pinion of the Independent Financial Advisor-Part 3

solely through EGCOMP. Thanks to the CLP Holdings Limited Group's expertise and experience in running power plants in many countries, business cooperation between EGCOMP and the CLP Holdings Limited Group will provide benefit to EGCOMP in terms of technical expertise that could be drawn upon by EGCOMP for managing its existing power plants and with respect to EGCOMP's participation in the next round of IPP bidding. Pros and Cons in Pursuing the Transaction with a Connected Person Pros - Create Clear and Transparent Shareholding Structure for EGCOMP By selling all of its equity interest in BLCP and ultimately PGS to EGCOMP, the CLP Holdings Limited Group will be in position to manage all of its Thai power generation business through EGCOMP. This helps to create clear and transparent shareholding structure for EGCOMP with no potential conflict of interest that may occur should the CLP Holdings Limited Group also invest in another Thai power generating firm. Selling its stakes in BLCP and ultimately PGS also allows the CLP Holdings Limited Group to conform with the initial agreement between EGCOMP and the CLP Holdings Limited Group that specifies such that should the Group invest in power generating firms or related ones in Thailand or its neighboring countries, it must do so via EGCOMP only. - Allowing EGCOMP to invest in a Coal-Fired Power Plant Project with Low Pre-Operating Risk but would Generate Good Return on Investment in the long-term Con - Concern about the Rationale and the Fairness of the Transaction Pursuing the transaction of acquiring BLCP shares from the CLP Group, a connected person to EGCOMP, may raise concerns about whether negotiation, conditions and pricing of the transaction are fair and conducted on an arm's length basis. However, this concern is mitigated. This is because EGCOMP's existing shareholding structure consists of two major shareholders, namely EGAT that holds a direct equity stake of 25.41 % in EGCOMP and the CLP Holdings Limited that holds an indirect equity stake of 11.21 % in BLCP via CLP Power Projects (Thailand) Limited. This helps to create check & balance mechanism in BLCP's shareholding structure. EGCOMP also appointed an Audit Committee consisting of three independent directors to ensure its operations are in compliance with relevant securities and exchange law and regulations, articles and policies relating to its business and to consider the disclosure of information in the case of connected transactions or transactions that may give rise to a conflict of interest to ensure accuracy and completeness. This would help to boost confidence in that the transaction of acquiring BLCP shares between EGCOMP and the CLP Group will be conducted on a fair and arm's length basis. In analyzing and deriving the fair price of BLCP shares, EGCOMP employed TURNAROUND Co., Ltd. that is a financial advisor under the approval of the SEC to study and provide valuation for use as a base for negotiation with the CLP Holdings Limited Group. EGCOMP also set up its internal project team to study and assess the feasibility in and benefit from acquiring BLCP shares to make sure this will provide benefit to EGCOMP in terms of generating stable revenue and profitability over the long-term, solidifying its competitive strength and providing appropriate level of ROI to EGCOMP's shareholders. Additional Factors to be Considered in the Transaction of Acquiring BLCP Shares In the view of the Independent Financial Advisor, the share purchase agreement to be entered into between EGCOMP and the CLP Group, with clearly specified conditions precedent to be fulfilled prior to entering into the transaction such as getting consent for the transaction from relevant governmental authorities and creditors, has clear and fair conditions and does not put EGCOMP as the acquirer in a disadvantaged position. In considering the impact of pursuing the transaction of acquiring BLCP shares on EGCOMP, other factors need to be taken into account as follows: - Entering into the Accession Agreement with BLCP's Existing Shareholders other than the CLP Group In accordance with the Shareholders' Agreement in respect of BLCP Power Limited (the Shareholders' Agreement), any person not being an original signatory to such agreement acquiring shares in BLCP shall, as a pre-condition of the share acquisition, covenant with the parties to the Shareholders' Agreement by way of the Accession Agreement to perform all the obligations and assume all the liabilities of the selling shareholder of the sale shares. Thus, in accordance with the Accession Agreement, EGCOMP is required to perform all the obligations and assume all