Announcement to Velan Customers for API 6D and 6A Ball Valves
June 22 , 2008

Velan Srl is a 50/50 owned joint venture company that was started in Italy in 2003. The founding partners in the company were Velan Inc. and BPS, a holding company owned by Roberto Bartolena and his 4 partners who together manage the joint venture company. Despite the great success in growing Velan Srl into a leading manufacturer of API 6D and 6A ball valves, it became increasingly apparent that the 50/50 partnership relationship was not sustainable.

The founding partners have agreed that BPS together with 21 Partners, an Italian Private Equity company, will acquire Velan’s 50% share in Velan Srl effective on or about August 8th, 2008. The company will be renamed Valbart and Roberto Bartolena and his 4 partners will hold a majority ownership and continue to manage the company.

Velan and Valbart have agreed on a longer term Master Supply Agreement, according to which Valbart will continue to manufacture and supply Velan brand API 6D and 6A trunnion mounted ball valves to the Velan group. Valbart will manufacture valves with the Valbart name for its own sales and with the Velan name for sales through the Velan Group.

Due to Velan Srl’s large backlog of orders at time of the change in ownership, Velan has granted Valbart the right to continue to manufacture and sell its ball valves under the Velan brand name for a one year transition period even though Velan will no longer be an owner of the company. For any Velan brand valves sold by Valbart during this transition period, Valbart will take 100% responsibility since Velan is no longer an owner of the company.

The valve plant in Mezzago (Italy) is a modern production facility with 13.000 m² of plant. This year the 130 employees manufactured and sold € 63 Million (US$ 99 Million) of API 6A and API 6D trunnion mounted ball valves supplied to projects around the world with excellent on-time delivery performance. The company is a world leader in trunnion mounted ball valve technology and has proven capability to supply superior quality valves to satisfy its customers’ requirements.

Both Velan and BPS are very proud of the world class company that has grown out of a meeting of the minds which took place just 5 years ago. Both partners will continue to supply superior quality API 6D and 6A ball valves to the Oil & Gas industries and look forward to a continuing business relationship in the future.

For any questions about this change in ownership, please contact the undersigned.

Sincerely yours,

Tom Velan
President,
Velan


Roberto Bartolena
President
Valbart