GUNKUL 58/026 9th March 2015 Subject : Information Memorandum on Wind Farm Power Plant Investment of Wind Energy Development Co., Ltd. (Addition) To : President and Managing Director of the Stock Exchange of Thailand Re : Information Memorandum on Acquiring of Common Shares in Wind Energy Development Co., Ltd., GUNKUL 55/046 dated 15th May 2012 and GUNKUL 57/059 dated 3rd June 2014 The Board of Directors Meeting of Gunkul Engineering Public Company Limited (the “Company”) No. 4/2015 was held on 7th March 2015 has passed a resolution to approve on the following subject matters: 1. Approve for Wind Energy Development Co., Ltd. (“WED” subsidiary company) to do the following transaction: -
To sign the Contract for Design, Engineering, Procurement, Construction, Commissioning, Transportation and Testing of Wind Turbine with PowerChina Zhongnan Engineering Corporation Limited and PowerChina Zhongnan Engineering Corporation Limited (Thailand Branch) in the value of THB 3,684,000,000. -
To sign the Service & Availability Agreement with PowerChina Zhongnan Engineering Corporation Limited (Thailand Branch) and Gamesa EOLICA S.L.U. in the value of THB 45,000,000 per year. -
To sign the Credit Facilities Agreement for supporting the WED’s wind farm project with the Siam Commercial Bank Public Co., Ltd. in the total amount of THB 3,725,000,000. 2. Approve to propose to the Shareholders’ Meeting for consideration and ratification on the above transactions as no. 1 of WED and for acknowledgement on the overview of investment in wind farm power plant of WED in the appropriated amount of THB 6,145,721,100. The transaction is considered an acquisition of assets according to the Stock Exchange of Thailand Notification Re: Disclosure of Information and Act of Listed Companies Concerning Acquisition or Disposition of Assets B.E. 2547 (2004). The Company hereby reports the detail of the transaction as follows: Page 1/7 1. Transaction Date After the conditions precedent of the Contract for Design, Engineering, Procurement, Construction, Commissioning, Transportation and Testing of Wind Turbine and the Service & Availability Agreement and the Credit Facilities Agreement for supporting the WED’s wind farm project have been fulfilled. The expected time for 3 contracts signing will be arranged within March 2015. 2. Contractual Parties 1. Contract for Design, Engineering, Procurement, Construction, Commissioning, Transportation and Testing of Wind Turbine Hirer : Gunkul Engineering Public Company Limited (“GUNKUL”) Contractor : PowerChina Zhongnan Engineering Corporation Limited * and PowerChina Zhongnan Engineering Corporation Limited (Thailand Branch) * Value : THB 3,684,000,000 2.
Service & Availability Agreement 3.
Hirer Contractor Value : Gunkul Engineering Public Company Limited (“GUNKUL”) PowerChina Zhongnan Engineering Corporation Limited (Thailand Branch) * and Gamesa EOLICA S.L.U. * THB 45,000,000 per year Credit Facilities Agreement for supporting the WED’s Wind Farm Project Lender Borrower Value : : : : : Siam Commercial Bank Public Company Limited * Gunkul Engineering Public Company Limited (“GUNKUL”) THB 3,725,000,000 * not connected to be the related party 3. General Characteristic of the Transaction The Company has been necessary to sign the Contract for Design, Engineering, Procurement, Construction, Commissioning, Transportation and Testing of Wind Turbine and the Service & Availability Agreement and the Credit Facilities Agreement for supporting the WED’s wind farm project with each party and the total transaction value of 3 contracts as above mentioned on item no. 2. However, the Company will provide to the Shareholders’ Meeting for consideration and ratification on the 3 above transactions of Wind Energy Development Co., Ltd. later. WED hold the Power Purchase Agreement (PPA) of wind farm power plant signed with the Electricity Generating Authority of Thailand (“EGAT”) in capacity of 50 MW and with the Provincial Electricity Authority in capacity of 8+2 MW by receiving THB 3.50 / unit as adder for 10 years, overall of acquisition of WED in the appropriated amount of THB 6,145,721,100 as details: -
