-Translation- 2. Related Parties Vintage Engineering Public Company Limited ( Company or VTE ) Green Earth Power (Thailand) Company Limited ( GEP )

Transcription

1 Information Memorandum of Vintage Engineering Public Limited Company Regarding Related Transaction on the Rendering of Construction Service for The 220MW Solar Power Plant Project located in Minbu, Myanmar To Green Earth Power (Thailand) Company Limited. (as amended) Whereas the meeting of the Board of Directors of Vintage Engineering Public Limited Company ( Company ) No. 6/2559, held on April 25, 2016, at The Gallery I Room, 3 rd Floor, Plaza Athenee Hotel, Wireless Road (Witthayu), Lumphini, Pathumwan, Bangkok, 10330, Thailand, has approved of and consent to propose to the meeting of shareholders to consider approving the related transaction with Green Earth Power (Thailand) Company Limited ( GEP ). This is a provision of construction service to the 220MW Solar Power Plant located in Minbu, Myanmar, which is a project that GEP has entered into Power Purchase Agreement ( PPA ) with Myanmar Electric Power Enterprise on March 20, The concessional agreement is under the BOT (Built-Operate- Transfer) scheme with the period of 30 years ( Project ). The Board approved of presenting the regulatory framework, conditions, the result of operation from the project, along with the possible risks to the Company s meeting of shareholders for approval to proceed with the Project and making the said related transaction, and also to delegate the authorizing power to Mr. Soraj Rojanabenjakul, as the Chairman of the Board of Directors, to approve the operational details as defined by the policy framework approved by the meeting of shareholders and includes any related and necessary procedures. The important details are as follow: 1. Date, Month, Year of Making Transaction The Company will make the transaction after being granted an approval from the Extraordinary General Meeting of Shareholders No. 1/2559, which is to be held on June 13, Related Parties Employee: Employer: Vintage Engineering Public Company Limited ( Company or VTE ) Green Earth Power (Thailand) Company Limited ( GEP ) 3. General Description of Transaction The Company has an intention to provide construction service under a Business Model called Engineering, Procurement, and Construction with Financing, or EPC+F, for the Solar Power Plant with a generating capacity of 220 Megawatts located in Minbu, Myanmar ( Project ), which is a project that GEP has developed and received concessional agreement under the BOT (Built-Operate-Transfer) scheme with the period of 30 years. The project will have a total construction time of 48 months, divided into 4 Phases as follow: Phase 1: Phase 2: Proceed with the construction of 50 Megawatts Solar Power Plant, with a construction period of 12 months. Proceed with the construction of 50 Megawatts Solar Power Plant, with a construction period of 12 months, after the Commercial Operation Date ( COD ) of Phase 1.

2 Phase 3: Phase 4: Proceed with the construction of 50 Megawatts Solar Power Plant, with a construction period of 12 months, after the Commercial Operation Date ( COD ) of Phase 2. Proceed with the construction of 70 Megawatts Solar Power Plant, with a construction period of 12 months, after the Commercial Operation Date ( COD ) of Phase 3. The EPC+F Business Model is a very prevalent one in China, and GEP has received the EPC+F service offerings from major contractors from China. This resulted in the Company seeing a business opportunity in the Project s cost of finance that GEP received from Chinese contractors and the cost of finance which the Company expects to be able to secure to support the Project. The Company has since been contacting many leading contractors in China to fulfill the role of Subcontractor. The contractors that the Company has contacted are all contractors with experience in constructing solar power plant of the size of no less than 220 Megawatts. The Company will give financial support to GEP by being the party to arrange for fund to be used during the construction in substitution to the financial support of the same nature provided by Chinese contractor. The Company will receive benefits from the management of financial cost which is different between the Chinese financial market and the financial market in other countries. 3.1 General Project Description Project Value: The total value of the construction contract is approximately USD Million, or Baht 10, Million 1, calculated with reference from construction cost under EPC+F that is not lower than the best price that the Chinese contractors offered to GEP, and is calculated to be about USD 1.33 Million per Megawatt, and is divided into 4 Phases as follow: Phase 1: Project Value USD Million, or Baht 2, Million 1 Phase 2: Project Value USD Million, or Baht 2, Million 1 Phase 3: Project Value USD Million, or Baht 2, Million 1 Phase 4: Project Value USD Million, or Baht 3, Million 1 Project Cost: The total cost of Project s construction is approximately USD Million, or Baht 9, Million 1, calculated from the estimation of construction cost under EPC and does not include the Company s Financing ( F ) part. The cost is derived with reference from the price offered by Chinese contractors to GEP. The price per Megawatts works out to be approximately USD Million, and is divided into 4 Phases as follow: Phase 1: Project Value USD Million, or Baht 2, Million 1 Phase 2: Project Value USD Million, or Baht 2, Million 1 Phase 3: Project Value USD Million, or Baht 2, Million 1 Phase 4: Project Value USD Million, or Baht 3, Million 1

