The Secretary to the Meeting introduced the Directors, the Executives and the Advisors who attended the Meeting today as follows:

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2 Limited ( BBLAM ), a subsidiary of Bangkok Bank Public Company Limited, may be the management company of the infrastructure fund. Therefore, Bangkok Bank Public Company Limited, a major shareholder and the controlling person of BBLAM, may have a conflict of interests in voting in Agenda 3 and 4. The Secretary to the Meeting informed the Meeting that the Company used the Barcode System of the Thailand Securities Depository Co., Ltd. for the registration and vote counting and that Mr. Kom Vachiravarakarn, the representative from Weerawong, Chinnavat and Peangpanor Limited, the legal advisor, acted as a witness to the vote counting. In addition, in order to promote the Company s good corporate governance, the Secretary to the Meeting also invited minority shareholders to act as a witness to the vote counting. However, no shareholder expressed his/her interest in acting as a witness to the vote counting. The Secretary to the Meeting introduced the Directors, the Executives and the Advisors who attended the Meeting today as follows: Directors presented at the Meeting Kanjanapas Chairman of the Board of Directors / Executive Chairman / Chairman of the Corporate Governance Committee Dr. Anat Arbhabhirama Mr. Surapong Laoha-Unya Mr. Kavin Kanjanapas Mr. Rangsin Kritalug Mr. Kong Chi Keung Prof. (Special) Lt. Gen. Phisal Thepsithar Dr. Amorn Chandara-Somboon Executive Director / Member of the Corporate Governance Committee Executive Director Executive Director Executive Director / Chief Operating Officer / Member of the Nomination and Remuneration Committee / Member of the Corporate Governance Committee Executive Director / Member of the Nomination and Remuneration Committee Independent Director / Chairman of the Audit Committee / Chairman of the Nomination and Remuneration Committee Independent Director Mr. Suchin Wanglee Independent Director / Member of the Audit Committee / Member of the Nomination and Remuneration Committee Prof. (Special) Charoen Wattanasin Independent Director / Member of the Audit Committee / Member of the Nomination and Remuneration Committee / Member of the Corporate Governance Committee Mr. Cheong Ying Chew, Henry Independent Director Executives presented at the Meeting Mr. Surayut Thavikulwat Mrs. Duangkamol Chaichanakajorn Chief Financial Officer Accounting Director 2

3 Mrs. Patchaneeya Pootme Mr. Daniel Ross Miss Chawadee Rungruang Miss Chayada Yodyingtammakul Corporate Communications Director Financial Director Financial Controller Legal Director / Company Secretary Advisors presented at the Meeting Financial Advisor Phatra Securities Public Company Limited Mr. Chainarong Rojanasintu Legal Advisor Weerawong, Chinnavat and Peangpanor Limited Miss Peangpanor Boonklum Independent Financial Advisor Sage Capital Company Limited Miss Rutchanee Chatbunchachai Auditor Earnst & Young Limited Miss Siraporn Ouaanunkun Kanjanapas (Mr. Keeree ), Chairman of the Board of Directors and Executive Chairman, acted as the Chairman of the Meeting, declared the Extraordinary General Meeting of s No. 1/2012 open and proceeded with Agenda 1 accordingly. Agenda 1 Message from the Chairman to the Meeting expressed his appreciation to all shareholders and advisors attending the Meeting. He informed the Meeting that the most important matter of this Meeting is to consider raising funds through the infrastructure fund, which would give a summary of the overall picture in brief, and the advisors would further give more details to the Meeting. The BTS Group is determined to operate the continual and sustainable SkyTrain business. As of December 5, 2012, Bangkok Mass Transit System Public Company Limited or BTSC, our subsidiary, has been operating the SkyTrain business for 13 years and there are another 17 years remaining under the concession. As the Government has a policy to encourage the establishment of an infrastructure fund, the Company believes that this will be a way to raise funds for expanding the Company s business. The expansion of the SkyTrain business requires a large amount of investment. If the Company has a strong financial position and is supported by its capability and experience in operating SkyTrain system, the Company believes that the Government will witness such and this will assist the Company to accelerate the expansion of its SkyTrain business. Compared to other countries, Bangkok still has very few SkyTrain networks. As the Government has a policy to encourage the establishment of an infrastructure fund, the Company believes that this will be an opportunity to sell the future net farebox revenue for the next 17 years of the core SkyTrain system (the Green Line) with an approximate track length of 23.5 km to the infrastructure fund (the Fund ). The achievement of this project will strengthen the Company s financial liquidity and investment capacity. The book value of such farebox revenue is approximately Baht 40,000 million. With regard to the approval from the Meeting, the Company will not sell the net farebox revenue if the selling price is less than Baht 50,000 million. However, the Company has an opportunity to sell the net farebox revenue for more than Baht 50,000 million, depending on several factors, including market conditions and investors demand and interest. 3

