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24 September 2007 Subject Opinions of Independent Financial Advisor concerning the Acquisition of Assets and the Connected Transaction To The Company's Shareholders CH. Karnchang Public Company Limited According to the Board of Directors Meeting of CH. Karnchang Plc. (the "Company" or "CK") No. 6/2007 which was held on 3 September 2007, resolutions were passed to propose to the Extraordinary Meeting of Shareholders No. 1/2007 dated 12 October 2007 to consider and approve the acquisition of assets from CK. Office Tower Co., Ltd. ("CK Office") comprising an office building, a parking building and an empty land (altogether called "assets") in a total amount of Baht 625,000,000 for use as the office condominium in the operations of the Company and its group members. The above transaction is considered a connected transaction. The transaction size, if calculatedpursuant to the Notification of the Stock Exchange of Thailand (the "SET") regarding Disclosure of Information and Procedures of Listed Companies on the Acquisition or Disposal of Assets B.E. 2546 (2003), would represent10.45 % of net tangible assets of the Company according to its consolidated financial statements ended 30 June 2007. With the transaction size higher than 3% of the Company's net tangible assets, such transaction is considered a connected transaction and the Company is required to disclose the transaction to the SET and seek approval for the transaction from its shareholders' meeting with no less than three-fourths of the total votes of the shareholders or their proxies (if any) present at the meeting and having voting rights, excluding shareholders with vested interests. Moreover, the transaction size, if calculated pursuant to the SET Notification regarding Disclosure of Information and Procedures of Listed Companies on Acquisition or Disposition of Assets B.E. 2547 (2004), by the total consideration of the transaction basis, would represent 2.00%. In view of the above, the Board of Directors resolved for the appointment of us, Far East Securities Co.,Ltd., as the Independent Financial Advisor ("Financial Advisor") to give the opinions concerning the price fairness and transaction reasonableness and also to opine to the Audit Committee and/or the shareholders related to the acquisition of assets as well as the connected transaction. We, as the Financial Advisor approved by the Office of the Securities and Exchange Commission (the "SEC") and also independent from the Company, has studied the information related to this transaction including the Board of Directors' resolutions, Information Memorandum concerning the transaction, financial statements and internal accounts (management accounts), list of shareholders, Certificate of Corporation, Memorandum of Association, agreements, financial projections and assumptions and relevant documents, interviews with executives and related persons, as well as survey of the site and the surroundings of the assets, and overview of the industry and other economic factors. Our opinions expressed herein have been based on the assumptions that the information and documents obtained from the Company and CK Office together with other related companies, and the information disclosed to the SET, are true and correct. In this regard, our opinions in connection to the transactions have been prepared and proposed to the Audit Committee and/or the shareholders concerning 1. Reasonableness and benefits of the transactions to the Company, 2. Fairness of the prices and conditions of the transactions, and 3. Whether the shareholders should agree or disagree with the transactions together with supporting reasons. The opinions given are based on the assumptions and information known at present and under the current circumstances. Any future changes in the information and unprecedented incidents arising may have material impacts on the value of the assets. Our opinions can be summarized as follows: Summary of the Financial Advisor's opinions The Company's acquisition of assets comprising an office building (Viriyathavorn Building), a car park building and a vacant land from CK Office, a connected person, at the total price of Baht 625 million will be financed by loan borrowings and cash flows from operations. The objective of the asset acquisition is to use these assets as office and operating site of the Company and its subsidiaries, which are the key tenants representing 88.55% of the rent space currently occupied. The Company and its subsidiaries have planned to rent additional office space in response to their future business expansion. After the Financial Advisor's study of the information and documents related to the acquisition of the assets and calculation of the net present value of the project, with other approaches such as the valuation price by an independent appraiser and book value of the assets as comparative