Please be informed accordingly. Sincerely yours, (Mr. Apisit Jirathalhakant) Company Secretary

Transcription

1 Ref: No. CS.030/2016 May 31, 2016 Subject: The Acquisition of Assets of Power Solution Technologies Public Company Limited To: Enclosed Director and Manager The Stock Exchange of Thailand 1. Information Memorandum of the Acquisition of Asset of the Company According to Power Solution Technologies Public Company Limited ( the Company ) has the policy to expand business and invest in power plant of renewable energy. Therefore, the Board of Directors Meeting of the Company No.4/2016 held on May 31, 2016, resolved to approve that PST Energy Company Limited ( PSTE ), its subsidiary company 100%, (a) invested in shares capital of Well Korat Energy Company Limited ( Well Korat ) 12,600,000 shares or Baht million from Newman Green Company Limited ( Newman Green ) and 2,800,000 shares or Baht million from Ratchada Power Company Limited ( Ratchada ). This is totaling 15,400,000 shares or approximately Baht million which has proportion percent of the share capital of Well Korat. Newman green and Ratchada have no relation to the company. By entering into the said transaction, Well Korat shall become a subsidiary of the Company; and (b) repayment its loan of Well Korat as approximately amount of Baht 200 million to the sellers. However, the total investment value of the project shall not exceed Baht 350 million. Well Korat Energy Company Limited ( Well Korat ) owns the ownership of assets associated with the production and distribution of electricity from biomass energy 1 factory at Buriram Province which has the power purchase agreement with the Provincial Electricity Authority (PEA) in full capacity of 8.0 Megawatt. All of the above, it is considered as acquisition of assets, pursuant to the Notification of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E.2004 (the Notification of the Acquisition and Disposition), and the Notification of the Capital Market Supervisory Board stated in Thor Chor. 20/2008 Re: Rules on the Significant Acquisition of Disposition of Assets, and other related notifications ( Significant on Acquisition of Assets Rules ) and the maximum calculated net value of consideration is higher than 15% but lower than 50%. Therefore, the Company has duty to disclose the Information Memorandum to the Stock Exchange of Thailand (SET) and to circulate the Information Memorandum to its shareholders within 21 days after the date of the disclosure to the SET. Details of the mentioned transaction are enclosed in the APPENDIX 1: Information Memorandum for the Acquisition of Assets of Power Solution Technologies Public Company Limited. Please be informed accordingly Sincerely yours, (Mr. Apisit Jirathalhakant) Company Secretary

2 Information Memorandum Regarding the Acquisition of Assets of Power Solution Technologies Public Company Limited APPENDIX 1 The meeting of the Board of Directors No. 4/2016 of Power Solution Technologies Public Company Limited (the Company ) on 31 May 2016 resolved to approve that its subsidiary company ( PSTE ) invest in additional concerning the alternative energy industry with the following details: Considered and approved that its subsidiary company: (a) purchases issued shares in Well Korat Energy Company Limited ( Well Korat ), an operator of biomass power plant using wood scraps as a renewable energy source with its production capacity of 9.9 megawatts (MW) and has entered into a power purchase agreement with the Provincial Electricity Authority (PEA) with its highest production capacity of 8 megawatts (MW) of 12,600,000 shares from Newman Green Company Limited ( Newman Green ) and 2,800,000 shares from Ratchada Company Limited ( Ratchada ) as totalling 15,400,000 shares at par value Baht 10 per share which has proportion 55% of total paid-up shares or approximately Baht million from the existing shareholders who are not the Company s related parties. By entering into the said transaction, Well Korat shall become a subsidiary of the Company; and (b) repayment its loan from shares vendors of Well Korat as approximately amount of Baht 200 million. The investment value in (a) and (b) can be changed, however, the total investment value of the project shall not exceed Baht 350 million. When considering the consolidated financial statements of the Company as of 31 March 2016 reviewed by the Company s auditor, it appears that the acquisition of assets by the Company are considered as the acquisitions of material assets pursuant to the Notification of the Capital Market Supervisory Board Notification No. Tor.Jor. 20/2551 entitled Rules on Entering into Material Transactions Deemed as Acquisition or Disposition of Assets (the Notification ) and the Notification of the Board of Governors of the Stock Exchange of Thailand (the SET ) re: Disclosure of Information and Other Acts of the Listed Company Concerning the Acquisition or Disposition of Assets, 2004 (the Major Transaction Rules ). The transaction size of the transactions is of the highest value when calculated based on the total value of consideration method equals to per cent of the total asset of the Company. The transactions are classified as Class 2 Transaction with the size equals to or higher than 15 per cent but less than 50 per cent. Therefore, the Company has duty to disclose the Information Memorandum to the Stock Exchange of Thailand (SET) and to circulate the Information Memorandum to its shareholders within 21 days after the date of the disclosure to the SET. The Information Memorandum as describe as follow: 1. Date of Transaction Following the approval from Board of Directors Meeting of the Company No.4/2016 held on May 31, 2016.