4 After the establishment of the Fund, the Company will be able to invest in this Fund. The Company will invest by subscribing for 33.33% of the total investment units of the Fund by using a part of the proceeds derived from the sale of the net farebox revenue by BTSC. With such investment, the Company will hold 33.33% of the total investment units of the Fund, which is the maximum percentage permitted by law. BTSC would not sell to the Fund the Long Term Operation and Maintenance Agreement and continues to operate and receive the benefits and revenues from such. The Fund will be listed on the Stock Exchange of Thailand and the Fund s investment units can be traded in the same manner as shares. If demand is high, the price of investment units may increase. However, if demand is low, the price of investment units may decrease. For this project, the Company only sells the net farebox revenue of BTSC, a subsidiary in which the Company holds 97.46% of the total issued shares, to the Fund, but the Company still operates other businesses. Some shareholders may wonder what will happen after BTSC sells its net farebox revenue, which is one of the Company s core revenue stream. The answer to this question as a role of the management is, if this project is complete, not only our cash position will be strengthen, but the operating result is also likely to perform better as a result of, among the other things, tax privileges, details of which will be further provided by the advisors. After the advisors have given their presentation and explanation, if there are any further questions, the Company will be pleased to respond. Remark: This agenda is for acknowledgement and no casting of vote. After Agenda 1 was completed, assigned the Secretary to the Meeting to conduct the Meeting from Agenda 2 onwards. The Secretary to the Meeting conducted the Meeting in accordance with the agenda as follows: Agenda 2 To consider and adopt the Minutes of the 2012 Annual General Meeting of s The Secretary to the Meeting informed the Meeting that the Company had prepared the Minutes of the 2012 Annual General Meeting of s dated July 26, 2012 and submitted the copy of the said minutes to the Stock Exchange of Thailand within 14 days from the meeting date and to the Ministry of Commerce as required by laws, as well as made available on the Company s website. The copy of the minutes of the 2012 Annual General Meeting of s was delivered to the shareholders along with the Invitation in pages The Secretary to the Meeting gave the Meeting an opportunity to express opinion and make inquiries with regard to this agenda. The shareholders expressed their opinion and made inquiries, and the answers to those inquiries were summarized at the end of this agenda. The Secretary to the Meeting then asked the Meeting to consider and adopt the Minutes of the 2012 Annual General Meeting of s dated July 26, Resolution: The Meeting considered and resolved to adopt the Minutes of the 2012 Annual General Meeting of s dated July 26, 2012 as proposed, with the following voting results: Votes Number of Votes Percentage Approve 7,202,305, Disapprove 108, Abstain 10,875,958 - Void Voting Cards 0 - Total (1,481 shareholders) 7,213,289,566-4

5 Remark: Resolution in this agenda shall be adopted by the majority votes of the shareholders attending the meeting and casting their votes, excluding the abstained votes from the calculation base. Agenda 2 Comments/ Inquiries/ Replies Miss Peangpanor Boonklum Mr. Sakchai Sakulsrimontree asked about the effect on BTS of a statement made in the Invitation Not for publication or distribution, directly or indirectly, in or into the United States. The legal advisor clarified that, as certain parts of the information regarding the infrastructure fund stipulated in the Invitation may be considered an offering of securities under the laws of certain countries, such as the U.S. securities law, it was necessary for such a statement be included in the Invitation. However, the Company has the duty to deliver the Invitation to all shareholders; therefore, the English Invitation includes a similar statement that, This document is not an offering of securities. Before proceeding to Agenda 3, the Secretary to the Meeting informed the Meeting that, since the matters in Agenda 3-5 are related to the infrastructure fund transaction (the IFF Transaction ), and are related to one another. If any of these agenda items are not approved by the Meeting, all of those agenda items shall be deemed disapproved by the Meeting. In order for the Meeting to understand the details of the IFF Transaction