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Arabian American Development Reaches Agreement With Joint Stock Company Investors

Posted on: Friday, 28 August 2009, 07:00 CDT

DALLAS, Aug. 28 /PRNewswire-FirstCall/ -- Arabian American Development Co. (Nasdaq: ARSD), a leader in the specialty chemical area, today announced that it has reached a binding agreement resolving prior discussions surrounding the Al Masane Al Kobra Mining Company (AMAK) corporate documentation. Under the Agreement, the Company is released from any future financial obligations and will have no further liability to AMAK or the mine property. The specifics of the Agreement dated August 25, 2009, are:

• The Company will convey 9%, or 4,050,000, shares of AMAK stock to the other AMAK shareholders pro rata;
• The Articles of Association and By-Laws of AMAK will be amended to reflect that the Company has fully and completely paid the subscription price for the 18,450,000 shares of AMAK stock (41% of the issued and outstanding shares), and that neither AMAK nor the other AMAK shareholders may require the Company to make an additional capital contribution to AMAK without the Company's written consent, and that the Company shall retain seats on the AMAK Board equal in number to that of the Saudi Arabian shareholders for a three year period beginning August 25, 2009;
• AMAK will assume the $11 million Promissory Note from the Saudi Arabian Ministry of Finance & National Economy Loan to the Company, dated January 24, 1979, and will fully indemnify and defend Company against any and all claims related to the Promissory Note;
• For a three year period commencing August 25, 2009, the Company has the option to repurchase from the Saudi Arabian shareholders the 4,050,000 shares of AMAK stock at a price equal to the then fair market value of these shares less 10%; and
• The two Memoranda of Understanding dated May 21, 2006 and June 10, 2006, respectively, as well as the Partnership Agreement dated August 6, 2006, are terminated for all purposes.
  

Nick Carter, President and Chief Executive Officer, Arabian American Development Co., commented, "The timely resolution of the issues that were raised now allows all parties to focus on completing mine development and starting production in late 2010 as planned. This agreement eliminates the stipulation in the original agreement which required Arabian American Development Co. to provide $30 million in capital from other sources should the Board of AMAK make a call for payment. The original plan called for AMAK to assist in the supporting the additional capital contribution, and when it became apparent that the financing sources would not be available, other alternatives were sought. Our Board conducted an intensive study of the ramifications of the options open to the Company, and we believe we have made the best choice. In addition, this agreement resolves concerns raised by a Saudi director, who is also an AMAK shareholder, regarding the validity of the Partnership Agreement between the Company and several of the Saudi investors. We are pleased to have come to an agreement which is in the best interests of Arabian American Development Co. shareholders and allow the project to move forward in a positive fashion."

Further information may be found in the Company's report on Form 8K filed with the Securities and Exchange Commission, which can be reviewed at www.sec.com.

About Arabian American Development Company (ARSD)

ARSD owns and operates a petrochemical facility located in southeast Texas just north of Beaumont which specializes in high purity petrochemical solvents and other solvent type manufacturing. The Company is also the original developer and an equity investor in a Saudi Arabian joint stock company involving a mining project in the Al-Masane area of Saudi Arabia which is currently under construction. The mine is scheduled to be in production in late 2010 and will produce economic quantities of zinc, copper, gold, and silver.

Safe Harbor

Statements in this release that are not historical facts are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon management's belief as well as assumptions made by and information currently available to management. Because such statements are based upon expectations as to future economic performance and are not statements of fact, actual results may differ from those projected. These risks, as well as others, are discussed in greater detail in Arabian American's filings with the Securities and Exchange Commission, including Arabian American's Annual Report on Form 10-K for the year ended December 31, 2008 and the Company's subsequent Quarterly Reports on Form 10-Q.

Company Contact: Nick Carter, President and Chief Executive Officer (409) 385-8300 ncarter@southhamptonr.com Investor Contact: Cameron Donahue Hayden IR (651) 653-1854 Cameron@haydenir.com

SOURCE Arabian American Development Company

Source: PR Newswire

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