The 1 st /2011 Minutes of the Extraordinary Meeting of Shareholders Of Sena Development Public Co., Ltd.

Transcription

1 (Translation) Sena Development Public Co., Ltd. 524 Ratchadaphisek Rd., Samsen Nok Sub-district, Huay Khwang District, Bangkok Tel (20 lines), Fax Meeting date and place The 1 st /2011 Minutes of the Extraordinary Meeting of Shareholders Of Sena Development Public Co., Ltd. The 1 st /2011 Extraordinary Meeting of Shareholders was held on 29 July 2011 at a.m. at Chaophraya Park Hotel, Ratchada Room 5 (Underground Floor), no. 247 Ratchadaphisek Rd., Din Daeng, Bangkok The meeting began. Mr. Wichien Rattanaphiraphong, Chairman of Board of Directors, acting as the meeting chairman opened the meeting to welcome shareholders and proxies, introduce names of directors attending the meeting, and said that Professor Chaiyos Hemaratchata could not attend the meeting because he was very busy. Moreover, independent financial advisors of Kim Eng Securities (Thailand) Public Co., Ltd and legal advisors were invited to attend the meeting to answer questions of shareholders. The chairman gave the information on holding the shareholders meeting. The person in charge of the meeting informed that the company has disseminated the meeting information about Investor Relation both in Thai and English in the company website: since 11 August 2011 so that shareholders are able to examine and have enough information in the shareholders meeting. Shareholders were allowed to additionally propose useful issues within 29 July 2011 but no shareholders proposed additional agendas. After that the person in charge of the meeting explained how to vote. Shareholders are eligible to give one vote per one share. The company will show results of counting votes on the screen in front of the stage. For transparent and fast meeting, the company will carry out the meeting by considering agendas according to the meeting invitation letters sent to shareholders. When the agendas are proposed to the meeting for consideration and shareholders have already asked questions,

2 shareholders have to mark in the ballots. After that, the company staff will count the votes from the ballots and inform the meeting about the results. To comply with the company law and regulations on shareholders meeting, resolution of shareholders meeting has to be made by voting and counting one share as one vote. Agenda 1 of the meeting resolution today comprises majority votes of shareholders attending the meeting and voting. Agenda 2 considers approval for buying ordinary shares of T. TREA regarded as the transaction acquired by assets of registered company. And related transactions have to receive special resolution with the votes not less than three-fourths of all votes of shareholders attending the meeting and being eligible to vote. Directors attending the meeting 1. Mr. Wichien Rattanaphiraphong Chairman of Board of Directors/Audit Chairman/Independent Director 2. General Bunsak Audit Director and Independent Director Kamhaengritthirong 3. Mr. Kamon Thammanichanon Audit Director and Independent Director 4. Police General Achirawit Director and Independent Director Suphanphesat 5. Mr. Thirawat Thanyalakphark Director/ Executive Chairman/ Managing Director 6. Miss Kessara Thanyalakphark Director 7. Miss Benyalak Thanyalakphark Director 8. Miss Umaporn Thanyalakphark Director 9. Mrs. Wiraporn Chaisiriyasawat Director/Company Secretary Other people attending the meeting 1. Mr. Phongsarn Financial Advisor, Kim Eng Securities (Thailand) Public Co., Ltd. Khlongwatthanakit 2. Mr. Thani Tembunsap Financial Advisor, Kim Eng Securities (Thailand) Public Co., Ltd. 3. Mr. Phadungchai Kletsuwan Legal Advisor, Sena Development Public Co., Ltd.