Acquisition value of common shares in the proportion of 70% THB 522,000,000 (Referring to the Information Memorandum on Acquiring of Common Shares in WED, GUNKUL 55/046 dated 15th May 2012) -
Acquisition value of common share in the proportion of 30% THB 373,721,100 (Referring to the Information Memorandum on Acquiring of Common Shares in WED, GUNKUL 57/059 dated 3rd June 2014) -
Overall value of development investment of WED THB 5,250,000,000 Page 2/7 The transaction size based on the calculation method specified in the Stock Exchange of Thailand Notification Re: Disclosure of Information and Act of Listed Companies Concerning Acquisition or Disposition of Assets B.E. 2547 (2004) equals to 8.46 percent which falls under Type 3 transaction “The Value of the Consideration Given and Received”. Therefore, the Company is required obtain approval from the Board of Directors, report and disclose the transaction to the Stock Exchange of Thailand including appoint the independent financial advisor to provide an opinion regarding the Acquisition of Investment in wind farm power plant of WED and propose to the Shareholders’ Meeting for consideration and approval. However, all transactions concerning acquisition of assets during 6 months ago are as details: ‐ According to the letter no. GUNKUL no. 57/126 dated 17th December 2014, the Company had submitted the Information Memorandum on Acquiring of Shares of Sendai Okura Mega Solar Godo Kaisha (“GK Sendai”) established in Japan by Gunkul International (Mauritius) (“GIM”) which is an subsidiary company of GUNKUL, hold 100%, to purchase the shares of GK Sendai at the total selling price of THB 504,000,000, where the transaction size, based on the calculation method of the value of the consideration given and received, calculated by the separated financial statements is equaled to 9.46 percent and by the consolidated financial statements is equaled to 8.48 percent. ‐ According to the letter no. GUNKUL no. 58/016 dated 23rd February 2015, the Company had submitted the Information Memorandum on Acquiring of Common Shares and Investment of Korat Wind Energy Co., Ltd. (“KWE”) at the total value transaction of THB 4,681,000,000 where the transaction size, based on the calculation method of the value of the consideration given and received, calculated by the separated financial statements is equaled to 75.68 percent and by the consolidated financial statements is equaled to 64.48
percent. Therefore, the total value of transaction of acquisition of assets during 6 months including KWE is equaled to 72.96 percent. The Company is required obtain approval from the Shareholders’ Meeting including to appoint the independent financial advisor to provide an opinion regarding the Acquisition of Investment in wind farm power plant of WED and propose to the Shareholders’ Meeting for consideration and approval. ‐ Therefore, total transaction size, including acquisition of WED based on calculation method of the value of the consideration given and received calculated by the consolidated financial statements is equaled to 84.66 percent and including three above transactions concerning acquisition of assets during 6 months ago which equaled to 72.96, by total equals to 157.62 percent. Therefore, the Company is required obtain approval from the Shareholders’ Meeting and also to appoint the Independent Financial Advisor (“IFA”) for providing an opinion regarding the acquisition. However, to exempt transactions that meet all of the following criteria and no need to have filing as a new listing application: 1) The Company is not intend to change in its core business after the acquisition. 