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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                       FOR FISCAL YEAR ENDED JUNE 30, 1999

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          FOR THE TRANSITION PERIOD FROM ........... TO ...............

                          REGISTRATION NUMBER 333-11569

                        TEXAS PETROCHEMICALS CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                TEXAS                                 74-1778313
   (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NO.)

     THREE RIVERWAY, SUITE 1500
           HOUSTON, TEXAS                                77056
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)              (ZIP CODE)

                                  (713) 627-7474
               (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

      SECURITIES REGISTERED PURSUANT TO SECTION 12(B) AND 12(G) OF THE ACT:
                                      NONE

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. Yes [X] No [ ]

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

   The number of shares of common stock of the registrant outstanding as of
September 27, 1999 is 4,162,000.


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                        TEXAS PETROCHEMICALS CORPORATION

                                TABLE OF CONTENTS

                                                                        PAGE

                                     PART I

Item 1. Business                                                         1

Item 2. Properties                                                       8

Item 3. Legal Proceedings                                                9

Item 4. Submission of Matters to a Vote of Security Holders              9

                                     PART II

Item 5. Market for Registrant's Common Equity and Related
         Stockholder Matters                                            10

Item 6. Selected Financial Data                                         10

Item 7. Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                      11

Item7A. Quantitative and Qualitative Disclosures About Market Risks     18

Item 8. Financial Statements and Supplementary Data                     19

Item 9. Changes in and Disagreements With Accountants on Accounting     35
         and Financial Disclosure

                                    PART III

Item 10. Directors and Executive Officers of the Registrant             35

Item 11. Executive Compensation                                         38

Item 12. Security Ownership of Certain Beneficial Owners and Management 39

Item 13. Certain Relationships and Related Transactions                 39

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
          on Form 8-K                                                   39

         Signatures                                                     41

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                                     PART I

ITEM 1.  BUSINESS

    Texas Petrochemicals Corporation (the "Company") is the third largest
producer of butadiene, the largest producer of butene-1, and the third largest
producer of MTBE in North America. In addition, the Company is the sole producer
of diisobutylene and isobutylene concentrate in the United States and the
largest domestic merchant supplier of high purity isobutylene to the chemical
market. The Company's products include: (i) butadiene, primarily used to produce
synthetic rubber; (ii) MTBE, used as an oxygenate and octane enhancer in
gasoline; (iii) n-butylenes (butene-1 and butene-2), used in the manufacture of
plastic resins, fuel additives and synthetic alcohols; and (iv) specialty
isobutylenes, primarily used in the production of specialty rubbers, lubricant
additives, detergents and coatings.

    The Company's manufacturing facility, located approximately one mile from
the Houston Ship Channel provides convenient access to other Gulf Coast
petrochemical producers and is connected to several of its customers and raw
material suppliers through an extensive pipeline network. In addition, the
Company's facility is serviced by rail, tank truck and barge. During fiscal 1997
the Company successfully gained access to the MTBE market on the East Coast of
the United States through the negotiation of a terminalling and storage
agreement with the Northville terminal in Linden, New Jersey.

    The Company was founded in 1968, at which time the Company was principally
engaged in the installation of crude butadiene processing facilities. In 1984,
Mr. Dave C. Swalm acquired from Tenneco, Inc. the assets (principally comprised
of the Houston facility) of Petro-Tex Chemical Corporation ("Petro-Tex") the
prior owner of the Company's manufacturing facility.

    On July 1, 1996 Texas Olefins Company, Texas Petrochemicals Corporation and
a raw material supply contract of Clarkston Corporation (collectively referred
to as the "Predecessor") were acquired for approximately $371 million in a
series of transactions (the "Acquisition"). After the transactions, TOC was
merged with and into Texas Petrochemicals Corporation with Texas Petrochemicals
Corporation becoming a 100% owned subsidiary of Texas Petrochemical Holdings,
Inc (the "Parent"). The closely held Parent was formed by a group of investors.

    The Company's principal executive offices are located at Three Riverway,
Suite 1500, Houston, Texas 77056. The Company's telephone number is (713)
627-7474.

PRODUCTS

    Butadiene is the most widely used feedstock for synthetic rubber products
and is also used in the manufacture of engineered plastics, nylon fibers and
other products. The Company sells butadiene to a stable customer base. As the
second largest producer of butadiene in North America, the Company believes that
many of its customers place significant value on its ability to provide a
reliable domestic supply of butadiene and as a result have entered into
long-term sales contracts with the Company.

    The Company extracts butadiene from crude butadiene, which is generated from
the production of ethylene and is comprised of a number of valuable components,
including butadiene, isobutylene, n-butylenes, isobutane and n-butane. Many U.S.
ethylene producers rely on third parties such as the Company to process their
crude butadiene streams, as the crude butadiene volumes they produce are not
sufficient to justify the construction of on-site butadiene recovery facilities.
The Company is the largest non-integrated crude butadiene processor in North
America and as a result of its strategic importance to ethylene producers, the
Company has been able to secure long-term supply contracts

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covering the majority of its crude butadiene requirements. Such contracts
provide for a fixed profit based on the Company's selling prices for butadiene,
and account for the relatively stable profitability of the Company's butadiene
operations.

    MTBE is a motor gasoline blending stock which reduces carbon monoxide and
volatile organic compound emissions and enhances the octane content of gasoline,
and has been one of the fastest growing petrochemicals, in terms of volume, over
the past fifteen years. MTBE is produced by reacting methanol and isobutylene.
The Company's ability to produce isobutylene by three alternative methods
enables it to produce MTBE by the most economical process available to the
Company. The U.S. Clean Air Act of 1990 requires the use of an "oxygenate" in
gasoline sold in certain regions that are not in compliance with air quality
standards. MTBE is the predominate oxygenate used in gasoline. However, as a
result of incidents in which MTBE from gasoline has contaminated drinking water,
the federal government and certain state governments are considering actions
that could reduce or even eventually eliminate the use of MTBE in gasoline.
There can be no assurance that these activities will not impact the Company's
market for MTBE. A significant reduction in the demand for MTBE could have a
material adverse effect on the Company's financial condition or results of
operations. See "Environmental Regulation" section for a further discussion of
MTBE.

    The Company is the leading producer of chemical grade n-butylenes and
specialty isobutylenes in North America. In recent years, the Company has
increased its sales of these products by increasing its market share in
polyolefin applications and the development of new end-use applications.
Butene-1 is used as a comonomer in the production of high-density polyethylene
("HDPE") and linear low-density polyethylene ("LLDPE"). Both HDPE and LLDPE are
raw materials for the production of trash bags, film wrap, pipe and plastic
containers. Butene-1 is also used to produce butylene oxide, a key component of
detergent additive packages used in many gasoline formulations. Butene-2 is
recovered as part of the crude butadiene stream that remains after extraction of
butadiene, isobutylene and butene-1. The Company sells purified butene-2
primarily for use in the production of coatings and plasticizers. Lower purity
butene-2 is sold as a gasoline feedstock.

    High purity isobutylene is used in the production of butyl rubber, which is
used to produce tires and in specialty chemical applications such as in the
production of resins, antioxidants, paints and coatings, synthetic lubricant
oils and rubber chemicals. The Company is currently the largest domestic
merchant supplier of high purity isobutylene to the chemical market. Isobutylene
concentrate is similar to high purity isobutylene in composition, although its
purity is 88% isobutylene compared to 99.9% in high purity isobutylene. The
Company markets isobutylene concentrate for use in the lubricant additives
business as well as for use in the production of butyl rubber. The Company is
the sole U.S. producer of isobutylene concentrate. Diisobutylene is used
primarily as an intermediate in the manufacturing of alkylphenols for the
surfactant and phenolic resins markets. Other uses include the production of
tackifier and ink resins, dispersants and lubricant oil additives, and rubber
and processing chemicals. The Company is the sole U.S.
producer of diisobutylene.

    The Company's principal feedstocks are crude butadiene, isobutane and
methanol. One of the Company's intermediate products, isobutylene, is used in
the manufacture of MTBE and specialty isobutylenes.

COMPANY STRATEGY

    The Company believes that it has become an industry leader in the production
of the majority of its products by capitalizing on its production flexibility,
its ability to add significant cost effective, incremental capacity across its
product lines, the marketing experience of its management team, its

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competitive cost position and its customer focus. The Company's strategy is to
strengthen its established presence in its selected markets by focusing on the
following factors:

    REDUCE EXPOSURE TO CYCLICAL END-MARKETS The markets in which the Company
competes are cyclical. The Company intends to mitigate the effects of this
cyclicality while benefiting from potential upturns in industry profitability by
optimizing the production of its sales under contracts allowing for a fixed
profit or at prices linked directly or indirectly to raw material prices.

    CAPITALIZE ON PRODUCTION FLEXIBILITY The Company has the ability to produce
a number of its intermediate and finished products (i.e. crude butadiene,
isobutylene and butene-1) by a variety of processes. The Company intends to
capitalize on this ability by shifting production to the most economical process
and production level based upon market conditions, thus ensuring a reliable
source of supply for its customers.

    UTILIZE INCREMENTAL CAPACITY The Company can increase its capacity to
produce butadiene, isobutylene and its derivatives at significantly lower cost
than that of new construction. The Company's ability to add incremental
butadiene capacity and its relationships with several North American ethylene
producers are expected to enable it to capture the benefit of increased U.S.
crude butadiene supply.

    RESPOND TO FAVORABLE INDUSTRY DYNAMICS The Company's production flexibility
and its ability to add low-cost capacity are crucial to its capitalizing on
market opportunities. The U.S. supply of crude butadiene is increasing in line
with domestic ethylene production, although it is currently insufficient to meet
U.S. demand. Industry operating rates are expected to remain at current high
levels as the increase in domestic crude butadiene production is expected to
replace imports with butadiene demand remaining strong in support of derivative
businesses.

    SUSTAIN CUSTOMER FOCUS The Company believes that producing quality products
and providing quality service with dependable supply are key factors in its
ability to compete in the market place for its products. Management believes
that its focus on customer service has resulted in strong customer relationships
and a high degree of customer loyalty. This is evidenced by the fact that
approximately 60% of the Company's current customers have purchased products
from the Company for more than ten years.

OTHER OPERATIONS

    The Company operates a cogeneration power plant that supplies electricity
and process steam to the facility's chemical processing operations. Excess
capacity of this power plant, as well as steam and boiler feed water are
currently sold to neighboring facilities under contracts at a price equal to the
cost of fuel plus a fixed profit. In addition, the Company generates revenues
from its terminals in Baytown, Texas and Lake Charles, Louisiana and from
chemical by-product sales to third parties.

CONTRACTS

    The Company enters into three general types of contracts in connection with
its production processes: feedstock supply contracts, product sales contracts
and, to a lesser extent, toll manufacturing agreements. The majority of these
contracts have terms of two to three years and provide for successive one-year
renewals unless either party objects to such renewal in a timely manner.

    Certain of the Company's largest customers account for a significant
percentage of the Company's sales of particular products. The Company had two
customers, which represented 11% and 14% of sales during the year ended June 30,
1999, 13% and 15% of sales during the year ended

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June 30, 1998, and 11% and 17% of sales during the year ended June 30, 1997.
Although the Company believes its relationships with its largest customers are
good, the loss of a significant customer or a number of significant customers
would have a material adverse effect on the Company's financial condition,
results of operations and cash flows.

COMPETITION

    The petrochemicals businesses in which the Company operates are highly
competitive. Many of the Company's competitors, particularly in the
petrochemicals industry, are larger and have greater financial resources than
the Company. Among the Company's competitors are some of the world's largest
chemical companies and major integrated petroleum companies that have their own
raw material resources. In addition, a significant portion of the Company's
business is based upon widely available technology. Accordingly, barriers to
entry, apart from capital availability, may be low in the commodity product
section of the Company's business, and the entrance of new competitors into the
industry may reduce the Company's ability to capture improving profit margins in
circumstances where overcapacity in the industry is diminishing. Further,
petroleum-rich countries have recently become more significant participants in
the petrochemical industry and may continue to expand their role in this
industry in the future. Any of these developments would have a negative impact
on the Company's financial position, results of operations and cash flows.