3 In the shareholders meeting, 81 shareholders attended the meeting with total 523,752,657 shares (77.59% of all 675,000,000 shares sold, constituting the shareholders quorum according to the company law and regulations. After that the chairman assigned Mr. Wichien Rattanapheeraphong, Chairman of Board of Directors to carry out the meeting. Mr. Thirawat Thanyalakphark, Executive Chairman, made a speech to welcome shareholders and proxies and informed the meeting that the company plans to extend income base from the lease business to reduce risk of real estate business operation. In the third quarter of 2011, the company plans to open SENA Fest Project which is the area leasing business (Retail). The agenda to be proposed to shareholders today is a project of the plan to extend income base of the lease business to share risk and reduce dependence on incomes of selling real estate only. If the company is able to successfully manage the golf course business different from the business of selling real estate, the company will have more incomes in the future. Moreover, the company is able to develop vacant land of the golf course as a hotel, which will develop the business to the company and promote the golf course business. Due to current economy and industry, company s change in the policy on business operation, better implementation of Phattaya Golf Court Project, the company s strong financial structure with readiness to invest for improvement of the golf course, the company thinks that the company is able to improve and develop the Phattaya Golf Course Project and to develop the surrounding land to increase potential and returns under the company management. The company, therefore, would like to do this transaction. The chairman, therefore, opened the meeting to consider various issues according to the meeting agendas with details as follows; Agenda 1 Considering confirmation of 2011 Minutes of the General Shareholders Meeting The person in charge of the meeting asked the meeting to consider confirmation of the 2011 Minutes of General Shareholders Meeting held on Monday 27 April The company had already sent the copy of minutes of the meeting and the meeting invitation letters to shareholders. The person in charge of the meeting informed the meeting that board of directors expressed opinion on the 2011 minutes of the general shareholders meeting held on Monday 27 April 2011 that as the meeting record was accurate and complete, they confirmed such minutes of the meeting.

4 After proposal and confirmation, the meeting had considered and had resolution with majority votes as follows. Resolution: Confirmation of the 2011 Minutes of the General Shareholders Meeting held on Monday 27 April 2011 as proposed by the person in charge of the meeting Results of counting votes are as follows; Shareholders Number of shares Percent Agree 523,749, Disagree - 0 No vote 3, Not sending ballots - - Total votes 523,752, Agenda 2 Considering approval for buying ordinary shares of T. TREA regarded as the transaction acquired by assets of registered company and related transactions. Before considering Agenda 2, the person in charge of the meeting informed the meeting that 13 shareholders additionally attended the meeting with 687,600 shares, therefore, 94 shareholders attended the meeting with 524,440,257 shares. The person in charge of the meeting informed the meeting that Agenda 2 has to receive special resolution with the votes not less than three fourths of all votes of shareholders attending the meeting and being eligible to vote without counting the part of shareholders with 488,260,290 shares..and Dr. Kessara Thanyalakphark, Company Director, informed the shareholders meeting about details of buying ordinary shares of T. TREA with proportion of of paid-up and issued ordinary shares (after increasing capital) at the amount of 590 million baht, operating the golf course business Phattaya Country Club & Resort as follows; 1. Business operation plan and estimation of company incomes structure In 2007, the company incomes derived from horizontal projects with 99% of total incomes. In 2008, 2009, 2010, the company began carrying out the vertical projects creating incomes by 18%, 39%, and 39% of total incomes, respectively. According to estimation of incomes in 2011, the company

5 expects that the vertical projects will have more proportions to 70% of total incomes. Due to high competition of the real estate business and rising price of land in the present time, the company plans to extend incomes base of the lease business in The company determines target income proportion of company lease business by 5% of total incomes with more tendency by 20%-25% per year. The company invested to do the lease business as the first project Sena House at Phahonyothin Soi 30, Warehouse for rent at Sukhumvit Soi 50, and SENA Fest. In 2011, the company initiates to develop the Golf Course Project and Hotel in the golf course to increase incomes of the lease business by 5% of total incomes in Comparison of land assessment price and making transactions with details as follows; Summary of assessment price Independent assessment company Night Frank Co.,Ltd. T.A Co., Ltd. - Golf Course Land Land for selling resorts Land waiting for development-hotel Land waiting for other development Total Price of buying ordinary shares of T. TREA Plans of developing hotel and golf course project are divided into three parts as follows; Building Club House and improving the course. Dr. Kessara said that the financial statement of T.TREA did not show returns of the golf course because the company received transfer of property for repayment from Phattaya Country Club Co., Ltd. ( PCC ). The advantage of making the transaction is to reduce risk of building the golf course. As the project has begun implementation and has created incomes, the company only improves and builds a new club house. Building a hotel in the area waiting for development. The company with 500 old customers plans to find new customers by contacting tour companies, hotels, department stores, restaurants, golf teaching schools, and various agencies, including organizing package promotion by emphasizing the outdoor activity hotel to attract customers from the industrial estates requiring to organize activities in the organization. Improving 20-unit resort for sale with main target group: foreigners, people in the industrial estate, people in Phattaya for opening the market of hotel business and opening the market of

