' Equity............ 5,423,730 11,387,248 26,344,917 611,251
---------- ------------ ------------ -----------
---------- ------------ ------------ -----------
</TABLE>

See notes to financial statements

F-4
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Provision for bad debts (Notes 5 and 10)................... -- -- 1,294,542 30,036
----------- ----------- ----------- -----------
Net loss................................................... -- -- (1,294,542) (30,036)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net loss per share......................................... -- -- (2.31) (0.05)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>

See notes to financial statements.

F-5
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Share capital:
Ordinary shares
Beginning balance........................................ 10,000 5,000,000 5,600,000 129,931
Shares sold to existing shareholders..................... 4,990,000 -- -- --
Share sold in public offering............................ -- 600,000 -- --
---------- ---------- ----------- -----------
Ending balance........................................... 5,000,000 5,600,000 5,600,000 129,931
---------- ---------- ----------- -----------
Paid in capital
Premium on share capital
Beginning balance........................................ -- 150,000 510,000 11,833
Shares sold to existing shareholders..................... 150,000 -- -- --
Share sold in public offering............................ -- 360,000 -- --
---------- ---------- ----------- -----------
Ending balance........................................... 150,000 510,000 510,000 11,833
---------- ---------- ----------- -----------
Deficit
Beginning balance.......................................... -- -- -- --
Net loss................................................... -- -- (1,294,542) (30,036)
---------- ---------- ----------- -----------
Ending balance............................................. -- -- (1,294,542) (30,036)
---------- ---------- ----------- -----------
Total Shareholders' Equity................................... 5,150,000 6,110,000 4,815,458 111,728
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>

See notes to financial statements

F-6
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

(IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss....................................................... -- -- (1,294,542) (30,036)
Adjustments to reconcile net loss to net cash used in operating
activities:
Provision for bad debts...................................... -- -- 1,294,542 30,036
Increase in inventories...................................... -- -- (459,497) (19,661)
Increase in value added tax recoverable...................... (27,394) (118,256) (40,958) (950)
Increase in insurance claim.................................. -- -- (60,738) (1,409)
Increase in other current assets............................. (44,814) (35,198) (31,638) (734)
Increase in other assets..................................... (56,905) (186,767) (727,258) (16,874)
Increase in accrued expenses................................. 857 88,405 548,462 12,725
Increase in other current liabilities........................ 963 3,908 30,805 715
--------- --------- ---------- -----------
Net cash used in operating activities.................... (127,293) (247,908) (740,822) (17,188)
--------- --------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loan to related company............................ -- -- (744,803) (17,281)
Purchases of promissory notes.................................. (8,854,066) (9,129,239) (2,481,443) (57,574)
Maturities of promissory notes................................. 6,181,636 10,955,611 2,801,431 64,998
Decrease (increase) in deposits and advance payments........... (82,634) (29,607) 38,577 895
Purchases of property, plant and equipment..................... (2,226,769) (6,290,364) (12,034,569) (348,712)
Increase in retention payables................................. -- 73,131 38,117 884
--------- --------- ---------- -----------
Net cash used in investing activities.................... (4,981,833) (4,420,468) (12,382,690) 287,301
--------- --------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in bank overdrafts and loan from financial
institutions................................................. 339 30,413 132,224 3,068
Increase in short-term loan.................................... -- -- 24,700 573
Proceeds from issuance of notes payable and advances from
related party................................................ 71,958 -- -- --
Repayment of notes payable and advances from related party..... (8,593) (71,958) -- --
Proceeds from issuance of long-term debt....................... -- 4,156,920 12,482,966 289,628
Proceeds from sale of share capital............................ 5,140,000 960,000 -- --
--------- --------- ---------- -----------
Net cash provided by financing activities................ 5,203,704 5,075,375 12,639,890 293,269
--------- --------- ---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............. 94,578 406,999 (483,622) (11,221)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 7).......... 10 94,588 501,587 11,638
BANK DEPOSIT PLEDGED AS COLLATERAL AT END OF YEAR (Note 7)....... -- -- (2,825) (66)
--------- --------- ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 7)................ 94,588 501,587 15,140 351
--------- --------- ---------- -----------
--------- --------- ---------- -----------
ADDITIONAL CASH FLOWS INFORMATION
Cash paid during year for interest............................. 2,409 59,145 624,392 14,487
--------- --------- ---------- -----------
--------- --------- ---------- -----------
</TABLE>

See notes to financial statements

F-7
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1996 AND 1997

NOTE 1--NATURE OF OPERATIONS

Nakornthai Strip Mill Public Company Limited (the "Company") is a Thai
public company listed on the Stock Exchange of Thailand. The Company was founded
in 1994 to become a producer of flat rolled steel for both domestic use and
export. Through December 31, 1997, the Company was in the development stage and
its activities primarily related to the construction of its mini-mill, which is
located in Thailand. The Company's hot mill, the core of the mini-mill, has been
completed as of December 31, 1997. The Company expects to begin commercial
production of hot-rolled steel in early 1998. The Company's facilities for
production of direct reduced iron and for production of cold-rolled, galvanized
and other value added steel products are still under construction. The Company
expects to complete these facilities in the first quarter of 1999.

NOTE 2--ECONOMIC ENVIRONMENT

The Company expects to sell a significant portion of its products in
Thailand and other countries in the Asia/Pacific region. In addition,
substantially all of the Company's assets are located in Thailand. Recent
adverse economic conditions in Thailand and other countries in the Asia/Pacific
region have resulted in, among other things, a national liquidity crisis in
Thailand, significant depreciation in the value of the Thai Baht and certain
other currencies in the Asia/Pacific region relative to, among others, the U.S.
Dollar, sharply higher domestic interest rates, reduced opportunities for
refinancing or refunding of maturing debts, and a general reduction in spending
throughout the region. In order to partially address this situation, the
Government of Thailand and certain other governments of countries within the
Asia/ Pacific region sought assistance from the International Monetary Fund and
announced policy packages intended to address the structural weaknesses within
their respective economies and financial sectors. These reform policies are
intended to alleviate the economic crisis in Thailand and other countries in the
Asia/Pacific region and improve their respective economies over time. However,
these reform policies may not be effective in the near term or at all. The
current economic conditions in Thailand, and similar conditions in the
Asia/Pacific region, could have a significant negative effect on the financial
position, cash flow, operating results and general levels of business activities
of the Company.

As of December 31,1997, the Company had net foreign currency denominated
liabilities of approximately Baht 16.3 billion, substantially all in U.S.
Dollars. As a result of the previously discussed depreciation in the Thai Baht
relative to the U.S. Dollar, the Company incurred significant unrealized foreign
exchange losses during 1997. The Company's ultimate foreign exchange gains or
losses with respect to currency fluctuations will depend on future currency
exchange rates and other factors.

As a result of the conditions noted in the previous paragraph, it is at
least reasonably possible that the estimates utilized by the Company as a basis
for supporting the carrying amounts of certain long-lived assets will change in
the near term.

NOTE 3--BASIS OF PRESENTATION

The financial statements of Nakornthai Strip Mill Company Limited are
prepared in accordance with accounting principles generally accepted in
Thailand, including Thai Commerce Ministerial Regulation No.7 dated October 25,
1996, and requirements of the Stock Exchange of Thailand (collectively, "Thai
GAAP"). The financial statements also have been reformatted from the original
Thai statutory financial statement presentation and include certain additional
disclosures in order to conform more closely to the

F-8
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 3--BASIS OF PRESENTATION (CONTINUED)
form and content required by the Securities and Exchange Commission of the
United States of America (the "SEC").

NOTE 4-- TRANSLATION OF THAI BAHT AMOUNTS INTO UNITED STATES DOLLAR AMOUNTS

The financial statements are stated in Thai Baht. The translations of the
Thai Baht amounts into United States Dollars ("U.S.$") are included solely for
the convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of Baht 43.1 to U.S.$1.00. The
convenience translations should not be construed as representations that the
Thai Baht amounts have been, could have been, or could in the future be,
converted into United States Dollars at this or any other rate of exchange.

NOTE 5--RELATED PARTY TRANSACTIONS

The Company is majority owned by the Horrungruang family group of companies.
The Company has significant transactions with these related parties. The
financial statements reflect the effects of these transactions on the basis
determined by the companies concerned.

The significant related party transactions as shown in the financial
statement as of and for the years ended December 31, 1995, 1996 and 1997 are as
follows (in millions):

<TABLE>
<CAPTION>
1995 1996 1997
BAHT BAHT BAHT
--------- --------- ---------
<S> <C> <C> <C>
Deposit and advance payments to related company....................................... -- 63.00 60.00
Loans to a related company, including interest receivable............................. -- 5.61 750.41
Advance receivable from related company............................................... -- 1.75 2.65
Notes payable and advances from related company....................................... 71.96 -- --
Accounts payable to related company for construction.................................. 0.39 -- 4.50
Accrued expenses...................................................................... -- -- 20.70
Interest income from related company.................................................. 7.13 39.39 36.92
Purchases of raw material............................................................. -- -- 6.31
Interest expense to related company................................................... 1.40 0.24 --
Management fee paid to related company................................................ 20.26 -- 6.30
Purchase of land from related company................................................. 719.96 -- --
Rental expense........................................................................ -- -- 8.92
Other expense......................................................................... -- -- 4.84
</TABLE>

Deposit and advance payments to related company includes a Baht 60 million
advance payment for water usage under a 19 year agreement. The Company plans to
obtain substantially all of its water needs at market rates from a reservoir
owned by the related company.

As at December 31, 1997, the loans to a related company include Baht 385.52
million related to loans where the Company authorized the conversion of its
promissory notes from finance companies whose operation were suspended by
Ministry of Finance, to promissory notes from the related company by allowing
the finance companies to offset such promissory notes against the related
company's loans from

F-9
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 5--RELATED PARTY TRANSACTIONS (CONTINUED)
those finance companies. The loans to a related company mature on January 30,
1998 with interest at 14.80 % per annum and are repayable in cash or in exchange
for raw materials and water usage at market rates. The remaining loan to the
related company amounting to Baht 364.89, including accrued interest, is an
unsecured promissory note that has been renewed several times and is currently
due on December 31, 1997. The promissory note bears 16% interest per annum.
Management has fully reserved these loans due to concerns about the financial
position of the related company.

NOTE 6--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowance for doubtful accounts is an estimate of those amounts which may
prove to be uncollectible, based on review of the current status of existing
receivables.

INVENTORIES

Inventories consist of raw materials and supplies that are stated at the
lower of cost, using the first in, first out method, or market, except fuel and
natural gas which are costed using a moving average method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation is computed
by the straight-line method based on the estimated useful lives of assets of
5-20 years. Depreciation of property and equipment used for administrative
purposes for the years ended December 31, 1995, 1996 and 1997 in the amount of
Baht 1,277,019, 6,053,340 and 12,841,716, respectively, is included in deferred
charges. Interest expense and exchange gains or losses related to liabilities
incurred to finance construction is capitalized as part of the cost of
construction.

DEFERRED CHARGES

Deferred charges consist of pre-operating expenses, which are net of
interest income in the amount of Baht 111.9 million, 202.8 million and 145.0
million for the years ended December 31, 1995, 1996 and 1997, respectively,
costs of issuing debt and costs of increasing share capital which will be
amortized over a ten-year period using the straight-line method commencing when
revenues are earned from operations.

ACCOUNTS IN FOREIGN CURRENCIES

Transactions in foreign currencies are converted into Baht at the rates of
exchange on transaction dates. Assets and liabilities in foreign currencies at
the end of the year are translated into Baht at the rates of exchange on that
date. Gain or loss on translation is included in pre-operating expenses and the
cost of construction.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are cash on hand and at banks and fixed deposits
at banks with an original maturity of three months or less, excluding amounts
pledged as collateral. While promissory notes

F-10
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 6--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
receivable from finance companies are similar to interest bearing deposits, and
generally have maturities of 3 months or less, the Company has adopted a policy
of treating all promissory notes receivable as investments.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.

INCOME TAXES

Income taxes are recognized on the basis of the estimated current income tax
liability for the period in accordance with existing regulations giving
consideration to applicable exemptions.

LOSS PER SHARE

Loss per share is computed by dividing net loss by the weighted average
number of shares outstanding during each year. Weighted average shares
outstanding during the year ended December 31, 1995, 1996 and 1997 were
292,083,333, 535,000,000 and 560,000,000, respectively.

NOTE 7--CASH AND CASH EQUIVALENTS

Cash and cash equivalents consisted of (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1995 1996 1997
BAHT BAHT BAHT
--------- --------- ---------
Cash and cash at bank............................................................... 60,001 492,693 15,140
Fixed deposits at banks............................................................. 34,587 8,894 2,825
Less fixed deposits pledged as collateral for guarantees............................ -- -- (2,825)
--------- --------- ---------
Cash and cash equivalents....................................................... 94,588 501,587 15,140
--------- --------- ---------
--------- --------- ---------
</TABLE>

At December 31, 1997, fixed deposits at banks are used as collateral for
guarantees.

NOTE 8--INSURANCE CLAIM

At December 31, 1997, an insurance claim in the amount of Baht 60.74 million
represents a claim submitted to an insurance company for recovery of expenses
incurred to hire a second boat to recover a damaged boat carrying equipment
purchased by the Company. The Company is currently negotiating this claim with
the insurance company and, if not successful in recovering this amount, the cost
will be taken to construction in progress as part of the cost of acquiring the
equipment.

F-11
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 9--INVENTORIES

Inventories as at December 31, 1997 consisted of (in thousands):

<TABLE>
<CAPTION>
BAHT
---------
<S> <C>
Raw materials...................................................................... 42,044
Parts and supplies................................................................. 411,998
Goods in transit................................................................... 5,455
---------
Total Inventories.............................................................. 459,497
---------
---------
</TABLE>

NOTE 10--LONG-TERM INVESTMENTS

In June and August 1997, the Thai Government suspended the operations of 58
finance companies with liquidity problems pending approval of rehabilitation
plans. On December 8, 1997, The Thai Government permanently closed 56 of the 58
finance companies. At December 31, 1997, the Company had promissory notes
receivable totaling Baht 544.13 million, including accrued interest, from
finance companies that have been closed.

These promissory notes from the closed finance companies, including accrued
interest, are used as collateral for loans by the finance companies to related
companies. The Company has fully reserved for these promissory notes receivable
due to concern about the recovery of these notes.

NOTE 11--PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
<S> <C> <C> <C>
1995 1996 1997
BAHT BAHT BAHT
---------- ---------- ------------
Land...................................................................... 719,958 749,658 776,091
Building.................................................................. -- 20,063 20,749
Furniture and fixtures.................................................... 2,753 5,106 16,548
Office equipment.......................................................... 4,821 19,359 49,333
Vehicles.................................................................. 8,137 15,449 18,141
Construction in progress.................................................. 1,696,210 8,635,307 23,593,586
---------- ---------- ------------
2,431,879 9,444,942 24,474,448
LESS Accumulated depreciation............................................. 1,317 7,370 20,170
---------- ---------- ------------
Property, Plant and Equipment--net.................................... 2,430,562 9,437,572 24,454,278
---------- ---------- ------------
---------- ---------- ------------
</TABLE>

Substantially all of the Company's property, plant and equipment is pledged
as collateral for long-term debt. The Company capitalized interest expense of
Baht 85.4 million and Baht 1,032.0 million and exchange losses of Baht 46.1
million and Baht 6,701.4 million as part of the cost of construction during the
years ended December 31, 1996 and 1997, respectively.

F-12
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 12--LONG-TERM AGREEMENT

In August 1996, the Company entered into an agreement (the "Agreement") with
a steel producer based in the United States of America (the "US Company")
whereby the US Company would provide training and data relating to the business
processes that the Company would use in its operations. As compensation for
these services, the US Company was to have received cash of up to U.S.$15
million, options to purchase a minimum of 2 1/2% and a maximum of 5% of the
Company's shares outstanding at the date of exercise and reimbursement of
out-of-pocket expenses. The minimum cash compensation was to have been U.S.$5
million. The first installment of U.S.$2.5 million was paid in August 1996 and a
second installment of U.S.$2.5 million was due in August 1997. The remaining
cash of up to U.S.$10 million was to have been payable in increments as
incentive compensation based on the successful start-up of the manufacturing
facility and achievement of certain operating performance objectives over the
first 24 months of operation. Under the Agreement, the options were granted
concurrently with the execution of the Agreement, but the percentage of the
Company's outstanding shares that could be issued upon exercise of the options
in excess of the 2 1/2% minimum was dependent upon the Company achieving certain
production results determined under a preset production model. The purchase
price of shares upon exercise of the options was equal to the lesser of 75% of
the market price at the date of exercise or Baht 16 per share. The options were
exercisable beginning in August 1998 and expired five years thereafter.

The Company did not make the cash payment of U.S.$2.5 million due in August
1997. However, by agreement between the Company and the US Company, the due date
was subsequently extended to October 1, 1997. The Company was unable to make
such payment and the US Company delivered a termination notice on October 27,
1997. The Agreement provides that, upon proper termination, any unpaid amount of
the maximum sum of U.S.$15 million that the US Company could have earned shall
be considered immediately earned and due and payable. The Company believes that
the notice of termination was improper under the terms of the Agreement, and
that the US Company repudiated the Agreement prior to the extended due date for
the payment. The minimum cash compensation of U.S.$5 million, consisting of U.S.
$2.5 million paid in cash and U.S. $2.5 million accrued, and out-of-pocket
expenses paid to the US Company are included in deferred charges as
pre-operating expenses. See subsequent event in Note 21.

NOTE 13--SHORT-TERM LOANS

Short-term loans represent loans from individuals. The Company issued
unsecured promissory notes due on demand bearing interest at 18% per annum.

F-13
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 14--LONG-TERM DEBT

On September 27, 1995, the Company entered into a long-term debt agreement
with a group of Thai financial institutions. The agreement makes amounts
available in both U.S. Dollars and in Baht. The Company may borrow up to U.S.$
308 million and up to Baht 3,300 million. U.S.$ amounts borrowed under this
agreement bear interest payable quarterly at SIBOR plus 2.5% per annum and Baht
amounts bear interest at MLR plus 0.5% per annum. These loans are due in 13
semi-annual installments beginning on the earlier of four years after the first
amount is borrowed or two years after the Company's manufacturing facility
begins operations. The Company first borrowed amounts under this agreement in
1996. The amount outstanding at December 31, 1996 is a US Dollar loan of US.$
162 million. The amount outstanding at December 31, 1997 is a U.S.$ loan of
280.51 million and a Baht loan of Baht 3,300 million.

After the manufacturing facility begins operations, the Company must reserve
0.5% of the balance of the U.S.$ loans outstanding as of each year end until the
total reserve is more than 5% of the outstanding balance of the U.S.$ loans.
Such amount must be deposited in a separate bank account and pledged to the
lenders. Substantially all of the Company's property, plant and equipment is
pledged as collateral for this long-term debt.