    Given the nature of the markets in which it competes, the Company believes
it has two primary competitive advantages over its competitors. First, the
Company's position as the most significant merchant crude butadiene processor in
the U.S. has allowed it to secure supply arrangements for crude butadiene that
provide for a fixed profit based on the Company's selling prices for the
finished product. The Company believes that this partially limits its exposure
to fluctuations in raw materials prices. Secondly, the Company's flexible
production processes enable it to take advantage of increases in demand for its
products at a lower cost than its competitors, thus allowing the Company to meet
its customers' needs through the most economic processes.

PATENTS AND LICENSES

    The Company presently owns, controls or holds right to approximately 21
patents and seeks patent protection for its proprietary processes where feasible
to do so.

ENVIRONMENTAL REGULATION

    The Company's policy is to be in compliance with all applicable
environmental laws. The Company is also committed to Responsible Care(R), A
chemical industry initiative to enhance the industry's responsible management of
chemicals. The Company's operations are subject to federal, state, and local
laws and regulations administered by the U.S. EPA, the U.S. Coast Guard, the
Army Corps of Engineers, the Texas Natural Resource Conservation Commission
(TNRCC), the Texas General Land Office, the Texas Department of Health and
various local regulatory agencies. The Company holds all required permits and
registrations necessary to comply substantially with all applicable
environmental laws and regulations, including permits and registrations for
wastewater discharges, solid and hazardous waste disposal and air emissions, and
management believes that the Company is in substantial compliance with the laws
and regulations that materially affect its operations. While management does not
expect that compliance with existing environmental laws will have a material
adverse effect on the Company's financial condition or results of operations,
there can be no assurance that future legislation, regulation or judicial or
administrative decisions will not have such an effect.

     Under federal and state environmental laws, companies may be liable for
remediation of contamination at on-site and off-site waste management and
disposal areas. Management believes

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that the Company is not likely to be required to incur material remediation
costs related to its management, transportation and disposal of solid and
hazardous materials and wastes, or to its pipeline operations. If the Company
were to be required to incur such costs, however, management believes that such
costs would not have a material adverse effect on the Company's results of
operations. In addition, under the terms of the 1984 purchase agreement, the
prior owner of the Houston facility, Petro-Tex, has indemnified the Company for
liability arising from off-site disposal of any materials prior to June 1984.
Notwithstanding the terms of the indemnity, in July 1994 Petro-Tex filed a claim
for indemnity against the Company for any costs that may be attributable to
Petro-Tex for the cleanup of the Malone Service Company ("Malone") site in Texas
City, Texas. Petro-Tex and many other companies along the Gulf Coast allegedly
sent wastes to the Malone site for disposal in the 1970s and possibly the early
1980s. Malone has been subject to several state enforcement actions regarding
its waste disposal practices. It is not known whether the site will require
remediation. The Company believes that it has meritorious defenses to
Petro-Tex's claim and intends to contest the claim vigorously. Although no
on-site contamination has been identified as requiring remediation, management
believes that certain areas of the Houston facility were historically used for
waste disposal. Based on limited, currently available information about these
waste disposal areas and their contents, the Company believes that, if such
remediation becomes necessary, any remediation costs would not have a material
adverse effect on the Company's financial condition or results of operations.
The Petro-Tex indemnity does not extend to these on-site waste disposal areas or
their contents.

     The day-to-day operations of the Company are subject to extensive
regulation under the Resource Conservation and Recovery Act, the Federal Clean
Water Act, the Clean Air Act (CAA) and similar requirements of state law. In
particular, under the CAA, the EPA and the TNRCC have promulgated, or are
required to promulgate, numerous regulations, which affect or will affect the
operations of the Company. The most significant of these are the so-called
Hazardous Organics National Emission Standard for Hazardous Air Pollutants or
HON Rule, the requirements of Title V of the CAA and rules relating to the
control of emissions of nitrogen, which are known as the Nitrogen Oxides
Reasonably Available Control Technology rules ("NOx RACT Rules").

   The HON Rule requires additional controls on emissions of certain listed
hazardous air pollutants ("HAPs"). Butadiene, methanol, dimethylformamide,
benzene, styrene, acrylonitrile and MTBE, which are manufactured, used and/or
processed by the Company, have been identified as HAPs for purposes of
regulation under the CAA. Areas of concern in the Company's operations for HAP
emissions include equipment leaks, process vents, product storage, transfer
operations and emissions from wastewater streams. The Company expended $600,000
on wastewater collection and treatment systems over the past year to comply with
the HON rule.

     The NOx RACT Rules require compliance by December 1999. The Company has
examined the rules and believes that the main expenditure required to achieve
compliance will involve the purchase and installation of monitoring equipment
for NOx emissions, which can be either continuous emission monitors, predictive
emission monitors or other approved monitoring methods. Management estimates
that the cost to comply with the NOx RACT Rules will be $0.8 million.

     The Company's Houston facility is located in Harris County, Texas, which
has been designated as a non-attainment area for ozone under the CAA.
Accordingly, the State of Texas is in the process of developing a revised State
Implementation Plan ("SIP") which is expected to require significant reductions
in emissions of ozone precursors, including volatile organic compounds and
oxides of nitrogen in Harris County. To comply with the anticipated SIP, the
Company installed new controls at a cost of approximately $7.8 million. The
Company anticipates that the revised SIP may require certain additional emission
reductions from the Company's facilities. Such reductions could require the
Company to modify existing controls, install additional controls for air
emissions, or install new

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equipment. The Company is unable to predict the cost of modifying its facilities
to comply with any additional requirements that the revised SIP may impose.

   The Company has elected to participate in the CARE program sponsored by the
TNRCC under which the Company will voluntarily obtain permits for certain air
emission sources that had historically been "grandfathered" from certain permit
requirements. The Company expects to be required to commit to certain emission
reductions in connection with the CARE program. Since the Company joined the
CARE program, the Texas Legislature enacted Senate Bill 766 which provides
incentives for grandfathered emissions sources to apply for a voluntary
emissions reduction permit instead of remaining grandfathered. In particular,
grandfathered sources are invited to apply for a permit prior to September 1,
2001 that can establish less stringent or deferred emissions controls for
facilities than are provided under permits for new emissions sources. Failure to
apply for and obtain a permit will result in emissions fees that will treble
annually until a grandfathered facility applies for a permit. The Texas Natural
Resource Conservation Commission is currently developing rules to implement the
requirements of Senate Bill 766. The Company will evaluate and pursue available
options with respect to its grandfathered emissions sources that allow the
Company to meet applicable air emissions requirements in a cost-effective
manner. Measures likely to be required as part of the CARE program and/or Senate
Bill 766 implementation are not anticipated to have a materially adverse impact
on the Company or its operations.

     Section 112 of the CAA requires prevention of accidental releases of
certain listed extremely hazardous substances. The EPA's rules implementing
portions of Section 112, which were signed by the EPA Administrator on May 24,
1996, required the Company to conduct a hazards assessment and develop a risk
management plan by June 1999. The Company completed the plan and filed it with
the appropriate agencies in a timely manner.

     The regulations under Title V of the CAA will require a facility-wide
inventory of emissions, sources and the air pollution control requirements
applicable to those sources. The Company is in the process of compiling the
required inventory. In connection with the Title V program, the Company may be
required to upgrade its on-going monitoring program once it has received its
operating permit. It is also possible that the Company may be required to make
modifications to some of its equipment in order to comply with requirements
identified through the facility-wide Title V permit process. These anticipated
commitments are not expected to have a materially adverse impact on the
Company's operations.

     The Company has an active program to manage asbestos-containing material at
its Houston facility in accordance with federal and state environmental, health
and safety regulations. The Company does not believe that, when properly
managed, these materials pose a hazard to the health of Company employees. There
is no requirement to remove these materials, provided they are properly managed.
As the plant is reconfigured or additions are made, asbestos-containing
materials are removed or encapsulated by a certified contractor.

     The wastewater treatment system for the Houston facility is 75% owned by
the Company and 25% owned by Bayer Corporation ("Bayer"), the owner of an
adjacent facility. Bayer has closed its facility, and the Company now operates
the treatment system. The federal and state discharge permits are held jointly
by the Company and Bayer. As a result of the change in operator the Company has
applied for new discharge permits for the wastewater treatment system. The
Company believes that the system has sufficient capacity for the Company's
projected needs.

    The Company has completed the first phase of its work on its storm water
discharge system. An engineering study is under way to determine whether
additional work will be required. The Company has completed installation of
noise barriers for certain equipment.

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     The terminals in Baytown and Lake Charles are subject to many of the same
or similar environmental laws and regulations as are applicable at the Houston
facility. Management believes that the terminals are in substantial compliance
with these requirements and that no significant expenditures will be required at
these facilities to allow them to continue to comply with such laws and
regulations.

   The EPA has determined that butadiene is a probable human carcinogen.
Effective February 1997, the Occupational Safety and Health Administration
lowered the employee permissible exposure limit ("PEL") over an 8-hour
time-weighted average for butadiene from 1000 parts per million ("ppm") to 1
ppm. The Company has conducted employee exposure monitoring and believes that it
currently meets the PEL at most of its operations. For some operations, the
Company anticipates employees will need to use respirators and that additional
emission controls may be necessary. The Company does not expect that the current
health concerns regarding butadiene will have a material adverse effect on the
Company's financial condition or results of operations, although no assurance
can be given that future studies will not result in more stringent regulation of
butadiene.

MTBE ENVIRONMENTAL AND MARKET ISSUES

   The possibly adverse effects of MTBE on health and the environment has become
a statewide concern in California because MTBE has appeared in certain drinking
water wells. It is believed that this is the result of leaks from older
underground gasoline storage tanks and pipelines.

     In addition, certain bodies of water have shown the presence of MTBE. A
typical source of MTBE in these bodies is the operation of two-cycle outboard
motors, which do not fully combust gasoline. Certain regulatory bodies are
considering imposing limitations on the use of two-cycle outboard motors in
bodies of water that are also used as sources of drinking water.

   In California, the legislature required the state Department of Health
Services (DHS) to assess MTBE and to set the maximum permissible levels of MTBE
in drinking water in 1999. The levels are referred to as the primary and
secondary maximum contaminant levels (MCLs). Secondary MCLs or secondary
drinking water standards apply to chemicals in public drinking water that may
adversely affect the taste, odor, or appearance of the water, and may cause
people served by the public water system to discontinue its use. In January
1999, the DHS adopted 5 parts per billion (ppb) as the California secondary MCL
for MTBE based upon the aesthetic factors alone.

   The primary MCL for MTBE in California is pending in the regulatory process
at this time. The DHS has proposed 13 ppb as the primary MCL for MTBE. It will
accept public comments on the proposal through November 1, 1999. It is unknown
at this time whether the proposed primary MCL would be adopted as the applicable
standard in California or when it would become effective. The DHS is authorized
to modify the proposed primary MCL for MTBE in response to public comments. The
primary MCL for MTBE is based upon the public health goal (PHG) for MTBE, and
the technical feasibility and costs associated with compliance. Notably,
however, a public health goal of 13 ppb for MTBE was set by the California
Office of Environmental Health Hazard Assessment (OEHHA) in March 1999 based
exclusively on public health considerations. PHGs represent the level of
chemicals in drinking water that would pose no significant health risks to
individuals, and are non-mandatory goals. Until a primary MCL is adopted, the
DHS will enforce the action level of 13 ppb for MTBE in lieu of the former level
of 35 ppb set in 1991. If MTBE is found in a drinking water supply at levels
exceeding 13 ppb, it is expected that the DHS will require treatment for the
removal of MTBE from the water system to attain compliance.

   On March 25, 1999, California Governor Gray Davis declared that, "on balance,
there is a significant risk to the environment from using (MTBE) in gasoline in
California," and issued an

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executive order calling for the removal of MTBE from gasoline at the earliest
possible date and no later than December 31, 2002. Governor Davis also mandated
state agencies to conduct an environmental analysis and evaluation of ethanol as
a possible substitute for MTBE and to seek relief from the requirement of the
CAA to use oxygenates in gasoline in certain areas of the state. In September
1999, several bills codifying the Executive Order were before the California
legislature. Senate Bill 192 would prohibit the sale of gasoline containing MTBE
on or after January 1, 2003. The bill would also require the State Energy
Resources Conservation and Development Commission to report to the legislature
the amount of MTBE used in gasoline in California by refineries on a quarterly
basis. Senate Bill 989 would require various state agencies to develop
guidelines for the investigation, remediation, and clean up of MTBE in ground
water. The bill would authorize the California Environmental Protection Agency
to prohibit the use of MTBE in motor vehicle fuel before December 31, 2002, on a
sub-regional basis in the Bay Area Air Basin, or in any other air basin in the
state.