6 selling houses in Chonburi which is a city with potential and high buying capacity to avoid high competition in Bangkok Details Duration Investment budget Building Club House and improving the course Building hotels in Phase 1 Building hotels in Phase 2 Expenses on designing Club House and hotels The fourth quarter of the fourth quarter of 2012 The fourth quarter of the fourth quarter of 2013 The third quarter of the fourth quarter of 2015 The third quarter of the second quarter of million baht 70 million baht 110 million baht 14 million baht 4. As for investment and returns from investment of the hotel and golf project, the company expects the returns of investment (IRR) about 10.4% and 10-year payback period. Part 1 SENA : Investment to buy ordinary shares of T. TREA As of shares transfer date SENA paid up cash 100 million baht aval 490 million baht (2 years) Total 590 million baht *Being net present value of 521 million baht with discount rate of 6.875% Part 2 T. Trea : Investment for project development Total Borrowing from banks 70% T.Trea investing 30% Golf Course Project million baht Hotel Project million baht Total million baht Summary of financial possibility Land expense 442 million baht Construction expense 245 million baht Total investment 701 million baht Returns Project IRR 10.4% Payback period 10 years. Dr. Kessara Thanyalakphark, Company Director, requested the financial advisor to additionally propose financial information in this agenda with details as follows; Khun Phongsarn Khlongwatthanakit, Financial Advisor, informed shareholders that Kim Eng Securities (Thailand) Public Co., Ltd acting as the independent financial advisor and representing minor shareholders expressed opinion that whether such items were reasonable and beneficial to

7 shareholders and whether price of making the transactions was fair. He had made and sent the report on opinions of the independent financial advisor to shareholders together with invitation letter of the extraordinary meeting of shareholders. Khun Thanee Tembunsap was requested to propose the information on opinions of the independent financial advisor to shareholders. Details of company assets acquired and values of returns Items of assets Ordinary shares of T. TREA with 99% of paid-up and registered capitals Company s main assets rais of 18- hole golf course - 38 rais of land waiting for future development - 15 rais of small land of the project rais of land of Golf Drive Course /3 Price of making the transactions (Million Baht) Transaction size (%) /2 Transactions acquired and sold by 26.68% of company total assets values Related transactions were 33.81% of net property values Values of returns Cash (Million Baht) 2-year aval (Million Baht) Remarks: /1 Avals certified by banks which the company expects to have fees about 0.75% of total avals per year /2 Calculation of avals as the present values equal to million baht with discount rate by ( MLR Rate) Related people and relationship characteristics Names SENA /1 T.TREA /2 Directors Holding shares Directors Holding shares 1. Mr. Thirawat Thanyalakphark / 31.30% / 70.00% 2. Miss Kessara Thanyalakphark / 14.26% x 10.00% 3. Miss Sriwarat Thanyalakphark x 14.26% x 10.00% 4. Miss Umaporn Thanyalakphark / 11.30% / 10.00% 5. Mrs. Srianong Kiratiwaranon x 1.22% x - 6. Miss Benyalak Thayalakphark / 1 share / - Total 72.33% % Remarks: /1 Information as of 30 June 2011 /2 Information as of 30 April 2011 /3 Daughter of Khun Thirawat (SENA s director and major shareholder) /4 Mother of Khun Kessara (SENA s director and major shareholder) /5 Younger sister of Khun Thirawat (SENA s director and major shareholder)

8 Summary information of T.TREA Shareholders Structure Names Present number of shares Number of shares after Percent increasing capitals/ 1 1. Mr. Thirawat Thanyalakphark 28,000 46, Miss Kessara Thanyalakphark 4,000 6, Miss Sriwarat Thanyalaphark 4,000 6, Miss Umaporn Thanyalakphark 4,000 6, Total 40,000 66, Company board of directors Names 1. Mr. Thirawat Thanyalakphark 2. Miss Benyalak Thanyalakphark 3. Miss Umaporn Thanyalakphark Summary of Financial Status (Million Baht) Q Assets Liabilities Shareholders equity /1 One of conditions before making the items is that T.TREA has to register to increase capital about 26,500 shares. There are total 66,500 shares (PAR 10, baht) or 265 million baht. And T.TREA has to repay debts of debentures of financial institution within 31 August 2011 before T.TREA shares selling group transfer sale of shares to SENA. Advantages of making the transactions - The company is able to share risk of business operation. - Company groups have more potential to operate business. - The company is able to immediately know incomes of the golf course business after making the items. - The company has opportunities to increase incomes of the hotel business in the future. - The company has opportunities to buy the land around the golf course from PCC in the future. - Buying T.TREA Shares instead of buying assets from T.TREA enables the company to save transaction costs which may occur. Weakness of making the transactions - The company has more liabilities and interests. - The company has risk of operating the golf course business and hotel business