The agreement contains certain restrictive covenants including the
following. The Company may not utilize amounts borrowed under the agreement for
any business other than the hot-rolled strip mill project. The Company may not
pay dividends in excess of 70% of net income during each year. The Company may
not dispose of, mortgage, pledge or otherwise encumber its property and
equipment or any other assets which is not in the ordinary course of its
business. The Company may not provide guarantees to or on behalf of other
persons which is not in the ordinary course of its business. The Company may not
reduce capital, or dispose of or transfer assets to its shareholders. The
agreement also discusses certain events which would be considered events of
default including any situation that occurred which, in the opinion of the
lenders, is a material adverse change in the business operation, property or
indebtedness of the Company that would impair the Company's ability to comply
with this agreement. A default of payment due to any creditor would also be an
event of default. The Company's obligations under the agreement are guaranteed
by a shareholder. Lawsuits against the guarantor, or if the guarantor is
deceased or otherwise incapacitated, would also be an event of default. If the
Company violates any of these restrictive covenants or an event of default
occurs, all amounts owed under the agreement become immediately due upon the
receipt of notice from the lenders.

The Company was not in compliance with certain restrictive covenants and
certain events of default existed as of December 31, 1997. See subsequent event
in Note 21.

NOTE 15--SHARE CAPITAL

A special resolution was passed by the Extraordinary General Meetings of
shareholders held on May 4, 1995 and May 19, 1995 authorizing a change of a par
value from Baht 100 per share to Baht 10 per share and the increase of share
capital from Baht 10 million to Baht 5,000 million dividing into 500 million
shares of Baht 10 par value. The Company registered the change of par value and
the increase of its share capital on May 29, 1995.

A special resolution was passed by the Extraordinary General Meetings of
shareholders held on July 21, 1995 and October 19, 1995 authorizing an increase
of share capital from Baht 5,000 million to Baht 6,500 million dividing into 650
million shares of Baht 10 par value. The increase of share capital will be

F-14
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 15--SHARE CAPITAL (CONTINUED)
issued at prices and conditions as the Board of Directors may deem appropriate.
On June 4, 1996, the Company registered the change of its share capital from
Baht 5,000 million to Baht 5,600 million divided into 560 million shares of Baht
10 par value.

The Extraordinary General Meeting of shareholders held on October 22, 1997
and December 11, 1997, passed a special resolution to authorize a decrease of
share capital from Baht 6,500 million to Baht 5,600 million and an increase of
share capital from Baht 5,600 million to Baht 8,600 million divided into 300
million share of Baht 10 par value. The Company has reserved 194.47 million new
shares for issuance to specific new investors, subject to Thai Securities and
Exchange Commission regulations, and for issuance under the long-term agreement
discussed in Note 12 to the financial statements. The remaining 105.53 million
shares will be distributed as the Board of Directors may deem appropriate.

NOTE 16--CONVERSION OF THE COMPANY INTO A THAI PUBLIC COMPANY

A special resolution was passed by the Extraordinary General Meetings of
shareholders held on July 1, 1995 and July 21, 1995 authorizing the conversion
of the Company into a limited public company in Thailand and the change in its
name from "Nakornthai Strip Mill Company Limited" to "Nakornthai Strip Mill
Public Company Limited." The Company registered its conversion into a Thai
public company on August 9, 1995.

NOTE 17--PROMOTIONAL PRIVILEGES

The Board of Investment granted promotional privileges to the Company by
issuing a certificate for the manufacturing of hot iron plate, Classification
2.25, the manufacture of hot iron plate or cold iron plate. These privileges are
subject to certain conditions which the Company expects to meet. The promotional
privileges will include exemption from corporate income tax of net income
arising from the promoted activities for seven years from the date when revenues
are first earned.

NOTE 18--COMMITMENTS

At December 31, 1997, the Company had commitments under construction
contracts in the amount of Baht 4,131.80 million, and had unused letters of
credit in the amount of Baht 604.75 million. At December 31, 1997, the Company
had a letter of guarantee in the amount of Baht 142.44 million and other
commitments of Baht 6.4 million.

The Company entered into a ten-year take or pay commitment to purchase a
fixed amount of coal per year beginning in 1998. Prices for the coal are
renegotiated at the beginning of each year.

The Company entered into a 20 year take or pay commitment to purchase
various industrial use gases beginning on July 1, 1997. Prices for the gases are
subject to adjustment each year to consider inflation. The Company entered into
a five-year take or pay commitment to purchase natural gas beginning in June
1997. The unit price is subject to adjustment for changes in market prices.

NOTE 19--RECLASSIFICATION OF ACCOUNTS

Certain accounts in the financial statements for 1995 and 1996 have been
reclassified to conform with the presentation of the financial statements for
1997.

F-15
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 20--OTHER INFORMATION

The Board of Directors' Meeting held on September 17, 1997 authorized the
establishment of a subsidiary company named NSM Holding Company Limited ("NSM
Holding") in the Cayman Islands for purposes of issuing long-term notes. The
authorized share capital is US$ 10,000 divide into 1,000 common shares of US$ 10
par value. The Company owns 100% of the authorized share capital. The subsidiary
was established on October 23, 1997.

The Extraordinary General Meeting of shareholders held on October 22, 1997
authorized the Company to guarantee debt expected to be issued by NSM Holding of
not more than US$ 750 million with terms not to exceed 10 years.

The Board of Directors' Meeting held on December 26, 1997 authorized the
change in the name of NSM Holding Company Limited to NSM Steel Company Limited
("NSM Steel") and the establishment of a wholly-owned subsidiary company of NSM
Steel named NSM Steel ( Delaware ), Inc. ("NSM Deleware") the United States of
America also for purposes of issuing long-term notes.

NOTE 21--SUBSEQUENT EVENTS

On April 3, 1998, the Company paid U.S.$2.5 million to the US Company
discussed in Note 12 under a letter providing that such payment was in full
satisfaction of all of the Company's obligations under the Company's agreement
with the US Company. By letter dated May 12, 1998, the US Company asserted a
claim to the remaining U.S.$10 million of cash compensation and options to
purchase 5% of the Company's outstanding shares. However, the Company still does
not believe it has any future obligation to the US Company for such cash
compensation and or stock options for the reasons discussed in Note 12 and
intends to vigorously defend against this claim.

On March 31, 1998, the Company registered the increase of its share capital
from Baht 5,600,000,000 to Baht 7,186,398,640 dividing into 718,639,864 fully
paid shares with Baht 10 par value.

On March 12, 1998, NSM Steel and NSM Delaware (collectively, the "Issuers")
completed on offering of long-term notes and debentures for total proceeds of
approximately U.S.$444 million. The Issuers immediately loaned the proceeds of
the debt offerings to the Company on terms substantially the same as the terms
received by the Issuers. The long-term notes were issued with an aggregate
principal amount due at maturity of US$ 249,000,000 and US$ 203,500,000 and
mature on February 1, 2006 and February 1, 2008, respectively. The long-term
notes bear interest at the rate of 12% to 12 1/4% per annum that will be paid
semi-annually. The long-term notes were issued at a discount to generate gross
proceeds of US$ 400,604,000. The purchasers of a portion of the long-term notes
received warrants (the "Warrants") to purchase 128,834,356 ordinary shares of
the Company at an exercise price of Baht 10 per share. The Warrants are
exercisable beginning on the first anniversary date of the issue date and expire
on February 1, 2008. The debentures were issued with an aggregate principal
amount due at maturity of US$ 53,133,016 and are due February 1, 2009. The
debentures bear interest at 12 3/4% per annum that will be paid semi-annually.
The debentures were issued at a discount to generate gross proceeds of US$
43,500,000. In conjunction with the debentures offering, the Company issued
64,417,180 ordinary shares for gross proceeds of Baht 644,171,800 through a
private placement. The long-term notes and loans from Thai financial
institutions are secured by a first mortgage over the land and buildings
comprising the mill and all machinery and equipment located at the mill. The
debentures are secured by a second mortgage on the land and buildings comprising
the mill and all machinery and equipment located at the mill. In addition, the
long-term notes and debentures are secured by all funds remaining in certain
cash accounts maintained

F-16
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 21--SUBSEQUENT EVENTS (CONTINUED)
with a trustee in the United States. A substantial portion of the gross proceeds
of the Company's recent debt and equity offerings are reserved for capital
expenditures and payment of interest on the long-term notes and debentures. The
Company's access to these funds is restricted to these uses. The maximum amount
of the gross proceeds which can be used for working capital and general
corporate purposes is US$ 70 million.

In connection with the offering, the Company entered into several other
agreements. The Company entered into a 10 year contract with a Management
Company. Pursuant to the agreement, the Company will assign and delegate to
Management Co. the exclusive right and obligation to control, posses and manage
all business affairs for Company. Under the agreement, Management Co. shall not
be entitled to any fee or other compensation for its services. The Company also
entered into a 10 year contract with Steel Dynamics, Inc., "(SDI)", under which
SDI will provide Management Co. with consultation and technical and advisory
services. As compensation for these services, SDI will receive an annual fee of
US$ 2 million and a one-time incentive fee of US$ 1.3 million. The Company also
entered into a license and technology sharing agreement with SDI for a period of
10 years. As compensation for the rights granted to the Company by SDI, the
Company issued 74,468,090 of its ordinary shares to SDI and granted warrants to
SDI to purchase up to 11,421,480 ordinary shares of the Company for Baht 10 per
share. Concurrent with exercise of the warrants, the Company would pay Baht 10
per share to SDI such that there would be no net cost to SDI. The warrants are
exerciseable only to the extent the Warrants discussed above are exercised such
that SDI would maintain its percentage ownership of the Company. Any unexercised
warrants expire on March 12, 2008. The Company also entered into eight year
sales agreements ("Offtake Agreements") with two international steel trading
companies. Pursuant to the Offtake Agreements, the trading companies are
obligated to purchase 100% of the Company's production in 1998, 1999 and 2000,
and 25% of the Company's production in the years 2001 through 2005. The Company
may, at its option, reduce the percentage of its production sold under the
agreements to as little as 67% in 1998, 50% in 1999 and 25% in 2000.

Also in connection with the offering, the Company amended its long-term debt
agreement with the Thai financial institutions. Also, the Company pre-paid US$
50 million of principal and paid all accrued interest due under the loan from
the Thai financial institutions by using funds from the offering. The amendment
modified the restrictive covenants and waived all past violations of the
agreement upon successful completion of the offering. As amended, the remaining
principle is payable semi-annually beginning in the first quarter of 2000.
Installments will be in the amount of US$ 24.01 million for the U.S.$ loan and
Baht 169.18 million for the Baht loan. The first installment will be payable on
March 1, 2000. Interest is payable quarterly at the rate of SIBOR + 2.5% per
annum for the US$ loan and MLR+0.5% per annum for the Baht loan. Also as
amended, the Company must prepay the outstanding balance of the loans by an
amount equal to 50% of annual earnings before depreciation and amortization,
less scheduled debt repayments and maintenance capital expenditures, beginning
in the year 2000.

NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA

The Company's financial statements have been prepared in accordance with
Thai GAAP, which differs in certain material respects from Generally Accepted
Accounting Principles in the United States of America ("U.S. GAAP"). Differences
that have an effect on net loss and shareholders' equity are as follows:

F-17
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
A. FOREIGN EXCHANGE GAINS AND LOSSES

Under Thai GAAP, foreign exchange translation gains and losses related to
foreign currency liabilities incurred specifically to fund construction of plant
and equipment are capitalized during the construction period. Under U.S. GAAP,
all foreign exchange translation gains and losses must be included in earnings
in the period in which such gains and losses arise.

B. DEFERRED CHARGES

Thai GAAP permits the deferral of pre-operating expenses, net of interest
income earned, during the pre-operating period. For U.S. GAAP purposes, these
expenses have been expensed as incurred and the related revenue recognized in
the period earned. Under U.S. GAAP, the minimum cash compensation due under the
agreement discussed in Note 12 was being amortized as administrative expense
over the approximate 17 month period of service. The accrual ceased upon
termination of the agreement.

Thai GAAP permits the capitalization and amortization of expenses incurred
for the acquisition of debt as an asset which is then amortized over the life of
the debt. Such amortization is generally provided using the straight-line
method. U.S. GAAP requires the capitalization of debt acquisition costs which
are subsequently amortized over the life of the related debt using the interest
method. The U.S. GAAP income statement has not been adjusted because the impact
of such difference is immaterial.

Both Thai GAAP and U.S. GAAP require the capitalization of costs incurred to
get an asset ready for its intended use. Under Thai GAAP, the cost of
engineering studies for construction projects is capitalized as deferred charges
and amortized on a straight-line basis over a period unrelated to the useful
life of the related assets. Under U.S. GAAP, all costs of getting an asset ready
for its intended use are capitalized as part of the historical cost of that
asset and depreciated over its useful life. This difference currently affects
only classification of the costs but will effect depreciation and shareholders'
equity in future periods.

Under Thai GAAP, costs incurred in connection with offerings of share
capital are deferred and amortized to income. Under U.S. GAAP, such costs are
charged against the proceeds from the offering.

C. STOCK OPTIONS

Under Thai GAAP, no value was ascribed to the stock options discussed in
Note 12 due to the variable exercise price and number of shares. Under U.S.
GAAP, the fair value of the options is not estimable and, therefore, the current
intrinsic value of outstanding options was being expensed through September 30,
1997 as an administrative cost over the vesting period. As discussed Notes 12
and 21, management believes the options have been canceled.

D. DEFERRED INCOME TAXES

Thai GAAP has no requirement for establishing deferred income tax assets or
liabilities. The Company has adopted a policy whereby income taxes are
recognized on the basis of the estimated current income tax liability for the
period in accordance with existing regulations giving consideration to
applicable exemptions.

U.S. GAAP requires deferred tax assets and liabilities to be established for
temporary differences between the tax and financial reporting bases of assets
and liabilities. Deferred tax assets and liabilities are

F-18
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
measured using the enacted tax rates applicable to the periods in which the
differences are expected to affect taxable income. Deferred income tax assets
are also established for tax losses which may be carried forward and used to
reduce future taxable income. U.S. GAAP requires a valuation allowance to be
established sufficient to reduce any deferred tax assets to the amount that,
based on the weight of the available evidence, is more likely than not to be
recovered.

E. CAPITALIZATION OF INTEREST EXPENSE

Under Thai GAAP, all interest incurred during the construction period on
debt specifically related to funding construction of plant and equipment is
capitalized as part of the cost of acquiring the assets. Under U.S. GAAP,
interest costs incurred during the construction period are required to be
capitalized as part of the cost of acquiring the asset. Interest costs
recognized on all borrowings and other obligations are eligible for
capitalization. The amount capitalized under U.S. GAAP is based on the effective
interest rates of outstanding borrowings applied to the cumulative expenditures
for the asset. If specific new borrowings are associated with the asset, the
effective interest rate on that borrowing may be applied to that portion of the
cumulative expenditures for the asset. All interest costs have been capitalized
under both Thai GAAP and U.S. GAAP; therefore, the U.S. GAAP income statement
has not been adjusted for this difference. However, a portion of interest
expense amounting to Baht 3.1 million and Baht 56.8 million at December 31, 1996
and 1997, respectively was capitalized as pre-operating expense for Thai GAAP
and such amount has been reclassified to construction in progress under U.S.
GAAP.

F. INSURANCE CLAIM

Under Thai GAAP, as discussed in Note 8, the Company is carrying the costs
of recovering a damaged boat carrying its equipment as a receivable from its
insurance company. Under Thai GAAP, such amount will be reclassified as a
component of the equipment cost if the claim is not successful. Under U.S. GAAP,
such costs are not considered part of the equipment cost and, due to
uncertainties about recoverability from the insurance company, have been
expensed as incurred.

G. RECENT CHANGES IN US GAAP

In June 1997, the U.S. Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130 which requires the
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses). SFAS No. 130 also requires that the components of
comprehensive income be reported in a financial statement that is displayed with
equal prominence as other financial statements. SFAS No. 130 is effective for
the Company's 1998 financial statements and requires reclassification of all
financial statements for prior periods presented under US GAAP. The Company has
not assessed the impact of SFAS No. 130.

In June 1997, the FASB issued SFAS No. 131 which requires disclosure of
certain information for the Company's reportable operating segments. SFAS No.
131 defines a reportable operating segment as a component of the Company about
which separate financial information is available that is evaluated regularly by
management in deciding how to allocate resources and in assessing performance.
SFAS No. 131 is effective for the Company's 1998 financial statements and
requires comparative information be presented for all prior periods presented
under US GAAP. The Company has not assessed the impact of SFAS No. 131.