2) The enlarged group resulting from the acquisition of assets is suitable for listing with SET. 3) There will be no significant change in the composition of the board of directors, control, and controlling shareholders of the listed company. Page 3/7 4. Details of the Acquired Assets a. Nature of Business Name : Wind Energy Development Co., Ltd. (“WED”) Address : 1038 Nakornchaisri Road, Nakornchaisri, Dusit, Bangkok 10300 Nature of Business : WED do business as a Power Producer from wind energy resource which electricity generated will be sold to the Electricity Generating Authority of Thailand (“EGAT”) in accordance to a Power Purchase Agreement in capacity of 50 MW receiving THB 3.50 / unit as adder for 10 years. Moreover, WED will sell electricity generated from wind energy resource to the Provincial Electricity Authority (“PEA”) in accordance to 2 Power Purchase Agreements in capacity of 8 MW and 2 MW respectively receiving THB 3.50 / unit as adder for 10 years. Both the Power Purchase Agreements between WED and EGAT and PEA are located at Sub‐District Huai Bong, Dankhuntod, Nakornratchasima. Currently, WED has Wind Report to support that the projects can operate as commercial wind power plants. WED expects that the construction of all wind farm projects will be finished within 31st December 2015 for 50 MW and within the first quarter of Year 2016 for 8+2 MW. GUNKUL
70% + 30%
WED
EGAT : 50MW
PEA : 8MW
PEA : 2MW
Note that: All projects receive THB 3.50 / unit as adder for 10 years b. Board of Directors of WED At present, the Board of Directors of WED consists of 4 directors as follows: 1. Mr. Somboon Aueatchasai 3. Mr. Phongsakorn Damnoen 4. Miss Naruechon Dhumrongpiyawut 5. Mr. Tridi Boonyayone c. Shareholding Structure List of shareholders as at 5th March 2015 are as follows: List of Shareholders 1. Gunkul Engineering Public Company Limited 2. Mr. Gunkul Dhumrongpiyawut 3. Miss Naruechon Dhumrongpiyawut Total Number of Shares 149,999,987 12 1 105,210,000 % 99.9999913% 0.0000081% 0.0000006% 100.0000000% Page 4/7 d. Summary of Key Financials The summary of financial position and the result of operation of WED for 31st December 2014, 2013 and 2012, according to the company’s audited and reviewed financial statements by the auditor, as follows: (Unit: THB) 31 Dec. 2014 31 Dec. 2013 31 Dec 2012 (Audited) (Audited) (Audited) Current Assets 202,683,061.62
73,380,819.95 27,018,940.26
Fixed Assets
521,933,863.95
470,133,456.67 383,173,048.43
Total Assets
724,616,925.57
543,514,276.62 410,191,988.69
Current Liabilities
176,748,292.83
160,417,665.29 351,786,302.47
Long‐Term Liabilities
4,790,241.89
158,091,180.54 1,167,131.59
Total Liabilities
181,538,534.72
318,508,845.83 352,953,434.06
Registered Capital
1,052,100,000
1,052,100,000 179,900,000
Paid‐Up Capital
681,942,000
321,525.00 103,475,000
Shareholder’s Equity
543,078390.85
225,005,430.79 57,238,554.63
Total Revenue
7,273,883.04
963,950.43 147,093.95
Cost of Sales
0.00
0.00 0.00
Operating Expenses
33,585,337.79
27,326,832.34 23,856,269.75
Interest Expenses
16,030,465.70
23,920,241.93 14,129,033.71
Net Profit (Loss)
(42,344,039.94)
(50,283,123.84) (37,838,209.51)
Book Value (Common Shares) (0.78)
(2.72) (5.01)
5. Total Value of the Transaction The transaction value of the acquisition in the appropriated amount of 6,145,721,100 concluded as details: -
Acquisition value of common shares in the proportion of 70% THB 522,000,000 (Referring to the Information Memorandum on Acquiring of Common Shares in WED, GUNKUL 55/046 dated 15th May 2012) -
Acquisition value of common share in the proportion of 30% THB 373,721,100 (Referring to the Information Memorandum on Acquiring of Common Shares in WED, GUNKUL 57/059 dated 3rd June 2014) - Overall value of development investment of WED 6. Value of the Acquired Assets The value asset acquired and will be acquired as details: THB 5,250,000,000 -
Common shares in the total proportion of 100 percent of registered shares by the value as referring to the Information Memorandum on Acquiring of Common Shares in WED, GUNKUL 55/046 dated 15th May 2012 in the amount of THB 895,721,100. -
Overall value of development investment of WED which will be acquired in the appropriated amount of THB 5,250,000,000. -