methods, it has been found that the acquisition of office and car park buildings is appropriate as the Company and its subsidiaries are the main users of the assets at present. There are lease and service contracts with common conditions applicable to all thetenants. The assets can generate income from the office lease and car park service. Meantime, the purchase of the vacant land sited next to the parking building is to serve as another car park area to relieve the high volumeof traffic at the parking building at present. Moreover, it can also serve vehicles with the height over 2.10 m. limit set for vehicles now using the car park building. Therefore, the Financial Advisor is of the opinion that theshareholders should approve this transaction at the Extraordinary Meeting of Shareholders No. 1/2007 to be held on 12 October 2007. According to the Information Memorandum on the acquisition of assets and the connected transaction on 3 September 2007, the Company will make payment for these assets in one cash lump sum using loan borrowings and cash flows from operations in a 50:50 proportion. However, based on the consolidated financial statements of the Company as of 30 June 2007, the Company recorded rather high current liabilities. The Financial Advisor thus deems it proper for the Company to consider an appropriate way in using such financial sources for the asset payment in line with its liquidity and capital adequacy at the moment. 1. Characteristics and details of transaction 1.1. Type and size of transaction 1.1.1 Connected transaction The asset acquisition transaction value, if calculated pursuant to the SET Notification, would be 10.45% of the value of net tangible assets of the Company as of 30 June 2007, which is higher than 3%. The transaction is thus considered a connected transaction and the Company is duty-bound to seek approval from its shareholders' meeting with no less than three-fourths of the total votes of the shareholders or their proxies (if any) present at the meeting and having voting rights,excluding shareholders with vested interests. 1.1.2 Acquisition of assets The asset acquisition, if calculated pursuant to the SET Notification, would have the transaction size of 2.00%. 1.2 Details of assets CK wishes to acquire assets (please see attachment) from CK Office the following assets: 1.2.1 Asset group 1 (office building, parking building and the land on which the two buildings are sited) Characteristics of assets : One office building named Viriyathavorn Building, a 23-story building with basement and rooftop floors and a 6-story parking building, located on the land with the title deeds no. 21495, 21496, 24496, 24497, 24499, 24500, 31431, 31432,31433, 31434, 41835, 57992, 138958, 138961 and 140145 in Dindaeng Sub-district (South Bang Sue), Dindaeng District (Bang Sue), Bangkok, covering total areas of 3-3-17.1 rai (The building was registered as office condominium under the name of Viriyathavorn Building with condominium registration number 1/2544. The single certificate of ownership was changed to 27 certificates of condominium ownership (Or. Chor. 2) by virtue of the Condominium Act B.E. 2522 (1979) including 26 certificates of condominium ownership no. 587, 587/1, 587/3-587/26 with total space of 16,978.18 sq.m., including all common assets of the condominium. Land areas : 3 rai 3 ngan 17.1 sq. wah (1,517.1 sq. wah) Period of use : According to the independent appraiser's report, 1) about 10 years for Viriyathavorn Building; and 2) about 12 years for parking building (including construction period), after deduction of accumulated depreciation of the building and construction based on the internal account as of 30 June 2007 of CK Office, with remaining 33 years for use. Maintenance : Good (from the asset survey by the Financial Advisor, the office and parking buildings have been well maintained being appropriate for further utilization, and upon enquiry with the Company's and CK Office's staff, no material improvement or repair is required.) Location of assets : No. 587 Viriyathavorn Building, Sutthisarnvinitchai Road, Dindaeng Sub-district, Dindaeng District, Bangkok. Infrastructure : Well equipped with utilities such as electricity, tap water, and telephone. There is right of way to the use of 3-lane road with asphalt surface of 8 meters wide and 12 meters wide road periphery. There are footpaths on both sides of the road, and electricity and drainage pipes are in place, Owner of land : CK. Office Tower Co., Ltd. Commitment : Under mortgage to TMB Bank Plc., to be released from the bank forthwith after the payment for the assets. Price appraiser : Year Appraisal Co., Ltd. made asset valuation on 3 August 2007, with the report dated 10 August 2007 submitted to the Company. Appraised price : According to the valuation of Year Appraisal Co., Ltd. using the income approach with cross-checking by the market comparison approach, the valuated