INFORMATION ON AQUISITION OR DISPOSAL
10 June 1998
THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED
Information on Aquisition or Disposal of Assets and Related Transactions
1. Transaction Date: December 29, 1997
2. Contractual Parties and Relationship with the Registered Company
Purchaser: THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED
(THIP), a registered company in the Stock Exchange of Thailand
Seller: SUNFLOWER ENTERPRISE (SE) which is the indirect major
shareholders of THIP by holding shares in SUNFLOWER
COMPANY LIMITED (SC) at proportion of 93.99%
Remark: SC is a shareholder in THIP at proportion of 56.39%
3. General Description of the Transaction:
THIP shall purchase land and building located at Soi Kangwarn II, Mu 8,
Phetkasem Road, Tumbon Omyai, Sampran District (Talard Mai), Nakorn Pathom Province
as following details:
Items Title Deed Area (Rai) Transaction Amount Percentage of Price to
No. in Million Baht Appraisal Value
Appraised Purchased Price
1. Partial Land in 56216 2-2-0 17.00 16.00 94.12
2. Land 55727 1-3-94 14.29 14.00 97.97
3. Building - 3,700 sq.m. 11.93 11.00 92.20
4-1-94 (Rai) 43.22 41.00 94.86
Details of Appraisal Price
Simon Lim & Associates Co., Ltd. has been appointed as independent price
appraiser of thistransaction whom received approval from the Office of the
Securities and Exchange Commission. The company appraised land price by
means of comparison with the market price (Market Approach) and the building
was appraised by means of Cost Approach in order to make valuation of the
present construction cost (Replacement Cost) in which valuation was concluded
as following:
1. Land title deed no. 56216 has appraisal price at Bt. 17,000 per
square wah.
2. Land title deed no. 55727 has appraisal price at Bt. 18,000 per
square wah.
3. Buildings have appraisal price at Bt. 3,224 per square metre.
This transaction for purchasing of land and building is deemed as acquisition
of assets by the registered company having transaction amount at 10.85% of total
asset value in the audited financial statements (account period ended September
30, 1997) by public accountants of the registered company. The transaction
falls into category 3 of the SET annoucement on Securities, Methods and Dis
closure of Acquisition or Disposal of Assets in Registered Company whereby
the company must disclose the deal transaction to SET and publicize the
transaction once in Thai and once in English new spapers within the next
day after filing the report to SET.
In addition, the purchasing of land and building of THIP from SE is deemed
as a related transaction in accordance with SET announcement on Criteria,
Methods, and Disclosure of Related Transaction of Registered Company.
Therefore, THIP must disclose the deal transaction and notify shareholders
within 21 days after publicize date in newspapers whereby having a financial
advisor to express opinion on reasonable price and suitability of the deal
transaction. Furthermore, THIP shall held shareholders meeting to approve
the transaction to be made with voting result of not less than 3/4 of the
total shareholders who attend the meeting and have voting rights but excluding
those shareholders having direct benefit or loss in the deal transaction.
THIP shall held this extraordinary shareholders meeting on January 22, 1998
to get approval of the deal transaction to be made.
4. Details of Assets:
THIP shall enter an agreement to purchase land and buildings from SE with
the purpose of utilization for business expansion, increasing management
efficiency, and upgrading production process to meet ISO 9002 in which having
detailson land and building as following:
Land location: Soi Kangwarn II, Mu 8, Phetkasem Road, Tumbon Omyai,
Sampran District (Talard Mai), Nakorn Pathom Province (the plot locates in
area of the existing factories)
Land Plot Land No. Survey Page Title Deed No. Area Total Area Bldg. Area
Rai Gnarn Wah sq.wah Sq.m.
1 1969 2458 56216 2 2 00 1,000 794
2 1960 2844 55727 1 3 94 794 3,700
Total 4 1 94 1,794 3,700
Building Description:
One factory building having 2 storeys which was built in 1990. The factory
has reinforced concrete structure and brick wall with mortar plastering and
having steel stucture roofing by typical roof tiling. The factory has funcitonal
areas totally 3,700 sq.m.
The Owner of Land and Building: Sunflower Enterprise Co., Ltd. (SE)
Appraisal Price:
Simon Lim & Associates, Co., Ltd. had appraised the first land plot by rate of
Bt. 17,000 per square wah having total amount of Bt. 17.00 million and the second
land plot by rate of Bt. 18,000 per square wah having total amount of Bt. 14.29
million and factory builiding price is Bt. 11.93 million (by rate of Bt. 3,224 per
square meter). The transaction total amount then is Bt. 26.22 million. Sum of
appraisal price of the two land plots is Bt. 43.22 million.