3 2. Transaction Party and Relationship Buyer 1. PST Energy Company Limited ( PSTE ) Sellers 1. Newman Green Company Limited ( Newman Green ), Establishment on October 28, Board of Directors Directors of Newman Green as of 8 January 2016 Name Position 1. Ms.Nita Treeweeranuwat Director Remarks: One director is authorized to sign Shareholders Shareholders of Newman Green as at 28 October 2015 Name No. of Shares % 1. Takuni Group Public Company Limited 1,499, Mr. Takool Treeweeranuwat Ms. Nita Treeweeranuwat Ms. Kanchana Rimpanichayakij Total 1,500, Ratchada Power Company Limited ( Ratchada ), Establishment on April 3, Board of Directors Directors of Ratchada as at 8 February 2016 Name Position 1. Ms. Ratchada Sittiponwanichkul Director 2. Mr. Parkpoom Panjawaranont Director 3. Mr. Nothawitch Choroenkawarawat Director Remarks: Two directors to sign and affix the Company s seal Shareholders Shareholders of Ratchada as at 8 February 2016 Name No. of Shares % 1. Ms. Ratchada Sittiponwanichkul 20, Mr. Parkpoom Panjawaranont 2, Mr. Nothawitch Choroenkawarawat 2, Total 25,

4 Relationship between buyer and sellers Entering into such transaction are considered a non-connected transaction as per Notification of the Capital Market Supervisory Board Thor Chor. 21/2008 Re: Rules on Connected Transactions, which refers to the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of information and other acts of listed companies concerning the Connected Transaction B.E.2003 and about of Notification. 3. General Characteristics of the Transaction PSET will purchase ordinary shares of Well Korat of 12,600,000 shares with Baht 10 par value per share from Newman Green and 2,800,000 shares with Baht 10 par value per share from Ratchada as totaling 15,400,000 shares or approximately Baht 150 million. In this connection, PSTE has given the deposit to sellers in the amount of Baht 5 million and will pay the balance amount of Baht 145 million on the date of share transfer which is tentative completion in July PSTE will repay outstanding loan to the sellers of Well Korat in the amount approximately Baht 200 million to Takuni Group PLC. And Ratchada which Well Korat borrowed for operation and power plant improvement. however, the total amount of investment of this project will not exceed Baht 350 million. 4. Calculation of the Transaction Size Details of the transaction size calculated based on four tests are as follows: Criteria of Calculation Formula of Calculation Transaction Value Net tangible Assets (NTA) Net Profit The Value of Consideration Value of Securities (NTA of the acquiring assets) (NTA of the Company) (Net profit from the acquiring assets) (Total net profit of the Company) (Book value of the acquiring assets) (Total asset of the Company) (Total number of shares issued as consideration) (Number of total issued and fully paid-up shares of the Company) Highest Value 7.63 per cent Cannot be calculated due to Well Korat had net loss per cent Unable to calculate as the consideration is not paid by the way of shares per cent When considering the consolidated financial statements of the Company as of 31 March 2016 reviewed by the Company s auditor, it appears that the aforesaid acquisition of assets by the Company is considered as an acquisition of material assets pursuant to the Major Transaction Rules. When considering the transaction size of all previous transactions for those assets acquired in the last six months, the transaction size is of the highest value when calculated based on the total value of consideration method equals to per cent of the total asset of the Company. The