9 - The company has risk of new project inception. - The company has risk of buying the land around the golf course from PCC in the future with higher price. However, the company will make MOU with PCC to fix price of such land after receiving approval from shareholders. - Buying T.TREA shares instead of buying assets from T.TREA may cause contingent liabilities. However, the contract specifies that sellers will be liable if contingent liabilities occur before the company receives transfer of shares. Important contents of MOU Contract Draft between the company and Phattaya Country Club Co., Ltd. - SENA are eligible to buy land and constructions of PCC (Call Option) with the price not higher than the price assessed by independent assessors not over six months before SENA buys such land. - If SENA buys such land within a year from the date of signing MOU, the trading price must not exceed 717 million baht. - If SENA buys such land after a year from the date of signing MOU, such trading price can be higher according to the cost at the rate not over 7% per year. Determining property price classified by characteristics of property and location Characteristics of land and constructions Areas (Square W Average trading valu Values (Baht (Baht/ Square Wa) Phase 1 (Already developed) 1. Constructions together with land 15,977 8, ,357, Vacant land adjacent to main roads 3,053 6,255 19,096, Vacant land adjacent to Soi Roads 641 5,716 3,663,956 Total 19, ,117,615 Phase 2 (Waiting for development) 1. Vacant land adjacent to main roads 19,765 3,928 77,636, Vacant land at the corner adjacent to main ro 3,168 4,236 13,419, Vacant land adjacent to Soi Roads 89,896 2, ,833, Vacant land at the corner adjacent to Soi roa 12,703 3,270 41,538, Vacant land adjacent to Soi roads and lakes 33,610 4, ,697,710 Total 159, ,126,704 Completely total 178, ,244,319 Dr. Kessara Thanyalakphark and the financial advisor answered shareholders questions about such project as follows;

10 - How did Night Frank Charter (Thailand) Co., Ltd. assess business values? Values of the golf course business were assessed by Discounted Cash Flow (DCF) while houses and hotel business was assessed by Market Approach. - If the company agreeing to buy land from Phattaya Country Clum Co., Ltd. is able to use lower assessment price if the assessment price in the next three years is higher than the present assessment price. Price assessment has to be done by the company certified by Office of the Securities and Exchange Commission. - According to MOU Contract, owners have to offer sale to the company before offering sale of land to other people. - T. TREA did not do the project by itself but offered sale to the company because in 2005, the company has registered in the Stock Exchange and has this plot of land on behalf of Phattaya Country Club Co., Ltd. but has faced the problems of debts and shareholders structure, the company, therefore, did not bring such issue into the company structure. MOU between Phattaya Country Club Co., Ltd and T.TREA cannot be made because MOU jointly made with the company will cause problems of business management as the founder of company operating the business for 30 years and initiating the project of giving all profits to public charity, reflecting that executives think of benefits of the company and minor shareholders. - As for this project, the company will have IRR about 12% derived from incomes of the golf course and hotel exclusive of incomes from Resort House Project. The company will rise Green Fee about 5-10% per year. The hotel is divided into 2 phases with average price about 1,300-1,500 baht/room. - The company bought shares of T.TREA at the amount of 590 million baht by paying on the date of making the contract at the amount of 100 million baht and issuing 2-year avals at the amount of 490 million baht. According to the company s financial statement for the year 2010, the company had 316-million baht profits used for paying dividends by 40% and reserving according to the law by 5%. Operation balance was about 174 million baht. How does the company have guidelines to manage the remaining money? And what should the company do to create profits?. The golf course business in Chonburi Province is able to make profits and the real estate business in Chonburi Province tends to grow continuously. The company making development can make profits, beneficial to the company. The company has transparently made these transactions according to MOU disclosed to the Stock