   Although the EPA continues to require oxygenates to be added to gasoline in
certain regions of the country either year-round or during the winter months,
and MTBE continues to be the predominate oxygenate used, a panel appointed by
the EPA has issued a report calling for the reduction in the use of MTBE in
gasoline. No assurance can be given that actions will not be taken to restrict
or prohibit the use of MTBE in certain areas of the country or to remove the
oxygenate requirement from the CAA. Any restriction on or prohibition of the use
of MTBE could have a material adverse effect on the Company's financial
condition or results of operations.

EMPLOYEES
     As of June 30, 1999, the Company had approximately 308 full-time employees,
all of whom were salaried employees. In addition, the Company contracts with a
third party to provide approximately 116 contract employees to perform routine
maintenance on and around its Houston facility. The Company believes its
relationship with its employees is satisfactory.

SAFETY RECORD
     The Company maintains one of the best workman's compensation records in
Texas, equivalent to most clerical operations. Over the last five years, the
Company has not experienced a lost time injury at the Houston Plant Site. The
Company believes this record is accomplished through extensive classroom and
on-the-job training as well as the efforts of its highly trained, 75-member
volunteer emergency response team.

ITEM 2.  PROPERTIES
     The Company's plant is located on a 257-acre tract approximately one mile
from the Houston Ship Channel and near one of the chemical industry's largest
domestic processing facilities. Approximately 230 acres is owned by the Company,
and 25% of the remaining 27 acres is owned by Bayer. The Company leases from the
Port of Houston two ship docks, which accommodate barge and ocean-going vessels,
and has the facilities to be served by rail and by truck. In addition, the
facility is connected by pipeline to customers and suppliers of raw materials,
directly and through other major pipelines in the immediate area as well as in
Texas City, and with salt dome storage facilities of other companies located at
both Mont Belvieu and Pierce Junction, Texas. The Company's facility also has a
laboratory for sampling and testing. The Company owns and operates a storage and
terminal facility at Baytown, Texas, leases storage and terminal facilities in
Lake Charles, Louisiana and Linden, New Jersey, and leases tank storage capacity
in Bayonne, New Jersey. The Company also leases office space in Three Riverway
Plaza, Houston, Texas as its principal executive offices. The Company believes
that is has adequate facilities for the conduct of its current and planned
operations.

                                        8

<PAGE>
ITEM 3.  LEGAL PROCEEDINGS
     In addition to the matters disclosed under "Environmental Regulation," the
Company is a party to various claims and litigation arising in the ordinary
course of its business. Management recognizes the uncertainties of litigation
and the possibility that one or more adverse rulings could materially impact
operating results. However, although no assurances can be given, management
believes that other than as disclosed, based on the nature of and its
understanding of the facts and circumstances which give rise to such claims and
litigation, and after considering appropriate reserves that have been
established, that the ultimate resolution of such issues, individually and in
the aggregate, will not have a material adverse effect on the Company's
financial position or results of operation.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   There were no matters submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended June 30, 1999.

                                       9

<PAGE>
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   Not applicable


ITEM 6.  SELECTED FINANCIAL DATA

   The selected financial data for the Company set forth below for the three
years ended June 30, 1999, the one month period ended June 30, 1996, the twelve
months ended May 31, 1996 and the year ended May 31, 1995 should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements.

<TABLE>
<CAPTION>
                                              PREDECESSOR                       COMPANY
                                     -------------------------------  ----------------------------
                                                 TWELVE      ONE
                                       YEAR      MONTHS     MONTH
                                      ENDED      ENDED      ENDED
                                      MAY 31,    MAY 31,    JUNE 30,       YEAR ENDED JUNE 30,
                                     ---------  ---------  ---------  ----------------------------
                                       1995       1996       1996      1997      1998      1999(1)
                                      -------    -------    -------   -------   -------    -------
                                                 (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:

<S>                                   <C>        <C>       <C>       <C>        <C>        <C>
Revenues ..........................   $ 474.7    $ 455.6   $  41.4   $ 490.2    $ 514.8    $ 448.2

Income from operations ............      47.5       42.0       2.4      18.3       37.4       38.7

Interest expense (income) .........      (0.7)       1.6       0.1      35.2       35.7       34.0

Net income (loss)(2) ..............      32.5       16.7       1.2     (12.7)      (1.4)       1.4

Loss per common share
      Before extraordinary loss ...      --         --        --     $ (2.71)   $ (0.34)   $  0.34
      Extraordinary loss ..........      --         --        --       (0.35)      --         --
                                                                     -------    -------    -------
                                                                     $ (3.06)   $ (0.34)   $  0.34
                                                                     =======    =======    =======

BALANCE SHEET DATA (AT PERIOD END):

Total assets ......................   $ 230.7               $ 167.9   $ 521.1   $ 496.8    $ 482.4

Long-term debt ....................      --                    13.0     317.7     310.8      293.5
</TABLE>

----------
(1)In January 1999, the estimated useful live of certain plant assets were
increased from 10 to 15 years. This change was accounted for as a change in
accounting estimate and resulted in a $4.2 million decrease in depreciation
expense.
(2)Net income (loss) for the twelve months ended May 31, 1996 includes a
non-recurring charge for the impairment of investment in land of $12.6 million,
with and associated income tax benefit of $4.7 million. Net loss for the year
ended June 30, 1997 includes an extaordinary loss of $1.5 million for early
extinguishment of debt.

                                       10

<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

    The Company's revenues are derived primarily from merchant market sales of
butadiene, MTBE, n-butylenes (butene-1 and butene-2) and specialty isobutylenes
(isobutylene concentrate, high purity isobutylene, and diisobutylene). The
Company's results of operations are affected by a number of factors, including
variations in market demand, production volumes, and the pricing of its products
and primary raw materials. The Company believes that the pricing for its
principal products is primarily dependent on the balance between the global
supply and North American demand for each product, the cost structure of the
various global producers (including their cost of raw materials), and from time
to time, other external factors, such as the implementation of the Clean Air Act
Amendments of 1990, which has significantly increased the demand for MTBE over
the past 10 years. Historically, the Company has successfully mitigated the
cyclicality of the markets for certain of its end products by entering into
contracts with pricing which allows for a fixed profit by linking prices
directly or indirectly to raw material costs. In addition, the Company has
attempted to optimize the use of isobutylene, an intermediate product produced
by the Company, to produce MTBE or higher margin specialty products depending on
prevailing market conditions. See "Environmental Regulation" section for a
further discussion of MTBE.



REVENUES

    The Company's revenues are a function of the volume of products sold by the
Company and the prices for such products. The following tables set forth the
Company's historical revenues and the percentages of historical revenues by
product and volume of products sold.


REVENUES

                                       YEAR ENDED JUNE 30,
                         ---------------------------------------------
                              1997            1998            1999
                         -------------   -------------   -------------
                                    (DOLLARS IN MILLIONS)

Butadiene ............   $130.9    27%   $135.0    26%   $ 98.2    22%
MTBE .................    230.3    47     235.4    46     229.3    51
n-Butylenes ..........     49.4    10      55.2    11      45.2    10
Specialty Isobutylenes     62.3    13      73.7    14      62.7    14
Other(1) .............     17.3     3      15.5     3      12.8     3
                         ------   ---    ------   ---    ------   ---
Total ................   $490.2   100%   $514.8   100%   $448.2   100%
                         ======   ===    ======   ===    ======   ===





----------

(1) Includes utility revenues and revenues realized from the Company's
terminalling facilities.

                                       11

<PAGE>
SALES VOLUMES

                                       YEAR ENDED JUNE 30,
                              -------------------------------------
                                 1997         1998          1999
                              -----------  -----------  -----------
                            (MILLIONS OF POUNDS, EXCEPT WHERE NOTED)

Butadiene                        750.3        822.0        821.1
MTBE(1)                          274.1        300.4        376.9
n-Butylenes                      266.4        320.4        317.5
Specialty Isobutylenes           275.7        369.7        330.9
----------
(1)Volumes in millions of gallons. Includes 98.5 million, and 15.0 million
   gallons finished MTBE purchased for resale for the years ended June 30, 1999
   and 1998, respectively.

RESULTS OF OPERATIONS

    The following table sets forth an overview of the Company's results of
operations.

<TABLE>
<CAPTION>
                                                    YEAR ENDED JUNE 30,
                                      ---------------------------------------------
                                          1997            1998            1999
                                      -------------   -------------   -------------
                                                  (DOLLARS IN MILLIONS)

<S>                                   <C>      <C>    <C>      <C>    <C>      <C>
Revenues ..........................   $490.2   100%   $514.8   100%   $448.2   100%
Cost of goods sold ................    436.3    89     438.7    85     374.4    84
Non-cash ESOP compensation ........     --     --       --     --        0.4   --
Depreciation and amortization .....     29.8     6      31.8     6      26.8     6
                                      ------   ---    ------   ---    ------   ---
       Gross profit ...............     24.1     5      44.3     9      46.6    10
Selling, general and
  administrative ..................      5.8     1       6.9     2       7.9     2
                                      ------   ---    ------   ---    ------   ---
       Income from operations .....   $ 18.3     4%   $ 37.4     7%   $ 38.7     8%
                                      ======   ===    ======   ===    ======   ===
</TABLE>

YEAR ENDED JUNE 30, 1999 COMPARED TO THE YEAR ENDED JUNE 30, 1998

REVENUES

    The Company's revenues decreased by approximately 13%, or $66.6 million, to
$448.2 million for the year ended June 30, 1999 from $514.8 million for the year
ended June 30, 1998. The decrease was primarily due to lower product sales
prices, which was partially offset by higher sales volumes.

    Butadiene revenues decreased by approximately 27%, or $36.8 million, to
$98.2 million for the year ended June 30, 1999 from $135.0 million for the year
ended June 30, 1998. The decrease was attributable to a decrease in sales
prices. Excess supply and imports of butadiene into the U.S. market contributed
to lower prices. Sales volumes remained stable over the prior year.

    MTBE revenues decreased by approximately 3%, or $6.1 million, to $229.3
million for the year ended June 30, 1999 from $235.4 million for the year ended
June 30, 1998. The decrease was due to lower sales prices, which was partially
offset by higher sales volumes. MTBE prices were lower in the current year due
to the lower unleaded gasoline and crude oil prices. Sales volumes increased
over the prior year due to purchases of finished MTBE for resale.

                                       12

<PAGE>
    n-Butylenes revenues decreased by approximately 18%, or $10.0 million, to
$45.2 million for the year ended June 30, 1999 from $55.2 million for the year
ended June 30, 1998. n-Butylene sales revenue decreased due to lower sales
prices during most of the fiscal year. Sales volumes of butene-1 and butene-2
were relatively unchanged as compared to the prior year.

    Specialty isobutylene revenues decreased by approximately 15%, or $11.0
million, to $62.7 million for the year ended June 30, 1999 from $73.7 million
for the year ended June 30, 1998. The decrease was due to lower sales prices of
all of the Company's specialty products and lower sales volumes of isobutylene
concentrate. Isobutylene concentrate sales volumes were lower due to a planned
turnaround by one of the company's customers during the first half of the fiscal
year.

  GROSS PROFIT

    Gross profit increased by approximately 5%, or $2.3 million, to $46.6
million for the year ended June 30, 1999 from $44.3 million for the year ended
June 30, 1998. Gross margin during the period increased to 10.4% from 8.6%. The
gross profit increase was primarily due to a change in accounting estimate,
which reduced depreciation expense by $4.2 million during the current year. In
January 1999, the depreciable lives of a certain plant assets were increased
from 10 years to 15 years. With this adjustment excluded, gross margin would
have decreased by $1.9 million over the prior year. The decrease is attributable
to lower MTBE margins caused by a smaller spread between sales prices and raw
materials. The decrease in MTBE margins was partially offset by improved margins
in butadiene, specialty isobutylenes and reductions in operating costs.