F-19
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
The following statements of income and deficit for the years ended December
31, 1995, 1996, 1997 and from inception to December 31, 1997, have been prepared
under U.S. GAAP to reflect the impact of the aforementioned differences between
Thai GAAP and U.S. GAAP (in thousands, except per share data):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FROM INCEPTION TO
-------------------------------------------- DECEMBER 31, 1997
1995 1996 1997 1997 ----------------------
BAHT BAHT BAHT U.S.$ BAHT U.S.$
--------- --------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Interest income....................................... 111,883 202,790 145,001 3,364 459,673 10,665
--------- --------- --------- ----------- --------- -----------
Expenses
Bad debt expense...................................... -- -- 1,294,542 30,036 1,294,542 30,036
Administrative........................................ 68,630 322,990 879,954 20,417 1,273,854 29,555
Depreciation.......................................... 1,277 6,053 12,842 298 20,212 469
Foreign exchange losses............................... 143 46,089 6,720,261 155,922 6,766,492 156,995
--------- --------- --------- ----------- --------- -----------
70,050 375,132 8,907,599 206,673 9,355,100 217,055
--------- --------- --------- ----------- --------- -----------
Income (loss) before income taxes..................... 41,833 (172,342) (8,762,598) (203,309) (8,895,427) (206,390)
Deferred income tax expense (benefit)................. 5,848 (5,848) -- -- -- --
--------- --------- --------- ----------- --------- -----------
Net income (loss) under U.S. GAAP..................... 35,985 (166,494) (8,762,598) (203,309) (8,895,427) (206,390)
Retained earnings (deficit) accumulated during the
development stage--beginning of year................ (2,320) 33,665 (132,829) (3,081) -- --
--------- --------- --------- ----------- --------- -----------

Retained earnings (deficit) accumulated during the
development stage--end of year...................... 33,665 (132,829) (8,895,427) (206,390) (8,895,427) (206,390)
--------- --------- --------- ----------- --------- -----------
--------- --------- --------- ----------- --------- -----------
Basic and diluted net income (loss) per share......... 0.12 (0.31) (15.65) (0.37)
--------- --------- --------- -----------
--------- --------- --------- -----------
Weighted average shares outstanding................... 292,083 535,000 560,000 560,000
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>

The following is a summary of the aforementioned adjustments to
shareholders' equity that would be required if U.S. GAAP had been applied
instead of Thai GAAP in the financial statements (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Shareholders' equity under Thai GAAP......................... 5,150,000 6,110,000 4,815,458 111,728
Items increasing (decreasing) reported shareholders' equity:
Foreign exchange losses.................................... (143) (46,231) (6,766,492) (156,995)
Deferred income taxes...................................... (5,848) -- -- --
Deferred charges........................................... 39,656 (125,931) (875,479) (20,313)
---------- ---------- ----------- -----------
Net increase (decrease) in reported shareholders'
equity................................................. 33,665 (172,162) (7,641,971) (177,308)
---------- ---------- ----------- -----------
Shareholders' equity (deficit) under U.S. GAAP............... 5,183,665 5,937,838 (2,826,513) (65,580)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>

F-20
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
The following is a reconciliation of deferred charges determined under Thai
GAAP to the amounts determined under U.S. GAAP (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Deferred charges under Thai GAAP................................ 60,169 252,202 987,257 22,906
Adjustments required under U.S. GAAP
Construction in progress...................................... (27,850) (35,464) (96,380) (2,236)
Administrative expense........................................ (70,909) (388,358) (1,221,464) (28,340)
Depreciation.................................................. (1,318) (7,371) (20,212) (469)
Interest income............................................... 111,883 314,673 459,673 10,665
Cost of issuing share capital................................. -- (44,875) (51,294) (1,190)
--------- ---------- ----------- -----------
Deferred charges under U.S. GAAP................................ 71,975 90,807 57,580 1,336
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
</TABLE>

The following is a reconciliation of property, plant and equipment
determined under Thai GAAP to the amounts determined under U.S. GAAP (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------
1995 BAHT 1996 BAHT 1997 BAHT 1997 US$
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Property, plant and equipment under Thai GAAP................ 2,430,562 9,437,572 24,454,278 567,385
Adjustments required under US GAAP
Deferred charges, classification........................... 27,850 35,464 96,380 2,236
Foreign exchange losses.................................... (143) (46,231) (6,747,936) (156,565)
---------- ---------- ------------ -----------
Property, plant and equipment under US GAAP.................. 2,458,269 9,426,805 17,802,722 413,056
---------- ---------- ------------ -----------
---------- ---------- ------------ -----------
</TABLE>

NOTE 23--ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP

A. CUMULATIVE CASH FLOWS

Cumulative net cash used in operating activities from inception to December
31, 1997 was Baht 1,021,091,000. Cumulative net cash used by the Company in
investing activities from inception to December 31, 1997 was Baht
21,800,538,000. Cumulative net cash provided to the Company by financing
activities from inception to December 31, 1997 was Baht 22,839,594.

B. INCOME TAXES

The Company has been granted certain income tax privileges as described in
Note 17 to the financial statements. These privileges are subject to certain
conditions which the Company expects to meet. These income tax privileges had no
impact on current taxes during 1995, 1996 or 1997 since the Company had no
earnings during those years for tax purposes. For U.S. GAAP purposes, deferred
income taxes have been

F-21
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 23--ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP (CONTINUED)
provided for temporary differences expected to reverse during periods after the
exemption from income tax expires.

On a U.S. GAAP basis, temporary differences giving rise to deferred tax
assets and liabilities as of December 31, 1995, 1996 and 1997 are as follows (in
thousands). All such differences relate to the differences between U.S. and Thai
GAAP as discussed in Note 22.

<TABLE>
<CAPTION>
1995 1996 1997
BAHT BAHT BAHT
--------- --------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Deferred charges.............................................................. -- 14,525 83,671
Property, plant and equipment................................................. -- 1,860 1,140,920
--------- --------- -----------
Gross deferred tax assets................................................... -- 16,385 1,224,591
Valuation allowance........................................................... -- (16,385) (1,224,591)
--------- --------- -----------
Total deferred tax assets................................................... -- -- --
--------- --------- -----------
--------- --------- -----------

Deferred tax liabilities:
Deferred charges.............................................................. (1,062) -- --
Property, plant and equipment................................................. (4,786) -- --
--------- --------- -----------
Total deferred tax liabilities.............................................. (5,848) -- --
--------- --------- -----------
--------- --------- -----------
Net deferred tax asset (liabilities)............................................ (5,848) -- --
--------- --------- -----------
--------- --------- -----------
</TABLE>

A valuation allowance was provided against the deferred tax assets at
December 31, 1996 and 1997 because the Company has no operating history.

C. MATURITIES OF LONG-TERM DEBT

The maturities of long-term debt for each of the five years subsequent to
December 31, 1997 are summarized as follows (in thousands):

<TABLE>
<CAPTION>
BAHT
------------
<S> <C>
1998............................................................................ 2,621,773
1999............................................................................ 2,621,773
2000............................................................................ 2,621,773
2001............................................................................ 2,621,773
2002............................................................................ 2,621,773
Thereafter...................................................................... 3,531,021
------------
16,639,886
------------
------------
</TABLE>

F-22
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

NOTE 23--ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP (CONTINUED)
D. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it was practical to estimate that
value:

- The carrying amount of cash on hand and at banks, short-term investments,
value added tax recoverable, bank overdrafts and loan from financial
institutions, accounts payable, retention payables and short-term loans
approximate fair value because of the short maturity of these instruments.

- The carrying amount of other receivables from related parties and notes
payable and advances from related party are materially the same as their
fair value.

- The fair value of long-term debt is estimated by discounting the future
cash flows at rates currently offered for similar debt instruments of
comparable maturities. The estimated fair value of long-term debt at
December 31, 1996 and 1997 is Baht 4,056 million and Baht 16,442 million,
respectively.

E. ALLOWANCE FOR BAD DEBTS

The following is a roll forward of the allowance for bad debts for the year
ended December 31, 1997 (in thousands) :

<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF ACCOUNTS END OF
YEAR EXPENSES WRITTEN OFF YEAR
----------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT
1997........................................................... -- 1,294,542 -- 1,294,542
-- --
-- --
---------- ----------
---------- ----------
</TABLE>

F-23
<PAGE>
ANNEX A

THE KINGDOM OF THAILAND

The following information regarding the Kingdom of Thailand ("Thailand") is
included for information only and has not been independently verified by the
Company or any of their respective affiliates or advisors. All of the data and
other information included below has been obtained from published or public
official sources of Thailand.

GENERAL

Thailand, formerly known as Siam, is situated in Southeast Asia. It is
bounded on the north and west by the Union of Myanmar (Burma), on the north and
east by Laos and on the southeast by Cambodia. In the south it becomes a
peninsula bounded by the Indian Ocean in the west, Malaysia in the south and the
South China Sea in the east. The country covers an area of 514,000 square
kilometers and has an estimated population of 60 million.

Approximately 70% of the population lives in the central and northeastern
regions of the country. By far the largest urban center is Bangkok (which
includes Thon Buri), the capital, where the population has been growing more
rapidly than the national population as a whole, increasing from 3.7 million in
1971 to approximately 5.6 million at the end of 1995.

Approximately 85% of the population of Thailand is of Thai ethnic origin.
The most important minority group is the ethnic Chinese who comprise over 12% of
the population. The predominant religion in Thailand is Buddhism to which 95% of
the population adheres. Islam accounts for 4% and is concentrated in the south
adjacent to Malaysia. The balance of the population is predominantly Christian.
The literacy rate is over 90% for adults over 15 years of age. The official
language is Thai, but the use of English is encouraged, and is part of the
school curriculum.

GOVERNMENT STRUCTURE AND POLITICS

Thailand is a constitutional monarchy. His Majesty King Bhumibol Adulyadej,
Rama IX, who ascended the throne in 1946, is a highly respected symbol of
national unity and provides an important stabilizing influence in the country.

Under the constitution, the King is the Head of State, Commander of the
Armed Forces and Patron of all Religions. He has power to, upon the advice of
the Prime Minister, declare and lift martial law, declare war with the approval
of the National Assembly, conclude treaties with other countries or
international organizations, grant pardons, appoint and remove high ranking
officials in the civil service and commissioned officers in the armed forces. He
is advised in the exercise of his functions by the Privy Council, appointed by
royal command.

The executive power is vested in the cabinet ("Council of Ministers"), which
consists of the Prime Minister and not more than 35 other ministers, each
appointed by royal consent. The cabinet can be dismissed by a vote of
no-confidence of the House of Representatives. The new constitution, enacted in
October 1997 stipulates that the members of the House of Representatives will
lose memberships if they become ministers.

Legislative power is exercised by the bicameral National Assembly, which is
comprised of the Senate and the House of Representatives. Under the
constitution, the President of the House of Representatives is also the
President of the National Assembly. The Prime Minister is nominated by the
president of the National Assembly and appointed by the King. The 200 members of
the Senate, who may not belong to a political party, are elected for six-year
terms. There are 500 members of the House of Representatives, 400 of whom are
elected by popular vote together with 100 members elected under a party list
system. The term of office of members of the House of Representatives is four
years.

A-1
<PAGE>
The Thai legal system with respect to the criminal, civil, commercial, and
special codes is based on British and European legal systems. There is also an
extensive system of administrative law consisting of royal decrees, executive
orders, and ministerial regulations. Thai law relating to family and inheritance
matters is codified based upon traditional Thai laws. The judicial power is
exercised by the courts of justice, consisting of the courts of first instance,
the court of appeal and the Supreme Court. The King appoints all judges of the
courts of justice after they have been approved by the Judicial Commission.

For the purposes of administration the country is divided into 76 provinces,
each under the control of a governor; each province is divided into districts,
sub-districts and villages. The governors are appointed by the King on the
advice of the Minister of Interior, except for the governor of Bangkok, who is
directly elected by Bangkok residents.

RECENT POLITICAL DEVELOPMENTS

After civil unrest in May 1992, an interim government was set up under Mr.
Anand Panyarachun and the House of Representatives was dissolved for a general
election that was held on September 13, 1992. The Democrat party won the most
seats in that election and Mr. Chuan Leekpai, the Democrat Party leader, became
Prime Minister and organized a five party coalition cabinet. However, due to
controversy in connection with the Land Reform Program, Prime Minister Chuan was
forced to dissolve the House. In the ensuing nationwide election held on July 2,
1995, the Chart Thai party won the largest number of seats in the House of
Representatives, leading to the appointment of Mr. Banharn Silpa-archa as Prime
Minister. In September 1996, however, Mr. Banharn was the subject of a censure
debate in the House of Representatives, during which various charges were made
against him, including mismanagement of the Thai economy and improper conduct by
members of his administration. On September 21, prior to the censure vote, Mr.
Banharn announced that he would resign as Prime Minister within the following
week. On September 27, the Prime Minister dissolved the House of
Representatives, as permitted by the constitution in effect at that time, and
announced a new general election, which was held on November 17, 1996. In the
election, the New Aspiration Party ("NAP") headed by former army chief General
Chavalit Yongchaiyudh, won the largest number of seats in Parliament, capturing
125 of 393 seats. NAP's total of 125 seats, however, was far short of an
absolute majority, so that a coalition government of six parties, which together
had a 24-seat majority, was created to control the House of Representatives. The
principal opposition to the new government was the Democrat Party, which won 123
seats in the election.

This coalition government included many members of the previous coalition
government and in its first nine months carried on many of the policies adopted
by the previous government, including economic policies. On September 27, 1997,
Prime Minister Chavalit survived a no confidence vote in the National Assembly
amid widespread criticism of the Government's response to Thailand's economic
crisis and controversy over political reform and a draft new constitution, which
the Prime Minister initially opposed and ultimately supported. However, on
November 7, 1997, Prime Minister Chavalit resigned from office under intense
political pressure. In the interim before constitutionally mandated elections,
Mr. Chuan Leekpai has been appointed to the office of Prime Minister. He
presides over a coalition government that includes the major parties that formed
the opposition to the former government of Prime Minister Chavalit.

On September 27, 1997, the National Assembly approved a new constitution,
which was signed by His Majesty the King on October 11, 1997 and took effect the
same day upon official publication. The new constitution is seen by its
supporters as a means of reforming and modernizing the Thai political system.

The new constitution, which is the first to have sought grassroots input,
expands citizens' rights, increases civil liberties, grants greater access to
official information and encourages participation in the governmental
decision-making process. The rights of local communities to participate in
managing natural resources and the environment have been spelled out. It is
unconstitutional to discriminate against Thai people on the basis of gender,
origin of birth, country of birth, race, language or religious faith. The new

A-2
<PAGE>
constitution also creates monitoring mechanisms against corruption. Members of
the Council of Ministers, as well as their spouses and children, are required to
disclose their assets, and members of the House of Representatives found to be
involved in misconduct can be more easily dismissed. The new constitution makes
voting compulsory. Formerly, low voter turn-out was considered by some to
encourage vote buying.

The constitution allows the Senate more power to scrutinize bills passed by
the House of Representatives and also to appoint members of monitoring agencies,
including a National Counter-Corruption Commission and certain Constitutional
Court judges. In addition, the Senate is empowered to appoint members of the
Election Commission, which supervises and manages all elections to ensure
fairness. Under the constitution, the National Assembly must, by mid-June 1998,
complete the consideration and approval of laws in respect of the elections of
members to the House of Representatives and Senate, the Election Commission and
political parties.

FOREIGN RELATIONS

Thailand has historically adopted a flexible approach in its conduct of
external relations. The success of this approach is evidenced by the fact that
Thailand is the only country in Southeast Asia, and one of the few in all of
Asia, never to be colonized by Western powers. Following the end of World War
II, Thailand's main external concern was to ensure that the spread of communism,
first in China and later in Vietnam, Cambodia and Laos, did not spill over into
Thailand. Consequently, in the early 1950's the Thai Government decided to align
with the West in general, and the United States in particular. In 1954, Thailand
became a party to a regional collective security arrangement called the
Southeast Asia Treaty Organization ("SEATO"). Although SEATO was dissolved in
1977, Thailand and the United States have remained allies under the Manila Pact,
which served as a basis for SEATO and remains in force today.

Thailand is a member of, and enjoys good relations with other members of,
the Association of Southeast Asia Nations, namely, Brunei, Indonesia, Malaysia,
the Philippines, Singapore, Vietnam, Laos and the Union of Myanmar (Burma).

Thailand has shown a strong interest in the development of multilateral
regional relations. It has been a signatory to a number of international
treaties including: the World Trade Organization (formerly the General Agreement
on Tariffs and Trade) (WTO); Agreement between the Government of the Kingdom of
Thailand, the Government of Malaysia and the Government of the Republic of
Indonesia relating to the Delimitation of Continental Shelf Boundaries in the
Northern Part of the Straits of Malacca; the Fifth International Tin Agreement;
the Treaty of Amity and Economic Relations Between the Kingdom of Thailand and
the United States of America; and the International Natural Rubber Agreement. In
the international financial context, Thailand is affiliated with major
multilateral lending institutions, including: the IMF, the World Bank, the
International Development Association (IDA), the International Finance
Corporation (IFC), and the Asian Development Bank (ADB). Thailand is also a
member of the United Nations, as well as a number of specialized United Nations
agencies, and of the International Coffee Organization, the International Sugar
Organization, the International Natural Rubber Organization and the
International Jute and Allied Fibres Organization.

Thailand is a party to the ASEAN Free Trade Agreement (AFTA) under which no
tariffs greater than 5% will be applied after 2003 on products, other than
certain unprocessed agricultural products, traded among the ASEAN member
countries. AFTA also requires that tariffs on such unprocessed agricultural
products be reduced by 2005.

In November 1996, Thailand and the United States of America signed the
"Convention Between the Government of the United States of America and the
Government of the Kingdom of Thailand for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with Respect to Taxes on Income." The treaty
has been ratified by both respective countries and came into force on January 1,
1998, although provisions concerning withholding tax will come into effect only
after a six-month delay. The treaty is expected to improve investment conditions
for U.S. investors.

A-3
<PAGE>
ECONOMY

Thailand's economy operates as a mixed economic system in which the private
sector plays a dominant role. The policy of the government has been to operate
most public utilities as well as to control a number of monopolies, such as the
lottery and domestic tobacco industry, and some other industries, but not to
displace private enterprise in the commercial or industrial sectors of the
economy, except where private capital is unable to develop essential industrial
projects. In particular, the government has begun to look to private industry in
connection with the modernization of telephone services and the development of a
mass transit system and has begun to privatize air transport.

While traditionally the Thai economy was based on agriculture, since the
early 1960's, the country has diversified its agricultural base and placed
increasing emphasis on the industrial and service sectors. The contribution of
agriculture, including crops, livestock, fishery, forestry, agricultural
services, and simple agricultural processing products to Gross Domestic Product
("GDP") decreased from 24% in 1979 to an estimated 10.7% in 1996 and increased
slightly to an estimated 11.2% in 1997, while during the same period the
industrial sector, including mining and quarrying, manufacturing, construction,
transportation and communication as well as electricity and water supply rose
from 36.1% to 47.2%. The contribution of the service sector, including wholesale
and retail trade, banking, insurance and real estate, ownership of dwellings,
public administration and defense and services increased from 39.9% to 41.6%
during the same period. Manufacturing activities at present range from the
production of major construction materials, electrical and electronic components
and goods to the processing of agricultural products.

The performance of Thailand's economy from 1992 through 1996 generally met
the targets set in the Seventh National and Social Development Plan (covering
fiscal years 1992-1996) (the "Seventh Plan"). Nominal GDP increased by an
estimated 70.52% during the period, from approximately 2,830.9 billion Baht in
1992 to approximately 4,827.2 billion Baht in 1996 and per capita GDP rose from
49,410 Baht in 1992 to an estimated 79,653 Baht in 1997. Average annual growth
in real GDP was 8.0% compared to 8.2% targeted in the Seventh Plan; average
annual growth in private sector investment was 7.0%, compared to 8.8% targeted
in the Seventh Plan and exports and imports grew by an average of 14.2% and
13.6%, respectively, compared to 14.7% and 11.4%, respectively, targeted in the
Seventh Plan. Inflation during the period rose at an average annual rate of
4.8%, compared to 5.6% targeted in the Seventh Plan. Real GDP in Thailand grew
by an estimated 5.5% in 1995, a decline from the previous four years.

Thailand's economy currently is experiencing significant contraction. Real
GDP growth is expected to decline from negative 0.4% in 1997 to a range of
negative 4.0% to negative 5.5% in 1998. Under the macroeconomic assumptions
developed in conjunction with the IMF Financial Assistance Program, domestic
consumption is expected to decline by 8.0% and gross fixed investment is
expected to decline by 24.0% in 1998.

The preparation of the Eighth Plan represented a departure from past
practice, as the Eighth Plan is intended to provide only general guidelines for
economic development. The preparation of the Eighth Plan involved extensive
public consultation through seminars held throughout Thailand. Under the Eighth
Plan, the Government's broad policy is to achieve balanced economic growth with
stability. As originally drafted, the Eighth Plan called for, among other
things, reducing the current account deficit as a percentage of GDP, controlling
inflation, mobilizing household savings to at least 10% of GDP, reducing the
percentage of the population below the defined poverty level to less than 10%,
improving the development of human resources and the quality of life, utilizing,
preserving and rehabilitating the natural environment and increasing the
quantity and quality of basic infrastructure in rural areas. One of the main
focuses of the Eighth Plan is human resource development and enhancement of the
productivity of the Thai labor force. The Government had previously increased
the level of compulsory education in the country from six years to nine years
during the Seventh Plan and has made efforts toward increasing the number of
technicians and skilled workers. Meanwhile, the Government is also actively
encouraging private sector corporations to re-train their workforce.

