SET Announcements

(Translation) Information Memorandum on Disposition of Shares in Thai Tap Water Supply Co., Ltd. The Board of Directors Meeting No. 1/2006 of CH. Karnchang Public Company Limited, held on February 27, 2006, 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 Board of Directors Meeting for execution of the transactions, whereby the Share Purchase Agreement will be executed within 30 days from the date on which the Board of Directors passes the resolution. 2. Contractual Parties 2.1 Seller : CH. Karnchang Public Company Limited Purchaser : Persons and/or legal entities which have no connection with the Company, and/or should they be connected persons with the Company, the Company shall comply with the rules of the Stock Exchange of Thailand. In this regard, the Company shall notify names of purchasers immediately when the Company has signed the Share Purchase Agreement, and the Company shall then make clarification through the system of the Stock Exchange of Thailand. Amount of Shares : 14,676,150 shares or 45.16 percent of the registered capital Transaction Value : At the minimum price of not less than Baht 290 per share or in the total transaction value of not less than Baht 4,256,083,500, whereby it is currently in the process of negotiation. The Company expects that the selling price will be declared immediately upon the Company's execution of the Share Purchase Agreement, which shall be executed within 30 days from the date on which the Board of Directors passes the resolution, and the Company shall also make clarification through the system of the Stock Exchange of Thailand. Relationship : Parties having no connection with the Company and/or should they be connected persons with the Company, the Company shall comply with the rules of the Stock Exchange of Thailand. 3. General Characteristics of the Transaction The Company intends to sell 14,676,150 shares in Thai Tap Water Supply Co., Ltd. to any persons and/or legal entities which have no connection with the Company, at the price of not less than Baht 290 per share, and in the total transaction value of not less than Baht 4,256,083,500, whereby it is currently in the process of negotiation. The Company expects that the selling price will be declared immediately upon the Company's execution of the Share Purchase Agreement, which shall be executed within no later than 30 days from the date on which the Board of Directors passes the resolution, and the Company shall also make clarification through the system of the Stock Exchange of Thailand. The volume of the disposition of such shares, if calculated based on net tangible assets, in accordance with the Stock Exchange of Thailand Notification, Re: Rules, Procedures and Disclosure on Disposition of Assets of Listed Companies, shall represent 32.45 percent. Upon combination of disposition transactions during the past 6 months, based on net tangible assets, the total volume of the transaction shall represent 36.30 percent. In this regard, the Company shall be required to report and disclose such transaction to the Stock Exchange of Thailand, and give written notice to shareholders within 21 days from the date on which such transaction is disclosed to the Stock Exchange of Thailand. 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 Province Nature of Business : Production and distribution of tap water to the Provincial Waterworks Authority in Nakhon Pathom Province and Samut Sakhon 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 held shares representing 15 percent of the company's 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 Company's 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 CH. Karnchang Public Company Limited's shareholding in such company to increase from 49.99 percent to 99.99 percent of the company's 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 of not exceeding Baht 240 per share as agreed to purchase from the existing shareholders (Thames Water International Service Ltd., Thames Water International (Thailand) Ltd. and Thames Water Public Company Limited). Subsequently in October 2005, CH. Karnchang Public Company Limited was granted approval by the Board of Directors Meeting No. 6/2005 to sell 1,450,000 ordinary shares (representing 4.83 percent) in Thai Tap Water Supply Co., Ltd. to Bangkok Expressway Public Company Limited, 750,000 shares (representing 2.5 percent) to Bangkok Bank Public Company Limited, and 750,000 shares (representing 2.5 percent) to TMB Bank Public Company Limited, at the price of Baht 290 per share. The sale of such shares to Bangkok Expressway Public Company Limited was also approved by the Extraordinary General Meeting of Shareholders . 