  INCOME FROM OPERATIONS

    Income from operations increased by approximately 3%, or $1.3 million, to
$38.7 million for the year ended June 30, 1999 from $37.4 million for the year
ended June 30, 1998. Operating margin during this period increased to 8.6% from
7.3%. The increase in income from operations was primarily due to the same
factors contributing the increase in gross profit described above, partially
offset by an increase in selling, general and administrative expenses. This
increase was associated with increased MTBE advocacy costs, software integration
costs and business development activity in the current year.


YEAR ENDED JUNE 30, 1998 COMPARED TO THE YEAR ENDED JUNE 30, 1997

  REVENUES

    The Company's revenues increased by approximately 5%, or $24.6 million, to
$514.8 million for the year ended June 30, 1998 from $490.2 million for the year
ended June 30, 1997. The increase was primarily due to increased sales volumes
of all products, which was partially offset by lower sales prices.

    Butadiene revenues increased by approximately 3%, or $4.1 million, to $135.0
million for the year ended June 30, 1998 from $130.9 million for the year ended
June 30, 1997. The increase was attributable to an increase in sales volumes of
approximately 10% or 71.7 million pounds. Production rates during the year
increased as a result of operating efficiencies and the availability of crude
butadiene. The volume increase was offset by a decline in butadiene prices,
which began during the second half of fiscal year. Excess supply and imports of
butadiene into the U.S. market contributed to lower prices.

                                       13

<PAGE>
    MTBE revenues increased by approximately 2%, or $5.1 million, to $235.4
million for the year ended June 30, 1998 from $230.3 million for the year ended
June 30, 1997. The increase was due to higher sales volume, which was partially
offset by lower sales prices. MTBE production levels increased during the period
due to improved on-stream time of the Company's Dehydro units during the current
fiscal year. MTBE prices were lower in the current year due to the lower
unleaded gasoline and crude oil prices during the second half of the fiscal
year.

    n-Butylenes revenues increased by approximately 12%, or $5.8 million, to
$55.2 million for the year ended June 30, 1998 from $49.4 million for the year
ended June 30, 1997. n-Butylene sales revenue increased due to higher sales
volumes particularly during the first half of the fiscal year. Sales volumes of
butene-1 increased due to an unplanned shutdown of a major competitor in the
market. The Company was able to successfully increase its butene-1 production
rates to meet this demand from customers. Sales volumes of butene-2 to also
increased during the current year.

    Specialty isobutylene revenues increased by approximately 18%, or $11.4
million, to $73.7 million for the year ended June 30, 1998 from $62.3 million
for the year ended June 30, 1997. The increase was due to higher sales volumes
of all of the Company's specialty products. Isobutylene concentrate sales
volumes returned to more historical levels during the current year after a down
year in fiscal 1997. Sales volumes of high purity isobutylene and diisobutylene
increased due to customer demand.

  GROSS PROFIT

    Gross profit increased by approximately 84%, or $20.2 million, to $44.3
million for the year ended June 30, 1998 from $24.1 million for the year ended
June 30, 1997. Gross margin during the period increased to 8.6% from 4.9%. The
gross profit increase was primarily due to higher margins on MTBE and increased
sales volumes of butadiene, n-butylenes and specialty isobutylenes. MTBE margins
improved primarily due to lower isobutane and methanol costs, which was
partially offset by lower MTBE sales prices.

  INCOME FROM OPERATIONS

    Income from operations increased by approximately 104%, or $19.1 million, to
$37.4 million for the year ended June 30, 1998 from $18.3 million for the year
ended June 30, 1997. Operating margin during this period increased to 7.3% from
3.7%. The increase in income from operations was primarily due to the same
factors contributing the increase in gross profit described above, offset
slightly by and increase in selling, general and administrative expenses. This
increase was associated with increased business development activity in the
current year.

                                       14

<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

  CASH FLOWS

YEAR ENDED JUNE 30, 1999 COMPARED TO THE YEAR ENDED JUNE 30, 1998

    Net cash provided by operating activities was $34.2 million for the year
ended June 30, 1999 compared to $34.9 million for the year ended June 30, 1998.
The decrease of $0.7 million was primarily attributable to lower profitability
levels offset by changes in working capital. Net cash used in investing
activities was $12.9 million for the year ended June 30, 1999 compared to $11.2
million for the year ended June 30, 1998. The increase of $1.7 million was
primarily attributable to an increase in capital expenditures during the current
year. Net cash used in financing activities was $22.1 million for the year ended
June 30, 1999 compared to $22.9 million for the year ended June 30, 1998. The
decrease of $0.8 million was primarily attributable to the net change in bank
overdraft and reduction in the outstanding revolving line of credit.

YEAR ENDED JUNE 30, 1998 COMPARED TO THE YEAR ENDED JUNE 30, 1997

    Net cash provided by (used in) operating activities was $34.9 million for
the year ended June 30, 1998 compared to $(1.8) million for the year ended June
30, 1997. The change of $36.7 million was primarily attributable to improved
profitability levels and changes in working capital. Net cash used in investing
activities was $11.2 million for the year ended June 30, 1998 compared to $352.3
million for the year ended June 30, 1997. The change of $341.1 million was
primarily attributable to the Acquisition of the Company on July 1, 1996,
partially offset by proceeds from the sale of non-plant assets and Predecessor
assets and investments. Net cash provided by (used in) financing activities was
$(22.9) million for the year ended June 30, 1998 compared to $354.2 million for
the year ended June 30, 1997. The change of $377.1 million was primarily
attributable to the issuance of long-term debt and an investment from the
Parent, in order to finance the Acquisition.

  LIQUIDITY

    On July 1, 1996 the Company issued $175 million of 11 1/8% Senior
Subordinated Notes due 2006 and borrowed $140 million under a Bank Credit
Agreement. The Company used the combined proceeds to finance the Acquisition of
the Company. The Company's liquidity needs arise primarily from principal and
interest payments under the Bank Credit Agreement and the Subordinated Notes.
The Company's primary source of funds to meet debt service requirements is net
cash flow provided by operating activities. Operating cash flow is significantly
impacted by raw materials cost as well as the selling price and volume variances
of finished goods. The Company enters into supply contracts for certain of its
products in order to mitigate the impact of changing prices. Additionally, the
Company has a $40 million Revolving Credit Facility, of which $2 million was in
use at June 30, 1999, to provide funds for ongoing operations, working capital
and planned capital expenditures. The Company believes that the availability of
funds under the Revolving Credit Facility are sufficient to cover any current
liquidity needs which could arise as a result of negative working capital. The
Company's ability to borrow under the Revolving Credit Facility is limited by
the terms of the Bank Credit Agreement and the Subordinated Notes. The Bank
Credit Agreement and the Subordinated Notes include certain restrictive
covenants, which include but are not limited to, limitations on capital
expenditures, indebtedness, investments and sales of assets and subsidiary
stock. Additionally, the Bank Credit Agreement requires the Company to maintain
certain financial ratios. Effective June 30, 1999 the Company obtained an
amendment to the Bank Credit Agreement to update the financial ratios relating
to fixed charge coverage and debt to EBITDA for fiscal 2000.

                                       15

<PAGE>
    In February 1998, the Company entered into a three-year swap agreement for
$125 million of its Senior Subordinated Notes. The swap agreement effectively
converts a portion of the 11 1/8% fixed rate Senior Subordinated Notes to a
floating debt with a structured collar. Under the agreement the Company's
interest rate is fixed at 10.8% while LIBOR is set between 5.45% and 6.75%. If
LIBOR rates are set above 6.75% the Company's interest rate is floating at
current LIBOR plus 5.35%. If LIBOR rates are set between 5.25% and 5.45% the
Company's interest rate is floating at current LIBOR plus 5.35%. If LIBOR rates
are set below 5.25% the Company's interest rate is fixed at 10.8%. As of June
30, 1999 LIBOR rates were set at 5.22%. In June 1998, the Company entered into a
three-year interest rate cap for $64 million of its senior debt under the Bank
Credit Agreement. The cap effectively converts a portion of the Company's
floating rate bank debt to a fixed rate of 6.75% plus the margin if LIBOR rates
are set above 6.75%. The principal amount of the cap amortizes from $64 million
to $32 million on a quarterly basis over the three-year term.

  CASH BONUS PLAN

    In connection with the Acquisition, the Predecessor established a $35
million Cash Bonus Plan covering subs
    substantially all employees of the Predecessor (or certain affiliates of the
Predecessor) and covering certain third-party contractors who had contributed to
the past success of the Predecessor. During the year ended June 30, 1999, $7.8
million of this amount was paid to eligible participants and the remaining $9.8
million will be made in five equal future quarterly installments.

  CAPITAL EXPENDITURES

    The Company's capital expenditures for fiscal 1999 related principally to
improving operating efficiencies and maintaining environmental compliance.
Capital expenditures for year ended June 30, 1999 were $14.4 million, compared
to $12.5 million for the year ended June 30, 1998. The Company expenses
approximately $20 million annually for plant maintenance. These maintenance
costs are not treated as capital expenditures.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    During 1998, the FASB issued SFAS No. 132 "Employers Disclosures about
Pensions and Other Postretirement Benefits," and SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Company has adopted the
provisions of SFAS No. 132 with no material revisions to the disclosures in the
financial statements. The Company has entered into interest rate swap and cap
agreements, and may have entered into other types of contracts, which are
included in the scope of SFAS No. 133. The Company will analyze SFAS No. 133 to
determine what effect it will have on the Company's future financial statements
and disclosures. In June 1999, SFAS No. 137 was issued to delay the required
effective date of SFAS No. 133 from fiscal years beginning after June 15, 1999
to fiscal years beginning after June 15, 2000.

                                       16

<PAGE>
YEAR 2000

    The Company has recognized the need to ensure that its systems, equipment
and operations will not be adversely impacted by the change to the calendar year
2000. The issues arise from computer programs, computer equipment and other
equipment with embedded chips or processors that use two digits rather than four
to designate the year. Date-sensitive computer operations may recognize a date
using "00" as the year 1900 rather than the year 2000, resulting in system
failures or miscalculations, which could potentially cause operational
disruptions.

    In preparation the Company has established a Steering Committee composed of
members of all functional groups of the organization to address these issues.
This committee is responsible for prioritizing the Company's efforts and
ensuring that the appropriate resources both internal and external have been
dedicated to the project. The committee's assessment was focused on those areas,
which were considered high-risk critical business processes. The assessment and
future progress has been based on the following categories including plant
automation and process control, client server, desktop, communications,
enterprise infrastructure and overall readiness. The Company's overall readiness
expressed as a percentage of completion as of September 15, 1999 is
approximately 95%. The total estimated spending for all categories is expected
to range from $15 to $16 million. The majority of these costs relate to capital
investments made in automating our plant production processes and in upgrading
our financial accounting systems.

    The Company believes that all significant systems controlled by the Company
will be Year 2000 ready in the last half of calendar 1999. The Company's
operations are dependent upon third parties for continuous supply of raw
materials, natural gas, transportation and storage. While the Company has
attempted to obtain an assessment of the readiness of these third parties, there
can be no assurance that all third parties will have their systems ready. The
Company is developing contingency plans to be implemented prior to end of
calendar 1999. These contingency plans are being developed to avoid any material
interruption of our core business operations. These plans include alternative
operating procedures and appropriate staffing on critical dates.

     The Company believes that it has taken all of the appropriate steps to
prevent any Year 2000 issues from arising. However, there can be no assurances
that all internal and third party systems will operate as expected into calendar
year 2000 and beyond. The failure of any such systems could have a material
impact on the operation of the Company's production facilities and cause a
general business interruption. The Company is unable to determine what the
impact on the financial results of the Company could be from such failure.

ALL STATEMENTS REGARDING YEAR 2000 MATTERS CONTAINED IN THIS ANNUAL REPORT ON
FORM 10-K ARE "YEAR 2000 READINESS DISCLOSURES" WITHIN THE MEANING OF THE YEAR
2000 INFORMATION AND READINESS DISCLOSURE ACT.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

    Part I, Items 1 and 2 of this document include forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Although the Company believes that the expectations reflected in such
forward looking statements are based upon reasonable assumptions, it can give no
assurance that its expectations will be achieved. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed in conjunction with the forward looking statements included herein
("Cautionary Disclosures"). Subsequent written or oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the Cautionary Disclosures.