price is Baht 666,500,000. Appraisal value by : Baht 609,153,559 (calculated by basing on the land Land Department appraisal price used as the official price in the transfer and register of right on land and entering into legal documents as presented in the asset valuation report dated 10 August 2007 of Year Appraisal) According to the lease and service contracts of Viriyathavorn Building (from the examination of all the contracts for the office space under actual rent as of 30 June 2007, which is in line with the rental and service income appeared in the internal account of CK Office), it has been found that the Company and its subsidiaries have rented the office space representing 73.79% of the total office space for rent of 15,740.38 sq.m. Another 9.58% space has been leased to outside parties not related to the Company. Thus, there remains unoccupied space of only 16.63% of the total office space for rent. The terms and conditions of the contracts with all the lessees are the same, except for the rent period. The contractual period for the Company and its group is three years (most of the contracts are going to expire in 2008) while that for outside parties is one year. The lessees' right to parking space is, as clearly stated in the contract, allocated in accordance with the rented space. For example, a lessee with rented space of 1,161.25 sq.m. is entitled to parking space for 20 vehicles. The Financial Advisor has summarized the lease and service contracts between CK Office and the Company and its group members as well as those with outside parties as below: Contract Contract expiration Rental per Service Tenants commencement sq.m. charge per (Baht) sq.m.(Baht) CH.Karnchang (CK) 1 Aug 05-11 Jul 07 23 Jan 07-31 Aug 09 120-40 180-450 CK Group members 1.Export Import 1 Jun 05 31 May 08 128 192 2.Construction Material Supply 1 Oct 05 31 Sept 08 128 192 3.Bang Pa-in Land 1 Nov 05 31 Oct 08 128 192 4.Tokyu Construction1 Mar 06 28 Feb 09 120 180 5.Bilfinger Berger (Thai) 1 Feb 06 31 Jan 09 120 180 6.CH. Karnchange Tokyu Construction 1 Mar 06 28 Feb 09 120 180 7.BMCL Network 1 Jun 05 31 May 08 128 192 8.JV BBCT 1 Jan 07 31 Dec 07 - 350 9.Southeast Asia Energy 1 Sept 04 31 Sept 07 140 210 10.JV CKNNL 1 Apr 07 31 Mar 08 - 350 11.BJT Water 1 Sept 06 31 Aug 09 128 192 12.JV BBCD 1 Jan 07 31 Dec 07 - 350 13.Bilfinger Berger AG 1 Jan 04 31 Dec 06 120 180 14.Metro Mall Development 10 Feb 07 9 Feb 10 128 192 15.Triads Networks 1 Jun 04 31 May 07 120 180 Outside parties 1 Aug 06-1 Mar 07 23 Aug 07-31 Jul 09 120-128 180-450 Notes : 1. Lease and service contracts with the Company are in 7 contracts, with different commencement and expiry dates. 2. Lease contracts with the Company and its group members carry 3-year term, and the lessee shall inform the lessor at least 90 days before the expiry date. 3. Lease and service contracts with outside parties are in 5 contracts, with different commencement and expiry dates. 1.2.2 Asset group 2 (empty land) Characteristics of asset : 1.The land under title deed no. 21494 Samsen Nai Sub-district (South Bang Sue), Dusit District (Bang Sue), Bangkok, covering an area of 62 sq. wah. 2.The land under title deed no. 61932 Samsen Nai Sub-district (South Bang Sue), Dusit District (Bang Sue), Bangkok, covering an area of 39 sq. wah. Areas (2 title deeds) :101 sq. wah (land fill and improvement already made to the same level as the road in front of the land) Location of asset : Next to Soi Inthamara 37, Sutthisarnvinitchai Road, Dindaeng Sub-district, Dindaeng District, Bangkok (in the same area as the car park building). Infrastructure : Well equipped with utilities such as electricity, tap water, and telephone. Land in rectangular shape, with around 31X31 meters in width and depth. Commitment :Under mortgage to TMB Bank Plc., to be released from the bank forthwith after the payment for the assets. Owner of land : CK. Office Tower Co., Ltd. ("CK Office") Price appraiser : Year Appraisal Co., Ltd. made asset valuation on 3 August 2007, with the report dated 10 August 2007 submitted to the Company. Appraised price : According to the valuation by Year Appraisal Co., Ltd. using the market comparison approach, the appraised price is Baht 8,080,000. Appraisal value by Land Department : Baht 4,444,000 (calculated by basing on the land appraisal price used as the official price in the transfer and register of right on land and entering into legal documents as presented in the asset valuation report dated 10 August 2007 of Year Appraisal) 1.2 Value of consideration The Company will make payment to CK Office for the assets in the total amount of Baht 625,000,000 by cash in one lump sum after the approval has been given at the shareholders' meeting. 