SET Announcements

Information Memorandum on Disposition of Shares in Thai Tap Water Supply Co., Ltd. The Board of Directors Meeting No. 6/2005 of CH. Karnchang Public Company Limited, held on August 26, 2005, resolved that the Company sold ordinary shares in Thai Tap Water Supply Co., Ltd. as per the following details: 1. Transaction Date After receipt of approval from the Shareholders Meeting for execution of the transactions. 2. Contractual Parties 2.1Seller : CH. Karnchang Public Company LimitedPurchaser : Bangkok Bank Public Company Limited Amount of Shares : 750,000 shares or 2.5 percent of the registered capital Transaction Value : A total of Baht 217,500,000Relationship : Party without connection with the Company2.2Seller : CH. Karnchang Public Company LimitedPurchaser : Thai Military Bank Public Company LimitedAmount of Shares : 750,000 shares or 2.5 percent of the registered capitalTransaction Value : A total of Baht 217,500,000Relationship : Party without connection with the Company2.3Seller : CH. Karnchang Public Company LimitedPurchaser : Bangkok Expressway Public Company LimitedAmount of Shares : 1,450,000 shares or 4.83 percent of the registered capitalTransaction Value : A total of Baht 420,500,000Relationship : Party without connection with the Company3. General Characteristics of the Transaction 3.1 The Company intends to sell shares in Thai Tap Water Supply Co., Ltd. to Bangkok Bank Public Company Limited, in the amount of 750,000 shares, at the price of Baht 290 per share, in the total transaction value of Baht 217,500,000. 3.2 The Company intends to sell shares in Thai Tap Water Supply Co., Ltd. to Thai Military Bank Public Company Limited, in the amount of 750,000 shares, at the price of Baht 290 per share, in the total transaction value of Baht 217,500,000. 3.3 The Company intends to sell shares in Thai Tap Water Supply Co., Ltd. to Bangkok Expressway Public Company Limited, in the amount of 1,450,000 shares, at the price of Baht 290 per share, in the total transaction value of Baht 420,500,000. The volume of the disposition of such shares under Clauses 3.1, 3.2 and 3.3, if calculated in accordance with the Stock Exchange of Thailand Notification, Re: Rules, Procedures and Disclosure on Disposition of Assets of Listed Companies, shall represent 7.61 percent, which has a value lower than 15 percent and is not an issuance of securities in consideration of an acquisition of assets. Since the transaction under Clause 3.3 is a disposition of shares to Bangkok Expressway Public Company Limited, if calculated in accordance with the Stock Exchange of Thailand Notification, Re: Rules, Procedures and Disclosure on Connected Transactions of Listed Companies, the transaction value shall exceed 3 percent of the net tangible assets value. However, Mr. Plew Trivisvavet holds the position of Chief Executive Officer of CH. Karnchang Public Company Limited and concurrently holds the positions of Chairman of the Executive Board and the Nomination Committee of Bangkok Expressway Public Company Limited, and who, at the same time, is authorized by the Company to monitor as the Company is the major shareholder of Bangkok Expressway Public Company Limited. As a result, this transaction is exempted in accordance with the Stock Exchange of Thailand Notification, Re: Disclosure of Information and Act of Listed Companies Concerning Connected Transactions, thus it is not deemed as a connected transaction. Nevertheless, the Company intends to disclose information on execution of such transaction to the Stock Exchange of Thailand, and convene a Shareholders Meeting to seek approval for the execution of such transaction. 4. Details of Disposed Assets A. Nature of Business Name :Thai Tap Water Supply Co., Ltd.Address :30/10 Moo 12 Tambon Rai Khing, Amphoe Sam Phran, Nakhon Pathom ProvinceNature of Business :Production and distribution of tap water to the Provincial Waterworks Authority in Nakhon Pathom Province and Samut Songkram Province, under a concession granted by the Provincial Waterworks Authority, on a Build, Own and Operate (BOO) basis, whereby Thai Tap Water Supply Co., Ltd. would invest in the construction of the tap water production and distribution systems, and the title to the tap water production and distribution systems shall not be required to be transferred to the Provincial Waterworks Authority, at the end of the concession period of 30 years from July 21, 2004 to July 21, 2034. Thai Tap Water Supply Co., Ltd. was incorporated on September 11, 2000, by CH. Karnchang Public Company Limited, Thames Water International Service Ltd., Thames Water International (Thailand) Ltd., CH. Karnchang Holding Co., Ltd. and Mahasiri Siam Co., Ltd. CH. Karnchang Public Company Limited holds shares representing 15 percent of the companys registered capital. Subsequently in December 2004, the Company was granted approval from the Shareholders Meeting to purchase 10,499,997 ordinary shares in Thai Tap Water Supply Co., Ltd. from a shareholder at such time, namely, General Akradej Sasiprapa, at the price of Baht 211.70 per share, rendering the Companys shareholding in such company to increase from 15 percent to 49.99 percent. Later, in June 2005, the Company was granted approval from the Shareholders Meeting for purchase of 15,000,000 ordinary shares in Thai Tap