                                       17

<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS


    The Company has a credit facility and interest rate swap agreements, which
subject the Company to the risk of loss associated with movements in market
interest rates. As of June 30, 1999 the Company has $65.4 million of floating
rate obligations under the credit facility. A 1% increase in interest rates
could result in a $0.7 million increase in annual interest expense. The Company
also has a swap agreement for $125 million of its Senior Subordinated Notes. The
swap converts this amount of the fixed rate obligations to floating if LIBOR
rates exceed 6.75%. If LIBOR rates were to exceed this level a 1% increase in
interest rates could result in a $1.3 million increase in annual interest
expense. As of June 30, 1999 LIBOR rates were set at 5.22%.

    The Company's exposure to foreign currency market risk is minimal since
sales prices are typically denominated in US dollars. The Company's exposure to
changing commodity prices is also minimal since substantially all raw material
acquisitions and finished goods sales prices are generally at posted or market
related prices.

                                       18

<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                        PAGE

Reports of Independent Auditors                                          20

Financial Statements

    Consolidated Balance Sheet                                           21

    Consolidated Statement of Operations                                 22

    Consolidated Statement of Stockholder's Equity                       23

    Consolidated Statement of Cash Flows                                 24

    Notes to Consolidated Financial Statements                           25

                                       19

<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
Texas Petrochemicals Corporation:

     We have audited the accompanying consolidated balance sheets of Texas
Petrochemicals Corporation and subsidiary (the "Company") as of June 30, 1999
and 1998, and the related consolidated statements of operations, stockholder's
equity, and cash flows for each of the three years ended June 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at June 30, 1999 and 1998 and
the results of its operations and its cash flows for each of the three years
ended June 30, 1999, in conformity with generally accepted accounting
principles.

                                                  DELOITTE & TOUCHE LLP

Houston, Texas
August 6, 1999

                                       20

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

                           CONSOLIDATED BALANCE SHEET
                  (IN THOUSAND OF DOLLARS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                     JUNE 30,
                                                              ----------------------
                                                                 1999         1998
                                                              ---------    ---------
               ASSETS

<S>                                                           <C>          <C>
Current assets:
    Cash and cash equivalents .............................   $     103    $     956
    Accounts receivable - trade ...........................      40,220       45,298
Inventories ...............................................      19,973       17,210
    Other current assets ..................................      18,624       13,636
                                                              ---------    ---------
       Total current assets ...............................      78,920       77,100

Property, plant and equipment, net ........................     219,706      227,217
Investments in land held for sale .........................       2,058        2,579
Investment in and advances to limited partnership .........       2,820        3,035
Goodwill, net of accumulated amortization
  of $14,925 and $10,342 ..................................     169,560      174,143
Other assets, net .........................................       9,374       12,679
                                                              ---------    ---------
       Total assets .......................................   $ 482,438    $ 496,753
                                                              =========    =========

    LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
    Bank overdraft ........................................   $     874    $    --
    Accounts payable - trade ..............................      38,992       28,000
    Payable to Parent .....................................       1,987        2,850
    Accrued expenses ......................................      17,228       18,868
    Current portion of cash bonus plan liability ..........       7,811        7,811
    Current portion of long-term debt .....................       7,465        6,982
                                                              ---------    ---------
       Total current liabilities ..........................      74,357       64,511

Revolving line of credit ..................................       2,000       12,000
Long-term debt ............................................     284,073      291,856
Cash bonus plan liability .................................       1,959        9,766
Deferred income taxes .....................................      60,531       62,941

Commitments and contingencies (Note 8)

Stockholder's equity:
    Common stock, $1 par value, 4,162,000 shares authorized
      and outstanding .....................................       4,162        4,162
    Additional paid in capital ............................      72,050       71,643
    Accumulated deficit ...................................     (12,694)     (14,126)
    Note receivable from ESOP .............................      (4,000)      (6,000)
                                                              ---------    ---------
       Total stockholder's equity .........................      59,518       55,679
                                                              ---------    ---------
         Total liabilities and stockholder's equity .......   $ 482,438    $ 496,753
                                                              =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       21

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

                      CONSOLIDATED STATEMENT OF OPERATIONS
                   (IN THOUSAND OF DOLLARS, EXCEPT SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                           YEAR ENDED JUNE 30,
                                                -----------------------------------------
                                                   1999           1998           1997
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Revenues ....................................   $   448,155    $   514,790    $   490,246
Cost of goods sold ..........................       374,401        438,725        436,339
Non-cash ESOP compensation ..................           407           --             --
Depreciation and amortization ...............        26,784         31,787         29,876
                                                -----------    -----------    -----------
  Gross profit ..............................        46,563         44,278         24,031

Selling, general and administrative
  expenses ..................................         7,916          6,888          5,760
      Income from operations ................        38,647         37,390         18,271

Interest expense ............................        33,953         35,720         35,157

Other income (expense)
  Loss on disposal of assets and
     investment securities, net .............           (44)          (436)          --
  Other, net ................................         1,320            993          2,271
                                                -----------    -----------    -----------
                                                      1,276            557          2,271
                                                -----------    -----------    -----------
      Income (loss) before income taxes and
       extraordinary loss ...................         5,970          2,227        (14,615)

Provision (benefit) for income taxes ........         4,538          3,624         (3,342)
                                                -----------    -----------    -----------

      Income (loss) before extraordinary loss         1,432         (1,397)       (11,273)

Extraordinary loss from early extinguishment
  of debt, net of tax benefit of $784 .......          --             --            1,456
                                                -----------    -----------    -----------


      Net income (loss) .....................   $     1,432    $    (1,397)   $   (12,729)
                                                ===========    ===========    ===========


Basic and diluted income (loss)
  per common share:
     Before extraordinary loss ..............   $      0.34    $     (0.34)   $     (2.71)
     Extraordinary loss .....................          --             --             (.35)
                                                -----------    -----------    -----------
                                                $      0.34    $     (0.34)   $     (3.06)
                                                ===========    ===========    ===========

Weighted average shares outstanding .........     4,162,000      4,162,000      4,162,000
                                                ===========    ===========    ===========
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       22

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
                            (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                                    UNREALIZED
                                           ADDITIONAL     NOTE       EARNINGS
                                 COMMON     PAID IN    RECEIVABLE (ACCUMULATED)
                                 STOCK      CAPITAL    FROM ESOP   (DEFICIT)     TOTAL
                               --------    --------    --------    --------    --------
<S>                            <C>         <C>         <C>         <C>              <C>
Opening Balance July 1, 1996   $  4,162    $ 71,643    $(10,000)       --        65,805
Net loss ...................                                        (12,729)    (12,729)
Reduction in ESOP Note .....                              2,000                   2,000
                               --------    --------    --------    --------    --------
Balance, June 30, 1997 .....      4,162      71,643      (8,000)    (12,729)     55,076
Net loss ...................                                         (1,397)     (1,397)
Reduction in ESOP Note .....                              2,000
                               --------    --------    --------    --------    --------
Balance June 30, 1998 ......      4,162      71,643      (6,000)    (14,126)     55,679
Net income .................                                          1,432       1,432
Non-cash ESOP compensation .                    407                                 407
Reduction in ESOP Note .....                              2,000                   2,000
                               --------    --------    --------    --------    --------
Balance June 30, 1999 ......   $  4,162    $ 72,050    $ (4,000)   $(12,694)   $ 59,518
                               ========    ========    ========    ========    ========
</TABLE>

            See accompanying notes to consolidated financial statements.

                                       23

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                          YEAR ENDED JUNE 30,
                                                                   1999         1998         1997
                                                                 ---------    ---------    ---------
<S>                                                              <C>          <C>          <C>
Cash flows from operating activities:
    Net income (loss) ........................................   $   1,432    $  (1,397)   $ (12,729)
    Adjustments to reconcile net income (loss)
       to cash flow from operating activities:
    Extraordinary loss .......................................        --           --          1,456
    Depreciation of fixed assets .............................      21,924       25,208       24,810
    Amortization of intangibles ..............................       4,860        6,759        5,066
    Amortization of debt issue costs and deferred premium ....       1,159        1,089        1,435
    Deferred income taxes ....................................      (1,460)      (1,680)      (2,897)
    Earnings from limited partnership ........................        (775)        (476)        (670)
    Non-cash ESOP expense ....................................         407         --           --
    Change in:
        Accounts receivable ..................................       5,078         (636)      (9,382)
        Inventories ..........................................      (2,763)         716       (5,993)
        Other assets .........................................      (4,183)       1,843       (4,906)
        Accounts payable, accrueds and other .................       8,489        3,661        2,051
                                                                 ---------    ---------    ---------
           Net cash provided by (used in) operating activities      34,168       34,907       (1,759)

Cash flows from investing activities:
    Capital expenditures .....................................     (14,413)     (12,466)      (7,634)
    Proceeds from asset sales ................................         477          871        4,754
    Acquisition of the Company, net of cash acquired .........        --           --       (366,277)
    Distribution received from partnership ...................         990          410          525
    Proceeds from sale of Predecessor assets .................        --           --         16,288
                                                                 ---------    ---------    ---------
           Net cash used in investing activities .............     (12,946)     (11,185)    (352,344)

Cash flows from financing activities:

    Bank overdraft ...........................................         874      (10,157)      10,157
    Net repayments on revolving line of credit ...............     (10,000)        --         (1,000)
    Proceeds from issuance of long-term debt .................        --          3,192      368,000
    Payments on long-term debt ...............................      (6,979)      (9,706)     (62,219)
    Cash bonus plan payments .................................      (7,807)      (7,807)      (9,406)
    Debt issuance and organizational costs ...................        (163)        (389)     (15,839)
    Investment by Parent .....................................        --           --         62,511
    Reduction in note receivable from ESOP ...................       2,000        2,000        2,000
                                                                 ---------    ---------    ---------
           Net cash provided by (used in) financing activities     (22,075)     (22,867)     354,204
                                                                 ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents .........        (853)         855          101

Cash and cash equivalents, beginning .........................         956          101         --
                                                                 ---------    ---------    ---------

Cash and cash equivalents, ending ............................   $     103    $     956    $     101
                                                                 =========    =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       24

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  THE COMPANY

    On July 1, 1996, Texas Olefins Company, Texas Petrochemicals Corporation and
a raw material supply contract of Clarkston Corporation (collectively referred
to as the "Predecessor") were acquired for approximately $371 million in a
series of transactions (the "Acquisition"). After the transactions, TOC was
merged with and into Texas Petrochemicals Corporation with Texas Petrochemicals
Corporation (the "Company") becoming a 100% owned subsidiary of Texas
Petrochemicals Holdings, Inc. (the "Parent"). In connection with the
Acquisition, the Company issued $175 million of Senior Subordinated Notes due
2006 (the "Subordinated Notes") and borrowed $140 million under the Bank Credit
Agreement.

    The Acquisition was accounted for using the purchase method of accounting
and, therefore, the consolidated financial statements for the year ended June
30, 1997 reflect the acquisition cost allocated to the net assets acquired based
on their estimated fair values as of July 1, 1996. The fair value of tangible
assets acquired, net of liabilities assumed, was $179 million. The balance of
the acquisition cost, $184 million, was recorded as goodwill and is being
amortized over 40 years utilizing the straight-line method.

    The Company through its facility in Houston, Texas is the third largest
producer of butadiene, the largest producer of butene-1, and the third largest
producer of methyl tertiary-butyl ether ("MTBE") in North America. In addition,
the Company is the sole producer of diisobutylene and isobutylene concentrate in
the United States and is the largest domestic merchant supplier of high purity
isobutylene to the chemical market. The Company's products include: (i)
butadiene, primarily used to produce synthetic rubber; (ii) MTBE, used as an
oxygenate and octane enhancer in gasoline; (iii) n-butylenes (butene-1 and
butene-2), used in the manufacture of plastic resins, fuel additives and
synthetic alcohols; and (iv) specialty isobutylenes, primarily used in the
production of specialty rubbers, lubricant additives, detergents and coatings.

    The Company's principal feedstocks are crude butadiene, isobutane and
methanol. The Company purchases a significant portion of its crude butadiene
requirements at prices, which are adjusted based on the Company's selling price
of butadiene as well as the cost of natural gas used to produce butadiene,
thereby providing the Company with a fixed profit on such sales. Methanol and
isobutane are purchased at prices linked to prevailing market prices.

