Keyuan Petrochemicals (PINK:KEYP)

On January 10, 2012, Mr. Lei (“Michael”) Xu joined the Board of Directors of Keyuan Petrochemicals, Inc. (the “Company”) as an non-voting observer, effective immediately.

Mr. Xu is a general partner of Prax Capital, one of leading private equity firms with the investment focus in China. Prax Capital, through Dragon State International Limited, invested $20M in the Company in September 2010 and is the largest institutional shareholder of the Company. Prior to joining Prax Capital in 2003, Mr. Xu worked at New Margin Ventures, Kamsky Associates, Inc. and Deloitte & Touch. Mr. Xu has about 15 years experience in venture investment and business advisory in China. Mr. Xu holds an MBA from the Wharton School at the University of Pennsylvania and a law degree from Ningbo University in China.

On July 5, 2011, Keyuan Petrochemicals, Inc. (the “Company”) received a letter from The NASDAQ Stock Market (“NASDAQ”) indicating that based on its review of the Company and pursuant to NASDAQ Listing Rule 5101 and Listing Rule 5250 (c)(1), the NASDAQ staff (the “Staff”) has determined that “continued listing of the Company’s securities on The Nasdaq Stock Market is unwarranted.”

In accordance with the procedures set forth in the NASDAQ Listing Rules, the Company timely appealed the Staff determination, and requested a hearing before a Hearings Panel.

In response to questions raised concerning the Investigation Team’s interim report, referred to in the Company’s press release published on July 11, 2011 and included in its Interim Report on Form 8-K filed with the SEC on July 11, 2011, the Company would like to clarify the following points: (1) the final investigation has not been completed by the Investigation Team, (2) the Investigation Team was not in a position to determine that the Company's accounting for revenue from certain customers had been "accounted for appropriately," as these are determinations to be made by the Company and its independent auditors, (3) the interim report was issued by the Investigation Team to report its findings in connection with certain sales and customer transactions, neither Pillsbury, Deloitte, King & Wood nor the industry expert “separately verified the accuracy of information related to the Company's 2010 sales”, and (4) the Investigation Team made no determination in the interim report that the Company is on "solid financial footing."

NINGBO, China, July 12, 2011 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. (Nasdaq: KEYP) ("Keyuan or the "Company"), a leading merchant manufacturer of various petrochemical products in China, announced today that the audit committee has received initial findings of its independent investigation of the Company's 2010 sales and revenue. Deloitte Financial Advisory Services ("Deloitte"), King & Wood, Pillsbury Winthrop Shaw Pittman LLP ("Pillsbury") and a petrochemicals industry expert, separately verified the accuracy of information related to the Company's 2010 sales.

On March 31, 2011, the Company's audit committee hired Pillsbury, Deloitte, and King and Wood to conduct an independent investigation of issues identified by the Company's former independent public accountant, KPMG. A team of lawyers and forensic accountants reviewed scores of documents at Keyuan's offices, visited select customer locations throughout China, and interviewed representatives of the customers, and senior officers and personnel of the Company. The independent investigators also consulted an industry expert, who has years of experience in the petrochemicals industry, to analyze Keyuan's production plants and operations.

Based on results from the independent investigation, the independent investigators made the following conclusions:

1. "…nothing has come to our attention to indicate that the Company has inappropriately accounted for the specific customer transactions we were able to test, other than the documentation issues notes above";(1)

2. "the Company-arranged interviews with selected customers supported that the customers transacted business with the Company in 2010";

3. "in the documents that we have reviewed, we have found no documents reflecting any intent by the Company to misstate revenues;"

4. "plant visit and document review by an expert in the petrochemical industry supports the finding that the plant is operating and producing petrochemicals at a quantity consistent with the revenues stated by the Company"; and

5. "interviews with management and selected Company personnel were consistent with the above findings."

"We are pleased with the results of the independent investigation," stated Mr. Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals. "The findings support our assertion throughout this process that we are an excellent company on solid financial footing with a clear and focused growth strategy. Having cooperated fully with examiners and regulators during this extensive review process, we will continue to focus on completing our 2010 and 1H 2011 audits."

(1) Please refer to Form 8-K we filed on July 11, 2011 for further information

Shareholder Update:

Interim independent investigation completed. Results favorable: Company accounted for revenue properly

• Secured new auditor - GHP Horwath; will be compliant with regulatory filings as soon as possible

• Unaudited revenues of $292 million for the first six months ending June 30, 2011, representing 17% Y-O-Y growth

• Production and sales volume expected to increase in 2H 2011

• Cash dividend will continue - next distribution scheduled for July 15th

NINGBO, China, July 11, 2011 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. (Nasdaq: KEYP) ("Keyuan or the "Company"), a leading merchant manufacturer of various petrochemical products in China, announced today that it has received a letter from NASDAQ regarding a delisting of its stock based on the NASDAQ staff's review of the Company and pursuant to NASDAQ Listing Rule 5101 and Listing Rule 5250 (c)(1).

The Company has requested a hearing to appeal this decision and management is working diligently with all relevant authorities to regain compliance with its regulatory requirements.

Information regarding the Management conference call can be found below.

Mr. Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals, provided an update to shareholders regarding the Company's operations, investigation and corporate actions:

"We apologize to our shareholders for the challenges we have experienced over the past few months. While these issues have taken longer to resolve than we originally anticipated, I assure you that the entire board of directors and senior management team is cooperating with all parties, including NASDAQ, to come to an expeditious resolution. I am especially proud of our employees and operations managers, who have continued to do an excellent job running our business throughout this process. I would also like to thank the Audit Committee and CFO who have stood by us during this difficult time and worked to complete the investigation and audit.