Purchasing Price:
1st Land Plot Bt. 16.00 million (average price per square wah Bt. 16,000)
2nd Land Plot Bt. 14.00 million (average price per square wah Bt. 17,632)
Factory Building Bt. 11.00 million (average price per square metre Bt. 2,973)
Total Bt. 41.00 million
5. Total Price of the Transaction and Payment Terms:
The total price of purchasing land and building has amount of Bt. 41.00 Baht with
following payment terms:
Payment Date Amount (million) As Percentage to Total Price
1. Signing purchasing agreement 20.50 50
2. Obtaining Title deed separation 20.50 50
and title transfer registration
with the land office or within
6 months after the purchasing
agreement date .... ....
Total 41.00 100
6. Names and Relationships of Related Personnel
Name %Holding in %Holding Shares Position Position Relationship of
THIP Indirectly in SC in THIP in SE Management and
Shareholders
1.Sunflower Enterprise 53.007 93.994 - - As indirect major
Co. Ltd. shareholders in THIP
2.Mr.Nam Mahathitirat 0.001 0.001 Chairman Chairman Brother-in-law of
Mr. Panya
3.Mr.Pasit Assamongkol 0.001 0.001 Vice Chairman - N/A
4.Mr.Phietoon 0.001 0.001 Vice Chairman - N/A
Trivijitkasem
5.Mr.Chanin Saensuk - 2.000 Vice Chairman Executive N/A
Vice Prisident
6.Mr.Thaweewat 0.126 0.001 Managing Vice Chairman N/A
Yinatsawaphan Director
7.Mr.Pichai 0.178 2.000 Deputy Managing - N/A
Tangwithetchit Director
8.Mr.panya - 2.000 Executive - Brother of
Siripornpitak Director Mr. Nams wife
Remark : THIP = Thantawan Industry Public Company Limited
SC = Sunflower Company Limited
SE = Sunflower Enterprise Company Limited
Names of legal person and individual person in the above table are those
who possibly have benefit or loss in this deal transaction therefore have
no voting rights in the extraordinary shareholders meeting to be held in
January 22, 1998 (session no. 1/1998)
7. Expected Return from the Investment on Purchasing Land and Building
7.1 Profit before interest and tax deriving from sales of the
increasing product volumes
Million Baht/Year %
- Reclosable plastic bags 3.31 33.13
- Thin plastic bags 4.81 48.15
7.2 Saving on labor costs deriving 1.87 18.72
from increasing efficiency
Total 9.99 100.00
8. Investment Budget of the Transaction
Million Baht %
1. Land and building costs 41.00 92.34
2. Improvement costs on machinery 3.00 6.76
and utilities system
3. Moving cost for machinery 0.40 0.90
Total 44.40 100.00
- Payback Period is 4.44 years.
Based on investment analysis of the above data and figures, the return
on investment (IRR on Project) to be received out of this Investment Cost
during next 10 years period shall be 18% per year of which is higher than
financial return received from deposit with financial institutions.
Part II: Additional Information as at 8 June 1998 which is the continuing
transaction from information in Part I with the following opinions:
1) Opinion of a new independent price appraiser
Proteam Management Co., Ltd. (PMC) had been appointed to be the second in
dependent price appraiser and was approved by the SEC office. PMC had
appraised the land price using comparative method of valuation and cost
method of evaluation. For the buildings, PMC had appraised the price
using method of estimated cost as new as base figure then deducted with
accumulated depreciation of buildings. The appraised market price of the
land and buildings are shown in the table attached.
Table of Comparative appraisal prices of land and buildings
Appraisal Prices
on 18 December 1997 on 27 May 1998
Item Title Area Simon Lim Proteam Average Price Reconciled selling price
Deed (Rai) Per Sq.WAH/M. Total Per Sq.WAH/M. Total Per Sq.WAH/M. Total Per Sq.WAH/M. Total
No. (Baht) Mill. Bt. (Baht) Mill. Bt. (Baht) Mill. Bt. (Baht) Mill. Bt.