2.  SIGNIFICANT ACCOUNTING POLICIES

  PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements as of and for the three years ended
June 30, 1999 include the accounts of Texas Petrochemicals Corporation and its
wholly owned subsidiary, Texas Butylene Chemical Company, (collectively referred
to as) the "Company".

CASH AND CASH EQUIVALENTS
    The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.

                                       25

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

INVENTORIES
    Inventories consist of raw materials, finished goods and chemicals used in
processing and are valued at the lower of average cost or market.

    The Company may enter into product exchange agreements with suppliers
whereby certain inventories are exchanged for raw materials. These exchanges are
recorded at the lower of cost or market. Any resulting gains or losses from the
utilization of these exchanges are reflected in cost of chemical products sold.
Balances related to quantities due to or payable by the Company are included in
inventory.

 PROPERTY, PLANT AND EQUIPMENT
    Property, plant and equipment are recorded at cost. Turnaround costs for
major units of the manufacturing facilities are capitalized and amortized over
the life of the turnaround. Maintenance and repairs are charged to expense as
incurred while significant improvements are capitalized. Upon retirement or sale
of an asset, the asset and the related accumulated depreciation are removed from
the accounts and any resulting gain or loss is reflected in operations.

DEPRECIATION
    Depreciation of property, plant and equipment is computed using the
straight-line method over their estimated useful lives ranging from 3 to 31
years. In January 1999, the estimated useful lives of certain plant assets were
increased from 10 years to 15 years based on engineering analysis. This change
was accounted for as a change in accounting estimate and resulted in a $4.2
million decrease in depreciation expense for fiscal 1999.

DEBT ISSUE COSTS AND OTHER
    Debt issue costs relating to the Company's long-term debt are amortized to
interest expense over the scheduled maturity of debt utilizing the effective
interest method. Unamortized debt issue costs relating to long-term debt retired
prior to its scheduled maturity are charged off as an extraordinary item. Other
assets include patents and catalysts, which are amortized using the
straight-line method over their useful lives ranging from 2 to 7 years.

REVENUE RECOGNITION
    The Company recognizes revenue from sales of refined products in the period
of delivery.

INCOME TAXES
    The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires that deferred taxes be provided at
enacted tax rates on temporary differences between the carrying amounts of
assets and liabilities for financial and tax reporting purposes. The Company's
Parent files a consolidated federal tax return for all of its subsidiaries. The
Parent's tax allocation policy provides for the Company to calculate its own
provision on a "separate return basis" and amounts payable and/or receivable are
reflected in intercompany accounts.

                                       26

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

EMPLOYEE STOCK OWNERSHIP PLAN

    The balance of the note receivable from the Employee Stock Ownership Plan
(See Note 9), is reported as a contra account in the stockholder's equity
section of the balance sheet. The Company has recognized as non-cash ESOP
compensation the increase in the fair value of the common stock for those shares
allocated to participant's accounts with the corresponding offset credited to
additional paid in capital.

MANAGEMENT ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    During 1998, the FASB issued SFAS No. 132 "Employers Disclosures about
Pensions and Other Postretirement Benefits," and SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Company has adopted the
provisions of SFAS No. 132 with no material revisions to the disclosures in the
financial statements. The Company has entered into interest rate swap and cap
agreements, and may have entered into other types of contracts, which are
included in the scope of SFAS No. 133. The Company will analyze SFAS No. 133 to
determine what effect it will have on the Company's future financial statements
and disclosures. In June 1999, SFAS No. 137 was issued to delay the required
effective date of SFAS No. 133 from fiscal years beginning after June 15, 1999
to fiscal years beginning after June 15, 2000.

RECLASSIFICATIONS

    Certain reclassifications have been made to previously issued financial
statements to conform to the current presentation.

3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (IN THOUSANDS OF DOLLARS)

INVENTORIES:

                                                            JUNE 30,
                                                       --------------------
                                                        1999         1998
                                                       -------      -------
Finished goods .............................           $10,594      $ 4,701
Raw materials ..............................             8,053       10,415
Chemicals and supplies .....................             1,326        2,094
                                                       -------      -------
                                                       $19,973      $17,210
                                                       =======      =======

                                       27

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

OTHER CURRENT ASSETS:
                                                             JUNE 30,
                                                        -------------------
                                                         1999        1998
                                                        -------     -------
Catalyst Inventory ...........................          $ 7,463     $ 4,849
Deferred turnaround costs ....................            2,585       1,265
Prepaid and other ............................            8,576       7,522
                                                        -------     -------
                                                        $18,624     $13,636
                                                        =======     =======

PROPERTY, PLANT AND EQUIPMENT:

                                                               JUNE 30,
                                                         -------------------
                                                           1999       1998
                                                         --------   --------
Chemical plants ..................................       $277,117   $260,808
Construction in progress .........................          8,834     13,624
Other ............................................          5,202      2,308
                                                         --------   --------
                                                          291,153    276,740
Less accumulated depreciation, depletion
  and amortization ...............................         71,447     49,523
                                                         --------   --------
                                                         $219,706   $227,217
                                                         ========   ========

ACCRUED EXPENSES:

                                                              JUNE 30,
                                                         ------------------
                                                          1999       1998
                                                         -------    -------
Accrued interest ...............................         $13,893    $14,581
Property and sales taxes .......................           1,995      2,836
Federal and state income taxes .................             744        710
Other ..........................................             596        741
                                                         -------    -------
                                                         $17,228    $18,868
                                                         =======    =======

4.  LONG-TERM DEBT

                                                             JUNE 30,
                                                       ---------------------
                                                         1999         1998
                                                       --------     --------
Bank Credit Agreement:
 Term A Loan .................................         $ 18,002     $ 21,003
 Term B Loan .................................           41,407       42,393
 ESOP Loan ...................................            4,000        6,000
 Revolving Credit Loans ......................            2,000       12,000
Senior Subordinated Notes ....................          225,000      225,000
Deferred premium on Senior
  Subordinated Notes .........................            2,250        2,571
Long-term financing ..........................              879        1,871
                                                       --------     --------
                                                        293,538      310,838
 Less current maturities .....................            7,465        6,982
                                                       --------     --------
 Long-term debt ..............................         $286,073     $303,856
                                                       ========     ========

                                       28

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


    The Bank Credit Agreement originally provided for term loans in the amount
of $130 million, an ESOP loan of $10 million, and a revolving credit facility of
up to $40 million. Quarterly principal and interest payments are made under the
Bank Credit Agreement. The final payments under the ESOP Loan, Term A Loan and
Term B Loan are due on June 30, 2001, December 31, 2002 and June 30, 2004,
respectively. The Revolving Credit Loan facility is currently scheduled to
expire on December 31, 2002. The debt under the Bank Credit Agreement bears
interest, at the option of the borrower, based on the LIBOR rate plus a margin
(2.5% and 3% at June 30, 1999) or the greater of the prime rate and the federal
funds rate plus 1/2% plus a margin (1.5% at June 30, 1999). Substantially all
assets of the Company are pledged as collateral under the Bank Credit Agreement.
The Senior Subordinated Notes are due 2006 and bear interest at 11 1/8% payable
semiannually on January 1 and July 1. The Bank Credit Agreement and the Senior
Subordinated Notes include certain restrictive covenants, which include but are
not limited to, limitations on capital expenditures, indebtedness, investments
and sales of assets and subsidiary stock. Additionally, the Bank Credit
Agreement requires the Company to maintain certain financial ratios. Effective
June 30, 1999 the Company obtained an amendment to the Bank Credit Agreement to
update the financial ratios relating to fixed charge coverage and debt to EBITDA
for fiscal 2000.

    The fair value of the Senior Subordinated Notes, based on quoted market
prices, was approximately $200 million and $244 million as of June 30, 1999 and
1998, respectively. The long-term debt under the Bank Credit Agreement carries a
floating interest rate, therefore, the Company estimates that the carrying
amount of such debt was not materially different from its fair value as of June
30, 1999 and 1998.

   In February 1998, the Company entered into a three-year swap agreement for
$125 million of its Senior Subordinated Notes. The swap agreement effectively
converts a portion of the 11 1/8% fixed rate Senior Subordinated Notes to a
floating debt with a structured collar. Under the agreement the Company's
interest rate is fixed at 10.8% while LIBOR is set between 5.45% and 6.75%. If
LIBOR rates are set above 6.75% the Company's interest rate is floating at
current LIBOR plus 5.35%. If LIBOR rates are set between 5.25% and 5.45% the
Company's interest rate is floating at current LIBOR plus 5.35%. If LIBOR rates
are set below 5.25% the Company's interest rate is fixed at 10.8%. As of June
30, 1999 LIBOR rates were set at 5.22%. In June 1998, the Company entered into a
three-year interest rate cap for $64 million of its senior debt under the Bank
Credit Agreement. The cap effectively converts a portion of the Company's
floating rate bank debt to a fixed rate of 6.75% plus the margin if LIBOR rates
are set above 6.75%. The principal amount of the cap amortizes from $64 million
to $32 million on a quarterly basis over the three-year term.

   The net premiums paid for interest rate swap agreements are charged to
expense over the terms of the agreements. The Company is exposed to credit
losses in the event of nonperformance by a counterparty to the derivative
financial instruments. The Company anticipates, however, that the counterparties
will be able to fully satisfy obligations under the contracts. Market risk
arises from changes in interest rates.

                                       29

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

    The aggregate scheduled maturities outstanding debt for the succeeding five
years are as follows:

               FISCAL YEAR
               -----------
                  2000                                 $7,465
                  2001                                  7,486
                  2002                                  6,386
                  2003                                 20,302
                  2004                                 24,647

5.  FEDERAL AND STATE INCOME TAXES

    Significant components of the Company's deferred tax assets and liabilities
at June 30, 1999 and June 30, 1998 are as follows (in thousands of dollars):

                                                                JUNE 30,
                                                         ----------------------
                                                           1999          1998
                                                         --------      --------
Deferred tax asset (liability) - current:
   Cash bonus plan .................................     $  2,756         2,756
   Turnaround costs ................................         (905)         (443)
   Other ...........................................         (537)          (49)
                                                         --------      --------
                                                         $  1,314      $  2,264
                                                         ========      ========
Deferred tax asset (liability) - noncurrent:
   Investment in land ..............................     $  4,828      $  4,813
   Cash bonus plan .................................          733         3,466
   Property, plant and equipment ...................      (65,872)      (71,000)
   Other ...........................................         (220)         (220)
                                                         --------      --------
                                                         $(60,531)     $(62,941)
                                                         ========      ========

    The current deferred tax asset is included in other current assets in the
accompanying balance sheet. The provision for federal and state income taxes is
comprised of the following (in thousand of dollars):

                                                     YEAR ENDED JUNE 30,
                                              ---------------------------------
                                               1999         1998         1997
                                              -------      -------      -------
Current:
    Federal .............................     $ 5,296      $ 4,368      $  (508)
    State ...............................         702          936           63
                                              -------      -------      -------
                                                5,998        5,304         (445)
                                              -------      -------      -------
Deferred:
    Federal .............................      (1,460)      (1,680)      (2,897)
    State ...............................        --           --           --
                                              -------      -------      -------
                                               (1,460)      (1,680)      (2,897)
                                              -------      -------      -------
       Total provision (benefit)
         for income taxes ...............     $ 4,538      $ 3,624      $(3,342)
                                              =======      =======      =======

                                       30

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

    The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income from continuing operations. The
reasons for this difference are as follows:

                                               YEAR ENDED JUNE 30,
                                         ------------------------------
                                          1999       1998        1997
                                         -------    -------     -------
Statutory federal income tax rate ....        35%        35%        35%
Computed "expected" federal income tax   $ 2,090    $   779    $(5,115)
Increase in tax resulting from:
    State income taxes, net of
      federal benefit ................       456        608         41
    Other, net .......................       388        328         22
    Amortization of goodwill and other     1,604      1,909      1,710
                                         -------    -------     -------
Provision (benefit) for income taxes     $ 4,538    $ 3,624    $(3,342)
                                         =======    =======     =======

6.  INVESTMENT IN AND ADVANCES TO LIMITED PARTNERSHIP

    The Company and Hollywood Marine, Inc. formed a limited partnership,
Hollywood/Texas Petrochemicals, Ltd., to operate four barges capable of
transporting chemicals. The Company is a 50% limited partner in the limited
partnership. The Company accounts for this investment under the equity method
and records its portion of the limited partnership's net income as other income
in the accompanying statement of operations. Summarized financial information of
the partnership has not been presented because the Company's investment in and
its proportionate share of the partnership's operations are not material.