A-4
<PAGE>
The devaluation of the Baht during 1997, combined with the concurrent crisis
in Thailand's financial sector and property markets and related adverse economic
developments in Thailand and other Asian countries, have substantially altered
the assumptions under which the Eighth Plan was developed. Accordingly, the
Government has adopted amendments to the Eighth Plan that reflect Thailand's
current economic and social environment and the economic rehabilitation program
developed in connection with the IMF Financial Assistance Program. The
amendments reflect lower public and private investment spending targets,
increased monitoring of private sector external debt, emphasis of fiscal and
monetary policy on controlling inflation, financial reform, increased export
competitiveness and alleviation of social problems arising from the economic
slowdown, including, INTER ALIA, unemployment. The amendments also target
acceleration of state enterprise reform, decentralization of government power,
privatization of state enterprises, development of human resource programs and
participation of non-governmental organizations in decision-making and policy
formation.

Thailand has obtained a U.S.$17.2 billion loan package from the IMF. The IMF
has imposed strict austerity measures as conditions to this package. These
include tax increases, government spending cuts and implementation of a plan for
financial reform and rehabilitation. In addition, Thailand has agreed to the
following adjusted fiscal goals:

1. Maintain economic growth rates at 3-4 percent in 1997-1998 and aim
for a potential growth rate of 6-7 percent over the medium term.

2. Reduce inflation to 4-5 percent following an initial increase to an
average of 7-8 percent in 1997-1998.

3. Reduce the current account deficit to 5 percent of GDP in 1997 and to
a sustainable level of 3 percent over the medium term.

4. Maintain gross international reserves of about U.S.$23 billion in
1997 and U.S.$25 billion in 1998, equivalent to approximately 4 months of
imports.

As a result of the continued slowdown in the Thai economy, which has been
more severe than previously anticipated due in part to the economic difficulties
experienced by other Asian countries (including lower demand from Japan and
other Southeast Asian trading partners), more pronounced weakness in private
consumption and investment demand and continued liquidity shortages, the
Government, in consultation with the IMF, revised in November 1997, February
1998 and May 1998 certain of its macroeconomic assumptions. The most recent
revisions in May 1998 included lowering the real GDP growth rate for 1998 to a
range of negative 4.0% to negative 5.5% (from negative 3.0% to negative 3.5%
following the February 1998 review), revising the expected inflation level to an
average of 10.5% in 1998 (from 11.6% following the February 1998 review),
increasing the consolidated public sector deficit to approximately 3.0% of GDP
(from 2.0% GDP following the February 1998 review) for the 1998 fiscal year,
increasing the current account surplus to 6.9% of GDP (from 4.0% of GDP
following the February 1998 review) in 1998 and maintaining gross international
reserves of U.S.$26-28 billion for 1998 (as compared to reserves of U.S.$23-25
billion following the February 1998 review) (approximately 6.2 to 6.7 months of
estimated 1998 import value). Actual performance of the economy could vary from
these assumptions, and future adverse developments in Asia could further
exacerbate Thailand's economic difficulties, including by adversely affecting
Thai exports.

The board of the IMF most recently met on December 8, 1997 to evaluate
Thailand's progress in meeting package conditions and approve a second round of
drawings in the amount of U.S.$810 million. On March 9, 1998, the IMF approved a
third round of drawings in the amount of U.S.$270 million. The government
expects to receive an additional disbursement from the IMF of U.S.$138 million
in mid-June 1998. Since August 1997, the IMF has made funds available to
Thailand in the amount of U.S.$2.67 billion.

A-5
<PAGE>
In addition, the World Bank is providing a U.S.$1.5 billion loan package in
order to assist in the reform of the Thai Financial system. The World Bank
released U.S.$350 million on December 30, 1997. Also, Asian Development Bank is
providing U.S.$1.2 billion loan package for on-going project loans and
structural adjustment loans. On December 20, 1997 and March 18, 1998, the total
of U.S.$600 million was released to Thailand.

PRIVATE SECTOR DEVELOPMENT

Thailand has a mixed economy, with almost all industrial and commercial
activity being owned and operated by the private sector and financial activity
being owned and operated by both the public and private sectors. The government
controls some portions of financial activity in Thailand and is responsible for
promoting the necessary infrastructure and a stable environment to foster
economic growth. The government operates most public utilities and some
industries but since 1983 the government has taken steps to liquidate, sell,
lease or contract out a number of government enterprise activities to the
private sector.

Thailand has been one of the largest recipients of foreign direct investment
("FDI") in the Asia Pacific Region, with net direct foreign investment of 53,691
million Baht , 43,812 million Baht , 33,241 million Baht , 49,887 million Baht,
57,472 million Baht and 91,346 million Baht in 1992, 1993, 1994, 1995, 1996 and
1997, respectively. (The drop in 1994 resulted from increased borrowings through
the Bangkok International Banking Facility ("BIBF") and growing FDI of Thais in
several foreign countries, particularly China, ASEAN and Indochinese countries.)
During the 1990's, FDI has been concentrated in a large number of large
companies engaged in manufacturing industries, trade and construction. The
agricultural sector, on the other hand, received less than 0.1% of the total FDI
in 1996 and 1997.

The government of Thailand permits foreign investment and established the
BOI in 1960 to be the focal point of the country's investment promotion. In
1977, the current Investment Promotion Act was passed, which provides for
guarantees, tax exemption and, if necessary, temporary protection to be accorded
to projects undertaking certain activities. Incentives are also provided for
export projects and those located in designated investment promotion zones. The
government, for example, has guaranteed against nationalization, state
competition or monopolization, duty-free government import of competing goods,
and unjustified price control, and, subject to certain restrictions, has
permitted foreign ownership of land, the entry and work of experts, skilled
workers and their families and repatriation of capital and remittance of
profits. Except for designated businesses in which foreign investment is
limited, including banking and service industries, Thai law otherwise permits
foreign majority investment and control of firms undertaking industrial or
commercial activities.

A-6
<PAGE>
SELECTED ECONOMIC DATA

The following table sets forth a summary of certain economic information
relating to Thailand for the years ended December 31, 1992 through 1996 except
as otherwise indicated:

<TABLE>
<CAPTION>
1992 1993 1994 1995(P) 1996(E)
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Population (million persons)................... 57.79 58.34 59.10 59.46 60.10
GDP
Real GDP at 1988 prices (% change)........... 8.1 8.3 8.9 8.7 6.7
--Agriculture................................ 6.0 -1.9 4.3 3.1 3.1
--Nonagriculture............................. 8.4 9.8 9.5 9.4 7.1
GDP at current prices (billion Baht)......... 2,827.2 3,163.9 3,600.5 4,173.0 4,665.4
(% change)................................... (12.8) (11.9) (13.8) (15.9) (11.8)
Per Capita GNP (Baht)........................ 48,359 53,357 59,940 69,077 75,911
Inflation (Consumer Price Index)............... 4.1 3.3 5.0 5.8 5.9
External Sector (billion Baht)
Exports...................................... 815.2 921.4 1,118.0 1,381.6 1,378.9
(% change)................................... (13.1) (13.0) (21.3) (23.6) (-0.2)
Imports...................................... 1,020.6 1,143.1 1,344.8 1,755.4 1,796.5
(% change)................................... (5.5) (12.0) (17.6) (30.5) (2.3)
Trade balance................................ -205.4 -221.7 -226.8 -373.8 -417.6
Current account balance...................... -160.1 -161.1 -203.2 -337.6 -372.6
(as percentage of GDP)....................... (-5.7) (-5.1) (-5.6) (-8.1) (-8.0)
Capital movements (net)...................... 240.7 265.9 305.9 545.1 456.0
--Private sector(1).......................... 237.2 260.9 301.9 517.6 424.3
--Public sector.............................. 3.5 5.0 4.0 27.5 31.7
Overall balance of payments.................. 77.1 98.8 104.8 179.5 54.6
International reserves (billion U.S.$)....... 21.2 25.4 30.3 37.0 38.7
Total outstanding debt(2) (billion U.S.$).... 43.6 52.1 64.9 82.6 89.8
(Public debt)................................ (13.1) (14.2) (15.7) (16.4) (16.8)
Debt service ratio(2)........................ 11.3 11.2 11.7 11.4 11.8
(Public sector).............................. (3.7) (3.7) (3.4) (2.8) (2.6)
Public Finance (fiscal year)
Cash balance (billion Baht).................. +85.9 +68.9 +65.8 +112.5 +104.3
(as percent of GDP).......................... (+3.0) (+2.2) (+1.8) (+2.7) (+2.2)
Money and Banking
Money supply (M2) (billion Baht)............. 2,117.8 2,507.1 2,829.3 3,310.6 3,726.6
(% change)................................... (15.6) (18.4) (12.9) (17.0) (12.6)
Domestic credit (% change)................... 18.0 22.7 28.9 23.1 14.0
Commercial bank (% change)(3)................ 20.6 23.2 30.1 24.2 14.2
Deposits(4) (% change)....................... 16.2 19.2 13.1 18.2 13.7
Interest rates (end of the year)
--Prime rates................................ 11.5 10.5 11.75 13.75 13.0-
8.25- 10.25- 13.25
8.50-
--Time deposit (1 year)...................... 8.5 7.0 10.25 11.0 9.25
Exchange Rate (annual average) Baht:
U.S.$(Exchange Equalization Fund).......... 25.40 25.32 25.15 24.92 25.34
</TABLE>

- ------------------------

(1) Including commercial banks and BIBFs.

(2) Including commercial banks. The Debt Service Ratio is the ratio of mature
public sector debt to export earnings.

(3) Including BIBFs.

(4) Excluding foreign currency deposit and interbank deposits.

(P) Preliminary figures. (E) Estimates.

SOURCE: THE BANK OF THAILAND, ANNUAL ECONOMIC REPORT 1996.

A-7
<PAGE>
The following table sets forth a summary of certain economic information
relating to Thailand for the months running from June 1997 to November 1997:

BANK OF THAILAND'S MONTHLY STATISTICAL RELEASE

Issued by the Economic Research Department, Bank of Thailand, Bangkok tel.
(662) 282-7803
<TABLE>
<CAPTION>
1997
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JUN. JUL. AUG. SEP. OCT. NOV.
------------- ------------- ------------- ------------- ------------- -------------

<CAPTION>
(PRELIMINARY) (ESTIMATED)
ACTIVITY AND PRICES (% CHANGE FROM THE SAME PERIOD OF LAST YEAR)
<S> <C> <C> <C> <C> <C> <C>
Manufacturing Production
Index....................... 5.0 3.8 -5.1 -6.7 -12.3 n.a.
(12-month moving average)..... (6.8) (6.7) (5.6) (4.3) (2.3) (n.a.)
Price Investment Index........ 4.1 4.1 2.5 1.4 -0.2 n.a.
Government cash balance (bn.
b) +29.7 -18.7 -21.9 +21.4 -17.4 -11.7
Consumer Price Index 4.4 4.9 6.6 7.0 7.2 7.6
- -Food......................... 5.7 6.9 9.5 9.2 8.0 7.9
- -Non-food..................... 3.4 3.5 4.4 5.3 6.7 7.3
<CAPTION>

EXTERNAL ACCOUNTS (IN MILLIONS OF U.S.$)
<S> <C> <C> <C> <C> <C> <C>
Exports....................... 4,639 4,745 4,790 4,986 5,141 n.a.
[%LU.S.$]..................... [7.4] [7.9] [2.2] [11.5] [11.7] n.a.
Imports....................... 5,558 5,273 5,336 4,767 4,520 n.a.
[%LU.S.$]..................... [-3.6] [-8.7] [-13.3] [-12.2] [-24.5] n.a.
Trade Balance................. -919 -528 -546 219 621 n.a.
Current Account Balance....... -868 -387 -413 81 701 n.a.
Balance of Payments........... -954 -1,706 -4,508 3,674 1,556 -4,716
Official Reserves
(bn.U.S.$).................. 32.4 30.4 25.9 29.6 31.3 26.3
<CAPTION>

MONETARY STATISTICS (IN BILLIONS OF BAHT)
<S> <C> <C> <C> <C> <C> <C>
M1............................ 396.4 393.5 428.4 400.5 407.3 388.0
(%L).......................... (0.8) (-3.6) (7.3) (-1.9) (3.0) (-4.6)
M2............................ 3,958.1 4,047.5 4,139.4 4,166.3 4,239.7 4,263.1
(%L).......................... (11.9) (14.5) (16.7) (16.6) (18.1) (17.0)
M2A........................... 4,721.0 4,702.2 4,622.2 4,574.6 4,600.7 n.a.
(%L).......................... (4.6) (4.1) (2.1) (0.6) (0.8) (n.a.)
Monetary Base................. 514.3 468.5 435.6 433.8 443.5 441.9
(%L).......................... (29.8) (14.6) (9.9) (7.4) (5.5) (5.7)
Bank deposits................. 3,986.9 4,059.4 4,035.0 4,065.5 4,144.1 4,169.1
(%L).......................... (15.9) (18.2) (16.9) (16.5) (18.9) (17.0)
Commercial bank credits....... 5,076.1 5,308.6 5,420.3 5,539.2 5,708.1 5,668.1
(%L).......................... (10.4) (15.3) (16.4) (17.0) (19.6) (17.4)
- -excluding BIBF's............. 4,246.2 4,281.3 4,326.0 4,391.8 4,425.8 4,430.0
(%L).......................... (11.1) (11.5) (11.3) (10.9) (11.0) (9.7)
<CAPTION>

INTEREST RATES (END OF PERIOD)
<S> <C> <C> <C> <C> <C> <C>
- -Prime Rate (MLR)............. 12.75 13.75 13.75 14.25 14.75 14.75
- -Minimum Retail Rate (MRR).... 13.00-13.50 14.00-14.50 14.00-14.50 14.50-15.00 15.00-15.50 15.00-15.50
- -Fixed Deposit Rate (1
year)....................... 8.00-8.75 10.00-11.50 10.00-11.50 10.00-11.50 10.00-11.50 10.00-11.50
- -Interbank Rate (average)..... 15.10 18.66 15.43 23.87 18.72 19.99

EXCHANGE RATE (AVERAGE
BAHT:U.S.$)................. 25.78 30.27 32.48 36.28 37.55 39.30
</TABLE>

A-8
<PAGE>
LABOR SITUATION

In Thailand, the labor force includes Thais aged 13 and over. In 1997,
approximately 46% of the total labor force was employed in the agricultural
sector. Between 1991 and 1996, the labor force increased at an average annual
rate of 0.9% from 31.0 million to 32.4 million. The labor force totaled 32.6
million in 1997. The unemployment rate at the end of 1997 was estimated at 3.5%.

A legal framework, which prescribes the procedures for union formation,
collective bargaining and dispute settlement, was established by the Labor
Relations Act of 1975. Laws relating to working conditions and the protection of
workers promulgated in 1972 are expected to be replaced by the Labor Protection
Act of 1998, currently expects to become effective in August 1998. Only a small
proportion of the work force is organized in labor unions. In 1991, the Thai
government enacted a law which prohibits unionization in all state agencies and
enterprises. However, labor associations are still permitted and serve a
corresponding function.

The government has attended to the welfare of workers through job creation
programs in different areas of the country and periodic minimum wage adjustments
to mitigate the effect of price increases. Effective January 1, 1998, the
minimum wage was 162 Baht per day for the Bangkok metropolis, its five
surrounding provinces (i.e., Nakornpathom, Nonthaburi, Patumthani, Sumutprakarn
and Samutsakorn) and Phuket, 140 Baht per day for Pangnga, Ranong, Chiang Mai,
Chonburi, Nakornratchasima and Saraburi, and 130 Baht per day for all other
provinces.

FOREIGN TRADE AND BALANCE OF PAYMENTS

Foreign trade plays an important role in the Thai economy. Notwithstanding
the diversification which has occurred since the early 1960's, Thailand's
exports are still influenced by fluctuations in world commodity prices, and its
imports are primarily structured by the requirements of a developing country.

Thailand's current account deficit has increased since 1987 principally due
to a trade deficit, and Thailand's terms of trade have declined over the period.
Although exports have risen significantly, imports increased even more rapidly
during this period due to heavy foreign and domestic investment flows. A large
percentage of imports during the past five years have been capital goods.
However, uncertainty concerning protectionism, growing competition for market
share from other countries in the region and continuing fluctuations in world
commodity prices will continue to affect future growth in export earnings.
Tourism has been a major source of foreign exchange earnings for the country.

Since 1993, credit growth has been fueled by both deposits and external
borrowing through the BIBF. The cheaper cost of foreign currency loans
accessible through the BIBFs, coupled with the perceived absence of exchange
rate risk owing to a fixed exchange rate system, generated greater credit
demand.

The large current account deficits over the past three years have been
financed by increases in direct investment, portfolio investment and external
borrowing. The net capital inflows in the past have more than offset the current
account deficits, resulting in a balance of payments surplus and a substantial
increase in the country's international foreign exchange reserves, from
U.S.$20.0 billion in 1992 to U.S.$37.2 billion in 1990, equivalent to
approximately 6.3 months of estimated 1996 imports.

Since 1996, the real estate sector and the stock market have been weakening.
The export market has also become less competitive due to an over valued Baht
and higher labor costs. These market conditions created a general lack of
confidence among depositors and creditors, both domestic and foreign and
therefore lead to capital outflows. In the first half of 1997, the balance of
payments was negative U.S.$7.5 billion.

In September 1997, strong export performance, aided by the depreciation of
the Baht, and a dramatic decrease in imports caused a trade surplus of 1.1
billion Baht. This was the first trade surplus of Thailand in decades. September
exports grew by 8.7% in U.S.$ terms over exports in September, 1996, while
imports

A-9
<PAGE>
for the same period shrank by 12.2%. Growth in exports of high technology
products, such as computers, computer parts, electrical circuits and plastic
products was noteworthy. October saw an estimated trade surplus for the month of
5.3 billion Baht and for November an estimated surplus of 27.3 billion Baht. The
current accounts deficit narrowed to Baht 3.9 billion in September. In 1997, the
current account deficit declined significantly to 2.0% of GDP. For the first two
months of 1998, the current account recorded a surplus of US$2.7 billion.

The government has introduced a number of measures to reduce the current
account deficit with emphasis upon export promotion rather than constraints on
imports. A value added tax of 7%, intended to reduce distortion in the tax
system and encourage more efficient export oriented production was introduced on
January 1, 1992 and was increased to 10% in August 1997. As of early February
1998, the BOI was planning to seek cabinet approval to set up a loan guarantee
body as a mechanism aimed at a liquidity crunch facing exporters and the
agricultural industry.