3 However, the cost of Project in each Phase may vary in accordance to the suitability of construction works. This means that the construction of Phase 1 may have higher cost than other Phases, since the works for Phase 1 include the construction of Common Facilities that will be utilized in every Phases. Nevertheless, there will be no change to the total cost of the Project. Project s Cost of Finance: The total cost of Project s cost of finance is approximately USD Million, or Baht Million 1, calculated from the Company s financial projection and with reference from the Financing ( F ) cost that Chinese contractors offered to GEP. The price per Megawatts works out to be approximately USD Million, and is divided into 4 Phases as follow: Phase 1: Project Value USD 6.10 Million, or Baht Million 1 Phase 2: Project Value USD 6.10 Million, or Baht Million 1 Phase 3: Project Value USD 6.10 Million, or Baht Million 1 Phase 4: Project Value USD 8.54 Million, or Baht Million 1 However, the cost of Project in each Phase may vary in accordance to the suitability of construction works. This means that the construction of Phase 1 may have higher cost than other Phases, since the works for Phase 1 include the construction of Common Facilities that will be utilized in every Phases. Nevertheless, there will be no change to the total cost of the Project. 1 The exchange rate is taken to be Baht to USD 1. GEP s Payment Conditions: GEP s payment conditions under EPC+F contract, which is not inferior to conditions from Chinese contractors, are the same for all Phases, as follow: Deposit: 5%-10% of total project value for each Phase, to be paid within 15 days after the Company has received Notice to Proceed ( NTP ) from GEP. Outstanding Balance: 90%-95% of total project value for each Phase, to be paid within days after the Company has received Certificate of Completion from GEP and/or after the power plant s Commercial Operation Date ( COD ), whichever takes place first. The Company s Payment Conditions: The Company s payment conditions are the same for all Phases, as follow: First Expense: 5%-10% of total project cost for each Phase, with payment by Telegraphic Transfer ( T/T ) to the subcontractor within 5 days after the Company has signed into an agreement with the subcontractor. Remaining Expense: 90%-95% of total project cost for each Phase, with payment by issuing Bank Guarantee ( B/G ) or Letter of Credit ( L/C ) to the

4 subcontractor within an agreed upon period of time. It is expected that in this second tranche the placement of B/G or L/C will be within 30 days after the payment of the First Expense, under the condition that the cash payment must be paid to the subcontractor within days after the placement of B/G or L/C for each Phase. Security during Construction: The payment condition of GEP is the one in which the payment is made after the Company has completed construction. Since the Company requires a certain amount of revolving fund to be utilised as payment to subcontractor before it receives payment from GEP, the Company therefore has negotiated for the provision of security to insure against the risk arising from the said payment condition as follow: 1) 40% of GEP s total fully issued and paid up common shares, or fully issued and paid up common shares of the juridical person in proportion that will ultimately result in the Company having a controlling stake, both directly and indirectly, of no less than 40% in the total fully issued and paid up common shares of GEP. The Company will release the security relating to GEP shares after GEP has fulfilled its payment obligations to the Company for all 4 Phases, unless in the Company's sole discretion, GEP has a stable financial status and sufficient liquidity and there is no credit risk for GEP, in other words, there is no risk to the Company that GEP will not be able to pay the construction cost to the Company such as in the event that GEP has carried out its Initial Public Offering ( IPO ), and has been registered as a publicly listed company in the Stock Exchange of Thailand or there are other investors with a strong financial position purchasing the shares of GEP, the Company may consider releasing the GEP shares in part or in full. 2) Total assets constructed under GEP s purchase order, which means the assets being invested into for the purpose of being constructed would become the security of the Company and/or Consortium, and for the Company to utilise as a contribution to secure the source of fund for project financing. The Company will release the security of each Phase back to GEP after GEP has fulfilled its payment obligations to the Company for each Phase. 3) Other securities as will be agreed upon in the future, and/or under additional conditions from related financial institutions lending financial support to the Company and/or the Project. Under the condition that the Company will release the pledged security back to GEP, after GEP made a complete payment to the Company for each Phase. Furthermore, during the construction of each Phase, and after the subcontractor has received the payment for the First Expanse for each of the Phases from the Company, the subcontractor will be responsible for issuing Bank Guarantee ( B/G ), in the proportion of the total construction cost of each Phase as will be agreed upon, to the Company during the entire construction period.