to be considered in Agenda 3 through 5 before casting their votes, all details of Agenda 3 through Agenda 5 will be given to the Meeting, and then the votes on each Agenda will be cast accordingly. The Secretary to the Meeting invited Mr. Chainarong Rojanasintu, the financial advisor from Phatra Securities Public Company Limited ( Mr. Chainarong ) and Miss Peangpanor Boonklum, the legal advisor from Weerawong, Chinnavat and Peangpanor Company Limited ( Miss Peangpanor ) to give details about Agenda 3 through Agenda 5 to the Meeting. In addition, the Secretary to the Meeting also invited Miss Rutchanee Chatbunchachai, the independent financial advisor from Sage Capital Company Limited ( Miss Rutchanee ), to give opinions on the IFF Transaction to the Meeting. Mr. Chainarong gave an explanation of the IFF Transaction to the Meeting, the key details of which are summarized as follows: 1. Benefits of the IFF Transaction The IFF Transaction will mutually benefit three parties as follows: (1) The Thai Government The Government wishes to develop the country s transportation system, especially the SkyTrain system in Bangkok and its vicinity, which is one of the first priorities of the Government. The development of the SkyTrain system is one way to drive the country s economy and to increase people s quality of life in society. According to the current National Economic and Social Development Plan ( ), the Government plans to expand the SkyTrain system to a total of 12 lines, with a total length of 508 km., which will substantially increase from the current length of approximately 80 km. (2) Bangkok Mass Transit System Public Company Limited ( BTSC ) BTSC is the leader in providing rapid mass transit services in Thailand, with more than 10 years experience in operating the SkyTrain system. BTSC wishes to continuously expand the SkyTrain business in order to improve the quality of life of people in Bangkok. The investment in the SkyTrain system, which is an infrastructure project, requires a substantial amount of funds to expand, and the need for investment is urgent in order to promptly provide the SkyTrain services to the public as soon as possible. Moreover, this will increase BTSC s revenue, especially when the current concession 5

6 agreement expires in the next 17 years, so it will create long-term sustainable value for the Company. (3) The Capital Market The Stock Exchange of Thailand (the SET ) and the Office of the Securities and Exchange Commission (the SEC ) promote the establishment and investment in the infrastructure fund in order to be a new channel of investment which provides a stable return to investors, and gives investors an opportunity to be an owner of the country s key infrastructure business, with several beneficial schemes, especially tax privileges. The investment in the infrastructure fund will provide investors with the following tax privileges in accordance with the terms and conditions as required by law: (a) (b) (c) Individuals: Dividends received are exempt from personal income tax for a period of 10 years from the date of the establishment of the Fund. Companies listed on the SET: Dividends received are exempt from corporate income tax. Companies incorporated under Thai law, but not listed on the SET: 50% of the dividends received are exempt from corporate income tax. The infrastructure fund is one of alternatives for raising funds from the public for the purpose of investment in and development of new infrastructure networks. 2. Principle and Rationale for Conducting the IFF Transaction The concession agreement for BTSC, which has a 30-year term, has been in operation for 13 years, and expires in the next 17 years. After the concession expires, it will result in a loss of certain parts of the Company s revenue: (i) the farebox revenue from the core BTS SkyTrain system through the Sukhumvit Line (from On Nut Station to Mo Chit Station) and the Silom Line (from the National Stadium Station to Saphan Taksin Station), which are the two major lines operated under the concession agreement; and (ii) the revenue from advertising space on the core SkyTrain system. BTSC is required to transfer the trains to the Bangkok Metropolitan Administration ( BMA ), the grantor of the concession. As a result, BTSC s business size will be smaller. However, BTSC will still earn revenue from the operation of other businesses, including revenue from the 30-year Long Term Operation and Maintenance Agreement entered into by BTSC and Krungthep Thanakom Company Limited, and the revenue from advertising space in areas other than the core SkyTrain system. Therefore, the Company is required to raise funds to expand its business, especially the mass transit business. 