The following table sets forth Thailand's balance of payments for the years
indicated:

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS OF BAHT)
Exports (f.o.b.)................................. 815,202 921,433 1,118,049 1,381,660 1,378,902
(% change)....................................... 13.1 13.0 21.3 23.6 (0.2)
Imports (c.i.f.)................................. 1,020,582 1,143,108 1,344,831 1,755,456 1,796,549
(% change)....................................... 5.5 12.0 17.6 30.5 2.3
Trade balance.................................... (205,380) (221,675) (226,782) (373,796) (417,647)
Net services & transfers......................... 45,306 60,546 23,629 36,155 45,488
Current account balance.......................... (160,074) (161,129) (203,153) (337,641) (372,159)
Capital and financial account.................... 240,742 265,895 305,851 545,121 493,530
Private.......................................... 237,200 260,939 301,859 517,642 460,555
Public........................................... 3,542 4,956 3,992 27,479 32,975
Net errors & omissions........................... (3,555) (5,975) 2,129 (27,950) (66,763)
Balance of payments.............................. 77,113 98,791 104,827 179,530 54,608
</TABLE>

- ------------------------

SOURCE: THE BANK OF THAILAND MONTHLY BULLETIN, JUNE 1997.

The large current account deficits over the past three years have been
financed by increases in direct investment, portfolio investment and external
borrowing. The capital inflows have more than offset the current account
deficits, resulting in a substantial increase in the country's international
reserves. The country's international reserves were significantly reduced in the
first half of 1997 in connection with the Bank of Thailand's attempt to maintain
a pegged exchange rate prior to July 2, 1997.

EXTERNAL DEBT

Thailand's external debt, both public and private (including short-term)
grew from U.S.$5.7 billion in 1980 to U.S.$25.1 billion in 1990 and to U.S.$91.8
billion at the end of 1997. As of February 1998, the total amount of Thailand's
external debt was US$89.7 billion. It is estimated that substantially all of the
external debt is denominated in U.S.$ and yen. Debt servicing obligations
expressed as a percent of exports of goods and services declined from 14.8% in
1980 to 10.8% in 1990 but increased to 15.8% in 1997 due principally to
increasing levels of private sector external debt.

Foreign borrowings have been on the rise since 1993, due to the commencement
of BIBF in March 1993, prompting subsidiaries of foreign companies to resort to
this new source of funds instead of bringing in foreign direct investment from
their parent companies or regional offices. Since borrowings through BIBF are
regarded as overseas obligations, Thailand's foreign debts have risen
accordingly.

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<PAGE>
Thailand's private sector is anticipated to face difficulty in payment of
approximately U.S.$39 billion of short term foreign debt falling due in 1998
although a significant amount of such debt has been voluntarily rolled over on a
short-term basis.

As of mid-February, 1998, the Overseas Economic Cooperation Fund of Japan
was considering providing additional foreign currency loans to the Thai
government in order to boost liquidity. In late February, the president of the
Thai Export-Import Bank estimated that loans from international agencies would
add over 30 billion Baht of liquidity for Thai exporters within several months.

CURRENCY AND FINANCIAL SYSTEM

The Bank of Thailand was established in 1942 as the central bank and is in
charge of implementing monetary policy.

The Bank of Thailand is managed by its Court of Directors which is presently
composed of 10 members, with the Governor to serve as ex-officio Chairman and
two Deputy Governors to serve as Vice-Chairmen. The Governor and the Deputy
Governors are appointed by the King upon the recommendation of the Cabinet after
being nominated by the Minister of Finance, and other members of the court are
appointed by the Cabinet on the advice of the Minister of Finance.

The principal functions of the Bank of Thailand are to act as (1) the
note-issuing authority on behalf of the government, (2) banker to the
government, commercial banks and other financial institutions, and (3) the agent
of the government to manage public debt, to administer exchange controls, to
supervise commercial banks, finance companies, and credit foncier (mortgage
lending) companies, and to deal with multinational monetary organizations. With
respect to exchange rate policy, the Exchange Equalization Fund, founded in 1955
and chaired by the Minister of Finance, is the agency of the government to carry
out exchange rate policy and foreign exchange transactions with banks.

There are 36 commercial banks in Thailand of which 21 are foreign
incorporated banks. As of December 31, 1997, estimated total deposits of
commercial banks were 4,229 billion Baht compared to approximately 3,533 billion
Baht as of December 31, 1996. This represents an increase of 19.7%. Within the
public financial sector there are specialized banking institutions, including
the Government Savings Bank which is the principal institution for small savings
deposits, the Bank of Agriculture and Agricultural Co-operatives which is the
chief source for farm credits, the Government Housing Bank which provides
mortgages to middle and low income individuals, and the Small Industries Finance
Office which advances loans to companies with registered capital or fixed assets
of up to 10 million Baht (U.S.$384,763).

As of March 31, 1998, 52 financial institutions held licenses to operate
offshore banking business through BIBF's. Of these, 15 belong to Thai commercial
banks, 18 to foreign bank branches already operating in Thailand, and 19 to
other foreign banks. As of March 31, 1998, 48 BIBF offices had commenced
operations.

In January 1995, 22 commercial banks were granted permission to operate
Provincial International Banking Facilities ("PIBF") offices. At the end of
1996, 37 PIBF's had begun operations in five different provinces including
Chonburi, Rayong, Ayutthaya, Chiang Mai and Songkhla. In January 1997, seven
foreign banks holding BIBF licenses were granted permission to open full
branches, and an additional three new bank licenses have been provisionally
granted to allow the establishment of new domestic banks.

As of January 1, 1995, the capital adequacy framework of the Committee on
Banking Regulation and Supervisory Practices of the Bank of International
Settlement was fully adopted in Thailand's banking system, which brought the
Thai commercial banks in line with international standards.

Against the background of sizeable non-performing loans carried by some of
the finance companies in their loan portfolio and the liquidity crisis
experienced by all of the finance companies, the Ministry of Finance in July and
August 1997 ordered 58 finance companies to suspend their operations, including

A-11
<PAGE>
suspension of trading of the suspended companies' shares on the SET, pending
approval of the rehabilitation plans submitted or to be submitted by the
suspended companies. On December 8, 1997, the Ministry of Finance ordered the
closure of 56 out of the 58 suspended finance companies resulting in an
estimated 20,000 employees losing their jobs. The Association of Finance
Companies believes that strong pressure on the remaining 35 finance companies
may induce mergers in the industry. The remaining finance companies will have to
comply with a higher capital fund to risk assets ratio and other similar rates.
They will also face competition from investors in the sector. The liquidity
crisis and overall lack of confidence in the financial sector by the public are
also felt by smaller commercial banks in Thailand. Depositors reportedly are
transferring their deposits from the smaller banks to larger Thai banks and
local branches of foreign banks. Recent disruption in the finance and property
sectors has severely affected certain property firms, the finance sector and, to
a lesser extent, the banking sector.

On November 6, 1997, the National Assembly passed four emergency decrees the
main purposes of which were to restore confidence and to provide direction and
stability in the financial system. Two of the decrees authorized the creation of
the FRA and the Asset Management Corporation ("AMC"). The objectives of the FRA
are to review the rehabilitation plans of suspended finance companies, to assist
bona fide depositors and creditors of suspended finance companies and to
administer the liquidation of finance companies which cannot be rehabilitated.
Six board members of the FRA were appointed to oversee the work of the FRA. As
of early February 1998, the FRA anticipated auctioning the assets of the closed
finance companies in early March 1998 and complete liquidation of the assets of
the 56 closed finance companies by year end 1998. The primary objective of the
AMC is to bid for the assets of those finance companies that the FRA deems
nonviable. The other emergency decrees amended the Bank of Thailand Act, the
Commercial Banking Act and the Act on the Undertaking of Finance, Securities and
Credit Foncier Business (the "Finance Act"). The new decrees give the Bank of
Thailand, under certain circumstances, new powers to intervene in the operation
of financial institutions. These powers include the power to remove directors or
executives of such financial institutions and to appoint replacement directors
or executives. Finally, the decree amending the Bank of Thailand Act reaffirms
the government's commitment to a government subsidized institution, the FIDF,
that will provide certain guarantees to depositors and creditors. One of the
most important features of the decree amending the Bank of Thailand Act is that,
if necessary, the FIDF can release the collateral pledged to the FIDF by
suspended finance companies. This will allow all creditors of such finance
companies to receive equal treatment.

The AMC is anticipated to have severe funding problems because the total
cost of buying problem assets of the 56 closed finance companies is now
anticipated to be much higher than originally thought. Such estimates range from
200 billion Baht to 700 billion Baht. AMC start-up capital is 1 billion Baht.

In late February, an independent investigation by the Finance Ministry found
that FIDF was likely to write-off at least half of the 800 billion Baht in loans
extended to ailing financial institutions. This expected loss is estimated to
equal the total value of assets held by the Bank of Thailand.

The Bank of Thailand has recently changed capital adequacy requirements
applicable to commercial banks and finance companies based on Bank of
International Settlement requirements. Because of these tough new capital
requirements, surviving finance companies are anticipated to seek substantial
increases in capitalization. Commercial banks will also feel the impact of the
new capital requirements and, according to recent press accounts, are seeking to
sell equity interests to foreign shareholders. In late February, 1998, two of
Thailand's larger banks announced plans to boost capital. In December 1997, the
Bank of Thailand replaced the boards of directors of two smaller banks, First
Bangkok City Bank and Bangkok Metropolitan Bank, in order to encourage these
banks' capital increase programs. In early February, 1998, IMF officials
reportedly characterized the local commercial banks as remaining "relatively
weak".

On February 6, 1998, the Bank of Thailand announced the formal takeover of
three ailing Thai commercial banks: the Siam City Bank Public Company Limited,
First Bangkok City Bank Public

A-12
<PAGE>
Company Limited and the Bangkok Bank of Commerce. The move resulted in the
elimination of all shareholders' equity in the three banks by ordering a massive
capital write-down to clear bad debt. The central bank's Financial Institutions
Development Fund ("FIDF") will swap its loans to the three banks for an equity
stake, becoming near 100% shareholder which will, in effect, turn the three
banks into state enterprises. The government is currently developing plans to
privatize these banks during 1998.

This action was similar to the decision by the Bank of Thailand in
mid-January when it ordered the Bangkok Metropolitan Bank Public Company Limited
to write off 11 billion Baht of its capital, reducing the par value of shares to
one one-hundredth of a Baht each. The FIDF will take a 99.96% stake in the bank
after the capital is increased by 25 billion Baht.

On May 18, 1998, the Bank of Thailand ordered seven additional finance
companies, with total assets of approximately Baht 92.2 billion, representing
approximately 15% of the total assets of operating finance companies, to
write-down their capital and announced that the FIDF would recapitalize six of
the seven finance companies by converting into equity approximately Baht 10.84
billion of debt owed by such finance companies to the FIDF and injecting
approximately Baht 620 million of additional capital into the seventh finance
company. The recapitalization is expected to raise the capital-to-risk assets
ratio for all seven companies to at least 9%. The Bank of Thailand also replaced
the board of directors of each company with representatives of the Bank of
Thailand and Krungthai Thanakit Public Company Limited ("KTT"), a subsidiary of
Krungthai Bank Public Company Limited. The Bank of Thailand intends that KTT
will acquire the assets and assume the liabilities of each of the seven
companies, which eventually will be consolidated into KTT. If necessary, the
FIDF may also assist in recapitalizing KTT by providing additional equity
capital. KTT is also expected to be granted a commercial banking license in
connection with such consolidation and recapitalization.

In addition to the Emergency Decrees, in May 1998, the National Assembly
approved five additional emergency decrees with the objective of increasing
liquidity in the Thai economy and expediting the resolution of the financial
sector crisis. These decrees (i) authorize the Government to incur, by no later
than December 31, 2000, external borrowings not to exceed Baht 200 billion in
addition to its authorized external borrowing limits (which are currently set at
a maximum annual limit of 10% of the Government's annual budget, (ii) authorize
Government domestic borrowing of up to Baht 500 billion to refinance the FIDF's
short-term borrowings, (iii) exempt the FIDF from certain bankruptcy law
provisions which prevent creditors who have knowingly provided financial
assistance to insolvent financial institutions from filing debt repayment claims
against such financial institutions, (iv) modify the AMC's charter to permit
increased capital and (v) specify procedures for the sale of assets of closed
finance companies by FRA.

The new Bank of Thailand governor, M.R. Chattumongkol Sonakul, has announced
that no financial institution will be ordered to close. However, financial
institutions with serious problems will be compelled to reduce their capital and
be taken over the the FIDF.

MONETARY POLICY

The Bank of Thailand is responsible for controlling the money supply in
Thailand. In furtherance of the country's objective of becoming the financial
center of this region, several financial liberalization policies have been
adopted, including the introduction of BIBF, which permit banks to make loans in
currencies other than Baht, and the relaxation of rules and regulations on the
movement of capital. These liberalization policies may have the effect of
impairing the ability of the authorities to control capital inflows, money
supply, and inflation in the foreseeable future. However, in early February
1998, IMF officials suggested that the reduction of relatively high interest
rates be delayed in an effort to prevent inflation.

Due to an increasingly open economy, external conditions have become
important factors affecting Thailand's economy. During the early 1980's when the
world economy suffered an economic downturn, which caused worldwide reduction of
inflation and declining investment, the country's GDP growth fell to

A-13
<PAGE>
around 5.5%. However, since the mid 1980's the world economy has improved and
conditions in trade and investment have changed rapidly. Among other things, the
substantial amount of foreign investment, particularly from Japan, was one of
the major forces behind the economic boom during 1987-1990.

FOREIGN EXCHANGE REGULATION

Throughout the first half of 1997, the Bank of Thailand had been actively
intervening in the foreign exchange markets in order to support the Baht against
the selling pressures of heavy speculation in the markets. However, on July 2,
1997, the former Minister of Finance, Thanong Bidaya, upon the recommendation of
the Bank of Thailand, allowed for the floatation of the Baht by repealing the
November 2, 1984 act which had pegged the value of the Baht against a basket of
currencies. The value of the Baht is now set by conditions in the foreign
exchange markets. The Bank of Thailand engages in the buying and selling of
foreign currency for the purpose of maintaining the stability of the Baht under
the new foreign exchange system. Foreigners and non-resident bank clients are
restricted from buying or selling U.S.$ for speculative purposes.

On August 21, 1997, the Bank of Thailand announced that the bulk of the
official reserves of U.S.$30.0 billion as at end-July had already been sold
forward, with U.S.$23.4 billion falling due within the next 12 months. The Bank
of Thailand's Economic Research Department disclosed that on November 14, 1997,
Thailand's foreign reserves dropped to U.S.$28.3 billion and U.S.$26.3 billion
in the following two weeks. At that time, U.S.$10.6 billion in offshore forward
obligations were still outstanding from the U.S.$14.8 billion in offshore
forward transactions taken out in May, 1997. Outstanding forward obligations
taken in the onshore market for 1997 total about U.S.$8 billion. The Bank of
Thailand maintains a foreign reserves target for 1997 at U.S.$23 billion and for
1998 at U.S.$24.8 billion.

On January 6, 1998, the Thai Cabinet approved the issuance of a Ministry of
Finance regulation to limit the U.S. dollar holding period for exporters in an
effort to curtail currency speculation and increase the U.S. dollar supply in
the local economy. According to the ministerial regulation, exporters must now
bring their earnings into Thailand immediately upon payment, after which, they
have seven days to either sell to or deposit their dollars in a foreign currency
account with an authorized Thai commercial bank. Previously, the Bank of
Thailand provided that exporters had 120 days in which to receive payment for
their goods and bring the money into the country, after which, they had a
further 15 days to deposit it.

As of January 30, 1998, the restrictions underlying the two-tier system were
lifted, and financial institutions may engage in spot foreign exchange
transactions involving Baht with non-residents. In addition, the restrictions on
transfers of Baht in connection with the sale by non-residents of Thai
securities were also removed. To discourage speculative activity, Baht
denominated credit facilities to non-residents are limited to a maximum amount
of Baht 50 million per counterparty in cases where there are no underlying trade
or investment activities in Thailand.

IMF-LED FINANCIAL ASSISTANCE

The Government agreed on August 5, 1997, to accept austerity measures of the
IMF aimed at rehabilitating and restructuring the economy as a condition to
receipt of IMF-led loans and financial assistance of approximately U.S.$17.2
billion. Key rehabilitation goals are:

- restore fiscal, monetary and economic stability immediately,

- maintain foreign exchange reserves equal to 3.5 months import value or a
minimum U.S.$25 billion,

- restore confidence and trust in the finance and banking system to counter
any run on deposits. restructure the FIDF's role to ease the burden on the
government,

- cut the current account deficit from 8% of GDP in 1996 to 5% in 1997 and
3% in 1998,

- maintain annual economic growth at 3-4% in 1997 and 1998,

A-14
<PAGE>
- cap inflation at 8-9% in 1997,

- continue with the balanced budget policy to maintain fiscal stability.

- Tackle economic problems and build international credibility through
financial and technical assistance from the IMF and foreign financial
institutions.

On August 20, 1997, the IMF approved a stand-by arrangement for Thailand,
authorizing drawings of about U.S.$3.9 billion over the next 34 months to
support the government's economic program, and in particular, its international
reserve position. Of the total, about U.S.$1.6 billion was available
immediately, and a further U.S.$810 million will be available after a review of
program implementation on December 8, 1997. The total amount of funds provided
by the IMF under the package since August 1997 has been U.S.$2.4 billion.

On October 14, 1997, the government of Thailand announced measures related
to the fiscal year 98 fiscal surplus target agreed to with the IMF, and to the
financial sector restructuring task ahead. On the fiscal front, the Council of
Ministers approved 1400 billion Baht of measures, including excise tax increases
of 400 billion Baht and spending cuts of 100 billion Baht, 70% of which are to
come from public investment projects. With these measures the authorities
believe the 1% of GDP fiscal surplus originally agreed with the IMF can be
achieved. In February, 1998, the government announced additional excise tax
increases, and, in response to a general perception that Thailand's economic
condition has stabilized, relaxed loan package requirements to allow the state
enterprise sector to run a budget deficit of 0.5%.

FISCAL UPDATE AND FINANCIAL SECTOR MEASURES

In the first 11 months of fiscal year 1997, the government budget was 60.6
billion Baht in deficit, an amount above the IMF target of 52.8 billion Baht for
the year. To provide a 1998 budget surplus, the government on August 16, 1997,
put into effect an increase in value added tax ("VAT") from 7% to 10%. The
Revenue Department said such an increase would generate an additional revenue of
Baht 70 billion per annum. In addition, the government reduced its 1998 budget
by 59 billion Baht to 923 billion Baht.