5 However, there is a possibility that all of the securities mentioned will be placed as a guarantee to the credit line for construction from the Company s and the subcontractor s financial institutions. For the purpose of arranging financing for the completion of the project, the Company must utilise more debt financing by issuing Bill of Exchange ( B/E ) and/or Bond/Debenture to be placed as a part of guarantee to the banks. For the remaining sum, securities issued from the subcontractor may be used as a guarantee for financial institutions to issue credit line in the form of Letter of Credit ( L/C ) and/or Trust Receipts and/or other credit types for the purpose of completing the said construction. Security after the Completion of Construction: Generally, EPC+F service provider would have the responsibility to place Performance Security after the completion of construction. However, for the said security, the Company has proceeded to negotiate with subcontractor to be responsible in issuing the said security to GEP. The structure and guideline in issuing the security will be in accordance to the future agreement reached by subcontractor and GEP. Under no case will the Company be held responsible for any risk arising from the said security. GEP s Condition Precedents: The Company will stipulate Condition Precedents to GEP prior to the start of its operation under the agreement between the Company and GEP, for at least these two matters: 1) Stipulate for GEP to follow any and all conditions that will allow GEP to be able to begin construction legally under the laws of Myanmar to completion. These include but not be limited to adhering to the Condition Precedents under the Power Purchase Agreement granted to GEP. 2) Stipulate for GEP to exhibit evidence of approval of take out loan between GEP and leading commercial bank(s) in Thailand and/or abroad, to grant loan to GEP after GEP has completed the construction of its Minbu power plant, whereby the value of loan must not be less than 60% of the total project value. Cost of Finance (Estimation) Cost of Interest Rate and Bank Fees: On average, about 4.5%-6.5%, and includes: cost of interest rate and bank fees incurred from the Company s issuance of bond placed as a guarantee for banks issuance of Bank Guarantee ( B/G ) and/or Letter of Credit ( L/C ) and/or Trust Receipts ( T/R ) and/or Promissory Notes ( P/N ) and/or other credit facilities according to their suitability at certain times. The main cost of finance will be an average according to the agreement with subcontractor. Cost of Insurance during Construction: On average, about 0.5% - 1.5%, since Myanmar has Political Risk, and therefore during the construction it might be necessary for the Company to purchase Political Risk Insurance ( PRI ) and/or other form of insurance for risk prevention. Main Risks of the Project

6 1) Risk from Arranging for Loan to be used as Revolving Fund for the Project The Project is a large construction project which is larger than the Company s financial position at the present. If the Project is to be brought to completion, the Company would need a high amount of revolving fund. If the Company cannot raise fund from borrowing to be used as revolving fund, then there would be a risk of bringing the Project s construction to completion by the intended target. Mitigation Guideline At the present, the Company has a Debt to Equity Ratio of The Company expects that it can raise cash flow from the market in the form of Bill of Exchange ( B/E ) and both shortterm and log-term debentures ( S/T and L/T Debenture ) to be utilised in conjunction with revolving credit facilities from financial institutions. Generally, if the Project has low risk, such as having an appropriate insurance coverage, and a clear and manageable source fund for debt repayment, the Company can then raise enough revolving fund for the Project s operations. The Company is in the process of seeking a resolution from the shareholders to proceed with the issuance of debentures to support the progress of the transaction. Nevertheless, in the case that the Company could not carry out fund raising to its goal, there is still an option to fall back on applying some of the conditions of EPC+F to subcontractor, which might reduce the level of profit to the Company. The said conditions are the conditions that the Company has negotiated and agreed in initial principle with subcontractor, and were the ones in which contractors have previously offered to GEP. 2) Risk in Payment from the Project Owner (GEP) Since the Project receives a large portion of financial support from the Company in the amount of 90-95% of the total project value, the Company therefore has a high chance of having its financial position affected if the Project s owner, or GEP, does not make payment on scheduled time. This is considered as GEP s Credit Risk, and even if GEP could increase its registered capital to full amount, it would only amount to about 30% of the total project value. The Company would also still possess a risk in a point; could GEP raise Project Finance from financial institutions to support the Project? And even if it could raise fund from financial institutions, there is still a risk in some perspective; could GEP adhere to the Condition Precedents to draw down the said credit line? Mitigation Guideline According to the management structure of EPC+F projects, there will be Condition Precedent which states that the Project must be granted Take Out Loan ( Loan Agreement ) before the Company can begin the Project s construction. The Loan Agreement must clearly states that once the Project reached its Commercial Operation Date ( COD ), the financial institution must release loan to the Project immediately. Therefore, the risk in receiving payment in the