5 transactions are classified as Class 2 Transaction with the size equals to or higher than 15 per cent but less than 50 per cent. The Company is required to disclose the Information Memorandum to the Stock Exchange of Thailand (SET) and to circulate the Information Memorandum to its shareholders within 21 days after the date of the disclosure to the SET. 5. Details of the Assets a. General Information Name of the Company Registered Capital and Paid-Up Capital Type of Business Location of office and the Power Plant Other Significant Information : Well Korat Energy Company Limited (Incorporated on 11 August 2009) : Baht 280,000,000, divided into 28,000,000 fully paid up ordinary shares with Baht 10 par value per share : Operate biomass power plant using wood scraps as a renewable energy source with its production capacity of 9.9 megawatts (MW). Well Korat has entered into a power purchase agreement with the Provincial Electricity Authority ( PEA) with its highest production capacity of 8 megawatts (MW) for the period of 5 years and automatic renewable for every 5 years, having its commercial operation date (COD) in July 2015 and remaining time to receive the adder at Baht 0.30 per megawatts (MW) is 6 years and 1 month. However, Energy Regulatory Commission of Thailand announce new policy that Well Korat can choose be an Adder type as original type, or change to be a Feed in Tariff type (FiT). Well Korat is on the process of performing to change to be in Feed in Tariff type which has FiT(fit) rate Baht 4.54 per unit for the first 7 years and Baht 4.24 per unit for 9 years later. : Muangphai Sub-District, Nonggi District, Buriram Province : Well Korat was granted with BOI Certificate from the Board of Investment (BOI) to invest in biomass power plant under category 7.1 for the Public Utilities and Basic Services. Well Korat is granted with (a) an exemption of juristic person income tax on the net profit derived from the promoted activity for a period of eight years (b) permission to deduct such annual loss from the net profits accrued after the expiration of the period of exemption of juristic person income tax for a period five years (c) exemption of computing dividends of taxable income for a period of eight years (d) a fifty per cent reduction of the normal rate of juristic person income tax on the net profit derived from the promoted activity for a period of not more than five years from the date the expiry date of the exemption of juristic person income tax on the net profit derived from the promoted activity ( e) permission to

6 b. Shareholder Structure and Management Structure of Well Korat Before the Transaction deduct double amount of the costs of transportation, electricity and water supply for a period of ten years (f) permission to deduct twentyfive per cent of the cost of installation or construction of facilities. Name of Shareholders No. of shares % 1. Newman Green Company Limited 12,600, Ratchada Power Company Limited 2,800, Mr. Thanom Thanurattanaboot 9,800, Mr. Somphob Wanichprapa 1,400, Mr. Precha Mongkalakorn 560, Mr. Sombat Wanichprapa 560, Mr. Pholeak Jarungphak 280, Total 28,000, Name of Directors 1. Mr. Thanom Thanurattanaboot 2. Ms. Ratchada Sittiponwanichkul 3. Mr. Somphob Wanichprapa 4. Mr. Nuttawat Nartpiriyarat 5. Mr. Prasert Treeweeranuwat The authorized signatory of the Company is Mr. Prasert Treeweeranuwat sign with Mr. Thanom Thanurattanaboot and affix the Company s seal. After the Transaction Name of Shareholders No. of Shares % 1. PST Energy Company Limited 15,400, Mr. Thanom Thanurattanaboot 9,800, Mr. Somphob Wanichprapa 1,400, Mr. Precha Mongkalakorn 560, Mr. Sombat Wanichprapa 560, Mr. Pholeak Jarungphak 280, Total 28,000, Remark The shareholders Structure after the share purchase of Well Korat.

