reports details on plan for Kanom power plant

Electricity Generating Plc (EGCOMP)'s board of directors at a meeting on July 5, 1995 resolved in principle to allow its subsidiary, Kanom Electricity Co Ltd, to negotiate the purchase of the Khanom power plant from the Electricity Generating Authority of Thailand (EGAT). In its report to the SET, EGCOMP provides the following details: 1.Transaction date: The purchase contract will be signed within 1995. The company will inform the SET of the transaction date afterwards. 2. Connected contractors: The buyer is Kanom Electricity Co Ltd, at which EGCOMP holds a 99.99% stake. The seller is EGAT which holds a 48% stake at EGCOMP. 3. The general feature of the transaction: Kanom Electricity Co LTd will purchase Bt20 billion worth of Kanom power plant from EGAT. The value of the acquired assets account for 93.5% of that of EGCOMP as of March 31, 1995, which is Bt21,399 million. As a result, the transaction is classified as Type 1 under the SET's announcement concerning the principles, the methods and disclosure of information on acquisition assets of listed securities. 4. Details of the acquired assets and future business plan: Kanom power plant has a production capacity of 824 Megawatt. It is located in Kanom District, Nakorn Srithammarat province. 5. Total value of assets and payment terms: Approximately Bt20 billionwhich will be all paid in cash upon the transfer of the assets. 6. Value of the bought assets: About Bt20 billion 7. Source of Fund and conditions affecting shareholders' rights: The source of fund will come from a 3:1 debt to equity ratio. The gearing ratio will prompt EGCOMP to increase its capital for more investment in Kanom Electricity Co Ltd within Bt5 billion to maintain its 99.99%stake. Kanom Electricity Co Ltd will have to build a debt of within Bt15 billion through the following means: - To issue and offer Bt7.5 billion worth of secured debentures to the general investors and/or through a private placement. - To issue and offer debentures worth within US$100 million or Bt2.5 billion in foreign markets. - To seek a syndicated loan of about US$200 million or Bt5.0 billion. There will be no other terms that will affect shareholders' rights. 8. Principles applied to calculate the transaction value. The price is mainly based on the book value from EGAT, with contributions from independent appraisal agencies and financial advisers. The final price will, however, depend on the outcome of the negotiations with EGAT, with participation by related government authorities in the calculation on the return on equity (RoE), which is about 20% per annum throughout the life of the project -- no matter whether the price of the transaction would increase or decrease. 9.Expected benefits: EGCOMP can increase its power production of Rayong Electrcity Co Ltd and Kanom Electricity Co Ltd from 1,232 to 2,056 Megawatt. It will also gain more profits from the expanded operations. 10. Stage of Negotiations: They are in the final stage of negotiations on acquisition assets and on an electricity supply contract with EGAT. In the meantime, a state committee is also in the process of appraising the price of the Kanom power plant. After the price settlement, EGAT must seek approval from the Cabinet. The matters also have to go through the Energy Policy Board and the National Energy Policy Board. 11. Gain and Loss of EGAT and related executives: EGAT holds a 48% stake at EGCOMP and it is a contractor with direct stake in Kanom Electricity Co Ltd, owned 99.99% by EGCOMP. EGCOMP is one of the projects to privatize state enterprises in accordance with state policy. The related executives are as follows: Name EGCOMP EGAT Kanom Shareholding in Shareholding EGCOMP in Kanom 1. Mr.Somboon Maneenava President Governor President 1 1 2.Preecha Choongwattana Director Deputy Director 17,001 - governor 3.Pisit Anantasarn Director Deputy governor Director 36,901 - 12. Connected transaction: The deal is a connected transaction and it must seek approval from EGCOMP's board of directors with at least a three-fourths endorsement by theeligible shareholders. Shareholders who will gain or loss from the transction will have no right to vote on the matter. The shareholders meeting is scheduled for Aygust 22, 1995 at 10.00 a. m. at Panirama Room 1, The Emnerald Hotel, 99/1, Ratchapisek Rd, Bangkok. The asset priceappraisal appointees and financial advisers will also participate in the meeting. Translated by The Nation