7.  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash paid for interest and income taxes are as follows (in thousands of
   dollars):

                                         YEAR ENDED JUNE 30,
                                ------------------------------------
                                  1999          1998          1997
                                -------      ---------      --------

    Interest ................    $ 34,641     $  33,735      $ 20,600
    Income taxes ............       6,897         1,641           967

8.  COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

    The Company leases tank cars under noncancelable operating leases. Under the
terms of the lease agreements, the Company is reimbursed by customers at a fixed
rate per mile, based on the distance the tank cars travel. Reimbursements were
approximately $0.5 million, $0.8 million, $0.8 million, for the three years
ended June 30, 1999, respectively.

                                       31

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

       Total rent expense was approximately $4.6 million, $3.6 million and $3.9
million, (net of reimbursements described above and including $0.7 million, $0.7
million and $1.8 million for the rental of barges) for the three years ended
June 30, 1999, respectively. Future minimum lease payments at June 30, 1999 are
as follows (in thousands of dollars):

               FISCAL YEAR
               -----------
                  2000                         $ 3,918
                  2001                           3,614
                  2002                           2,450
                  2003                           1,360
                  2004                             270

PURCHASE COMMITMENTS

    The Company has purchase commitments incident to the ordinary conduct of
business. The prices of such purchase commitments are based on formulas, which
are determined from the prevailing market rate for such products. These
commitments generally have cancellation provisions given proper notification.

LITIGATION

    The Company is involved in various routine legal proceedings which are
incidental to the business. Management of the Company is vigorously defending
such matters and is of the opinion that their ultimate resolution will not have
a material adverse impact on the Company's financial position, results of
operations or cash flows.

ENVIRONMENTAL REGULATION

    The Company's operations are subject to federal, state and local laws and
regulations administered by the U.S. Environmental Protection Agency, the U.S.
Coast Guard, the Army Corps of Engineers, the Texas Natural Resource
Conservation Commission, the Texas General Land Office, the Texas Department of
Health and various local regulatory agencies. The Company holds all required
permits and registrations necessary to comply substantially with all applicable
environmental laws and regulations, including permits and registrations for
wastewater discharges, solid and hazardous waste disposal and air emissions, and
management believes that the Company is in substantial compliance with all such
laws and regulations. While management does not expect the cost of compliance
with existing environmental laws will have a material adverse effect on the
Company's financial condition, results of operations or cash flows, there can be
no assurance that future legislation, regulation or judicial or administrative
decisions will not have such an effect.

     Under federal and state environmental laws, companies may be liable for
remediation of contamination at on-site and off-site waste management and
disposal areas. Management believes that the Company is not likely to be
required to incur remediation costs related to its management, transportation
and disposal of solid and hazardous materials and wastes, or to its pipeline
operations.

                                       32

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

If the Company were to be required to incur such costs, however, management
believes that such costs would not have a material adverse effect on the
Company's results of operations. In addition, under the terms of the 1984
purchase agreement, the prior owner of the Houston facility, Petro-Tex, has
indemnified the Company for liability arising from off-site disposal of any
materials prior to June 1984. Notwithstanding the terms of the indemnity, in
July 1994 Petro-Tex filed a claim for indemnity against the Company for any
costs that may be attributable to Petro-Tex for the cleanup of the Malone
Service Company ("Malone") site in Texas City, Texas. Petro-Tex and many other
companies along the Gulf Coast allegedly sent wastes to the Malone site for
disposal in the 1970s and possibly the early 1980s. Malone has been subject to
several state enforcement actions regarding its waste disposal practices. It is
not known whether the site will require remediation. The Company believes that
it has meritorious defenses to Petro-Tex's claim and intends to contest the
claim vigorously. Although no on-site contamination has been identified as
requiring remediation, management believes that certain areas of the Houston
facility were historically used for waste disposal. Based on limited, currently
available information about these waste disposal areas and their contents, the
Company believes that, if such remediation becomes necessary, any remediation
costs would not have a material adverse effect on the Company's financial
condition or results of operations. The Petro-Tex indemnity does not extend to
these on-site waste disposal areas or their contents.

9.  EMPLOYEE BENEFITS

PROFIT SHARING PLAN

     The Company has a noncontributory profit sharing plan that covers all
full-time employees that have completed one year or more of service. Employees
can contribute up to 10% of their base compensation to a tax deferred fund which
is matched by the Company at the rate of $.25 per one dollar contributed by the
employee up to 6% of the employee's base compensation. The Company's expense to
match employee contributions was approximately $0.2 million for each of the
three years ended June 30, 1999, respectively. Additionally, the Company made
additional discretionary contributions to the plan, which amounted to
approximately $2.0 million, $2.1 million and $1.1 million, for the three years
ended June 30, 1999, respectively. The Company's contributions vest with the
employee at a rate of 20% per year.

EMPLOYEE STOCK OWNERSHIP PLAN

   In connection with the Acquisition, the Parent established an Employee Stock
Ownership Plan (the "ESOP"), covering substantially all full-time employees of
the Company. The ESOP borrowed $10 million under the Bank Credit Agreement to
purchase 100,000 shares of the Parent's Common Stock at the closing of the
Acquisition. The shares of Common Stock purchased by the ESOP were pledged as
security for the ESOP Loan, and such shares will be released and allocated to
ESOP participants' accounts as the ESOP Loan is discharged. For employees whose
employment commenced prior to October 1, 1996 and who have attained 21 years,
participation begins as of the Acquisition date or the date of commencement of
the participant's employment. A participant's ESOP account vests at the rate of
20% per year. The Company's contributions to the ESOP, which are used to retire
principal and pay interest on the loan is reported as compensation expense.
Principal and interest payments made for the three years ended June 30, 1999
amounted to $2.4 million, $2.6 million and $2.7 million, respectively. As of
June 30, 1999, 60,000 shares have been allocated to employees.

                                       33

<PAGE>
                        TEXAS PETROCHEMICALS CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

CASH BONUS PLAN LIABILITY

    In connection with the Acquisition, the Predecessor established the $35
million Cash Bonus Plan covering substantially all employees of the Predecessor
(or certain affiliates of the Predecessor) and covering the employees of certain
third-party contractors who had contributed to the past success of the
Predecessor. All participants of the plan as of July 2, 1996 were distributed
10% of the cash bonus in August 1996, and the remaining amount is to be paid in
sixteen quarterly installments which began in October 1996.

10.  RELATED PARTY TRANSACTIONS
   In June 1998 the Company made a loan to its Vice President, Finance and
Corporate Development in the amount of $200,000 of which $21,024 remained
outstanding as of June 30, 1999. The proceeds from the loan were utilized to
purchase outstanding shares of the Parent's common stock at fair market value.
The loan carries an interest rate of 7%. During fiscal 1999 and 1998 the Company
made payments totaling $250,000 and $500,000, respectively, to a consulting firm
whose majority shareholder is also an outside director and shareholder of the
Company. The Chairman of the Company receives annual compensation of $150,000
for consulting services provided to the Company and reimbursements of
approximately $25,000 per year for office expenses.

11.  CONCENTRATION OF CREDIT RISK
     The Company sells its products primarily to chemical and petroleum based
companies in North America. For the three years ended June 30, 1999
approximately 34%, 41% and 41%, respectively, of the Company's sales were to
four customers. The Company had two customers, which represented 11% and 14% of
sales during the year ended June 30, 1999, 13% and 15% of sales during the year
ended June 30, 1998, and 11% and 17% of sales during the year ended June 30,
1997. The Company performs ongoing credit evaluations of its customers and
generally does not require collateral for accounts receivable. The Company's
credit losses have been minimal.

   The Company maintains its cash deposits and short-term investments with a
major bank and a financial services company which at certain times exceed the
federally insured limits. Management assesses the financial condition of these
institutions and believes that any possible credit loss is minimal.

12.  FINANCIAL INSTRUMENTS
     At June 30, 1999 the Company estimated that the carrying value and fair
value of its financial instruments, other than long-term debt (See Note 4), were
approximately equal due to the short-term nature of the instruments. Such
instruments include cash and cash equivalents, accounts receivable and accounts
payable. The Company enters into certain derivative financial instruments as
part of its interest rate risk management. Interest rate swaps, caps, collars
and floors are classified as matched transactions. The differential to be paid
or received as interest rates change is accrued and recognized as an adjustment
to interest expense.

   The fair value of derivative financial instruments are the amounts at which
they could be settled base on estimates from dealers. As of June 30, 1999, the
carrying amounts and estimated fair values of derivative financial instruments
were not significant.

                                       34

<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

    None.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The following table sets forth certain information concerning the directors
and executive officers of the Company. Each director is elected for a one-year
term or until such person's successor is duly elected and qualified.
<TABLE>
<CAPTION>
                                                                           YEARS OF
                                                                       SERVICE WITH THE
                                                                          COMPANY
NAME                  AGE  POSITION                                 OR ITS PREDECESSORS
------------------    ---  --------                                 -------------------
<S>                    <C>                                                    <C>
Gordon A. Cain         87  Director                                           15
Hunter W. Henry Jr     71  Director                                            1
William R. Huff        49  Director                                            3
William A. McMinn      69  Director and Chairman                              15
Steve A. Nordaker      52  Director                                            2
Gary L. Rosenthal      50  Director                                            1
Susan O. Rheney        40  Director                                            3
John T. Shelton        68  Director                                           15
B. W. Waycaster        60  Director, President and Chief Executive Officer     7
Bill R. McNeese        65  Vice President, Operations                         11
H.E. Sebastian         55  Vice President, Marketing and Supply                1
Carl S. Stutts         52  Vice President, Finance and Corporate Development   1
Stephen R. Wright      51  Vice President, Secretary and General Counsel       3
</TABLE>


      Mr. Cain is Chairman of the Board of Agennix Inc. and of Lexicon Genetics,
Inc., biotechnology companies. From August 1982 until his retirement in December
31, 1992, he was Chairman of the Board of The Sterling Group, Inc. ("Sterling").
Mr. Cain was the Chairman of the Board of Sterling Chemicals, Inc. from 1986
until it was sold in August 1996 and was on the Board of Directors of Arcadian
Corporation from May 1989 until it was sold in April 1997. Prior to organizing
Sterling, Mr. Cain was involved in the purchase of a variety of businesses and
provided consulting services to these and other companies. Mr. Cain was also
Chairman of the Board of UltraAir, Inc. from 1991 to 1994, Chairman of the Board
of Cain Chemical Inc. from its organization in March 1987 until its acquisition
by Occidental Petroleum Corporation in May 1988 and the Chairman of the Board of
Vista Chemical Company from 1984 until 1986.

                                       35

<PAGE>
      Mr. Henry has held various manufacturing and management positions in the
Dow Chemical Company, including Vice President - Business Operations for Latin
America, Vice President - Manufacturing Dow Badische, General Manager - Michigan
Division, President - Dow Brazil, President - Dow USA and Executive Vice
President of Dow Chemical Company (1982 - 1988). Mr. Henry was on Dow's board
from 1979 to 1993 and has served on the Executive, Compensation, Health and
Safety Committees and as Chairman of the Finance and Investment Policy
Committee. Mr. Henry also served as Chairman of the Board of Dowell
Schlumberger, 1985 - 1988.

      Mr. Huff has been President of the General Manager of WRH Partners,
L.L.C., the General Partner of The Huff Alternative Income Fund, L.P. (the "Huff
Fund") since 1994. He also has been President of one of the general managers of
W.R. Huff Asset Management Co., L.L.C., an investment management firm, since
1984. Mr. Huff serves on the Board of Directors as the designee of the Huff
Fund.