7 The Company will appoint its representative to be the directors of Well Korat as the Company s subsidiary when the share purchase is completed. c. Conclusion of Financial Position and Overall Operation of Well Korat Unit: Baht Transaction Audited for the year ended 31 December 2014* 2015* Total Assets 787,398, ,271,867 Total Debt 528,131, ,584,539 Shareholders Equity 259,267, ,687,328 Total Revenue 48,233 26,905,204 Gross Profit (Loss) 0.00 (41,495,029) Net Profit (Loss) (14,919,291) (70,579,794) Remark: *The financial statements for the year ended 2014 and 2015 is audited by Mr. Natee Hongratana-utai a certified auditor with the registration number Total Value of the Consideration Total value is not exceeding Baht 350 million to consider for purchasing 55% of issued shares in Well Korat and repay loan to the sellers of Well Korat. 7. Method Used for Determination of the Total Value of the Consideration The determination of the purchase price of Well Korat s ordinary shares, totaling Baht 350 million, is based on a negotiation between the purchaser and the sellers who agreed to purchase and sell. The share purchasing of 55% in Well Korat approximately amount Baht 150 million and repay outstanding loan to the sellers of Well Korat approximately amount Baht 200 million. Criteria used to determine value of asset for development investment was upon the financial model simulation and the feasibilities study and expected rate of return (IRR). In this connection, the Company has determined the total value of the consideration base on the discounted cash flow (DCF) method in the Feed - in tariff type (FiT) for the period of 16 years. It is expected to have the project IRR at approximately per cent

8 Income Projection of Well Korat Project * Period receiving Premium (Year 1-7) Period wihout Receiving Premium (Year 8-16) Total Revenue Total Cost and Expense EBIDA Net Profit (Unit: Baht million) It is estimated that for Well Korat project, the Company will have payback period in 7 years (*) Remarks: The Company has conducted the feasibility study of the project based on the current situations and several assumptions and conditions set out by the Company in order to study and consider the suitability and investment worthiness of each project at its current situations. Therefore, the actual result of operation of each project may be different in material from the result of study. 8. Value of Acquired Assets Value of ordinary shares that PSTE acquire by invest in shares of Well Korat Energy Company Limited ( Well Korat ) in number of 15,400,000 shares at par value Baht 10 per share or 154,400,000 baht. 9. Expectation of benefits to be received The investment in Well Korat was to expand the business of the company in renewable energy in accordance with the policy of the Company. The Company expected to increase in profitability and strong in competition. 10. Source of fund on investment of acquisition Cash flow of the Company 11. Condition of Transaction None 12. Opinion from Board of directors All Board of Director members had opinions to the benefits of entering into this transaction as follows: 1.) The Company specializes in the acquired business. 2.) Well Korat made the agreement to purchase bark for five years at price Baht 360 per ton (including transportation) and the Company is looking for additional sellers and encourage community to grow napier

9 grass, in order to increase the capability of seeking raw material. In addition of raw material survey in Buriram province and surrounding, there are a lot of raw material to support the power plant. 3.) The past performance of Well Korat is negative because the sellers are not the expert to manage the Biogas power plant and the government sector announced to allow the existing power plant to change from Adder to FiT affected to the increasing in revenue. All Board of Director members had opinions that the acquisition of assets of the Company and subsidiaries is appropriate and will benefits for the Company and shareholders by supporting to strengthen future revenue of the Company. It also expanded the business in renewable energy in accordance with the policy of the Company. 13. Opinion from the Audit Committee and/or directors which is different from the of the Board of Directors All Audit Committees had same opinions with the Board of Director and there is no different in opinion from any directors Please be informed accordingly Respectfully yours, (Mr. Apisit Jirathalhakant) Company Secretary