As a first step in reforming and strengthening the country's financial
sector, the Council of Ministers on June 24, 1997, approved four decrees aimed
at restructuring the country's financial sector, and boosting liquidity. The
first decree amended the Commercial Banking Act to allow foreign investors to
hold shares in local banks in excess of the existing 25% limit. The second
decree amended the Finance Act to eliminate several obstacles to mergers among
the financial institutions. Companies are now permitted to transfer debt rights,
without having to notify borrowers, thus speeding up the merger process. The
third decree formalized securitization, with special institutions authorized to
accept assets and issue securities. The fourth decree established a secondary
mortgage corporation, which develops a secondary market for property loans.

As a result of these reforms, Citibank has entered into negotiations to hold
at least 50.1% of the paid up capital of First Bangkok City Bank Plc, a
medium-sized bank. China Development Corporation of Taiwan has shown interest in
buying a 2% to 3% stake in Bangkok Bank Plc, Thailand's largest bank.

On June 27, 1997, the central bank suspended the operations of 16 finance
companies, and ordered them to merge with core finance companies or seek strong
partners. The authorities ordered these companies to prepare rehabilitation
plans and provided depositors with promissory notes in the amount of their
deposits. After the mergers, promissory-note holders are expected to be able to
reclaim their deposits from the new firms. Furthermore, promissory-note holders
are also expected to be able to discount their promissory notes in the secondary
bond market, use them as collateral for loans or exchange their notes for a
certificate of deposit at Krung Thai Bank.

On August 5, 1997, the Thai government suspended an additional 42 finance
and securities companies, bringing the number of suspended finance firms up to
58. The Government said it will protect

A-15
<PAGE>
depositors and "bona fide" creditors of the 42 suspended firms, with the option
of exchanging promissory notes and certificates of deposit with Krung Thai Bank,
which is 60% owned by the Finance Ministry. In late November, 1997, the Bank of
Thailand suspended an additional finance firm.

On October 14 new financial sector measures were announced including:
liberalization of the restrictions on foreign participation in the sector,
creation of the AMC, which is to take over, manage and sell bad debts of
financial institutions, the creation of the FRA, which is to regulate financial
institutions and guarantee depositors and other creditors, the introduction of
higher capital requirements and higher provisioning requirements for bad loans,
and the amendment of the bankruptcy laws to make it easier to seize collateral.

On December 8, 1997, the Finance Minister, on the recommendation of the FRA,
announced that only two of suspended finance firms would be allowed to reopen,
and the other 56 suspended firms were ordered closed. The good assets of the
closed finance companies would be transferred to a so-called "good bank," which
was set up in February 1998. Bad assets will be transferred to AMC for
management. Creditors and depositors of closed finance companies have the option
to convert their claims into Krung Thai Bank's certificates of deposit or, as
the case may be, Krung Thai Thanakit Finance and Securities Plc's promissory
notes. The government regulation also prevented the resale of notes held by
depositors. This prevented the resale of these notes at a discount in secondary
capital markets. This has resulted in liquidity problems for depositors.

In May 1998, the Ministry of Finance and the Bank of Thailand also adopted a
15-point program designed to increase liquidity in the Thai economy, including
(i) seeking additional multilateral and bilateral external financing, (ii)
issuing the Debt Securities offered hereby, (iii) improving the FRA auction
process for the assets of the 56 closed finance companies to attract foreign
buyers, (iv) accelerating the raising of capital by commercial banks from
foreign investors, (v) refinancing the FIDF's short-term debt through longer
term domestic borrowings, (vi) encouraging debt restructuring by Thai commercial
banks and their clients, (vii) revising macroeconomic assumptions under the IMF
Financial Assistance Program, (viii) encouraging the restructuring of private
sector external debt, (ix) accelerating the increase of capital by Thai
commercial banks, (x) completing amendments to Thai bankruptcy and foreclosure
laws, (xi) encouraging foreign investment in domestic capital markets, (xii)
accelerating the privatization of state enterprises, (xiii) stabilizing the Baht
and the short-term money markets to facilitate lower interest rates, (xiv)
increasing hire purchase and housing credits, and (xv) timely payment by
Government entities to private sector contractors for services performed.

SOVEREIGN AND CORPORATE CREDIT RATINGS

Moody's Investors Service, Inc. ("Moody's") has currently rated the Kingdom
of Thailand at Ba1, with a negative rating outlook, for its long-term foreign
currency debt, and not Prime for its short-term foreign currency debt, with a
credit watch for a possible downgrade. Moody's has rated foreign currency bank
deposits at B1, with a stable outlook, and short-term foreign currency bank
deposits at not prime. At the same time, the country's ratings by Standard &
Poor's Corporation are currently BBB- for its long-term, foreign currency debt
rating, and A-3 for its commercial paper and short-term, foreign currency debt,
with a negative overall outlook on foreign currency debt. Additionally, S&P has
a local currency rating on Thailand's long-term debt of A- with a negative
outlook and a short-term local currency credit rating of A-2.

In recent months, various rating agencies have steadily down-graded Thailand
related investments. On April 9, 1997, Moody's downgraded the foreign currency
ceilings for bonds and bank deposits of Thailand from A2 to A3. The agency said
the downward adjustment reflected an incremental deterioration in the country's
creditworthiness stemming (1) from a build up of short term foreign currency
obligations that has contributed to the recent escalation of the country's
overall external debt ratios, (2) structural problems that have adversely
affected Thailand's competitiveness in its traditional manufactured export
industries,

A-16
<PAGE>
(3) constraints on the array and effectiveness of macroeconomic policies at the
government's disposal to respond to these challenges and (4) the crisis in the
domestic financial and property sectors.

On September 3, 1997, S&P lowered its long-term, foreign currency rating of
the country from A to A-. At the same time, S&P lowered Thailand's long-term
local currency rating to AA- from AA. S&P said the downgrades reflected
substantial loan losses in the financial sector as well as the diminution of
Thailand's external financial flexibility.

On October 2, 1997, Moody's cut its assessment of Thailand for a second time
that year and maintained a negative outlook, lowering Thailand's long-term
foreign currency country ceiling for bonds and notes and the long-term foreign
currency country ceiling for bank deposits from A3 to Baa1. Moody's said the
downgrades reflected an erosion of assets in the country's financial system
crippled by the slowest economic growth in 30 years, increased foreign debt
following a currency devaluation in July and problems in the property industry.
Moody's had placed these ratings on review for possible downgrade since
September 9, 1997.

On October 24, 1997, S&P again lowered Thailand's long-term, foreign
currency rating to BBB from A- and its long-term local currency rating to A from
AA-. S&P cited weak political leadership as one of the factors for the
downgrade. S&P said the outlook on Thailand's long-term ratings remained
negative.

On November 28, 1997, Moody's downgraded Thailand's ratings for long-term,
foreign currency debt from Baa1 to Baa3 with a negative rating outlook. Moody's
ratings for short-term foreign currency debt remained at Prime-3 under a credit
watch for possible downgrade. Moody's also lowered Thailand's ratings for
foreign currency bank deposits from Ba2 to B1, with a stable outlook. Short-term
foreign currency bank deposits remain unchanged at Not Prime. Moody's maintained
that the downgrades reflected the deterioration in Thailand's credit and
financial fundamentals and concerns that domestic political conditions would
limit the Thai government's progress in meeting conditions of the IMF
stabilization program.

On December 21, 1997, Moody's again downgraded Thailand's rating for foreign
currency debt from Baa3 to the current Ba1.

On January 9, 1998, S&P lowered Thailand's long-term, foreign currency
rating to BBB- from BBB, long-term local currency debt rating to A- from A, and
the short-term local currency debt rating to A-2 from A-1. In making the
downgrades, S&P predicted a 3% economic contraction in 1998 and cited high
interest rates, depreciation of the Baht and the high proportions of
non-performing loans in bank and finance company portfolios.

A-17
<PAGE>
ANNEX B

HATCH ASSOCIATES LTD.
2800 SPEAKMAN DRIVE
SHERIDAN SCIENCE AND TECHNOLOGY PARK
MISSISSAUGA, ONTARIO CANADA L5K 2R7

EVALUATION OF OPERATING COST AND PRODUCTION CAPACITY PROJECTIONS OF
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

B-1
<PAGE>
INTRODUCTION

Nakornthai Strip Mill Public Company Limited (NSM) is in the final
construction/commissioning of the first stage of its flat rolled mini-mill
located at Chonburi Industrial Estate, Thailand. Construction of the first
stage--electric arc furnace (EAF)--ladle metallurgy--compact strip production
(CSP) is nearly complete, with first production from the EAF scheduled for late
November 1997. The second stage--coal based DRI--pickling--galvanizing--cold
rolling is just commencing construction.

Nakornthai Strip Mill Public Company Limited engaged Hatch Associates, Ltd.,
Toronto, Canada to provide an independent evaluation of their projections for
operating costs and production capacity for the first and second stages of its
facility. The operating cost and production tonnage projections were contained
in the document "McDonald & Company Securities, Inc.", dated October 29, 1997.
Information concerning unit pricing, unit consumptions, equipment specifications
and process productivity was obtained from various documents examined during a
site visitation in late October, 1997. Where possible, contracts or purchase
orders were examined to verify prices of consumables and raw materials.
Productivity of potential "bottleneck" units were examined in greater detail
than other areas since these would be key to achieving the expected capacity.

SUMMARY OF FINDINGS

FACILITIES

The NSM facilities contain (or will soon contain) a rather unique
combination of U.S. flat rolled mini-mill technology and operating philosophy
along with process equipment and technologies more frequently associated with
speciality or higher quality steel producers. The equipment is definitely
"State--of--the-- Art", with a good deal of it similar to that installed at
Nucor's Berkeley, South Carolina plant. Subtle changes in equipment design have
been made where appropriate, however, maintaining the spectra of proven
technology. The latest in level I and level II process control systems are being
installed and have incorporated functions critical to production optimisation.
For example, the loading of scrap onto the Consteel conveyor will be dynamically
monitored and displayed to the scrap loaders in order to insure that scrap feed
to the EAF, which is so critical to this process, is optimised.

The coal based DRI process, lnmetco, will take advantage of iron ore fines
and coal to produce a lower cost iron unit than available from the international
market. The DRI facility will have the capacity to fulfill approximately 30% of
NSM's iron unit requirements. The ladle metallurgy facilities at NSM--ladle
furnaces and vacuum tank degassing--will obviate disadvantages (namely sulfur
from the coal carried into the steel) which may otherwise be associated with the
Inmetco process.

A waste heat generation facility is also planned. This facility would
generate electricity from waste gases from the DRI and EAF processes and will
significantly reduce NSM's overall energy costs.

The EAF will contain the latest in Consteel technology, utilizing the
furnace off--gases to preheat scrap, thereby reducing energy consumption and
scrap melting time. The EAF is also equipped with electric energy reduction
technologies such as large capacity oxygen and carbon injection and submerged
tuyeres for light oil injection.

The ladle metallurgy furnaces and vacuum tank degassers will assist in the
production of high quality steels as well as to provide a buffer between the EAF
and the continuous caster.

The continuous caster and hot strip mill (CSP) will be of SMS' most recent
design. The caster will incorporate "soft reduction" and electromagnetic brake (
EMBR ) technologies to enhance productivity and reliability.

The hot strip mill will contain the latest in work roll shifting and
bending, hydraulics and gauge and shape control.

B-2
<PAGE>
The pickle / galvanizing line will target a particular market and contains
equipment (cold reduction, skin passing, tension leveling) seldom seen, even in
new facilities.

PRODUCTIVITY

The projected capacity of the facility is 1.35 million tonnes per year of
hot rolled coils. At a yield of 95% from liquid steel to hot rolled coil, this
equates to 1.42 million tonnes per year of liquid steel. The steelmaking
facilities--Consteel--EAF--ladle furnaces--vacuum degassers should have little
difficulty in achieving this production level. In addition to NSM's own
knowledgeable staff of steelmakers, advisors from Nucor experienced with the
Consteel process will be available during start up.

The continuous caster should also be capable of producing at the 1.35
million tpy rate provided that NSM's product mix does not have an inordinately
high percentage of steel in the narrower width ranges, otherwise production
capacity will suffer.

The start up expectations--651,000 tonnes in year 1 (48% of capacity) and
1,232,000 tonnes in year 2 (91 % of capacity)--are well within the range of
historical start-up curves and should be achievable considering the expertise
available and the training of the personnel.

OPERATING COST

The operating costs, once all of the equipment is installed and operating at
capacity, are projected to be:

<TABLE>
<CAPTION>
THROUGH PROCESS UNIT OPERATING COST $/MT
- ------------------------------------------------------------------------- -------------------
<S> <C>
DRI...................................................................... 84.98
EAF--Melt Shop........................................................... 202.91
Cast Slab................................................................ 215.23
Hot Rolled Coil.......................................................... 231.68
Pickled & Oiled Coil..................................................... 248.41
Galvanized coil.......................................................... 307.04
Sales, General & Administration.......................................... +8.41
</TABLE>

These costs were calculated at an exchange rate of 45.5 Baht:1 $US.

Raw materials and energy comprise approximately 70% of the operating costs
and were examined closely. Electrical energy consumption at the plant is aided
significantly by the planned installation of a waste heat generation facility
which will supply 44 MW of capacity and which will reduce the amount purchased
of electricity by nearly $17 million per year (approximately $12.50/tonne).

Prices for iron ore and coal for the DRI plant have been established through
contractual agreements. Unit costs for other consumables are in line with
international prices. Unit consumptions for energy, electrodes, refractories,
etc. are neither optimistic nor conservative and are representative of the
employed technology.

NSM expects that by year 2001, sufficient domestic scrap will be generated
such that all of its scrap needs will be accommodated from within Thailand. In
our opinion it remains uncertain whether the domestic scrap market will be
sufficient to accommodate 100% of NSM's scrap needs by the year 2001. However,
we also believe that NSM's projected scrap prices--$178/MT for imported scrap
(delivered to site) and at $150/MT for domestic scrap (delivered)--are
conservative, particularly the price for domestic scrap. High quality domestic
scrap is priced in the $100-120/MT range as of late October 1997. Therefore we
feel that NSM's projected price of $150/MT is very conservative, particularly
considering that domestic scrap is traded in Baht. These factors--a lower priced
domestic scrap and a need to import more scrap than planned--will likely offset
each other, resulting in an overall raw material cost which is as stated in
NSM's projections.

B-3
<PAGE>
In the initial review of the operating cost projections, it appeared as
though certain inefficiencies in consumption of energy and other consumables was
not thoroughly accounted for during the start up period--first 2 years, although
lower yields during the start up phase were acknowledged. Projections concerning
these inefficiencies, which are quite normal during start up, were recently
provided to NSM.

OVERALL SUMMARY

NSM's projections of operating cost and production capacity are very
realistic. NSM's flat rolled mini-mill will have State--of--the--Art equipment
which emphasizes the production of quality steel products while concurrently
minimizing energy consumption and yield losses. Such a facility configuration is
critical to success in the South East Asian area where energy and iron unit
costs are generally higher than in other steel producing regions of the world.

The only projection with a degree of uncertainly concerns the capability of
the continuous caster to support 1.35 million tpy if the product mix contains an
inordinately high percentage of narrow product. The market is likely not yet
defined well enough to resolve this issue, however, the productivity penalty, if
any, would be modest at worst.

B-4
<PAGE>
- --------------------------------------------------------------------------------

Resource Strategies

THE OUTLOOK FOR STEEL SHEET PRODUCTS
IN SOUTH EAST ASIA

A report prepared for
Nakornthai Strip Mill Public Company Ltd.
by
Resource Strategies, an affiliated company of CRU International Ltd.

C-1
<PAGE>
- --------------------------------------------------------------------------------

Resource Strategies

THE OUTLOOK FOR STEEL SHEET PRODUCTS IN
SOUTH EAST ASIA

The following provides a brief overview of the outlook for steel sheet
products in Thailand, Malaysia, Indonesia, the Philippines, South Korea and
Taiwan over the period 1991 to 2005.

INTRODUCTION

Steel consumption in the South East Asian region has seen double digit
growth over the last fifteen years, compared with virtually no growth in the
mature economies of Japan, North America and Western Europe. This trend is
likely to continue for the foreseeable future, though recent macroeconomic
developments and currency turmoil in all the Asean countries will dampen growth
prospects for the next couple of years. In the medium term, we expect the region
to remain the fastest growing steel market in the world with steel demand
growing at an annual average of 6-8%. This will provide substantial
opportunities for investment in steel making and rolling facilities to replace
the growing flow of imports into the Asean region from all over the world, from
such places as Japan, India and Russia.

Korea and Taiwan dominate the region in terms of production and consumption
of sheet products, having established integrated steelmaking facilities and
substantial export markets for their products. Though relatively small in size,
many of the Asean countries have seen strong growth in steel consumption,
exceeding an average of 10% per year between 1980 and 1995. With the exception
of Indonesia, the Asean countries all rely heavily on imports, particularly of
steel sheet products, to meet their growing demand requirements. As these
markets have grown, several major new steel making facilities have come on
stream or are planned to do so in the next two years which will substantially
reduce the current dominance of imports.

Though the medium term economic prospects remain good, there has been some
slow down in the region recently. In 1996, industrial production growth rates in
a number of the Asean countries slowed as the region suffered a slow down in
manufacturing exports. Growth rates are expected to slow further this year in
response to the currency markets turmoil evident since early July. This
development continues to create uncertainty and make investors more cautious.
The devaluations against the dollar have had the immediate effect of reducing
regional import demand for steel products. Thailand and to a lesser extent
Indonesia are more severely affected, but Malaysia and the Philippines have also
reduced import levels in recent months in response to the rising dollar.