7 part of loan is reduced. Besides, the Company would have to consider that there is a high possibility that GEP could fulfill the Condition Precedents of the financial institution(s). Moreover, the Company has negotiated for additional security for the risk of receiving payment in the form of 40% of GEP s paid up common shares, which when combined with GEP s shares that the Company holds 12% of, the Company will then hold more than 51% of the total share. In the case that GEP cannot raise enough fund to pay for the EPC service, the Company will then possess the authority to assume control and management of the Project. In there is a case that GEP ultimately could not fulfil the said conditions, the Company could then offer the shares for sale to potential co-investor with capability to take out debt financing to repay the Company. However, the prompt sale of shares could negatively affect the share s price (Discount), which results in the share price being lower than the price the Company acquired them for in the past, and might result in accounting loss. However, the Company has no policy to proceed with any conduct that would require the Company to submit an application to the SET to consider the stock of the new company under the regulations for Backdoor Listing as a result of the transaction. It should be noted that the risk in this area cannot be 100% mitigated, and is a risk that most construction contractors for large businesses incur. The mitigation guideline of Chinese large construction contractor is to have an energy company within the same group of companies to take over the entire project. But for the Company this may be difficult in practice since the Project s assets might be very large. 3) Risk from the Company breaching Loan Agreements with Banks If the Company makes the transaction, its Debt to Equity Ratio might continuously rise, adding more risk to the Company s business. If there is any accident taking place, it might result in the payment from GEP not being received in a timely manner. This will result in the Company breaching the loan agreements with debtors and financial institutions lending financial support to the Company. Mitigation Guideline Since the Project has a very large transaction size and high risk, the Company has a guideline to employ high-quality subcontractor with experience and an excellent financial position. It will also use reputable advisor, along with an insurance company with high enough Credit Rating to elevate the Project s Credit Rating. 4. Total Value of Transaction and Criteria Used in Fixing Value of Transaction 4.1 Transaction Value Net Tangible Assets ( NTA )

8 The value of Net Tangible Assets of the Company and Subsidiaries, according to the Audited Financial Statement as of 31 st December 2016 can be calculated by: NTA = Total Assets Total Liabilities Noncontrolling Interest Intangible Assets = 1,822,793, ,600,706 46,929 60,738 = 1,307,084,752 The Related Transactions has two components, which are: 1) The Company s income from providing EPC+F service The size of the transaction in providing the EPC+F service is equal to % of the value of Net Tangible Assets, which is calculated by: Transaction Size = (10,387,300,000 / 1,307,084,752) X 100% = % 2) Providing Financial Support to Related Party (F) The transaction size for providing financial support to related party is equal to % of the value of Net Tangible Assets, which is calculated by: Transaction Size = (10,387,300,000 / 1,307,084,752) X 100% = % 5. Description and Extent of Interests of Related Parties It is noted that the said transaction is regarded as related transaction under the Notice of Capital Market Supervisory Board No. Thor.Jor. 21/2551 Re Criteria on Related Transaction, dated August 31, 2008, and amended thereof, and the Notice of the Board of Governors of the Stock Exchange of Thailand Re Disclosure of Information and Other Acts of Listed Companies Concerning the Related Transactions, 2003, dated November 19, 2003, and amended thereof (altogether called Notice on Related Transaction ). This is because GEP is a juridical person with the same main shareholders and persons with controlling interests as the Company s. The related transaction is considered related transaction under the Notice of Capital Market Supervisory Board, Re Criteria on Related Transaction Category 3 (Transaction Concerning Assets or Service) under the Notice on Related Transaction, whereby the transaction size of the service provision is equal to % of the total value of the Company s Net Tangible Asset ( NTA ) (calculated from Audited Financial Statement of the Company and its Subsidiaries as of December 31, 2015), which is also more than Baht 20 Million or more than 3% of NTA, and is also considered as Related Transaction Category 4 (Transaction on Giving or Receiving Financial Support ) under the Notice on Related Transaction, whereby the transaction size of the giving of financial support is equal to % of the Company s NTA (calculated from Audited Financial Statement of the Company and its Subsidiaries as of December 31, 2015), which is more than Baht 100 Million