Water Supply Co., Ltd. from Thames Water Group, rendering the Companys shareholding in such company to increase from 49.99 percent to 99.99 percent of the companys registered capital. Such Shareholders Meeting granted approval for sale and/or transfer of the option to purchase certain portion of ordinary shares in Thai Tap Water Supply Co., Ltd. at the price not lower than that as agreed to purchase from the existing shareholders (Thames Water International Service Ltd., Thames Water International (Thailand) Ltd. and Thames Water Public Company Limited). Should the Company be granted approval by its shareholders in the Extraordinary General Meeting of Shareholders No. 2/2548, which would be held on October 5, 2005, for sale of ordinary shares in Thai Tap Water Supply Co., Ltd., the Company shall hold shares representing 90.16 percent of the companys registered capital. B. Board of Directors of Thai Tap Water Supply Co., Ltd. The Board of Directors of Thai Tap Water Supply Co., Ltd. comprises a total of six members as listed below: 1. Mr. Narong Sangsuriya Chairman of the Board of Directors 2. Mr. Sombat Kitjalaksana Director 3. Mr. Prasert Marittanaporn Director 4. Mr. Sompodh Sripoom Director 5. Miss Pornpimol Chirtchoochai Director 6. Mr. Vorapot Uchupiboonvong Director C. Shareholding Structure On August 2, 2005, the registered and paid-up capital of Thai Tap Water Supply Co., Ltd. amounts to Baht 3,000 Million, divided into 30 million ordinary shares at the par value of Baht 100 per share. The names of the shareholders are as follows: Shares%1. CH. Karnchang Public Company Limited29, 999,99499.999982. Mr. Sombat Kitjalaksana10.0000033. Mr. Narong Sangsuriya10.0000034. Mr. Prasert Marittanaporn 10.0000035. Mr. Sompodh Sripoom 10.0000036. Mr. Samai Paiboon 10.0000037. Miss Punsakul Punphom 10.000003Total30, 000,000 100.00D. Summary of Financial Position The summary of the financial position and the results of operation of Thai Tap Water Supply Co., Ltd., as audited by the auditor as at December 31, 2002-2004, and the internal financial statements as at June 30, 2005, are as follows: Financial Statements Audited by Ernst & Young Office LimitedUnreviewed Financial Statements(Unit: Thousand Baht)(Auditor: Ms. Siraporn Ouaanunkun)200220032004June 30, 2005Current assets498,39799,037459,810725,193Fixed assets5, 452,0749,036,5829,753,9379,648,392Total assets6, 488,7269,157,40710,213,74710,373,585Current liabilities686, 575230,200235,96763,796Long-term liabilities4, 214,0006,430,0006,860,0006,930,000Total liabilities4, 900,5756,660,2007,095,9677,015,946Registered and paid-up capital1, 876,0002,812,0003,000,0003,000,000Shareholders equity1, 588,1512,497,2073,117,7803,357,639Total income6404,635889,910674,289 Cost of sales--274,063249,489Operating expenses152, 88731,57927,09317,644Interest expenses--151,181167,297Net earnings (loss)(151,887)(26,944)432,573239,859Retained earnings (loss)(287,849) (314,793)117,780357,639Net earnings (loss) per share (Baht)(11.30) (1.15)14.567.99Number of shares (million)18.7628.1229.7130.00Book value per share (Baht)84.6688.81103.93111.92 Miss Siraporn Ouaanunkun is an auditor of Ernst & Young Office Limited who audited the year-end financial statements of Thai Tap Water Supply Co., Ltd. 5. Total Value of Transaction The transaction value of the disposition of ordinary shares in Thai Tap Water Supply Co., Ltd. to Bangkok Bank Public Company Limited, Thai Military Bank Public Company Limited and Bangkok Expressway Public Company Limited, totaling 2,950,000 shares, representing 9.83 percent of the companys registered capital, in the total transaction value of Baht 855,500,000. 6. Value of Disposed Assets The assets disposed by the Company are 2,950,000 ordinary shares in Thai Tap Water Supply Co., Ltd., at an unaudited book value of Baht 111.92 per share as at June 30, 2005. Therefore, the total value of the disposed assets amounts to Baht 330,164,000. 7. Plan for Utilization of Proceeds from Disposition of Assets The Company shall use the proceeds from the disposition of shares to be its working capital of the business and to make partial repayment of the loan. 8. Basis of Calculation of the Share Price The price of shares in Thai Tap Water Supply Co., Ltd. is fixed at the price of Baht 290 per share, which is mutually agreed upon between both contractual parties and is higher than the costs incurred by the Company (the share value appraised by the external independent financial advisor is in the range of such selling price). 9. Benefits Expected to Be Obtained by the Company The Company shall derive benefits from the join ventures which are experienced and competent in operating concession business, which shows a tendency of appropriate return on investment to be received by the Company. 10. Opinion of the Board of Directors and the Audit Committee The Board of Directors and the Audit Committee are of the view that the above disposition is reasonable and beneficial to the Company, as it shall give rise to value added to the Company and mutual support to each others business with fairness in terms of price and related conditions. The Company hereby certifies that the foregoing information is true and correct in all respects. Signed: (Mr. Plew Trivisvavet) Chief Executive Officer ?? ?? ?? ?? (Translation) Part 1 Page 6 (Translation)