2/2005. As a result, CH. Karnchang Public Company Limited at such time held shares representing 90.16 percent of the company's registered capital. Thereafter, Thai Tap Water Supply Co., Ltd. was granted approval by the Extraordinary General Meetings of Shareholders No. 1/2006 of Thai Tap Water Supply Co., Ltd., held on January 10, 2006, and No. 2/2006, held on February 1, 2006, to increase its registered capital from Baht 3,000,000,000, divided into 30,000,000 shares, to Baht 3,250,000,000, divided into 32,500,000 shares, by issuing 2,500,000 ordinary shares for capital increase, at the par value of Baht 100 per share, at the offering price of Baht 290 per share, whereby the shares were offered to the existing shareholders in proportion to their shareholding ratio. Should CH. Karnchang Public Company Limited be granted approval by the Board of Directors Meeting No. 1/2006 on February 27, 2006, for sale of such ordinary shares in Thai Tap Water Supply Co., Ltd., CH. Karnchang Public Company Limited shall hold shares representing 45.18 percent of the company,s registered capital. B. Board of Directors of Thai Tap Water Supply Co., Ltd. The Board of Directors of Thai Tap Water Supply Co., Ltd., as at December 31, 2005, 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 December 31, 2005, the registered and paid-up capital of Thai Tap Water Supply Co., Ltd. amounted 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 Limited 227,049,994 90.166646 2.Bangkok Expressway Public Company Limited 1,450,000 4.833333 3.Bangkok Bank Public Company Limited 750,000 2.50 4.TMB Bank Public Company Limited 750,000 2.50 5.Mr. Sombat Kitjalaksana 1 0.000003 6.Mr. Narong Sangsuriya 1 0.000003 7.Mr. Prasert Marittanaporn 1 0.000003 8.Mr. Sompodh Sripoom 1 0.000003 9.Mr. Samai Paiboon 1 0.000003 10.Miss Punsakul Punphom 1 0.000003 Total 30,000,000 100.00 Remark: 1) Thai Tap Water Supply Co., Ltd. is currently in the process of amendment of its registered capital from Baht 3,000,000,000 (30,000,000 shares) to Baht 3,250,000,000 (32,500,000 shares). 2) Should the company have sold shares in accordance with the resolution of the Board of Directors, CH. Karnchang Public Company Limited would hold shares representing 45.18 percent. D. 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, 2003-2005, are as follows: Financial Statements Audited by Ernst & Young Office Limited (Unit: Thousand Baht) (Auditor: Ms. Siraporn Ouaanunkun) 2003 2004 2005 Current assets 99,037 459,810 820,443 Fixed assets 9,036,582 9,753,937 9,540,521 Total assets 9,157,407 10,213,747 10,360,964 Current liabilities 230,200 235,967 293,147 Long-term liabilities 6,430,000 6,860,000 6,720,000 Total liabilities 6,660,200 7,095,967 7,013,147 Registered and paid-up capital 2,812,000 3,000,000 3,000,000 Shareholder's equity 2,497,207 3,117,780 3,347,817 Total income 4,635 889,910 1,360,248 Cost of sales - 274,063 628,130 Operating expenses 31,579 27,093 52,186 Interest expenses - 151,181 344,895 Net earnings (loss) (26,944) 432,573 335,037 Retained earnings (loss) (314,793) 117,780 347,817 Net earnings (loss) per share (Baht) (1.15) 14.56 11.17 Number of shares (million) 28.12 29.71 30.00 Book value per share (Baht) 84.66 88.81 111.59 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 shares in Thai Tap Water Supply Co., Ltd. to other persons and/or legal entities which have no connection with the Company (or should they be connected persons with the Company, the Company shall comply with the rules of the Stock Exchange of Thailand), totaling 14,676,150 shares, representing 45.16 percent of the company's registered capital, shall be in the amount of not less than Baht 4,256,083,500, whereby it is currently in the process of negotiation. The Company expects that the selling price will be declared immediately upon the Company's execution of the Share Purchase Agreement, which shall be executed within not later than 30 days from the date on which the Board of Directors passes the resolution, and the Company shall also make clarification through the system of the Stock Exchange of Thailand. 6. Value of Disposed Assets The assets disposed by the Company are 14,676,150 ordinary shares in Thai Tap Water Supply Co., Ltd., at an audited book value of Baht 111.59 per share as at December 31, 2005. Therefore, the total value of the disposed assets amounts to Baht 1,637,711,578.50. 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 not less than Baht 290 per share, which is in accordance with the price appraised by Advisory Plus Co., Ltd., the external appraiser, whereby it is currently in the process of negotiation. The Company expects that the selling price will be declared immediately upon the Company's execution of the Share Purchase Agreement, which shall be executed within not later than 30 days from the date on which the Board of Directors passes the resolution, and the Company shall also make clarification through the system of the Stock Exchange of Thailand. Such price is mutually agreed upon between both contractual parties and is higher than the costs of purchase incurred by the Company. The Company is of the view that such price is reasonable. 9. Benefits Expected to Be Obtained by the Company The Company shall derive benefits from the joint investors which have experience and funds to enhance the capacity in operating the company's concession business, including the ability to make additional investment, so as to show 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. The companies participating in investment have potential which would help strengthen the company, as a company experienced in concession business operation, and further enhance its capability to expand the investment in the future. Furthermore, such transaction is fair 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 ?? ?? ?? ??