9 or more than 3% of the Company s NTA. Therefore, this transaction is considered as a large related transaction, and the Company has obligations to proceed with as follow: 1.) Prepare a report and declare the agreement to enter the transaction to the Stock Exchange of Thailand. 2.) Dispatch invitation letter to meeting of shareholders to the shareholders no less than 14 days prior to the meeting, while providing information at least as determined by the Notice on Related Transaction. 3.) Arrange for the meeting of shareholders to approve the related transaction of the Company, whereby the approval must come from the votes of no less than 3 in 4 of all the shareholders with right to cast vote presented at the meeting, excluding shareholders with interests. 4.) Arrange for an Independent Financial Advisor to give opinion to the shareholders in considering approving the making of the said related transaction. 6. Directors with Interests/ Directors who are Related Parties 6.1 Mr. Soraj Rojanabenjakul holds the position of Chairman of the Board of Vintage Engineering Public Limited Company, and also holds the position of Director in Green Earth Power (Thailand) Company Limited. 6.2 Mr. Supasit Pokinjaruras holds the position of Managing Director in Green Earth Power (Thailand) Company Limited, and also holds the position of Director in Vintage Engineering Public Limited Company. 6.3 Mr. Aung Thiha holds the position of Managing Director in Green Earth Power (Thailand) Company Limited, and also holds the position of Director in Vintage Engineering Public Limited Company. 6.4 Mr. Foong Sai Kong holds the position of Managing Director in Green Earth Power (Thailand) Company Limited, and also holds the position of Director in Vintage Engineering Public Limited Company. 7. Details of Related Parties and Shareholders with Interests Planet Energy Holdings PTE. LTD. is the Company s major shareholder, whereby as of 23th June 2015 it held 85,637,713 shares, or calculated as 10.31% of Company s total registered and paid up shares. It is also a major shareholder of GEP. Mr. Supasit Pokinjaruras and Mr. Aung Thiha, both the Director of the Company, are also major shareholders of Planet Energy Holdings PTE. LTD.. GEP s Current Status Currently, the shareholding structure of GEP is as follows: 1) Planet Energy Holding PTE. Limited is a major shareholder, holds 123,628 shares, calculated as 48% of GEP s registered capital 2) Nobel Planet PTE. Limited, holds 103,022 shares, calculated as 40% of GEP s registered capital and 3) the Company, holds 30,908 shares, calculated as 12% of GEP s registered capital, where Planet Energy Holding PTE. Limited and Nobel Planet PTE. Limited

