pinion of the Independent Financial Advisor-Part 4

It can be seen from the above table that GLOW is the company that has different operating characteristics than those of BLCP. Most of its plants are Small Power Producers (SPPs) and therefore a portion of its revenues comes from sales of steam. Therefore, the only appropriate comparable companies that can be used in the calculation are EGCOMP and RATCH. If we were to consider the physical and operating characteristics of these power plants, it can be seen that the two comparable companies' plants are much older than the BLCP facility and they have been in operation for several years under much different PPA conditions. Generally, BLCP's new plant should have higher value (per MW) than those of the two comparable companies. Therefore, the Independent Financial Advisor has adjusted the comparable companies' EV/MW ratios by aging factors that reflect the remaining lives of the plants of the two comparables against that of BLCP's. Furthermore, it can be seen that the bulk of comparable companies' portfolio plants are gas-fired which have much different characteristics than a coal-fired plant. Generally, investments used to construct gas-fired plants range from USD 0.6-0.7 million per MW while those used to construct coal-fired plants range from USD 1.0-1.5 million per MW 1 or 1.67 - 2.15 times that of gas-fired plants (with average of 1.9 times). Therefore, such factor has been incorporated to adjust the EV/MW ratios of comparable companies to be used to estimate BLCP fair equity value. In addition, as mentioned in the P/BV and EV/EBITDA approaches, as BLCP has to further increase its capital from all shareholders after this transaction, the 2007 equity calls that will be shouldered by EGCOMP after the transaction is complete have to be deducted from the calculated full equity value. From the total installed capacity of BLCP and adjusted EV/MW ratios for the two comparable companies in our universe, the calculated full equity value (50% proportion) and fair value of the portion EGCOMP intends to purchase is as shown in the ranges below. Full Equity Value (after all capital increase) Minimum: Baht 7.949 Billion Average: Baht 12.071 Billion Maximum: Baht 16.194 Billion Fair Value of the portion intended to purchase Minimum: Baht 4.305 Billion Average: Baht 8.427 Billion Maximum: Baht 12.550 Billion This methodology is a simple and focuses on the installed capacities. It has limitations in that it does not take into account the unique characteristics, revenue structure and future operating performance of BLCP, and as such, the resulting values are not appropriate to be used to assess the fairness of BLCP equity price to be purchased by EGCOMP. Note: Minimum value is determined based on the lowest comparable companies'EV/MWs. Average value is determined based on the average of comparable companies'EV/MWs. Maximum value is determined based on the highest comparable companies'EV/MWs. The Independent Financial Advisor has used 2 main methodologies to estimate the fair equity value of BLCP shares. These methods are (i) Discounted Cash Flow and (ii) Market Comparables (4 ratios have been considered: P/E, P/BV, EV/EBITDA and EV/MW). The resulting fair equity value ranges have been summarized in the table below. Valuation Methodology Fair Equity Value of BLCP in the proportion that EGCOMP intends to purchase (50 %) (Billions of Baht) Discounted Cash Flow (DCF) Downside Case Base Case Upside Case 6.301 8.133 8.618 Market Comparables Minimum Average Maximum P/E Ratio Not Appropriate to be used P/BV Ratio (Full Value) 10.450 12.814 15.143 P/BV Ratio (Purchased portion) 6.806 9.170 11.500 EV/EBITDA Ratio (Full Value) 9.213 12.937 16.662 EV/EBITDA Ratio (Purchased portion) 5.569 9.293 13.018 EV/MW Ratio (Full Value) 7.949 12.071 16.194 EV/MW Ratio (Purchased portion)4.305 8.427 12.550 Note: Minimum value is determined based on the lowest comparable companies' financial ratios. Average value is determined based on the average of comparable companies' financial ratios. Maximum value is determined based on the highest comparable companies' financial ratios. Value of the portion intended to purchase (the full equity value deducted by capital call) It can be seen from the table above that different methodologies yield different fair value ranges. After thorough consideration, the Independent Financial Advisor strongly considers that the Discounted Cash Flow Method of valuation is the most appropriate valuation approach in this case as it takes account of all unique characteristics of BLCP including operating efficiency, revenue and profit structures, partial operations phases, as well as estimated long-term financial performance of BLCP. As well, the Discounted Cash Flow Method takes into consideration further capital increase in the future (In this case, the Method also takes into account capital increase amounting Baht 4.0 billion on November 6, 2006 and additional capital call of roughly Baht 7.4 billion in the Year 2007). Therefore, it can be concluded that the fair value of BLCP equity stake that EGCOMP intends to purchase lies in the range of Baht 6.301 - 8.618 Billion. It should be clearly noted that after this purchase transaction, BLCP will have to make additional capital calls on its shareholders to cover the remaining plant's construction and commissioning costs. The portion to be drawn down from EGCOMP for such calls which will occur in 2007 is approximately Baht 3.7 billion, the amount of which conforming to the equity stake of 50 % in BLCP to be held by EGCOMP. In conclusion, the purchase price of Baht 6.645 billion for the 50% interest in BLCP's common shares is considered fair and beneficial to EGCOMP's shareholders.