SEPI Sociedad Estatal de Participaciones Industriales

The contract sales are executed

Mr. Juan Pedro Gómez Jaén and Mr. Juan Taus, on behalf of the Commission for the Liquidation of IZAR Construcciones Navales, S.A. en Liquidación, have signed today before a Public Notary, and in the presence of the Chairman of the state-owned industrial holding company SEPI, Mr. Enrique Martínez Robles, the contracts for the sale of the assets corresponding to the Gijón, Sestao and Seville factories to their new owners, Factorías Juliana, S.A.U, Construcciones Navales del Norte, S.L., and Astilleros de Sevilla, S.A., respectively.

Once the Council of Ministers authorized the sale transactions on November 3rd, 2006, the above signing makes possible for the shipyards to definitely overcome the liquidation situation in which IZAR finds itself, so that they will be able to receive new workload and to have access to new contracts.

Equally, the sale of these assts, which has been carried out in accordance with the criteria stipulated by the European Commission, meets the goal set by the Framework Agreement subscribed on December 16th, 2004 between SEPI, the Company and the trade unions and which aimed to maintain the activity and to guarantee the continuity of those factories.

IZAR went into liquidation proceedings on April 1st, 2005 due to its inability to give back 1,200 million Euros which it had received as non-notified state aid between the years 1998 and 2000, and which were declared incompatible by the European Commission. Besides, IZAR had not fulfilled the expectations envisaged in the plan made for the incorporation of this Company in 2000, incurring in heavy losses which made it likely the bankruptcy of the civil and military state-owned shipyards in a short period of time.

SEPI´s Board of Directors, on the meeting which it held on July 18th, 2006 authorized to IZAR´s Liquidation Commission to award the Sestao, Gijón and Seville factories to the offers which had received the best assessment of the Independent Assessor for the sale´s process, out of the 8 valid binding offers which had been submitted on February 10th, 2006. Between the beginning of August and of September the corresponding private contracts were subscribed between IZAR and Factoría Juliana, S.A.U., Astilleros de Sevilla, S.A. and Construcciones Navales del Norte, S.L..

Later, on October 2nd, 2006, the Consultative Board of Privatizations reported that in the processes for the divestiture of the factories´assets and in the award proposal the publicity, transparency and free competition principles had been met.

The Company to which the assets of the Sestao factory were awarded to, Construcciones Navales del Norte, S.L., is made up by Astilleros de Murueta, S.A., Inversora para el Desarrollo de Iniciativas Empresariales, S.L,; Marlon 25, S.L.; Iniciativas Navales del Norte, S.L. and Naviera del Nervión S.L.; all of them combine the experience acquired in the shipbuilding industry with the experience earned in other industries. CNN takes over 340 workers and aims to build gas-carriers and dredgers. In order to adjust the Sestao´s workforce to the CNN´s offer, an early retirement scheme has been carried out, with terms and conditions similar to those applied on the commitment made on December 16th, 2004, for which the Council of Ministers on its meeting on November 24th, authorized the application of the corresponding labor and social security measures to 229 workers.

Astilleros de Sevilla, S.A. is a company participated by Astilleros de Huelva and Contenemar, S.A., both of which are partners of the consortium which won the assets of the IZAR´s factory in Seville, and which envisages to focus its industrial activity in building ships for the regular transport of passengers and cargo, besides building ships specialized in carrying other products. For that purpose, it will require the support of all the workforce at the factory in Seville.

Factorías Juliana, S.A.U. is the winner of the assets of the IZAR´s factory in Gijón; it was incorporated for this purpose by Factorías Vulcano, S.L. Its goal is to maintain the activity of the Gijóns´ shipyard, specializing it in the building of medium-sized chemical-products carriers, for which it will make use of all the workforce currently available at the shipyard.