10 have the same ultimate shareholders, namely, Mr. Supasit Pokinjaruras and Mr. Aung Thiha, both of whom hold 50% each in both companies, and collectively has a controlling stake in the total paid up common share of GEP, both directly and indirectly, in the amount of 88%. GEP signed the Power Purchase Agreement ( PPA ) with Myanmar Electric Power Enterprise ( MEPE ) on March 20, 2015, and GEP is currently awaiting an approval of its investment permit from the Myanmar Investment Commission ( MIC ). 8. Reason for giving Financial Support The Company foresees the opportunity to grow under the business conduct of being construction contractor for large projects, which requires knowledge and expertise in managing high-level engineering works. Its policy is to practice the business conduct under business model of EPC+F, which is a business practice of multinational businesses that has been met with high level of success, especially for Chinese multinational contractors. The Company has thus been studying the possibility of project management by comparing the Company s cost of finance (under estimation provided by the Financial Dept.) with cost of finance as arranged by Chinese contractors. It is found that the Company has more advantage in cost of finance, and not only would the Company be receiving profit from project management, but it would also receive profit from difference in interest rates that the Company could raise from the financial market and the rate that it charges to the customer by adding to the project construction cost. The executives thus gave no delay to start negotiation and presented the conditions in providing the service of the Company with GEP s executive team and proposed that the Company be selected as EPC+F provider for the said Project under the principle that the Company must be able to give an offer which is not inferior to the offers that Chinese contractors could arrange. This would be beneficial to the shareholders of both parties, as the shareholders of the Company would receive benefit in the form of profit from making the transaction, while GEP s shareholders would not lose benefit since they would receive an offer that is not inferior to offer from Chinese contractor. Furthermore, they would also benefit from the Company s profit as a shareholder of the Company who received the Company s shares from entering the transaction for the sale of GEP s shares to the Company in Procedure in the Consideration to Giving Financial Support 9.1 Policy, Procedure, and Criteria in the Consideration to Giving Financial Support The Company takes into consideration the conditions and benefits to be gained whereby the giving of support would have to be aligned with other related plans and conditions. 9.2 Approval Authority and Financial Amount of the Support The Shareholders of the Extraordinary General Meeting of Shareholders No. 01/2559, which will be held on June 13, 2016, whereby the transaction must receive an approval from no

11 less than 3 in 4 of shareholders who attend the meeting and with voting right, excluding shareholders with interests. 9.3 Factor in Consideration of Debt Servicing Capability The Company has a limited amount of cash flow, while at the same time the Project requires a lot of investment in the part of the Project s owner. The Project owner is required to pay 95% of each of the phases of the total Project s value within 180 days after the completion of construction, resulting in the risk of the Company not receiving payment on the scheduled payment dates. 9.4 Mitigation Guideline and the Effect on the Company s Financial Position According to the management structure of EPC+F projects, there will be Condition Precedent which states that the Project must be granted Take Out Loan ( Loan Agreement ) before the Company can begins the Project s construction. The Loan Agreement must clearly states that once the Project reached its Commercial Operation Date ( COD ), the financial institution must release loan to the Project immediately. Therefore, the risk in receiving payment in the part of loan is reduced. Moreover, the Company has negotiated for additional security from the said risk of receiving payment in the form of 40% of GEP s paid up common shares, which when combined with GEP s shares that the Company holds 12% of, the Company will then hold more than 51% of the total share. In the case that GEP cannot raise enough funds to pay for the EPC service, the Company will then possess the authority to assume control and management of the Project. 10. Benefits Expected from Making Transaction 10.1 The Company has Increased Income and Profit The Company would receive increased income from the construction of Project by more than Baht 2,000 Million for 4 consecutive years. When comparing to the current income at Baht 460 Million (in 2015), this is an increase of more than 500%. In addition, the Company would also receive profit from both the management of construction works and the difference in interest rates in the amount of about Baht Million (depending on the cost of finance that the Company can arrange at the present and the future). Currently, the Company s operational result from its business operations is a loss of Baht 6.60 Million (in 2015, and excluding depreciation), and therefore this transaction is beneficial to the Company and its shareholder, while GEP receives offer that is not inferior to offers from multinational companies, and therefore does not lose benefit.