            Mr. McMinn has been Chairman of the Board of the Company since 1996.
He was Corporate Vice President and Manager of the Industrial Chemical Group of
FMC Corporation, a manufacturer of machinery and chemical products, from 1973
through 1985. He became President and Chief Executive Officer of Cain Chemical
Inc., a producer of petrochemicals, in 1987 and served in that capacity until
its acquisition by Occidental Petroleum in May 1988. He became Chairman of the
Board of Directors of Arcadian Corporation in August 1990 and served in that
capacity until it was sold in April 1997

      Mr. Nordaker has been a Managing Director of Chase Securities since August
1995. From 1982 to 1995, he was a Group Manager at Texas Commerce Bank National
Association and, in addition, served in several capacities at Texas Commerce
Bank in the Energy Group, including Section Manager and Division Manager. From
May 1977 to March 1982, Mr. Nordaker was a Manager of Projects for The Frantz
Company, an engineering consulting firm servicing the oil refinery and
petrochemical industry. Prior thereto, he was a chemical engineer with Universal
Oil Products. Mr. Nordaker serves on the Board of Directors as the Designee of
Chase Venture, an affiliate of Chase Securities.

      Ms. Rheney has been a principal of The Sterling Group, Inc. since February
1992. She worked as an independent financial consultant from December 1990 to
January 1992. Prior to that time, from June 1987 to November 1990, she was an
associate at Sterling. Ms. Rheney is also a director of AXIA Group, Inc., and
American Plumbing & Mechanical, Inc.

      Mr. Rosenthal has served as President of Heaney Rosenthal, Inc. which
focuses on investment, acquisition and advice to various businesses since 1994,
and as Chairman of the Board, President and CEO of AXIA Incorporated since 1998.
Mr. Rosenthal previously served as Chairman of the Board (1990-1994) and CEO
(1994) of Wheatley TXT Corp.

      Mr. Shelton has been Vice Chairman of the Board, Executive Vice President
and Chief Operations Officer of the Company since 1983. Prior thereto, Mr.
Shelton held various positions in the chemicals industry including Vice
President - Manufacturing of Oxirane Corporation and Manager -
Manufacturing/Engineering of Atlantic Richfield Company.

                                       36

<PAGE>
      Mr. Waycaster has been President and Chief Executive Officer of the
Company since 1992. Prior thereto, Mr. Waycaster spent 27 years with The Dow
Chemical Company and was serving as Vice President of the Hydrocarbons and
Resources when he left to join the Company. Mr. Waycaster is a Board member of
the Chemical Manufacturers Association, National Petrochemical and Refiners
Association, and serves on the Advisory Board of ChemConnect, Inc..

      Mr. McNeese retired from the Company on July 1, 1999, and has been
retained as a consultant. Mr. McNeese was the Vice President - Operations of the
Company from 1992 - 1999. He joined the Company in 1986 and has held positions
in manufacturing, production and utilities. From 1984 to 1986, Mr. McNeese
served as General Manager- Operations and Engineering for Paktank Corporation.
Prior thereto, Mr. McNeese held various positions in a number of Atlantic
Richfield Company businesses. Mr. McNeese has 36 years of experience in the
chemicals industry.

      Mr. Sebastian joined the Company in March 1998 as Vice President Marketing
and Supply. Prior to joining the Company, he performed consulting activities in
chemical and oil products marketing, operations and logistics, specializing in
buying and selling physical assets and companies. Prior to that, he was
Executive Vice President of Commonwealth Oil Refining Company and a Co-Founder
of Arochem Corporation, both with refinery and petrochemical operations in
Puerto Rico. He also brings extensive marketing and trading experience from
Exxon Chemical Company and Phibro Energy.

      Mr. Stutts joined the Company in April 1998 as Vice President of Finance
and Corporate Development. Previously, he was a general partner of Columbine
Venture Funds, an institutional venture capital fund focusing on investments in
early stage companies. From 1971 to 1988 he held various management positions in
Tenneco, Inc. and its subsidiary companies.

      Mr. Wright joined the Company in August 1996 as Vice President and General
Counsel. From January 1996 until he joined the Company, Mr. Wright was engaged
in the private practice of law, either as a sole practitioner or of counsel to
Andrews & Kurth, L.L.P. For over five years prior thereto, Mr. Wright was the
Vice President and General Counsel or the Senior Vice President and General
Counsel of Destec Energy, Inc.

COMPENSATION OF DIRECTORS
     Directors of the Company who are not employees of the Company receive an
annual retainer of $15,000 and a fee of $500 for each meeting of the Board or
any committee thereof that they attend. Directors who are also employees of the
Company do not receive Director compensation.

                                       37

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION
     The following table sets forth the total value of compensation received by
the Chief Executive Officer and the four most highly compensated executive
officers, other than the Chief Executive Officer, who served as executive
officers of the Company for the three years ended June 30, 1999.

                           SUMMARY COMPENSATION TABLE

NAME AND PRINCIPAL POSITION         YEAR(1)    SALARY       BONUS
---------------------------         -------   --------     --------
B. W. Waycaster, President and
 Chief Executive Officer            1999     $ 300,000    $ 459,156
                                    1998       300,000      507,186
                                    1997       300,000      326,787

Stephen R. Wright, Vice
 President, Secretary and           1999     $ 180,000    $ 275,494
 General Counsel                    1998       180,000      281,138
                                    1997       165,000       50,104


Bill R. McNeese, Vice
 President, Operations              1999     $ 150,000    $ 229,579
                                    1998       150,000      236,251
                                    1997       148,500       63,869

H.E. Sebastian
 Vice President, Marketing
 and Supply                         1999     $ 175,000    $ 265,500
                                    1998        58,333       19,779



Carl S. Stutts, Vice President,
 Finance and Corporate Development  1999     $ 175,000    $ 267,841
                                    1998        41,761         -


--------------

(1) None of the executive officers has received perquisites, the value of which
exceeded the lesser of $50,000 or 10% of the salary and bonus of such executive
officer.

                                       38

<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Texas Petrochemical Holdings, Inc. owns 100% of the outstanding shares of
the Company's common stock.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    In June 1998 the Company made a loan to its Vice President, Finance and
Corporate Development in the amount of $200,000 of which $21,024 remained
outstanding as of June 30, 1999. The proceeds from the loan were utilized to
purchase outstanding shares of the Parent's common stock at fair market value.
The loan carries an interest rate of 7%. During fiscal 1999 and 1998 the Company
made payments totaling $250,000 and $500,000, respectively, to a consulting firm
whose majority shareholder is also an outside director and shareholder of the
Company. The Chairman of the Company receives annual compensation of $150,000
for consulting services provided to the Company and reimbursements of
approximately $25,000 per year for office expenses.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

    (a) Exhibits

       3.1  Certificate of Incorporation of the Company, as amended
            (incorporated by reference to Exhibit 3.1 of Form S-4, File No.
            333-11569).
       3.2  Bylaws of the Company (incorporated by reference to Exhibit 3.2 of
            Form S-4, File No. 333-11569).
       4.1  Indenture dated as of July 1, 1996 by and between the Company and
            Fleet National Bank, as Trustee, with respect to the 11 1/8% Senior
            Subordinated Notes due 2006, including the form of the Note
            (incorporated by reference to Exhibit 4.1 of Form S-4, File No.
            333-11569).
       4.2  Indenture dated as of March 1, 1997 by and between the Company and
            Fleet National Bank, as Trustee, with respect to the 11 1/8% Series
            B Senior Subordinated Notes due 2006, including the form of Note
            (incorporated by reference to Exhibit 4.2 of Form S-4, File No.
            333-24589).
       5.1  Opinion of Bracewell & Patterson as to the validity of the 11 1/8%
            Senior Subordinated Notes die 2006 and the validity of the 11 1/8%
            Series B Senior Subordinated Notes due 2006.

      10.1  Holdings' 1996 Stock Option Plan (incorporated by reference to
            Exhibit 10.1 of Form S-4, File No. 333-11569).

      10.2  TPC Employee Stock Ownership Plan (incorporated by reference to
            Exhibit 10.2 of Form S-4, file No. 333-11569).

      10.3  TPC Employee Stock Ownership Plan Trust Agreement (incorporated by
            reference to Exhibit 10.3 of Form S-4, File No. 333-11569).

      10.4  TPC Cash Bonus Plan (incorporated by reference to Exhibit 10.4 of
            Form S-4, File No. 333-11569).

      10.5  Security Agreement by and between Boatmen's Trust Company of Texas
            and the Company (incorporated by reference to Exhibit 10.5 of Form
            S-4, File No. 333-11569).

      10.6  TPC Profit Sharing Plan (incorporated by reference to Exhibit 10.6
            of Form S-4, File No. 333-11569).

                                       39
<PAGE>
      10.7  Lease for Calcasieu Parish, Louisiana (incorporated by reference to
            Exhibit 10.7 of Form S-4, File No. 333-11569).

      10.8  Credit Agreement dated as of July 1, 1996 among the Company, Texas
            Commerce Bank, National Association, ABN AMRO North America, Inc.,
            and The Bank of Nova Scotia (incorporated by reference to Exhibit
            10.8 of Form S-4, File No. 333-11569).

      10.9  Security Agreement date as of July 1, 1996 by and between the
            Company and Texas Commerce Bank, National Association (incorporated
            by reference to Exhibit 10.9 of Form S-4, File No. 333-11569).

      10.10 Pledge Agreement date as of July 1, 1996 by and between the Company
            and Texas Commerce Bank, National Association (incorporated by
            reference to Exhibit 10.10 of Form S-4, File No. 333-11569).

      10.11 Letter Agreement dated May 6, 1996 by and among The Sterling Group,
            Inc., Texas Petrochemical Holdings, Inc., TPC Holding, and the
            Company (incorporated by reference 10.11 of Form S-4, File No.
            333-11569).

      10.12 Form of Indemnity Agreement between the Company and each of its
            officers and directors (incorporated by reference to Exhibit 10.12
            of Form S-4, File No. 333-11569).

      10.13 Form of Tax Sharing Agreement among Texas Petrochemical Holdings,
            Inc., TPC Holding, the Company and Texas Butylene Chemical
            Corporation (incorporated by reference to Exhibit 10.13 of Form S-4,
            File No. 333-11569).

      10.14 Employment Agreement with Bill W. Waycaster (incorporated by
            reference to Exhibit 10.14 of Form S-4, File No. 333-11569).

      10.15 Amendment to Credit Agreement dated as of June 30, 1999 by and among
            the Company, Chase Bank of Texas, National Association, ABN AMRO
            North America, Inc., the Bank of Nova Scotia and other financial
            institutions listed on the signature pages attached.

      21    Subsidiaries of the Company (incorporated to Exhibit 21 of Form S-4,
            File No. 333-11569).

      25.1  Statement of Eligibility and Qualification on Form T-1 of Fleet
            National Bank as Trustee under the Indenture dated as of July 1,
            1996 (incorporated by reference to Exhibit 25.1 of Form S-4, File
            No. 333-11569).

      25.2  Statement of Eligibility and Qualification on Form T-1 of Fleet
            National Bank as Trustee under the Indenture dated as of March 1,
            1997 (incorporated by reference to Exhibit 25.2 of Form S-4, File
            No. 333-24589).

      27    Financial Data Schedule

(b) Financial Statement Schedules

    Not applicable

(c) Reports on Form 8-K

    There were no reports on Form 8-K filed during the three months ended
    June 30, 1999.

                                       40
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, September 27, 1999.

                                   TEXAS PETROCHEMICALS CORPORATION
                                             (Registrant)

                                   By: /s/ B.W. WAYCASTER
                                           B.W. Waycaster
                                   President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
to be signed below by the following persons on behalf of the registrant in the
indicated capacities on September 27, 1999.

     /s/ WILLIAM A. MCMINN          Chairman
         William A. McMinn


      /s/ B.W. WAYCASTER            Director, President and Chief Executive
          B.W. Waycaster            Officer



      /s/ GORDON A. CAIN            Director
        Gordon A. Cain


    /s/ HUNTER W. HENRY JR.         Director
      Hunter W. Henry Jr.


      /s/ WILLIAM R. HUFF           Director
        William R. Huff


     /s/ STEVE A. NORDAKER          Director
       Steve A. Nordaker


      /s/ SUSAN O. RHENEY           Director
        Susan O. Rheney


     /s/ GARY L. ROSENTHAL          Director
       Gary L. Rosenthal


      /s/ JOHN T. SHELTON           Director
        John T. Shelton

      /s/ CARL S. STUTTS            Vice President, Finance and
        Carl S. Stutts              Corporate Development

                                       41