1. Land 56216 2-2-0 17,000 17.00 15,000 15.00 16,000 16.00 16,000 16.00
2. Land 55727 1-3-94 18,000 14.29 16,000 12.70 17,000 13.50 17,632 14.00
3. Building - 3,700 Sq.M 3,224 11.93 3,622 13.40 3,423 12.67 2,973 11.00
Total 4-1-94 43.22 41.10 42.16 41.00
2) Opinion of financial advisor
Navathanakit Finance Public Co., Ltd., whom had been appointed as financial
advisor, had expressed its opinion on resonable prices and justification
of the transaction as followings:
2.1 Reasonable prices
The financial advisor had compared the proposed transaction price with
the appraisal prices prepared by the 2 independent price appraisers,
whom have been approved by SEC office, and gave its opinion that the
proposed transaction price is reasonable and justifiable due to the
total transaction price is 41 million Baht (Forty one million Baht only)
which is lower than the appraisal price of Simon Lim & Associates and
close to the appraisal price prepared by the Proteam Management Co., Ltd.
2.2 Justifiable reason
The financial advisor had considered the transaction was justifiable
by reason of elimination of risk involved as following described:
Risk elimination
If THIP has entered into agreement of purchasing the land and buildings
which will have ownership rights of the properties including having
registration of servitudes rights in the land for accessing to the
main public road, THIP hence can eliminate the risk and uncertainty
that the land owner might commit the land for other benefits as it
seems fit legitimately.
But in the case that THIP unables to purchase the land and buildings,
THIP has to proceed with the following obligations:
2.2.1 Moving out of the land immediately on the expiration date of
leasing agreement of the land and buildings or on 31 December 1999.
2.2.2 Paying rentals of another 3 land plots left which situated close
to the factory site, go-down, and office builiding (total areas:
10 rai, 42 sq.wah) at the rental rate of 6 million Baht per year.
These land plots belong to Sunflower Enterprise Co., Ltd. and
THIP has utilized these 3 land plots for these puposes: canteen,
parking, soccer field, and multi-purpose open grounds.
2.2.3 If THIP could not move out within the leasing agreement expiration
date, THIP has obligation to pay fine at the rate of 50,000 Baht
per day.
2.2.4 The land owner has legal rights to claim for damages occurring
from which THIP could not move out of the occupied land.
In case of THIP has to move out factories, THIP will face with risk of
unability to find new location site for the factories or might have to
move out to land site in Prachinburi province. In this case, THIP had
estimated of paying cost outlays for the existing size of factory in
construction amounting 59 million Baht (est. cost: 5,000 Baht per sq.m.).
Such cost estimation is still excluded costs of land, infrastructure
and utilities, moving expenses for machineries, accessories, labors
and so on.
2.3 Financial aspect
In considering of THIPs operational performance for 1st quarter in 1998,
THIP was able to make profit up to 31.7 million Baht, increasing amount
of 31.5 million Baht when compared with the same quarter in previous
year which only made profit amounting 0.2 million Baht. In addition,
THIP also had net cash from operation amounting 29.2 million Baht.
The financial advisor therefore has opinion that THIP has high potential
of having adequate cash for purchasing payment of the land and buildings
price left amounting 20.5 million Baht which shall due soon. The purchasing
price was divided into instalments in which the first instalment was
paid on 29 December 1997 and the remainder payment of 20.5 million
Baht shall be due within 60 days after having agreed the said deal.
However, the financial advisor expressed opinion that THIP has to be
aware of the fluctuation of economies both domestic and international
at the moment and should be prepared to find the reserved capital
sources to deal with uncertainty in case of the cash inflow and
outflow are not performingas estimated.
Regarding to opinions given for the justification of the related transaction
above, the financial advisor had considered from the viewpoint of situation
and information which obtainable at the present only. However, since the
countrys current financial situation still has instability coupled with
high domestic liquidity crnch problem and the rising trend of high interest
rates, therefore, as long as there are economic fluctuation, THIP is
inevitably affected by external uncontrollable factors and might increase
risk for this investment transaction made. In sum, the financial advisors
opinions relating to the said transaction could not confirm for any significant
effects to THIP which might have had occurred in the future.
3) Opinion of Independent Director
The Independent Director had considered that the transaction was
reasonable and justifiable with following reasons:
1. Having necessity to purchase the land and buildings for business
expansion and production process improvement in order to have potential
for competition with foreign competitors and to upgrade the companys
standard towards ISO 9002.
2. Gaining more saving than moving out factories to Prachinburi province
which would have had cost outlays for construction of factories in
comparable to existing factories for amounting 59.0 million Baht
(est. cost 5,000 Baht per sq.m.) but still excluded costs of land,
infrastructure and utilities, moving expenses for machineries and
etc.
3. Presently, THIP has enough cash flow to purchase the land and buildings.
4. This investment transaction is made timely for improving the
organization to meet with demands of constantly fast changing world
economy.
5. If THIP has to move out from the existing factory sites where
are the most suitable location, the company shall waste the existing
factories amounting not less than 70.0 million Baht.
Please be informed accordingly.