Therefore, the total amount of acquired assets is in appropriated amount of THB 6,145,721,100. Page 5/7 7. Basis of Calculation of the Share Price Basis of calculation of the shares price for the total buying price of common shares in the amount of THB 895,721,100 was agreed upon by the contractual parties (referring to the Information Memorandum on Acquiring of Common Shares in WED, GUNKUL 55/046 dated 15th May 2012 and GUNKUL 57/059 dated 3rd June 2014). Basis of calculation of the share price for the total development investment in the appropriated amount of THB 5,250,000,000 was upon the financial model simulation which the figure as negotiation with the suppliers and also find out from the reliable source including the value of the consideration of the investment is based on the feasibility study and expected internal rate of return (IRR). 8. Benefits Expected to be obtained by the Company 8.1 The Company acquired common share of WED in order to jointly develop wind power plants. The Company will record the revenue from doing business as Power Producer as well as earn the return from the project in accordance to 100 percent of shareholding. Nevertheless, the projects will sustainably support growth of the Company in term of Assets and Revenues. 8.2 Investment by acquiring WED shares supports the company’s policy in matter of becoming a leader and a significant participant to encourage Renewable or Clean Power Plants. 9. Source of Investment Presently, the Company have got the approval for Credit Facilities Agreement from the Siam Commercial Bank Public Co., Ltd. for supporting the wind farm power plant project and is in the process of appointment to sign together in the amount of THB 3,725,000,000. 10. Opinion of the Board of Directors Rationale By Approval of the Board of Directors Meeting 4/2015 was held on 7th March, 2015, approved Wind Energy Development Co., Ltd. to sign these three contracts by the following considerations. 1. Wind project of 8 + 2 MW (Subplu 1 and 2) with the Provincial Electricity Authority is nearly close to the supply electricity commercially period within 1st November, 2015, and the wind project of 50 MW with the Electricity Generating Authority of Thailand to supply electricity commercially period within 1st September, 2016, there is an urgent need to make a decision to approve these transaction for signing these contracts as to hedge the risk of fines and, if there is any fatality during the construction and installation of wind turbines were forced to schedule a waiver would probably result in a suspension agreement. 2. Consequently from the article 1 above, the Board of Directors acknowledged the request of the Wind Energy Development Co. Ltd. to request authorization to sign these three agreements to facilitate the construction and the construction of foundations and roads and others without lapse of the rainy season, which will hinder the operation of the project construction. 3. Board of Directors has considered the impact on monetary basis, then, approved Wind Energy Development Ltd. to sign these three contracts as follows. 1) Amount of interest paid on the loan for the acquisition of land for the project 2,200,000 baht per month. 2) Revenue forecasting in case of delays as follows: 2.1.1 Subplu 1 and 2 (8+2 MW) of THB 12,000,000 per month. 2.1.2 Wayu Wind Farm (50 MW) of THB 48,000,000 per month. Page 6/7 3)
In the event that the grace period has elapsed followed by the terms of the electricity sales contracts with the delay or case fatality may have lost the fee paid amount of THB 850,000,000 of which binding on the contract. 4. The Board of Directors has considered the significance of the risk assumed by the case of disapproval, or waiting for the approval of the Annual General Meeting of Shareholders to be held on April 10, 2558 and consists of a holiday for the festival. This resulted in a delay of at least 60 consecutive days. Also, The Board of Directors has received. "Confirm ratify the agreement signed three contracts for the Annual General Meeting of Shareholders No. 1/2015 dated April 10, 2015 " from Gunkul Group Co., Ltd, which holds a 60 percent stake of Gunkul Engineering PCL. to coordinate with the approval of the Board of Directors in this episode. 11. Opinion of the Audit Committee Members and/or Directors which is different from the Opinion of the Board of Directors under Clause 10 ‐ None ‐ The Company hereby certifies that the foregoing information is true and correct in all respects. Sincerely yours, (Ms. Sopacha Dhumrongpiyawut) Chief Executive Officer Ms.Chantra Jongjamareeseethong Manager, Investor Relations Dept. Executive Office Tel. 0‐2242‐5867 E‐mail: [email protected] Page 7/7