2003

Exchange of share in Sithe Energies, a U.S Corporation, owned by Marubeni Corporation and IPP* business assets mainly in Asia owned by Sithe Energies Inc.-- Expanding and improving IPP business --

Oct. 22. 2003
Marubeni Corporation

Marubeni Corporation (the Company) and Exelon Corporation (*Independent Power Producer (IPP) in U.S.) have made an agreement regarding exchange of 14.86% shares in Sithe Energies Inc. (IPP) owned by the Company group and the main Asian IPP business assets of Sithe Energies Inc. 1. BackgroundIn electric power-related fields, in addition to business contracts for the engineering, procurement and construction of power production facilities, the Company has always focused on having a hand in rapidly growing power production businesses since the middle of the 1990s.With the aim of acquiring further understanding and knowledge of the IPP industry, in 1996 the Company purchased a 29.8% share of Sithe Energies Inc., a U.S. IPP. As a result of improved business development within this field, the Company now has a hand in 16 IPPs, which have a total power output capacity of 5,195MW(1,530MW based on the portion owned by the Company).After having reached the aim of acquiring increased knowledge, in December 2002 the Company sold off approximately half of the Company group's 29.8% shares of Sithe Energies Inc. to Exelon Corporation and, in an effort to make the Company's goal of future expansion within the Asian market possible, the Company and Exelon Corporation signed a contract as outlined below.a) Both companies have the right to priority trading of the remaining 14.86% shares of Sithe Energies Inc. owned by the Company group.b) When the right to priority trading of shares is used, the Company will acquire IPP business assets in Asia, which are primarily consolidated under Sithe-Asia, in which Sithe-International, a wholly-owned subsidiary of Sithe Energies Inc., owns a 44.17% stake.The above contract forms the basis for this agreement. 2. Significance Overseas IPP are priority business field as defined in "V" PLAN, a current mid-term management plan, however this agreement will increase superior IPP business assets centered in Asian countries such as the Philippines, Korea, China and Pakistan. The Company's IPP business expansion strategy of placing a major emphasis on Asia will also be strengthened and a strong business base established for further development.Moreover, to make Sithe-Asia a 100% owend subsidiary with an eye to further business expansion, the Company is currently in negotiations to acquire additional shares owned by other companies.If the goal of making Sithe Asia a 100% owned subsidiary is achieved, the number of IPPs that the Company has a hand in will go up to 21 and the total power output capacity to 5,852MW (2,165MW based on the portion owned by the Company), a massive 40% increase on the current figure of 1,530MW. 3. Influence on financial resultsBased on these transactions (the use of the right to priority trading of Sithe Energies Inc. shares (handover) and the acquisition of IPP business assets), as a result of current price assessments of Sithe Energies Inc. shares owned by the Company group, there will be an estimated valuation loss of approximately six billion yen. <Reference>Sithe Energies Inc - Profile         Company name: Sithe Energies Inc.         Founded:           1984         Location:            New York, U.S.A.         Shareholders:      Exelon 49.9%         Appolo               35.2%         Marubeni            14.9%         Main Business:    Development, construction and management of power plants         Capital:               $2,492million (as of end 2002)         Net worth:           $ 651millon (as of end 2002)Results trends: (unit: million$) Year 2000 2001 2002 Total Volume of Trading Transactions 1,225 1,087 1,031 Net Income 260 -165 -475   Exelon Corporation - Profile       Company name:  Exelon Corporation       Founded:            October 2000       Location:            Chicago, U.S.A.       Main Business:    Development, construction and management of power plants       Annual business:   $14,955million (for FY2002)

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