SET Announcements

(Translation) No. CK-08-0000-PO-L-0046 March 26, 2008 Re: Clarification on Additional Information of Revisions of the Conditions of Repayment of Loans for Joint Ventures Attn.: President of the Stock Exchange of Thailand Reference: Financial Statements 2007 According to the reference, CH. Karnchang Public Company Limited submitted the financial statements for the year 2007 to the Stock Exchange of Thailand on February 29, 2008. The Stock Exchange then required the Company to clarify additional information to ensure investors' understanding of the revisions of the conditions of repayment of loans for two common businesses, i.e., CKAE Consortium (CKAE) and Joint Venture CKET (CKET). The Company hereby clarifies such additional information as follows: 1. Description of Transactions of Loans to Both Joint Ventures 1.1 The Company entered into such transaction by providing a loan to CKAE for investment in construction of the project for development and enhancement of the Bangkok Airport. The Company's shareholding in CKAE represents 98 percent while the other companies hold an aggregate of 2 percent. Such financial support in the form of loan is based on the Company's shareholding percentage in the Consortium and the Company's source of funds for such transaction is derived from the Company's operation.Such financial support in the form of loan is granted by the Company since June 5, 2001 in an amount of not exceeding Baht 686 Million (based on the shareholding percentage in the Consortium) out of the total amount of not exceeding Baht 700 Million which CKAE required of the Company and the other companies. 1.2 The Company entered into such transaction by providing a loan to CKET for the project for management of the design, supply, installation, testing of the M&E Equipment as well as the operation of the metro. The Company's shareholding in CKET represents 80 percent while Expert Transport Co., Ltd. (ET) (a subsidiary in which 90% of shares are held by the group of major shareholders) holds the remaining 20 percent. Such financial support in the form of loan is based on the Company's shareholding percentage in the Joint Venture and the Company's source of funds for such transaction is derived from the Company's operation. Such financial support in the form of loan is granted by the Company since February 27,2002 in an amount of not exceeding Baht 1,320 Million (based on the shareholding percentage in the Joint Venture) out of the total amount of not exceeding Baht 1,650 Million which CKET required of the Company and ET. 2. Reason and Necessity of the Company's Extension of Time and Revisions of the Conditions of Repayment of Loans to Both Joint Ventures 2.1 It is the Company's reason and necessity to extend the time and revise the conditions of repayment of the loan for CKAE because CKAE notified the requirement of working capital to accelerate the construction of the project for development and enhancement of the Bangkok Airport, with a project value of Baht 3,877,661,810, and thus requested the financial support from the shareholders as hereinabove described. This financial support was in addition to the credit facilities borrowed by CKAE from financial institutions. When CKAE completed the construction, CKAE would be required to first repay the credit facilities in full to the lending financial institutions for such project prior to utilizing the remaining funds from its operation to repay the loan to the shareholders. However, CKAE provided loans to subcontractors out of the credit facilities borrowed by CKAE from the financial institutions. Such subcontractors, namely, Best Plan Technology Co., Ltd. (BPT) and Modern Construction Material Co., Ltd. (MCM) (as the companies borrowing funds from CKAE), received such loans to accelerate the construction, however, BPT and MCM could not complete the construction in accordance with the contracts. As a result, BPT and MCM thus became debtors in respect of such loans with CKAE, and CKAE was thus unable to repay the loans owed to the shareholders. Subsequently, BPT and MCM repaid the principals and interest in the total amount of Baht 572,679,979 (in proportion) to CKAE, with the outstanding balance of Baht 221,903,456 (in proportion) as at December 31, 2007. Furthermore, during the year 2007, CKAE repaid the principal and interest in the total amount of Baht 583,535,225 to the Company, with the outstanding balance of Baht 140,968,197 as at December 31, 2007, which was thus changed from a short-term debt to a long-term debt due for repayment on March 31, 2009. Considering the debt serviceability in the year 2007, the Company believes that CKAE shall be able to repay the loan and interest to the Company within the scheduled time. Furthermore, in granting such loan, the Company also increases the interest rate by 1.75 percent per annum on the loan from the borrowing date until the date the repayment is made in full, which in no way causes any loss of benefits to the Company from granting such loan. 2.2 It is the Company's reason and necessity to extend the time and revise the conditions of repayment of the loan for CKET because CKET was engaged by Bangkok Metro Public Company Limited to control and manage the construction of the metro as well as the project maintenance administration, with a contract value of Baht 2,181.7 Million. CKET sent letters requesting the financial support from the shareholders in an amount of not exceeding Baht 1,650 Million, which was in addition to the credit facilities borrowed by CKET from financial institutions. CKET would be required to first repay the credit facilities in full to the lending financial institutions for such project prior to utilizing the remaining funds from its operation to repay the loan to the shareholders. However, CKET provided advance payments for project commencement to Rayong Real Estate Co., Ltd. (RY) and Private Inter Construction Co., Ltd. (PIC) during such time when RY was pending the consideration and approval of the credit facilities from financial institutions for construction in the project for land development for golf course, resort and golf club and development of Premium Grade real estate for sale with buildings. As a result, RY furnished a security in the form of land and buildings as collateral for such loan. Moreover, the Company had a project to carry out construction of the foregoing large-sized golf course with infrastructure for RY, which is a borrower of funds from CKET, and RY furnished a security to the financial institutions providing credit facilities to the Company at as high value as Baht 1,675 Million. However, as RY and PIC were affected by the economic slowdown in the year 2007 which prevented the real estate projects from proceeding according to plan, the repayment of such debts was thus delayed. It was thus necessary for CKET to consider granting an extension of time for repayment of the loans to RY and PIC, and as a result, CKET became unable to repay the loans to its shareholders. Later, RY and PIC (as the companies borrowing funds from CKET) repaid the loans in the total amount of Baht 219,791,241 (in proportion) to CKET, with the outstanding balance of Baht 1,263,543,477 (in proportion) as at December 31,2007. During the year 2007, CKET repaid the principal and interest in the total amount of Baht 273,484,926,with the outstanding balance of Baht 1,115,972,672 as at December 31, 2007, which was thus changed from a short-term debt to a long-term debt due for repayment on September 30, 2009. Moreover, CKET has also increased the interest rate which would enable the Company to derive 1 percent additional interest on the loan from the borrowing date until the date the repayment is made in full. In this connection, the Company expects that RY and CKET shall be able to pay the debt to the Company within the agreed schedule, based on such security which has the value sufficient to cover the loan. 3. In relation to the extension of time for repayment of the loans granted to CKAE and CKET, it is necessary for the Company to extend the repayment schedule to be consistent with the extension of time for repayment of the loans granted by CKAE and CKET to BPT, MCM, RY and PIC, due to the fact that at present,the accounts receivable of the said four companies are the main sources of funds for CKAE and CKET to repay the loans to the shareholders, as already described in Clauses 2.1 and 2.2 above. The Company shall report the development of such repayment of the loans and interest from CKAE and CKET through the system of the Stock Exchange of Thailand, with the submission of the financial statements commencing from the quarter 1/2008 onwards until the Company has received full repayment of the loans and interest. Please be informed accordingly. Very truly yours, (Mr. Plew Trivisvavet) Chief Executive Officer