C-2
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

[LOGO]

C-3
<PAGE>
- --------------------------------------------------------------------------------

Resource Strategies

TABLE 1: FLAT PRODUCTS CONSUMPTION BY COUNTRY
<TABLE>
<CAPTION>
YEAR 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(UNIT: 000 METRIC TONNES)
HOT-ROLLED COIL
CONSUMPTION
Indonesia........... 649 543 765 499 676 466 482 506 544 591
Korea............... 7,564 5,249 5,767 6,588 6,974 8,875 9,182 9,898 10,690 11,428
Malaysia............ 708 684 806 805 996 880 880 940 1,024 1,147
Philippines......... 376 359 359 413 504 704 739 789 851 918
Taiwan.............. 4,868 4,001 3,608 2,575 2,781 3,001 2,929 3,114 3,347 3,615
Thailand............ 1,586 1,820 1,742 2,103 2,959 2,580 2,264 2,389 2,549 2,801
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 15,751 12,656 13,047 12,983 14,890 16,505 16,477 17,635 19,005 20,500

% Change y-o-y...... (19.6%) 3.1% (0.5%) 14.7% 10.8% (0.2%) 7.0% 7.8% 7.9%

COLD-ROLLED COIL
CONSUMPTION
Indonesia........... 529 382 643 664 810 820 911 975 1,076 1,198
Korea............... 2,031 1,761 1,923 2,415 2,690 2,964 3,153 3,878 4,305 4,649
Malaysia............ 461 427 528 474 570 668 686 723 776 838
Philippines......... 277 262 279 220 460 359 387 415 449 487
Taiwan.............. 1,992 2,204 2,287 2,195 2,227 2,548 2,708 2,906 3,121 3,364
Thailand............ 794 801 976 862 524 1,114 1,057 1,103 1,216 1,301
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 6,084 5,837 6,635 6,831 7,281 8,473 8,902 10,000 10,944 11,838

% Change y-o-y...... (4.1%) 13.7% 3.0% 6.6% 16.4% 5.1% 12.3% 9.4% 8.2%

COATED SHEET
CONSUMPTION
Indonesia........... 284 309 261 412 531 478 510 549 597 647
Korea............... 1,414 1,389 1,828 2,394 2,717 3,015 2,909 3,133 3,350 3,719
Malaysia............ 329 424 494 448 1,195 565 613 668 712 784
Philippines......... 258 325 370 437 473 507 537 579 631 678
Taiwan.............. 1,001 1,219 1,549 1,445 1,624 1,675 1,834 2,018 2,244 2,526
Thailand............ 596 567 633 881 915 913 880 912 963 1,040
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 3,882 4,233 5,135 6,017 7,455 7,153 7,283 7,858 8,496 9,395

% Change y-o-y

<CAPTION>
YEAR 2001 2002 2003 2004 2005
- -------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HOT-ROLLED COIL
CONSUMPTION
Indonesia........... 658 725 787 857 922
Korea............... 12,113 12,719 13,469 14,022 14,554
Malaysia............ 1,277 1,409 1,540 1,677 1,821
Philippines......... 987 1,062 1,136 1,210 1,292
Taiwan.............. 3,929 4,240 4,579 4,927 5,277
Thailand............ 3,098 3,405 3,667 3,968 4,313
--------- --------- --------- --------- ---------
Total............... 22,061 23,559 25,178 26,660 28,179
% Change y-o-y...... 7.6% 6.8% 6.9% 5.9% 5.7%
COLD-ROLLED COIL
CONSUMPTION
Indonesia........... 1,300 1,409 1,526 1,628 1,749
Korea............... 4,965 5,238 5,547 5,774 5,994
Malaysia............ 942 1,076 1,154 1,234 1,315
Philippines......... 528 569 609 648 693
Taiwan.............. 3,634 3,890 4,128 4,371 4,633
Thailand............ 1,415 1,542 1,661 1,797 1,953
--------- --------- --------- --------- ---------
Total............... 12,783 13,724 14,624 15,453 16,337
% Change y-o-y...... 8.0% 7.4% 6.6% 5.7% 5.7%
COATED SHEET
CONSUMPTION
Indonesia........... 705 760 833 907 979
Korea............... 4,065 4,223 4,472 4,656 4,832
Malaysia............ 877 970 1,060 1,154 1,253
Philippines......... 728 781 836 890 951
Taiwan.............. 2,766 3,029 3,271 3,520 3,770
Thailand............ 1,145 1,269 1,367 1,479 1,608
--------- --------- --------- --------- ---------
Total............... 10,287 11,033 11,839 12,606 13,394
% Change y-o-y
</TABLE>

- ------------------------

Note: Hot-rolled coil includes sheet and strip and does not include hot-rolled
plate: coated sheet includes zinc and other metallic coatings except
tinplate

Source: Resource Strategies.

C-4
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

TABLE 2: FLAT PRODUCTS PRODUCTION BY COUNTRY
<TABLE>
<CAPTION>
YEAR 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(UNIT: 000 METRIC TONNES)
HOT-ROLLED COIL
PRODUCTION
Indonesia........... 943 770 859 1,103 1,237 1,160 1,250 1,353 1,664 2,179
Korea............... 13,196 14,308 17,132 17,323 17,781 19,458 20,275 21,309 22,801 23,599
Malaysia............ 0 0 0 0 0 0 0 80 480 1,320
Philippines......... 302 281 389 629 785 793 893 982 1,281 2,209
Taiwan.............. 4,218 5,038 5,145 5,341 5,484 5,849 6,217 7,287 8,169 9,802
Thailand............ 0 0 0 510 1,131 1,311 1,325 2,120 2,862 3,463
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 18,659 20,397 23,525 24,906 26,418 28,571 29,961 33,131 37,256 42,572

% Change y-o-y...... 9.3% 15.3% 5.9% 6.1% 8.1% 4.9% 10.6% 12.4% 14.3%

COLD-ROLLED COIL
PRODUCTION
Indonesia........... 476 383 379 553 763 847 898 1,041 1,448 2,244
Korea............... 3,533 3,670 4,453 4,725 4,998 5,066 5,431 5,903 6,777 7,638
Malaysia............ 47 97 139 140 230 480 499 539 620 750
Philippines......... 367 358 415 398 513 463 509 611 825 908
Taiwan.............. 2,290 2,691 3,209 3,405 3,836 4,498 4,660 4,769 4,869 5,074
Thailand............ 0 0 0 0 0 60 258 839 1,258 1,761
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 6,713 7,199 8,595 9,221 10,340 11,414 12,255 13,702 15,796 18,374

% Change y-o-y...... 7.2% 19.4% 7.3% 12.1% 10.4% 7.4% 11.8% 15.3% 16.3%

COATED SHEET
PRODUCTION
Indonesia........... 248 290 216 333 398 415 540 593 712 812
Korea............... 2,328 2,564 2,857 3,013 3,351 3,667 3,916 4,194 5,012 6,195
Malaysia............ 164 144 162 225 279 273 383 521 658 796
Philippines......... 226 278 310 348 350 380 471 636 763 809
Taiwan.............. 437 456 754 1,027 1,248 1,618 1,739 1,878 2,113 2,388
Thailand............ 289 293 354 525 502 512 540 713 1,019 1,203
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 3,692 4,025 4,653 5,471 6,128 6,865 7,589 8,536 10,278 12,203

% Change y-o-y...... 9.0% 15.6% 17.6% 12.0% 12.0% 10.6% 12.5% 20.4% 18.7%

HOT-ROLLED COIL
PRODUCTION
Indonesia........... 2,484 2,857 2,943 3,208 4,170
Korea............... 24,732 27,259 28,350 29,484 31,695
Malaysia............ 1,782 1,871 2,432 3,041 3,497
Philippines......... 2,629 2,761 2,982 3,131 3,193
Taiwan.............. 10,292 10,910 11,674 12,257 13,140
Thailand............ 3,913 4,618 5,310 6,160 7,022
--------- --------- --------- --------- ---------
Total............... 45,833 50,276 53,691 57,280 62,717
% Change y-o-y...... 7.7% 9.7% 6.8% 6.7% 9.5%
COLD-ROLLED COIL
PRODUCTION
Indonesia........... 2,625 2,757 3,087 3,334 3,401
Korea............... 8,478 8,969 9,373 9,635 10,021
Malaysia............ 863 1,018 1,191 1,489 1,638
Philippines......... 1,016 1,067 1,217 1,302 1,549
Taiwan.............. 5,393 5,749 6,186 6,755 7,265
Thailand............ 2,025 2,227 2,571 2,853 3,053
--------- --------- --------- --------- ---------
Total............... 20,400 21,788 23,625 25,369 26,927
% Change y-o-y...... 11.0% 6.8% 8.4% 7.4% 6.1%
COATED SHEET
PRODUCTION
Indonesia........... 840 874 923 964 1,041
Korea............... 6,889 7,165 7,337 7,557 7,919
Malaysia............ 867 954 1,001 1,072 1,179
Philippines......... 850 907 977 997 1,002
Taiwan.............. 2,632 2,879 3,129 3,583 3,924
Thailand............ 1,251 1,293 1,396 1,458 1,488
--------- --------- --------- --------- ---------
Total............... 13,329 14,071 14,763 15,631 16,553
% Change y-o-y...... 9.2% 5.6% 4.9% 5.9% 5.9%
</TABLE>

- ------------------------

Note: Hot-rolled coil includes sheet and strip and does not include hot-rolled
plate: coated sheet includes zinc and other metallic coatings except
tinplate

Source: Resource Strategies.

C-5
<PAGE>
- --------------------------------------------------------------------------------

Resource Strategies

Uncertainty caused by the crisis has reduced steel trading activity with
buyers deferring purchases and sellers not extending terms of credit. In our
forecasts, we have assumed that this crisis is likely to have repercussions for
steel consumption in the region for 1997 and 1998 but that demand will recover
more strongly in 1999 and beyond.

Steel sheet products, hot-rolled, cold-rolled and metallic coated sheet and
coil, which are the markets that NSM will be competing in, account for just
under 40% of total steel product consumption in the Southeast Asian region. The
other 60% or so is primarily reinforcing bar and other long products used in the
construction industry. As these markets develop and the population's prosperity
rises, the demand for consumer durables, such as automotives and consumer
durables, will raise the share of sheet products in total steel consumption.

In order to assess the market opportunities for Nakornthai Strip Mill (NSM)
and the competitor behaviour of existing and new steel sheet producers over the
next ten years, we look at each of the countries of the region in turn. The
accompanying tables provide our estimates of historical and forecast
consumption, production and capacity of hot-rolled, cold-rolled and coated sheet
in each of the major markets discussed. According to our forecasts, total sheet
consumption is forecast to grow robustly at an annual average of 8.2% in
Thailand and 7.4% in the six major consuming countries of the region between
1997 and 2005.

THAILAND

In 1996, Thailand consumed about 4.6m tonnes of sheet products and imported
3.3m tonnes. The sheet market has been growing rapidly over the last five years,
at an annual average rate of 9%. However, growth slowed in 1996 to 4.6%, down
from more than 14% per year in the previous two years. The collapse of the baht
is expected to have a noticeable impact on steel demand in 1997 and 1998.
Imports will fall and domestic producers will face reduced demand and difficulty
in passing on fully the effects of the devaluation in higher baht prices. We
believe that sheet demand could fall almost 9% this year, partially recovering
in 1998 to reach 4.4m tonnes. From 1999, assuming the impact of the currency
crisis has worked through the system, sheet demand is forecast to pick up
strongly growing by as much as 10% per year, so that we estimate that growth of
just over 8% average over the forecast period to 2005.

Sahaviriya Steel Industries is currently the only hot strip producer,
rolling imported slab. It sources its slab from a variety of mills, most
recently from the CIS (Commonwealth of Independent States) and Eastern Europe,
and these varied sources have affected its ability to supply a consistent
quality product. NSM is expected to bring on stream its 1.5m tpy hot strip
mini-mill at the beginning of 1998 and the Japanese joint venture, Siam Strip
Mill, will follow within a year with a further 1.7m tpy of hot rolling capacity.
By the time both of these mills are fully running, Thai demand for hot-rolled
coil (including that for further processing into cold-rolled) is likely to reach
around 5 5.5m tonnes. Hence, these new producers should find good opportunities
in their domestic market for import substitution. Both new producers are making
provision to expand capacity in the longer term.

Thailand has not produced cold-rolled coil to date and imports between 1.5
and 2m tpy. Now there are two new cold mills, Thai Cold-Rolled, which has
recently come on stream and Siam United Steel, which is under construction, with
a joint capacity of 2.2m tpy. Both mills are Japanese joint ventures which are
likely to source the majority of their mother coils from Japan to supply high
quality cold-rolled to Japanese OEM (original equipment manufacturers)
transplants in Thailand and other Asean. BHP Steel (The Broken Hill Proprietary
Company Limited) is installing a 300,000 tpy cold mill and 150,000 tpy
galvanising line. The cold-rolled produced on this mill will be galvanised at
the same location or shipped to Indonesia to the other BHP galvanising line
there. Currently Thailand imports almost half of its coated

C-6
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

sheet requirement of almost 1m tpy. This situation should change over the next
five years as NSM brings on 500,000 tpy of galvanising capacity and several
other smaller lines come on stream. By the end of the forecast period, Thailand
could be a net exporter of hot-dipped galvanised sheet.

INDONESIA

Indonesia consumed nearly 1.8m tonnes of sheet products in 1996, and its
consumption of sheet products has risen and fallen regularly over the last five
years, with an underlying trend of +4%. Prospects for future steel consumption
are good as economic growth is forecast to be strong. We are forecasting that
total sheet consumption will rise by 8.5% per year on average over the next nine
years.

Krakatau Steel is a fully integrated steelworks established in 1986 which
produces around 1m tpy of hot-rolled coil and about 50% of the country's
cold-rolled production. The company is planning to expand capacity and may be
privatised to raise the necessary funding. One of the key stumbling blocks has
been on the choice of steelmaking route to supply the increase in capacity. In
1993, regulation of the industry was relaxed allowing investment in flat
products. Several foreign investors, most notably Posco of Korea and Yieh Phui
of Taiwan, are considering joint venture flat product facilities in Indonesia.
There are plans to install galvanising lines that will double existing capacity.
If all the announced planned projects come to fruition, their production is
likely only to meet the growth in domestic demand in the medium term.

C-7
<PAGE>
- --------------------------------------------------------------------------------

Resource Strategies

TABLE 3: ASEAN SHEET CAPACITY, MILLION TPY

<TABLE>
<CAPTION>
START-UP HR CR COATING
COUNTRY COMPANY DATE CAPACITY CAPACITY CAPACITY
- ------------------------------------ ------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INDONESIA........................... EXISTING CAPACITY, END 1996 2.00 1.70 0.75
PLANNED:
Tumbakmas...................... Q1 1997 0.10
Sarana Steel................... 1997 0.07
Bisma Nerendha................. H1 1998 0.10
PT Fumira...................... H1 1998 0.15
KS Posco/Krakatau Phase I...... 1998/9 1.00 --
Keris Mas...................... H1 1999 0.15
Krakatau*...................... 1999 0.50 --
Yieh Phui Enterprises.......... 1999 1.60 --
Other smaller galvanizes....... by 2000 0.10
--- --- ---
TOTAL INDONESIA, END 2000...... 3.50 3.30 1.42
MALAYSIA............................ EXISTING CAPACITY, END 1996 0.00 0.50 0.35
PLANNED:
BHP-Malaysia................... Q1 1997 0.15
Federal Iron Works............. H1 1997 0.20
Ornatube....................... H2 1997 0.25 0.25
Megasteel--Phase I............. H2 1998 2.00
Cold Rolling (Maruichi)........ 1998 0.20
Nusantara Steel Corp........... 1999 1.60
--- --- ---
TOTAL MALAYSIA, END 2000....... 3.60 0.95 0.95
THAILAND............................ EXISTING CAPACITY, END 1996 2.40 0.00 0.70
PLANNED:
Thai Cold-Rolled (SSI)......... 1997 1.20 0.30
Nakornthai Strip Mill (NSM).... H1 1998 1.50
Siam Strip Mill (SSM).......... H1 1999 1.70
Siam United Steel.............. 1998 1.00
Bangkok Steel Industry......... 1998 0.16
BHP-Thailand................... 1998 0.30 0.15
Nakorn Strip Mill (NSM)........ 1999 0.80 0.50
Siam Steel Pipe Group.......... 1998-1999 0.25
Siam Integrated (SSM).......... 1999 0.50
--- --- ---
TOTAL THAILAND, END 2000....... 5.60 3.80 2.06
PHILIPPINES......................... EXISTING CAPACITY, END 1996 1.20 0.85 0.65
PLANNED:
Puyat Steel Corp............... H2 1997 0.15
Coresteel...................... 1997 0.05
Bacnotan Steel................. 1997 0.06
Philippine Steel Coating Q497/98 0.30 0.24
Group..........................
Jacinto Group.................. 1999 1.25
National Steel*................ by 2000 0.50
--- --- ---
TOTAL PHILIPPINES, END 2000.... 2.95 1.20 1.10
</TABLE>

C-8
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

TABLE 3 CONT'D: SOUTH KOREA & TAIWAN SHEET CAPACITY, MILLION TPY

- ------------------------

* expansion at existing plant.

Data: Resource Strategies, CRU International

C-9
<PAGE>
- --------------------------------------------------------------------------------

Resource Strategies

MALAYSIA

The Malaysian sheet market is currently about 2.1m tonnes, and has been
growing at an annual average of 7% in the last five years. It imports 100% of
its hot-rolled coil requirement as it has no hot rolling facility. There are
several proposed new mills, the most ambitious of which is the Megasteel
project, which will commission a 2m tpy hot rolling mill in 1998. It is likely
that the company will install further downstreaming rolling and coating at this
facility in the future. Nusantara Steel has recently announced that it aims to
start producing 1.6m tpy of hot-rolled coil in 1999.

Growth in Malaysian sheet steel consumption is expected to be the strongest
in the region at an annual average of just over 9%. If this growth is realised,
Malaysia will remain a significant net importer of sheet steel unless further
projects are announced.

PHILIPPINES

Philippine sheet steel consumption grew dramatically from very small volumes
over the last five years at an average rate of 11.5% to reach 1.6m tonnes in
1996. We believe that it will grow at an average rate of 7.4% over the next nine
years to reach 2.9m tonnes by 2005.

The previously state-owned National Steel Corp. is currently the only
producer of hot-rolled coil, and like Sahaviriya Steel in Thailand, relies on
imported slab from a variety of sources for feed. This rolling mill has plans to
remove some bottlenecks and expand capacity by 500,000 tpy. The Jacinto Group is
planning to build a Danieli-designed thin slab hot-strip mini-mill with a
capacity of 1.25m tpy. There are several projects planned to install cold
rolling and galvanising facilities. The additions to cold rolling capacity from
announced projects are insufficient to meet the projected growth in demand and
it will remain a net importer of cold-rolled coil unless further projects are
announced.

KOREA

The Korean steel industry dominates the region. Korea is a major player in
the global steel market. It produced 39m tonnes of steel in 1996, of which
Posco, the second largest steel producing company in the world, produced over
24m tonnes, 19.5m tonnes of which was hot-rolled coil. Posco is one of the
lowest cost producers of hot strip in the western world. Total imports of steel
products into Korea in 1996 were 11.1m tonnes. This comprised 4.2m tonnes of
semi finished goods and 6.87m tonnes of finished goods. Total exports of steel
products were 9.89m tonnes. This comprised 0.44m tonnes of semi finished goods
and 9.45m tonnes of finished goods. Overall, net imports of semi finished and
finished goods into Korea in 1996 were 1.65m tonnes.

Korean steel consumption will continue to grow strongly at about 6% per year
on average over the next nine years. There are a large number of sheet steel
projects planned to come on stream over the next five years, though some, such
as Hanbo Steel whose problems have been well-publicised, may take longer to be
realised.

TAIWAN

Strong industrial growth in Taiwan has supported sheet growth. The Taiwanese
sheet steel market was just over 7m tonnes in 1996 and is expected to grow by an
average of almost 8% per year over the forecast period. Remarkably, Taiwan has a
large but mainly balanced trade in sheet products. In 1996, it exported 2.6m
tonnes of sheet, 68% of which was hot-rolled coil, and it imported 2.5m tonnes
of sheet, of which more than 50% was cold-rolled.