3. Investment Opportunity to which the Company Gives Priority The Company will consider the investment opportunity by giving priority to the four main lines of the SkyTrain system, as the Company has an advantage over the competition in operating these mass transit lines. (1) Green Line: Consisting of two lines: from Mo Chit to Saphan Mai, and from Bearing to Samut Prakarn, with a combined track length of 25 km., consisting of 21 stations. It is expected to commence operation by April 2017, with a total project value of approximately Baht 64,500 million, and the bidding process is expected to start in This project is a strategic line covering areas with a dense population, and directly connects to BTSC s current Green Line, from Mo Chit Station and Bearing Station. If the Company becomes the operator of this project, the Company will have a competitive advantage due to low costs from economies of scale, and can facilitate passengers who wish to go to these destinations easily as passengers do not have to leave one train to connect to another train. 6

7 (2) Pink Line: From Khae Rai to Minburi, with a track length of 34.5 km., consisting of 30 stations. It is expected to commence operation around October 2017, with a total project value of approximately Baht 42,000 million, and the bidding process is expected to start in This project will connect to the Green Line at Laksi Turnabout Station. (3) Light Rail Transit Line (LRT): From Bangna to Suvarnabhumi, with a track length of approximately 18 km., consisting of 15 stations. It is expected to commence operation by 2017, with a total project value of approximately Baht 25,000 million. This project is in the process of awaiting for the Cabinet s approval. The project will connect to the Green Line at Bangna Station. The total value of investment for these three projects is approximately Baht 130,000 million. 4. Overall Structure of the Transaction BTSC, a subsidiary of the Company and the concessionaire of the two core lines of the SkyTrain system, will enter into the IFF Transaction by selling the net farebox revenue from the core BTS SkyTrain system to the Fund: the Sukhumvit Line and the Silom Line with a combined track length of 23.5 km., consisting of 23 stations. The revenue from the 30-year Long Term Operation and Maintenance Agreement remains with BTSC. Other businesses of BTSC, such as the business of VGI Global Media Public Company Limited ( VGI ), media business and shares in VGI held by BTSC, as well as the service business of Bangkok Smartcard System Company Limited or Rabbit Card, and other businesses are still owned by BTSC and having opportunities to continue growing in the future. The Fund will raise money by offering investment units to both domestic and international investors, and will use the entire proceeds to invest in the net farebox revenue, which will be at least Baht 50,000 million. The Company will invest in this Fund by subscribing for 33.33% of the total issued investment units of the Fund, which is the maximum investment percentage permitted by law. The net farebox revenue to be sold to the Fund by BTSC is all farebox revenue to be generated from the operation of the core SkyTrain system, and compensation and money to be received by BTSC from the BMA arising out of or related to the concession agreement less operating expenses, such as labor, electricity, maintenance, administrative expenses or SG&A (Selling, General & Administrative Expenses), and capital expenditures (for example, investment in rolling stocks to provide services to passengers). In addition, the Fund will pay a management fee and/or incentive fee as an incentive for BTSC if the actual net farebox revenue is higher than the projection, at the rate set out in the agreement. 5. Management Structure of the Fund The Company, as a shareholder of BTSC, will support these transactions by supporting the performance of BTSC s obligations having toward the Fund. The Company will provide a guarantee (with limited liability) to secure the obligations of BTSC, and will pledge all shares in BTSC held by the Company to secure the obligations of BTSC. Where BTSC breaches its obligations, the Fund may enforce such security and become BTSC s shareholder. However, the support and guarantee will be limited to the shares that the Company holds in BTSC. Moreover, the fund management company that will manage the Fund will take part in BTSC s management. The structure of BTSC s Board of Directors will consist of the following: (1) one-third of the directors will be representatives from the Company, (2) one-third of the directors will be independent directors and (3) one-third of the directors will be representatives from the Fund in order to oversee the performance of BTSC s obligations having toward the Fund. In addition, a fund supervisor will be appointed to oversee the interests of the unitholders. 7