1.3 Connected persons and their related persons 1.3.1 Connected persons and their related persons - Trivisvavet group is the major shareholder of 1. CK (3.94%) 2. Mahasiri Siam Co., Ltd. (91.71%) 3.CK. Office Tower Co., Ltd. (75.00%) 4. CH. Karnchang Holding Co., Ltd. (87.50%) and 5. Bang Pa-in Land Co., Ltd. (41.67%). - Mahasiri Siam Co., Ltd. is a shareholder of 1. CK (20.32%) 2. CH. Karnchang Holding Co., Ltd.(25.00%) 3. CK. Office Tower Co., Ltd. (25.00%) and 5. Bang Pa-in Land Co., Ltd. (25.00%). - CH. Karnchang Holding Co., Ltd. has 10.49% shareholding in CK. - CK. Office Tower Co., Ltd. is a shareholder of 1. CK (5.19%) and 2. Bang Pa-in Land Co., Ltd.(25.00%). - Bang Pa-in Land Co., Ltd. has 1.31% shareholding in CK. - Mr. Plew Trivisvavet is a director and shareholder of the Company, having shareholding of 1.46% of registered and paid-up capital and is a director and shareholder of CK. Office Tower Co., Ltd.,having shareholding of 12.50% of registered and paid-up capital. - Mr. Tavorn Trivisvavet is a shareholder of the Company, having shareholding of 1.47% of registered and paid-up capital and is an elder brother of Mr. Plew Trivisvavet. He is also a shareholder of CK. Office Tower Co., Ltd. with shareholding of 12.50% of registered and paid-up capital. - Mr. Prasert Trivisvavet is a shareholder of the Company, having shareholding of 0.80% of registered and paid-up capital and is an elder brother of Mr. Plew Trivisvavet. He is also a shareholder of CK. Office Tower Co., Ltd. with shareholding of 12.50% of registered and paid-up capital. - Mr. Thep Trivisvavet is a shareholder of CK. Office Tower Co., Ltd. having shareholding of 12.50% of registered and paid-up capital and is an elder brother of Mr. Plew Trivisvavet. - Mr. Yim Trivisvavet is a director and shareholder of CK. Office Tower Co., Ltd. having shareholding of 12.50% of registered and paid-up capital and is an elder brother of Mr. Plew Trivisvavet. - Mr. Kamthorn Trivisvavet owns 1,000 shares of the Company and is a younger brother of Mr. Plew Trivisvavet. He is also a director and shareholder of CK. Office Tower Co., Ltd. having shareholding of 12.50% of registered and paid-up capital. - Mr. Prasert Thongkiitkul owns 26,200 shares of the Company and is a director of CK. Office Tower Co., Ltd. Trivisvavet group 91.71% 87.50% 75.00% 41.67% 25.00% 25.00% 25.00% Mahasiri Siam CH. Karnchang CK. Office 25.00% Bang Pa-in Holding Tower Land 20.32% 10.49% 5.19% 1.31% 3.94% CH. Karnchang 1.3.2 Common directorship Company Related company CH. CK. Office Mahasiri CH. Bang Pa-in Director Karnchang Tower Siam Karnchang Land Holding 1.Mr.Plew Trivisvavet // / / / / 2.Mr.Prasert Trivisvavet - / / / / 3.Mr.Thep Trivisvavet - / / / / 4.Mr.Yim Trivisvavet - / / / / 5.Mr.Kamthorn Trivisvavet - / / / / 6.Mr.Prasert Thongkiitkul - / - - - 2. Profiles of CH. Karnchang Plc. and CK Office Tower Co., Ltd. 2.1 Background CK was incorporated as a limited company on 27 November 1972 with a start-up capital of Baht 1.40 million to engage in a general construction business. Initially, the Company provided construction services of buildings and general civil works for main customers from the government sector such as the Royal Thai Army and the Royal Thai Air Force. Being aware of the necessity to broaden the scope of business to ensure growth in the long run, CK in 1981 entered into a joint venture with Tokyu Construction Co., Ltd., one of the top ten contractors in Japan. By doing so, the Company has benefited from technology transfer in construction and management know-how, as well as partnership with a competent strategic alliance. CK has consistently undertaken business expansion and capital increase. The Company was converted into a public company on 10 October 1994 and listed on the SET on 3 August 1995. Its current registered capital is Baht 1,450.00 million, of which Baht 1,446.01 million is paid-up. 2.2 Nature of business operations 2.2.1 The Company's services CK is a contractor, mainly serving the government sector projects, whether large-scale infrastructures or buildings. It has also engaged in joint ventures in concession businesses such as Pathum Thani Tap Water Co., Ltd. ("PTW")'s water production and distribution project, Samut Sakhon - Nakhon Pathom Tap Water Co., Ltd.'s water production and distribution project, subway management project, and Nam Ngum 2 hydroelectric power plant designing, development, construction and operation project, each with a concession period of 25-30 years. Construction service revenues earned by CK from the government and the private sectors are in a proportion of 70:30. The Company's businesses are divided into three categories: production, construction and concession. Members of the CK group, comprising subsidiary, joint venture and associated companies, are classified by the nature of their business. CK currently has seven subsidiaries,13 joint venture companies, four associated companies, and one related company. 2.2.2 Competition The National Economic and Social Development Board have forecast Thai GDP growth for 2007 at a slower rate of 4.00% - 5.00% in line with the (more)