"Demand for our products remains strong, and we continue to sign new customers. I look forward to resolving all pending issues as soon as possible. In the meantime, we welcome all investors to come visit our facilities to witness the tremendous progress we are making," Mr. Tao concluded.

On April 1, 2011, Keyuan filed for an extension of its 2010 10-K filing with the SEC after issues were raised by the independent auditor primarily related to certain cash transactions and recorded sales. The Audit Committee engaged the services of independent legal counsel, Pillsbury Winthrop Shaw Pittman LLP ("Pillsbury"), who in turn engaged the services of Deloitte & Touche LLP ("Deloitte"), a forensic accountant, and King & Wood, Audit Committee's legal counsel in PRC, to commence an investigation of the issues raised by the Registrant's auditors at the time, KPMG. While our new auditors, GHP Horwath, will commence work immediately we must first complete this independent investigation being carried out by Pillsbury, Deloitte and King & Wood before the 2010 audit can be completed. NASDAQ's notification to delist the Company's stock from the exchange is based primarily on the Company's inability to file audited financial statements on a timely basis, as well as issues raised by KPMG.

The Company has filed a request of an appeal to NASDAQ on the basis of Management's confidence that we will regain compliance with all regulatory requirements in a reasonable amount of time. In the event that the stay to delist is not granted, the Company's shares will continue to be listed on NASDAQ but trade on the OTC Pink beginning July 26, 2011 until the decision of the appeal is released.

Management has fully cooperated with Pillsbury, Deloitte and King &Wood to provide the information they have requested. The interim report of the Company's unaudited sales to certain customers in fiscal year 2010 provided by the investigative team found that the sales were accounted for appropriately. Once the full investigation is completed, the Company is confident that it will be able to regain compliance with the applicable securities laws.

New Auditor Secured

On July 5, Keyuan engaged GHP Horwath to be the Company's new auditor. GHP Horwath will begin to audit the Company's 2010 financial results immediately.

Business Updates

Keyuan continues to operate its business as usual and is executing the growth plan according to schedule.

• From January 1, 2011 to June 30, 2011, our unaudited revenue was $292 million, representing 17% growth over the same period last year. Market demand for our products remains strong.

• We completed our capacity expansion on time and on budget in April, 2011 and now have 720,000 metric tons of annual capacity. Due to the expanded capacity and strong market demand, we sold 113,971 metric tons (MT) products in the two months of May and June 2011, representing 4.2% growth over the same period last year. We expect sales volume to increase in the second half of the year as our newly expanded facility continues to ramp up production.

• Our next phase facility expansion is progressing well. The expansion of the storage facility and the addition of the raw material pre-treatment facility and asphalt facility are now in the final stage of approvals by the local authorities. The Styrene-Butadiene-Styrene ("SBS") production facility is progressing on schedule.

• Keyuan signed a joint technology development agreement with Hangzhou Zhongce Rubber Company to develop new commercial applications for a Solution Polymerization styrene Butadiene Rubber ("SSBR"). SSBR, which is a safer, more environmentally friendly raw material used primarily in tires, represents a new opportunity in a fast-growing market.

• We continue to enjoy strong support from the local government and banks in Ningbo, PRC. Our strong and growing businesses support the local economy through 437 employees we hired and the $164 million we have invested in infrastructure and land since breaking ground in 2008. Because we maintain a healthy balance sheet with no receivables and positive cash flows, the local banks continue to supply us with working capital loans to support our business.

Corporate Actions

The Board remains committed to paying a quarterly cash dividend. The dividend record dates for the distribution of the quarterly cash dividend of $0.09 per share for 2011 will be the first of March, June, September and December with payment dates on the fifteenth of April, July, October and January, or the following business day if the fifteenth of those months fall on Saturday or Sunday.

Separately, Prax Capital, who invested $20 million in our Company in September 2010, reiterated their commitment to Keyuan and our management team. "We are as confident as before on the management and business prospect of Keyuan," said by Michael Xu, a partner of Prax Capital, "I believe Keyuan will come out much stronger after the unfortunate special investigation and deliver fundamental value."

Mr. Tao concluded "In conclusion, I am deeply humbled by the collateral damage resulting from our short-term challenges. I want to personally thank our 437 dedicated employees and our shareholders for maintaining their trust in our management team through these difficult times. We are committed to assisting with the completion of this independent investigation and to regain reporting and listing compliance. Furthermore, we continue to grow our business through facility expansions and new customers. With the tremendous assets we have already built and a clear growth plan, I am confident we will generate significant shareholder returns."

NINGBO, China, July 6, 2011 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. (Nasdaq: KEYP) ("Keyuan or the "Company"), a leading merchant manufacturer of various petrochemical products in China, announced today that it has engaged GHP Horwath P.C., ("GHP Horwath") a member of Crowe Horwath International, as its new auditor. GHP Horwath will commence its work immediately with the audit of the Company's 2010 financial statements, which are to be included in the Company's 2010 Annual Report on form 10-K.

Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals stated, "After an extensive search process, we decided to engage GHP Horwath as our new auditor. As a member of a top 10 network of worldwide audit firms with extensive experience with U.S. and Chinese accounting standards, we believe GHP Horwath will provide us with quality audit services."

NINGBO, China, June 28, 2011 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals, Inc. (Nasdaq: KEYP) ("Keyuan or the "Company"), a leading merchant manufacturer of various petrochemical products in China, today announced that KEYP and Hangzhou Zhongce Rubber Company Limited "Hangzhou Zhongce") have formally agreed to jointly develop commercial application