8 6. The Holding of Investment Units by the Company The Company will obtain a bridge loan from a commercial bank to invest in the Fund by subscribing for one-third of the total investment units of the Fund. After fund raising from the public and the establishment of the Fund, the Fund will use such proceeds to purchase the net farebox revenue. BTSC will distribute the proceeds for, among other things, dividend payments, capital reduction, loans or other debt instruments, and the Company will use such proceeds to repay the bridge loan. 7. Objective for the Use of Proceeds Assuming that the net farebox revenue will be sold for Baht 60,000 million, the Company will invest the first portion of approximately Baht 20,000 million in the Fund by subscribing for one-third of the total investment units of the Fund; the second portion of approximately Baht 10,600 million will be deposited by BTSC with a financial institution to guarantee the principal and interest of BTSC s debentures; and the remaining portion of approximately Baht 29,000 million will be allocated by BTSC for investing in the four priority mass transit projects as mentioned above. If there is any remaining cash and the Company has good liquidity, the Board of Directors or the shareholders meeting may consider the declaration of a special dividend to shareholders. However, in paying the special dividend, the Company will consider it together with the future business plan and capital investment requirements, as well as any legal restrictions and other factors. 8. Benefits to the Company s s The IFF Transaction will benefit the Company s shareholders as follows: (1) Create long-term value of the Company for shareholders; (2) Create opportunities to invest in new lines of the mass transit system in order to increase the long-term revenue of the Company; (3) The Company will have sufficient cash and the ability to invest in the mass transit system projects which are opened for participation, including both Green Line extensions and other lines. (4) The Company will receive a stable return from the investment in the Fund in the form of dividends, which will have the opportunity to increase in line with the number of passengers when the extension lines are in operation in the near future. Miss Peangpanor, the legal advisor from Weerawong, Chinnavat and Peangpanor Limited, provided an explanation regarding the IFF Transaction and legal issues related to the concession agreement to the Meeting; the key details of which are summarized as follows: 1. Agreements related to the IFF Transaction and their Material Terms (All of these agreements were under negotiation) (1) The Net Revenue Purchase and Transfer Agreement, to be entered into between BTSC and the Fund, has the following material terms and conditions: (a) The net farebox revenue to be sold under this agreement is all farebox revenue to be generated from the operation of the core BTS SkyTrain system less all costs and expenses in connection with the operation and maintenance of the core BTS SkyTrain system. In addition, the revenue to be sold includes all cash or revenue arising from any claims, awards, or judgments. Please see the Invitation on pages 3-4 for further details. 8

9 (b) (c) The selling price of the net farebox revenue is expected to be approximately Baht 50,000 to 60,000 million, or may be higher. However, it shall not be lower than Baht 50,000 million. The final price of the net farebox revenue will be agreed on between BTSC and the Fund. In this respect, the Fund may procure a loan in a certain amount in order to pay the price, but this will be subject to negotiations between the Fund and its lender. The key obligations of BTSC are: 1) BTSC shall deliver to the Fund the net farebox revenue on a daily basis. 2) BTSC shall deposit the O&M expenses of the core BTS SkyTrain system according to the daily projection in the account opened by BTSC with the fund supervisor, and the O&M expenses can be withdrawn from the account at the end of each month, and will be reconciled quarterly. 3) Where the net farebox revenue received for any particular period exceeds the selling price allocated for that period, the Revenue Department may consider the Fund to be engaging in a business having the nature of a commercial bank, and will be subject to specific business tax of 3.3%. In that case, BTSC has agreed to reimburse the Fund for the specific business tax. However, at present, the Revenue Department is considering this issue, and if specific business tax is exempt, BTSC will not have that tax burden. (d) (e) BTSC will grant the Fund the right to purchase and the right of first refusal to purchase certain projects under: 1) any extension of the concession agreement after its expiration in next 17 years; 2) the 30-year Long Term Operation and Maintenance Agreement; and 3) other agreements in relation to the mass transit system in Bangkok and its vicinity. The purchase price will be subject to negotiation between the parties. If they fail to reach an agreement, the parties shall follow the procedures and conditions set out in the agreement. The price for the right to purchase shall, in no case, be less than the investment cost of the asset plus the rate of return set out in the agreement. The exercise of the right to purchase shall be made in accordance with the procedures set out in the agreement, including obtaining approval from the board of directors and the shareholders meeting in