the rights, duties and liabilities of the CLP group as BLCP's shareholder. Such important obligations to be assumed and performed by EGCOMP include provision of Standby Letter of Credit to BLCP's creditors to ensure EGCOMP would inject additional equity capital, injection of additional equity capital into BLCP in proportion to its percentage of stake in BLCP and the requirement that EGCOMP has to pledge BLCP shares with creditors as a collateral for BLCP's loans. Although its BLCP shares are pledged with lending financial institutions, EGCOMP still maintains its shareholder rights such as rights to receive dividends, voting rights in the shareholders' meeting and rights to appoint BLCP's directors. - Acquisition of Investment in Power Generation Services Co., Ltd. (PGS) EGCOMP and the CLP Holdings Limited Group has an initial agreement that allows EGCOMP to buy all stake in PGS currently held by the CLP Holdings Limited Group that accounts for 60 % of PGS's paid-up shares at the price to be agreed upon in the future. As at December 31, 2005, PGS's total assets, liabilities and shareholders' equity stand at Baht 76.14, 34.11 and 42.03 million consecutively. For the Year 2005, PGS's total revenue and net profit are Baht 212.03 and 35.64 million respectively. In the view of the Independent Financial Advisor, such acquisition will add no burden to EGCOMP as BLCP could decide whether to acquire PGS shares, and if BLCP decides to do so, this would allow it to be a joint major shareholder and joint operator of BLCP via PGS. - Additional Capital Infusion into BLCP After EGCOMP's Extraordinary General Shareholder Meeting No.1/2006 to be held for approving the transaction of acquiring BLCP shares, BLCP may need to raise additional equity capital for the approximate amount of $186.8 million (roughly Baht 7,400 million) during the Year 2007. Such equity capital is a committed part of BLCP's fund-raising plan. Thus, in proportion to the equity stake of 50 % in BLCP it will hold, EGCOMP would infuse additional equity capital of $93.4 million (roughly Baht 3,700 million) into BLCP. However, BLCP may need to do so when some conditions precedent have yet to be fulfilled (thus resulting in incompletion of the transaction of acquiring BLCP shares by EGCOMP). In such a case, pursuant to the Share Purchase Agreement, EGCOMP would make an advance payment in the Year 2007 for the approximate amount of $93.4 million (roughly Baht 3,700 million) to CLP-BLCP for subscription of newly issued BLCP shares (the amount of advance payment to be made to CLP-BLCP will be in proportion to the equity stake of 50 % in BLCP to be held by EGCOMP). After all conditions precedent as specified in the Share Purchase Agreement have been fulfilled, the CLP Group will transfer existing as well as newly issued BLCP shares to EGCOMP. To provide guarantee to BLCP's creditors that EGCOMP would infuse additional equity capital into BLCP in proportion to the percentage of equity stake it will hold, BLCP would provide Standby Letter of Credit to such creditors. It is the view of the Independent Financial Advisor that injection of capital into BLCP would provide benefit to BLCP itself as additional equity capital would be used as a source of financing for project investment in accordance with the financing agreements, and this would help to maintain BLCP's D/E ratio at the acceptable level. Although additional equity injection into BLCP may impose a short-term financial burden for EGCOMP, investing in BLCP, a company with stable revenue flow, would allow it to obtain appropriate level of ROI in the long-term, and this would help to ease EGCOMP's burden. - Increase in EGCOMP's Financial Risk due to Investment in BLCP As at June 30, 2006, EGCOMP's D/E ratio stands at 0.97 times that is lower than those of SET-listed firms engaging in the business of generating and distributing electricity. In investing in BLCP, EGCOMP would obtain loans from financial institutions totaling Baht 5,000 million. In addition, given EGCOMP is obligated to gradually inject additional equity capital approximately amounting Baht 3,700 million into BLCP by the end of Year 2007, EGCOMP would finance such equity infusion for the amount totaling Baht 3,000 million via debt financing. Thus, initial investment in BLCP coupled with additional equity injection into that company would increase EGCOMP's debt burden by approximately Baht 8,000 million. This would raise EGCOMP's D/E ratio as at June 30, 2006 to 1.19 times. However, such increase in D/E ratio has yet to take into account EGCOMP's future financial performance and return from investment expected to earn from investing in BLCP. This would help to reduce EGCOMP's D/E ratio.