SET Announcements

(Translation) No. CK-08-0000-LAW-L-0082 July 2, 2008 Re: Long-Term Loan to Bangkok Metro Public Company Limited Attn.: President of the Stock Exchange of Thailand Reference is made to the interim financial statements for the three-month period ended March 31,2008 of CH. Karnchang Public Company Limited, "CK", indicating a transaction of long-term loan to and accrued interest receivable from Bangkok Metro Public Company Limited, "BMCL", as at January 1, 2008,amounting to Baht 1,003.09 Million and Baht 141.76 Million, respectively, in which Note 2 indicated that during the first quarter of the year 2008, CK extended an additional loan of Baht 100 Million to BMCL, thereby increasing the principal to Baht 1,103.09 Million and the accrued interest receivable to Baht 160.85 Million accordingly. CK hereby clarifies the details and principle of the agreement relating to provision of financial support to BMCL in accordance with the Sponsors Support Agreement, the "SSA", as follows: Execution Date: February 18, 2002 Contractual Parties: 1) CH. Karnchang Public Company Limited; 2) Bangkok Metro Public Company Limited; 3) A group of financial institutions providing financial support, comprising Krung Thai Bank Public Company Limited, TMB Bank Public Company Limited, Bank of Ayudhya Public Company Limited, and Siam City Bank Public Company Limited; 4) TMB Bank Public Company Limited in its capacity as Security Agent. Contractual Terms: The Company shall extend financial support to BMCL: 1) during the operation under the agreement to procure the M&E Equipment, in the amount of not exceeding Baht 1,000 Million; 2) after BMCL's commencement of the Revenue Service, in the amount of not exceeding Baht 2,000 Million, provided that the remaining amount from the financial support during the operation under the agreement to procure the M&E Equipment shall also be used as financial support after commencement of the Revenue Service; 3) from the effective date of the Agreement as at April 2, 2004, the Company would issue a Standby Letter of Credit (SBLC) in the amount of Baht 700 Million to the group of financial institutions providing financial support; 4) should BMCL hold an initial public offering of shares, and BMCL have a paid-up capital of exceeding Baht 7,050 Million, and such excess capital be more than Baht 2,000 Million, BMCL may reduce the balance under the SBLC. Due Date: BMCL may repay the principal and interest when BMCL has completely repaid the loan under the Onshore Facilities Agreement to the group of financial institutions providing financial support by the year 2017 or when BMCL has any excess cash. Nature of the Agreement: CK would extend financial support to BMCL in an aggregate amount of Baht 3,000 Million, comprising the loan of Baht 1,000 Million to BMCL to procure the M&E Equipment, and another Baht 2,000 Million to BMCL after commencement of the metro service, excluding the amount under the SBLC. CK's financial support to BMCL up to the end of the first quarter of the year 2008 represented the principal of Baht 1,103.09 Million and interest of Baht 160.85 Million. Interest Rate:Relative to MLR plus 0.5 percent per annum. Execution of the SSA: In the year 1998, CK established BMCL, in which CK was the major shareholder (CK held 79.94 percent of shares in BMCL). In the year 2000, BMCL was granted a concession from the Mass Rapid Transit Authority of Thailand (MRTA) to operate the metro concession project, whereby BMCL participated in the bidding for the concession and was granted such concession for the project. Therefore, it was necessary for CK to supervise the project, particularly the sources of financing for the project in order to ensure the continued operation of such concession project. In this regard, the key factor to being a concessionaire for such project is the sources of financing for operation of the project. CK in its capacity as the project leader was required to undertake such arrangements for BMCL to continue operating such concession project, which is considered the first subway concession project of Thailand. In providing the sources of financing for operation of the project, the financial institutions which would extend support at that time considered granting their support in reliance on CK's potential. In addition, to assure the lenders, the financial institutions then required CK as the concession project leader to jointly commit to extend its financial support to BMCL in case that BMCL would need financial support in addition to the loan. However, approval for the loan by the financial institutions must be based on the project feasibility for the financial institutions to ensure that such project would be successful. In this regard, the financial institutions requested CK to sign the SSA, which was proposed by CK to the Executive Board Meeting No. 12/2001 on December 17, 2001 for approval of such Agreement in support of the approval for the loan for the concession project by the financial institutions; and thereafter to the Board of Directors Meeting No. 1/2002 on February 28, 2002 for acknowledgment. Moreover, based on BMCL's projections under the investment plan of the government at that time, the financial support of the financial institutions was sufficient for the business operation and it was not necessary for the shareholders to extend any financial support under the SSA. However, because of change in the investment plan of the government, which considerably delayed the extension