C-10
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

Total imports of steel products into Taiwan in 1996 were 10.1m tonnes. This
comprised 5.95m tonnes of semi finished goods and 4.1m tonnes of finished goods.
Total exports of steel products were 3.32m tonnes. This comprised 0.02m tonnes
of semi finished goods and 3.3m tonnes of finished goods. Overall, net imports
of semi finished and finished goods into Taiwan in 1996 were 6.78m tonnes.

Hot-rolled output from China Steel Corporation's new hot mill is expanding
rapidly, and Yieh Loong has started production on its new 2.4m tpy hot rolling
mill. Given the predicted growth in demand, the country is likely to be a net
importer of cold-rolled and coated sheet unless further projects are planned.

OTHER ASEAN MARKETS

There are likely to be export opportunities for new Asean producers to
supply the emerging markets for steel in the smaller less developed countries
such as Vietnam, Cambodia, Laos and Burma. These markets are currently consuming
only very small quantities of steel, and most of this is reinforcing bar for
construction. In the longer term, however, these markets will grow and imports
will meet this demand until sufficient demand will support domestic facilities.
China is also expected to remain an importer, particularly of higher value added
sheet products such as high strength low alloy and other specialty grades of
steels.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
FLAT PRODUCTS CONSUMPTION BY COUNTRY
<S> <C>
1996, 2005
1996: 32.1m tonnes
Taiwan 22%
Thailand 14%
Indonesia 5%
Malaysia 7%
Philippines 5%
Korea 46%
2005: 57.9m tonnes
24%
14%
6%
8%
5%
44%
</TABLE>

SUMMARY

- - Regional steel consumption growth, which had been robust up to mid-1997, is
set to moderate this year and in 1998 in response to the economic uncertainty
and lower economic activity. Nevertheless, the growth prospects for the
region remain considerably higher than other steel consuming areas of the

C-11
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

world. With the obvious exceptions of Korea and Taiwan, the region has been a
significant net importer of sheet products and is expected to remain so.

- - Long term outlook for steel consumption in the region is good. As economies
of the region develop, consumption of flat products is expected to grow at a
faster rate than long products, because demand for automotives, appliances
and other products made with flat steel will grow with the increasing
prosperity of the population.

- - All of the ASEAN countries state that they are now committed to trade
liberalisation and, as members of Afta, have committed to reducing tariffs on
all steel products to 5% by the year 2003. Therefore, new producers locating
in these markets will be competing in the global steel market and must be
efficient on an international basis.

- - Currency markets are expected to stabilise, albeit at lower levels, in
mid-1998. We expect there to be a general recovery in demand in 1999 and over
the remainder of the forecast period growth should be steady.

- - In several countries, stock market volatility has been exacerbated by the
currency problems and this has made it more difficult to raise funds to
finance capital projects. Several planned new production facilities are
likely to be delayed and some may be suspended indefinitely because of the
recent turmoil. For this reason, imports are likely to continue to play a
significant role for the foreseeable future.

- - Forecast sheet steel prices (shown in the accompanying chart) are likely to
level out in nominal dollar terms in the region. These price levels represent
spot transaction prices for commercial grades; there are substantial premiums
on top of these base prices for higher value-added sheet products supplied to
individual customer requirements. As long as currencies continue to devalue,
the rising cost of steel imports will have a dampening effect on steel
demand.

[LOGO]

C-12
<PAGE>
- --------------------------------------------------------------------------------

RESOURCE STRATEGIES

SOME OF THE COMPETITIVE ADVANTAGES OF NSM

- - Thailand is a significant importer of sheet products and therefore there are
significant opportunities for import substitution.

- - NSM has several advantages over the incumbent hot-rolled producer, Sahaviriya
Steel Industries, because it can be more flexible in response to customers'
requirements in terms of dimensions, grades, quality and just-in-time
delivery. NSM will face more formidable competition from the other new player
in the hot rolling market, the Japanese joint venture Siam Strip Mill when it
comes on stream in late 1998 or early 1999. However, NSM will have almost a
year to establish customer relationships with Thai consumers who currently
must rely on imports. Given our forecasts of sheet consumption, we believe
that there will be room for both players to supply primarily the Thai market
in the medium term.

- - NSM will produce a full range of steel grades including HSLA grades for the
automotive industry and API grades for the higher quality end of the pipe
industry. Therefore, it should be able to compete at the top end of the
hot-rolled coil market with strip sourced from Korea and Taiwan, leaving the
Sahaviriya mill to serve the commercial quality commodity end of the market.

- - The ability to produce a broad range of qualities to tight specifications at
low cost means that the mill output is potentially attractive for export
markets worldwide. NSM has the support of two of the world's biggest global
steel traders who are willing to offtake significant volumes of higher grade
material.

- - The ability to carry out ferritic rolling on the hot strip mill allows the
unique configuration of the finishing plant, combining a two stand cold
rolling mill with an inline galvanising line. This combination facility,
which will primarily produce hot-dipped galvanised sheet, will also be able
to produce a cold-rolled equivalent coil and pickled and oiled. The principal
advantage of this type of facility is its flexibility and low production
costs.

C-13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.......................... i
Enforceability of Civil Liabilities............ i
Presentation of Financial Information.......... ii
Glossary....................................... iv
Prospectus Summary............................. 1
Risk Factors................................... 9
Use of Proceeds................................ 20
Selling Shareholders........................... 20
Plan of Distribution........................... 21
Capitalization................................. 22
Selected Financial Data........................ 23
Management's Discussion and Analysis of
Financial Conditions......................... 24
Business....................................... 28
Description of Project Participants............ 54
Description of Material Agreements............. 56
Management..................................... 62
Principal Shareholders......................... 67
Related Party Transactions..................... 69
Description of Certain Indebtedness............ 73
Description of the Warrants.................... 76
Description of Share Capital................... 81
Tax Considerations............................. 82
Legal Matters.................................. 83
Experts........................................ 83
Index to Financial Statements.................. F-1
Annex A-The Kingdom of Thailand................ A-1
Annex B-Hatch Report........................... B-1
Annex C-RSI Consulting Ltd/CRU Report.......... C-1
</TABLE>

[LOGO]

NAKORNTHAI STRIP MILL PUBLIC
COMPANY LIMITED

WARRANTS TO PURCHASE
128,834,356 ORDINARY SHARES OF
NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED

---------------------

PROSPECTUS

---------------------

1998

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses payable by the Company
in connection with the warrants being registered:

<TABLE>
<S> <C>
SEC Registration Fee................................................................ $ 9,502
Blue Sky Qualification Fees and Expenses............................................ *
Accounting Fees..................................................................... *
Legal Fees and Expenses............................................................. *
Transfer Agent and Registrar Fees................................................... *
Printing and Engraving.............................................................. *
Miscellaneous....................................................................... *
---------
Total............................................................................... $ *
---------
---------
</TABLE>

- ------------------------

* To be filed by Amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Neither the Articles of Association (By-laws) of Nakornthai Strip Mill
Public Company Limited (the "Company") nor the Public Limited Company Act (the
"PLCA") specifically provide for an indemnification of directors and officers of
the Company. However, the PLCA excludes a director from being held liable to the
Company, any shareholder or the Company's creditor, if her act has been approved
or ratified by the shareholders' resolution, even if it has been rescinded
later. A director may be exempt from liabilities for an alleged breach in
certain situations, e.g., she can prove that she took no part in the alleged
breach, or that she made an objection in the meeting, or that she has taken
reasonable actions or precautions to avoid such a breach.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On March 12, 1998, NSM Steel (Delaware), Inc., an indirect subsidiary of the
Company and NSM Steel Company, Ltd., a direct subsidiary of the Company
(collectively, the "Note Issuers") issued the following securities: 12% Senior
Notes Due 2006 in an aggregate principal amount of $249 million (the "Senior
Notes"), 12 1/4% Senior Subordinated Notes Due 2008 (the "Senior Subordinated
Notes") in an aggregate principal amount of $203.5 million and 12 3/4%
Subordinated Second Mortgage Debentures Due 2009 in aggregate principal amount
of $53,133,406 (the "Debentures"). All such securities were guaranteed by the
Company. Purchasers of the Senior Subordinated Notes also received warrants (the
"Warrants") to purchase ordinary shares, par value 10 Baht per share (the
"Ordinary Shares") of the Company. The aggregate number of the Warrants issued
was 128,834,356. The Senior Notes, the Senior Subordinated Notes and the
Warrants were issued in reliance upon the exemption from the registration
requirements of the Securities Act provided by Rule 144A of the Securities Act.
Natwest Capital Markets Limited, McDonald & Company Securities, Inc.,
PaineWebber Incorporated and ECT Securities Corp. were the initial purchasers of
the Senior Notes, the Senior Subordinated Notes and the Warrants. The proceeds
received by the Note Issuers in respect of the Senior Notes were $225,594,000.
The proceeds received by the Note Issuers in respect of the Senior Subordinated
Notes and the Warrants were $175,010,000. The Debentures were issued in a
private placement transaction in reliance upon Section 4(2) of the Securities
Act. The proceeds received by Note Issuers in respect of the Debentures were
$43,500,000. The Debentures were initially purchased by a group of private
investors. These private purchasers also purchased 64,417,180 Ordinary Shares
for an aggregate purchase price of $14,928,663.

II-1
<PAGE>
In addition, in reliance on Section 4(2) of the Securities Act, on March 12,
1998, the Company issued to Steel Dynamics, Inc. 74,468,090 Ordinary Shares (the
"SDI Shares") and warrants to purchase 11,421,480 warrants (the "SDI Warrants")
which contain certain covenants restricting SDI's ability to exercise SDI
Warrants unless an equivalent percentage of Warrants has been exercised. The
consideration received by the Company for the SDI Shares and SDI Warrants was
the execution by SDI of a license agreement, which includes the grant by SDI and
NSM of a reciprocal license rights to certain technical and operational
know-how. The Company will also reimburse SDI for the exercise price of each SDI
Warrant exercised.

Finally, in reliance on Section 4(2) of the Securities Act, certain entities
purchased an aggregate of 19,754,594 Ordinary Shares of the Company for
approximately $4.9 million.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>

*3.01 Articles of Association of Nahornthai Strip Mill Public Company Limited (the "Company").

*4.01 Warrant Agreement, dated as of March 12, 1998 between the Company and United States Trust Company of
New York (the "Warrant Agent").

**5.01 Opinion of White & Case (Thailand), Thai counsel to the Company, as to the legality of the Warrants.

**5.02 Opinion of White & Case LLP, U.S. counsel to the Company, as to the legality of the Warrants.

**10.01 Shareholders' Agreement dated as of March 12, 1998 among Steel Dynamics, Inc., ECT Thailand
Investments, Inc., NSM McDonald Company, N.T.S Group Public Company Limited, Kuhn Sawasdi
Horrungruang and the Company.

**10.02 Management Agreement dated as of March 12, 1998 between the Company and NSM Management Co. LLC

*10.03 Reciprocal License and Technology Sharing Agreement dated as of March [12], 1998 between Steel
Dynamics, Inc. ("SDI") and the Company

*10.04 Management Advisory and Technical Assistance Agreement dated as of March [12], 1998 between SDI and
NSM Management Company.

*10.05 BNP Onshore Credit Facility (Onshore Bill Discount Facility Agreement) dated as of March 12, 1998
between the Company and Banque National de Paris as the Agent, the Arranger and the Bank.

*10.06 BNP Offshore Credit Facility (Syndicated Offshore Bill Discount Facility Agreement) dated as of March
12, 1998 between the Company and Banque Nationale de Paris as the Agent, the Arranger and the Bank.

**10.07 Preussag Off-Take Agreement (Export Sales and Marketing Agreement) dated as of November 19, 1997
between Preussag Handel GMBH and the Company.

**10.08 Klockner Off-Take Agreement (Export Sales and Marketing Agreement) dated as of November 19, 1997
between Klookner Stahl-und Metallhandel GMBH and the Company.

*10.09 Sriracha Harbour Lease (Throughput Agreement) dated as of March 19, 1998 between Sriracha Harbour
Public Company Limited and the Company.
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
*10.10 Coal Supply Agreement (Contract for the Sale and Purchase of Anthracite Coal) dated as of October 16,
1996 between SSM Coal B.V. and the Company.

*10.11 Iron Ore Supply Agreement dated as of February 6, 1997 between MMTC Limited and the Company.

*10.12 Hylsa Assistance Agreement dated as of June 6, 1996 between the Company and HYLSA, S.A. de C.V.

**10.13 Reubin Perin Consulting Agreement

*10.14 Employment Agreement for John Schultes dated as of March 12, 1998 between the Company and John W.
Schultes.

*10.15 Employment Agreement for Sawasdi Horrungruang dated as of February 14, 1988 between the Company and
Sawasdi Horrungruang.

*10.16 Employment Agreement for Chamni Janchai dated as of February 14, 1998 between the Company and Chamni
Janchai.

12.01 Statement re Computation of Ratios.

**21.03 Subsidiaries of the Company.

**23.01 Consent of White & Case (Thailand) re its opinion as to the legality of the Warrants (included in
Exhibit 5.01 hereto).

**23.02 Consent of White & Case LLP re its opinion as to the legality of the Warrants (included in Exhibit
5.02 hereto).

23.03 Consent of Peat Marwick Suthee Limited

**23.04 Consent of Hatch Associates

**23.05 Consent of Resource Strategies

24.01 Powers of Attorney for the Company (included on pages II-5 and II-6).
</TABLE>

- ------------------------

* Incorporated by reference to the Company's registration statement on Form
F-4 filed on June 10, 1998.

** To be filed by amendment.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement;

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended ("Securities Act");

(ii) To reflect in the prospectus included in this registration statement
any facts or events arising after the effective date of this
registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus

II-3
<PAGE>
filed with the Securities and Exchange Commission ("SEC") pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and

(iii) To include any material information with respect to the plan of
distribution nor previously disclosed in the registration statement
or any material change to such information in this registration
statement.

(2) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(3) To file a post-effective amendment to this registration statement to
include any financial statements required by Rule 3-19 of Regulation S-X under
the Securities Exchange Act of 1934 throughout the offering.

(4) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chonburi, Thailand on June 10, 1998.

<TABLE>
<S> <C> <C>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

By: /s/ JOHN W. SCHULTES
-----------------------------------------
John W. Schultes
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
</TABLE>

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints and
hereby authorizes John W. Schultes and Gary Heasley, and each of them, as
attorney-in-fact, to sign on such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this registration statement.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons (who include a
majority of the Board of Directors) in the capacities indicated on June 10,
1998:

<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------

<C> <S>
Director, President and
/s/ JOHN W. SCHULTES Chief Executive Officer
- ------------------------------ (Principal Executive
John W. Schultes Officer)

/s/ GARY E. HEASLEY Chief Financial Officer
- ------------------------------ (Principal Financial and
Gary Heasley Accounting Officer)

/s/ SAWASDI HORRUNGRUANG
- ------------------------------ Chairman of the Board of
Sawasdi Horrungruang Directors

/s/ CHAMNI JANCHAI
- ------------------------------ Vice Chairman of the Board
Chamni Janchai of Directors

- ------------------------------ Director
Keith Busse

/s/ DAVID STICKLER
- ------------------------------ Director
David Stickler
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------

<C> <S>
/s/ SUNTHORN CHAILAEMLAK
- ------------------------------ Director
Sunthorn Chailaemlak

/s/ CHAN BULAKAL
- ------------------------------ Director
Chan Bulakal

- ------------------------------ Director
Kevin McConville

- ------------------------------ Director
Reuben Perin

- ------------------------------ Director
Anutin Charnvirakul

/s/ PATTAMA HORRUNGRUANG
- ------------------------------ Director
Pattama Horrungruang

/s/ CHATCHAI SOMSIRI
- ------------------------------ Director
Chatchai Somsiri

/s/ RAVEEWAN PEYAYOPANAKUL
- ------------------------------ Director
Raveewan Peyayopanakul

/s/ AMONRAT LEEVARAPAKUL
- ------------------------------ Director
Amonrat Leevarapakul

- ------------------------------ Director
Sandeep Alva
</TABLE>

II-6

<PAGE>
EXHIBIT 12

NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1994 1995 1996 1997
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT
Thai GAAP:
Net loss........................................................... -- -- -- (1,294,542)
Add fixed charges, excluding amounts capitalized................... -- -- -- --
--------- --------- ---------- -----------
Adjusted loss...................................................... -- -- -- (1,294,542)
--------- --------- ---------- -----------
--------- --------- ---------- -----------

Fixed Charges:
Interest capitalized............................................... -- 2,409 86,094 1,085,790
Interest portion of rentals capitalized(1)......................... -- -- 58 108
Interest portion of rentals expensed(1)............................ -- -- -- --
Amortization of debt issuance costs................................ -- -- -- --
--------- --------- ---------- -----------
Total fixed charges.............................................. -- 2,409 86,152 1,085,898
--------- --------- ---------- -----------
--------- --------- ---------- -----------
Deficiency of earnings to fixed charges.............................. -- 2,409 86,152 2,380,440
--------- --------- ---------- -----------
--------- --------- ---------- -----------

U.S. GAAP:
Net earnings (loss)................................................ 35,985 (166,494) (8,762,598)
Add fixed charges, excluding amounts capitalized................... -- 7,256 7,306
--------- ---------- -----------
Adjusted earnings (loss)........................................... 35,985 (159,238) (8,755,292)
--------- ---------- -----------
--------- ---------- -----------

Fixed charges:
Interest capitalized............................................... 2,409 86,094 1,085,790
Interest portion of rentals capitalized(1)......................... -- -- --
Interest portion of rentals expensed(1)............................ -- 58 108
Amortization of debt issuance costs................................ -- 7,198 7,198
--------- ---------- -----------
Total fixed charges.............................................. 2,409 93,350 1,093,096
--------- ---------- -----------
--------- ---------- -----------
Ratio of earnings to fixed charges................................... 14.9 -- --
--------- ---------- -----------
--------- ---------- -----------
Deficiency of earnings to fixed charges.............................. -- 252,588 9,848,388
--------- ---------- -----------
--------- ---------- -----------
</TABLE>

- ------------------------

(1) Management of the Company believes approximately one-third of rental and
lease expense is representative to the interest component of rent expense.

<PAGE>
EXHIBIT 23.03

The Board of Directors

Nakornthai Strip Mill Public Company Limited:

We consent to the use of our audit report dated February 14, 1998, except as
to Note 21, which is as of May 12, 1998, on the financial statements of
Nakornthai Strip Mill Public Company Limited as of December 31, 1995, 1996 and
1997, and for each of the years then ended, included herein, and to the
references to our firm under the headings "Summary Financial Information",
"Selected Financial Data" and "Experts" in the prospectus.

Peat Marwick Suthee Limited

Bangkok, Thailand

June 10, 1998