11 Exchange and Securities Exchange Commission. Such repayment conditions were considered to prevent effects on D/E Ratio. In 2011, the company assets are 3,600 million baht. After buying shares of T.TREA., the company has 1,600-million baht liabilities and 1,800- million baht capitals. In the future, the company aims to make business growth by 20-25% per year. In 2013, it is expected that the company will have 4,900-million baht assets, registered capitals to be increased to 2,400 million baht, and liabilities about 2,500 million baht. - As for buying shares of T.TREA, at present, it is not necessary to increase registered capitals. As for guidelines to establish Property Fund, if the company has clear rental incomes according to criteria on P-Fund, it is possible to establish the fund. Advantage of the Fund is no tax payment and proprietorship not less than 33% - Whether MOU still exists if Phattaya Country Club Co., Ltd. is bankrupt. At present, Bor Sor thor owning 400 rais of land has announced sale of small plots of land of the golf course not the golf course about 370 million baht. After Bor Sor Thor ceased business, it appointed a liquidator who is Ministry of Finance. At present, PCC does not have any liabilities because it has already transferred all liabilities. - SENA Fest Project received very good response from people interested to rent the areas. SENA Fest Project has four phases divided as supermarket, fashion shops, restaurants, and banks. The hotel business is not new for the company because the company has had Apartment Project at Phahonyothin As for the question about the company investing 750 million baht and making the profits only 20 million baht, Dr. Kessara Thanyalakphark, Company Director, answered that, as for investment of 750 million baht, the company divided payment at interval and divided incomes into three parts comprising the golf course, hotel, and houses by considering net cash flow of three parts. Khun Thani Tembunsap, Financial Advisor, additionally said that incomes of all three projects (the golf course, hotel, and houses) in 2017 will be 200 million baht. In the future, the company will have more incomes from the lease businesses such as SENA Fest, hotel, house, whether this will excessively disperse incomes of the lease business. As for shareholders of Phattaya Country Club Co., Ltd where Khun Thirawat presently holds shares by 63%, whether Khun Thirawat formerly held shares as equally as the present time. As for related transactions of wife of of

12 Khun Thirawat s elder brother, Dr. Kessara Thanyalakphark, Company Director, answered that as company businesses respond to changing direction of main customers: people with low-moderate incomes, the company initiated the SENA Fest Project to respond to needs of consumers. As for Khun Thirawat holding shares in Phattaya Country Club Co., Ltd, at present, as PCC owning the Phattaya Country Club Project does not have any liabilities, wife of Khun Thirawat s elder brother invests in the company. Mr. Thirawat Thanyalakphark, Executive Chairman, additionally explained that, due to economic crisis in 1997, other shareholders were affected and sold shares to him so he presently additionally holds shares by 63%. - The company can use the golf course, hotel, and houses as mutual sale promotion project by jointly organizing promotion in the future. Moreover, Khun Thani Termbunsap, Financial Advisor, summarized criteria of considering appropriateness of price assessment for making transaction as follows; 1. Book value approach - Being referred from book value of assets to be acquired or sold. 2. Adjusted book value approach - Being referred from reports on assets value assessment of two independent price assessors as follows - Night Frank Charter (Thailand) Co., Ltd. - T.A. Management Corporation (1999) Co., Ltd. 3. Sum-of-the part - Assessing shares values by thinking of the method of appropriately assessing values for main assets of each type of business which may be different. Combination of fair values for each type of net assets creates fair values of business shares. Transaction Values (million baht) Assessment Methods Assessment price By IFA (Million Baht) Assessment price of IFA is higher (lower) than transaction values Opinions of IFA and reasons of expressing opinions Million Baht Percent Reasonable price due to Book value Price offering purchase of Adjusted BV shares of T.TREA is in the Sum-of-the-part (88.0)-93 (16.8) price spread of IFA.

13 Projects Methods of assessing values Estimated price (Million Baht) Values of the golf course business Discounted cash flow Add: other assets values of T.TREA Cash and transaction equivalent to cash as of 31 March Values of rais of small plots of land inside the project Price assessed by the independent assessors Values of rai of land waiting for future development Price assessed by the independent assessors Values of the front drive golf course (For the part of T.TREA) Price assessed by the independent assessors Values of real estates for investment Price assessed by the independent assessors Total values per shareholder After proposal and confirmation without counting shareholders with 488,260,290 shares, the meeting considered and had resolution with votes by having results of counting votes in this agenda as follows; Shareholders Number of shares Percent Agree 22,117, Disagree 5,722, No vote 8,339, Not sending the ballots - - Total votes 36,179, After voting in this meeting, people concerned discussed that whether votes of people failing to vote are also counted. After considering this issue for a period of time, the meeting proposed that the company should coordinate and consult with related agencies before summarizing for further implementation.

14 Agenda 3 Considering other subjects (If any) The person in charge of the meeting informed the meeting and invited shareholders to ask or express opinions in this agenda. But, no shareholders wanted to express opinion and recommendations. The chairman, therefore, thanked shareholders and all proxies and closed the meeting at p.m. (Mr. Wichien Rattanaphiraphong) Meeting Chairman Minutes of the meeting recorder (Mrs. Wiraporn Chaisiriyasawat) Company Secretary