12 10.2 Expanding Business Practice Receiving the Project from GEP would result in the Company having the opportunity to gain a credential in being contractor for a large project. Generally, companies without relevant experience would not have even the chance to participate in contract bidding of large projects. After the success of this Project, the Company has a chance to having a Track Record that will allow it to expand this business line with other businesses in the future Benefits to the Company in its Position as a Shareholder of Green Earth Power (Thailand) Company Limited The Company is a shareholder of GEP in the amount of 12%. When the Company proposes to GEP an offer superior to other contractors, GEP s return would increase, and/or GEP s share value that the Company holds would increase as well. 11. Source of Fund The Company has a plan to raise fund from the financial market in the form of Bill of Exchange ( B/E ), and S/T and L/T Debenture, to be utilized as cash deposit to leading commercial banks. Additionally, the Company has negotiated for short term loan from leading commercial banks to be used as revolving fund for the costs that the Company has to bear in the form of advance payment before it receives payment from GEP. 12. Directors with Interests and/or Directors considered as Related Person not attending the Meeting and not having any Voting Right Mr. Soraj Rojanabenjakul, Mr. Supasit Pokinjaruras, Mr. Aung Thiha, and Mr. Foong Sai Kong did not attend the meeting and did not have any voting rights. 13. Opinions of Board of Directors The Directors without interests, after having considered conditions of entering into the transaction, have opinions with regards to making this related transaction that it will benefit the Company in the following ways: 1. If the Project can be completed successfully without problems, it would generate income to the Company by more than Baht 2,000 Million for 4 consecutive years. When comparing to the current income at Baht 460 Million in 2015, this is an increase of more than 500%, and is the highest level of income in the history of the Company. This is an opportunity to make profit to the Company, since currently the Company s operational result from its business operations is a loss (not including depreciation) of Baht 6.60 Million in The making of the said transaction is truly a business expansion under the policy to conduct business by the EPC+F model. In particular, the Project is a very large project, and making the transaction will be a crucial factor since it will become a reputable Track

13 Record of the Company. It will also result in the Company having enough qualification to participate in contract bid of projects or to propose other works under EPC+F service in the future. Besides, this will also develop the Company s personnel to be experienced in working on an EPC+F project as well. The Directors without interests have also considered the reasonableness of the Project, and the benefit that the Company would receive in comparison to it agreeing to enter into the transaction with an outside and independent party. After consideration, the Directors without interests have an opinion that even if making the transaction in conduction business under the EPC+F model creates additional risks to the Company, the said risks are normal risks in conducting business. The making of this related transaction has advantages and disadvantages and risk factors not different from making the transaction with an outside and independent party due to the following reasons: 1. The value of the Project that the Company determined and bills to GEP is the value that the Company determined according to the market price. It is the value of the Project that has a reference in the cost of construction under EPC+F scheme that many other Chinese contractors offered to GEP. 2. The Payment Conditions of GEP that the Company stipulates is the general conditions in the market as well. The said conditions are stipulated by the Company with reference from the payment conditions that many Chinese contractors offered to GEP. While at the present the Company is still undergoing negotiation for the said conditions with GEP, ultimately the Company will determine the conditions under the framework mentioned above (outlined under GEP s Payment Condition), which is a conditional framework that is not crucially different from what GEP received from other Chinese contractors. 3) The conditions of security and Condition Precedents of GEP that the company determined are based on the consideration to close GEP s Credit Risk in the main. The Company has stipulated an important Condition Precedent to GEP, which is for GEP to have an approval for Take Out Loan agreement between GEP and leading commercial bank(s) in Thailand and/or abroad, for the latter to grant loan to GEP after GEP has completed the construction of its Minbu power plant, whereby the value of loan must not be less than 60% of the total project value. This Condition Precedent will be able to mitigate the risk to the Company to a certain extent. Furthermore, the said Condition Precedent is the same one as all other Chinese contractors stipulated as well. Besides, the Company also stipulates securities to reduce the risks to the Company further. The important securities are 1) all assets during construction, which is the security all other Chinese contractors stipulated as well, and 2) 40% of common shares (both directly and indirectly in combination) of GEP, which is a security no Chinese contractor stipulated. After considering all of the factors as have been mentioned above, the Directors without interests have an opinion that the making of the said transaction, even if it is a related transaction, but the conditions of the transaction are not crucially different when comparing to the conditions prevalent in the market, and are conditions that are similar to

14 the conditions the Company could offer to an independent, outside party. Beside, by the said conditions, the Company also receives benefit both in the form of income, profit, and crucial business expansion. Therefore, it is considered and seen that the making of the said related transaction is a transaction for the highest benefit to the Company. However, since the said transaction is a high risk transaction, the Directors without interests appeal the shareholders to diligently consider the advantages and disadvantages and the emerging risks that the Company has disclosed within this information memorandum and in the report of the independent financial advisor before exercising any voting right in the Extraordinary General Meeting of Shareholders. 14. Opinion of Audit Committee Different from those of Board of Directors - None The Company hereby certifies that the information contained herein is wholly correct and complete. Yours Sincerely, (Soraj Rojanabenjakul) Chairman of the Board of Directors