of the metro, the projections could not be met, and as a result, it was necessary for BMCL to request financial support under the SSA. Amendments to the SSA Further to CK's effort to seek a strategic partner jointly support BMCL's project by inviting Natural Park Public Company Limited, "N-Park", to join as a shareholder (24.71 percent), the SSA was amended on April 2, 2004 for N-Park to jointly sign the SSA to make financial support available to the project. Therefore, the parties to the SSA consisted of CK, N-Park and BMCL. CK proposed to the Executive Board Meeting No.3/2004 on March 8, 2004 for consideration of the amendment to such Agreement. The Executive Board expected that such undertaking would lessen CK's commitment under the SSA. However, after the execution of such Agreement, BMCL was notified by N-Park that N-Park was facing some problem, which prevented N-Park from providing financial support under the SSA despite BMCL's attempt, per advice by CK, to demand N-Park to comply with the SSA on several occasions. Subsequently, N-Park put an effort to approach a strategic partner to jointly support BMCL's project in its stead by contacting Hicrete Products & Technology Co., Ltd., "Hicrete", to join as a shareholder (6.68 percent), resulting in two amendments to the SSA, namely, on February 27, 2008 and on March 28, 2008 (due to Hicrete's purchase of additional shares in BMCL), for Hicrete to jointly sign the SSA to provide financial support to BMCL. Therefore, the parties to the SSA then consisted of CK, N-Park, Hicrete and BMCL. CK proposed to the Executive Board Meetings No. 2/2008 on February 12, 2008 and No. 3/2008 on March 20, 2008, respectively, for consideration and approval of the amendments to such Agreement. The Executive Board expected that such undertaking would accommodate N-Park's commitment under the SSA. However,after the execution of such Agreement, BMCL was notified by Hicrete that Hicrete merely intended to be a shareholder of BMCL and was unable to provide financial support under the SSA even though BMCL, peradvice by CK, tried to demand Hicrete to comply with the SSA. Regarding the financial support under the SSA, most of the shareholders are unable to provide support under the Agreement made with BMCL, especially N-Park and Hicrete, which are unable to comply with such Agreement. However, CK as the concession project leader is therefore required to provide financial support for the project to proceed further. In this regard, CK has notified BMCL to demand N-Park and Hicrete to comply with the Agreement. However, given that it is necessary for BMCL to operate and administer the project in accordance with the concession contract and due to the fact that CK is the leader and that BMCL has business potentials in respect of the government's extension projects which are continuously announced, should CK not provide financial support to BMCL, BMCL may lose its value and opportunity. Moreover, should the government's extension projects proceed as planned, the administration as well as revenue of BMCL should meet the projections in respect of the loan, which would release CK from such commitment under the SSA or CK might have a relatively small portion of such commitment. Furthermore, once the government's extension projects continue, the commitment under the SSA would be substantially reduced and it is expected that CK shall then be completely released from such commitment. Provision of Financial Support under the SSA CK commenced to provide financial support to BMCL under the SSA in the year 2005 in the principal amount of Baht 1,403.09 Million and from time to time extended additional loan as necessary, as disclosed in the financial statements as follows: Year of Transaction Total Principal Total Interest (Million Baht) (Million Baht ) December 31, 2005 1,403.09 35.75 September 24, 2006 1,915.00 128.15 September 25, 2006 1,003.09 39.17 December 31, 2006 1,003.09 62.06 March 31, 20081 1,103.09 160.85 May 31, 20082 1,203.09 174.97 1 Remarks: CK proposed to the Executive Board Meeting No. 3/2008 on March 20, 2008 for consideration and approval, whereby BMCL made a drawdown of such amount on March 31, 2008. 2 CK proposed to the Executive Board Meeting No. 5/2008 on May 15, 2008 for consideration and approval, whereby BMCL made a drawdown of such amount on May 29, 2008. The remaining committed amount under the SSA which can be requested by BMCL is Baht 1,796.91 Million. In this regard, such loan amount as provided by CK over the past period represents the total principal of approximately Baht 1,915 Million. In the year 2006, BMCL repaid the loan to CK out of certain portions of the proceeds derived from the initial public offering of shares, and as a result, the remaining principal amounts to Baht 1,003.09 Million without any further drawdown. Until the first quarter of the year 2008, BMCL notified of its necessity and requested additional financial support from CK in the amount of Baht 100 Million. CK proposed to its Executive Board for consideration and approval as disclosed in CK's financial statements. Moreover, in May 2008, BMCL further notified of its necessity and requested additional financial support from CK in the amount of Baht 100 Million. CK proposed to its Executive Board for consideration and approval,and already extended such loan to BMCL. Please be informed accordingly. Very truly yours, =Signature= (Dr. Anukool Tuntimas) Executive Vice President Human Resource and General Administration 4 5