compliance with the law. With regard to the right of first refusal, if any third party offers to purchase the asset, BTSC shall inform the Fund of such an offer, and the Fund will have the right of first refusal to purchase at the same price offered by that third party. The right is given for a period of 17 years, provided that that period may be extended according to the term of the relevant project. For example, the right to purchase and the right of first refusal to purchase the assets under the 30-year Long Term Operation and Maintenance Agreement will be extended according to the term of that agreement. BTSC will give the Fund a right to participate in its management. For this purpose, the Fund will be entitled to nominate persons to be appointed as the directors of BTSC for one-third of the board of directors. Passing resolutions in the reserved matters, including the incurrence of expenditure or new indebtedness in the amount or type not permitted, making new investment, appointment or removal of certain senior management members, capital restructuring (such as the capital reduction or amalgamation) or change of auditor, shall require approval from the directors nominated by the Fund. 9

10 (f) (g) (h) BTSC will be entitled to receive the management fee and incentive fee at the prescribed rate. If the actual net farebox revenue is exceeding the projected net farebox revenue for such period, BTSC s incentive fee shall increase accordingly. There are certain undertakings that BTSC shall comply with or is restricted from carrying out, including engaging in a new business, amending or terminating the concession agreement, incurring any new indebtedness in the amount or type not permitted, and amending the agreements in connection with the operation and maintenance of the core BTS SkyTrain system, unless the approval of the Fund is obtained in advance. Events of default, such as, 1) Failure to deliver the net farebox revenue, unless such a failure is caused by a technical error, and payment is made within 5 days of its due date; 2) Failure to comply with any obligation under the agreement, and failure to remedy such breach within the specified period; 3) Breach of other financing agreements for the specified amount (cross default); 4) Business reorganization, a composition or compromise with creditors in general, or entering into bankruptcy proceedings; and 5) Unenforceability of the agreements in connection with the IFF Transaction. (i) Consequences of Events of Default 1) The Fund will become the creditor and be entitled to enforce the pledge of BTSC shares made by the Company, or to exercise the right to purchase BTSC shares from the Company under the Agreement to Purchase and to Sell Shares. 2) If the event of default is due to a breach of the concession agreement, the Fund may exercise its step-in right as the creditors representative under the concession agreement. 3) The Fund agrees to cause BTSC to separate the revenue to be generated from the assets which are not bought by the Fund, or to transfer the assets which are not bought (except for the assets which are required for the operation of the core BTS SkyTrain system), such as VGI shares, to the Company or any person designated by the Company. The Fund will assume both risks and rewards; namely, if the net farebox revenue obtained exceeds the purchase price paid by the Fund, such premium will belong to the Fund. However, if there are expenses and maintenance costs incurred or any related problems arise, the Fund shall also assume such risks. (2) The Sponsor Support and Guarantee Agreement, to be entered into between the Company and the Fund, has the following material terms and conditions: (a) The Company shall give a guarantee to secure the obligations of BTSC, but not the payment obligation. As a result, the Fund will receive the actual net 10

11 farebox revenue. The Company has no obligation to pay the projected net farebox revenue. (b) (c) (d) (e) (f) (g) (h) The Company shall maintain its current shareholding percentage in BTSC. The Company shall support BTSC s operation in accordance with the Net Revenue Purchase and Transfer Agreement, such as appointing people nominated by the Fund to be one-third of BTSC s directors, and carrying out the reserved matters. The Company will pledge its shares in BTSC to secure its obligations under the agreement. The Fund cannot enforce the Company to perform its obligations by any means other than enforcing against all BTSC shares held by the Company under the Share Pledge Agreement or the Agreement to Purchase and to Sell Shares, and, upon transfer of BTSC shares to the Fund, the Company will be released from its guarantee obligation. The Company and the Fund may agree that the Company makes the payment to the Fund in place of enforcement upon BTSC shares. However, this agreement will be subject to further negotiation between the Fund and the Company in the future. In the event that the Concession Agreement expires and the Fund releases the pledge of BTSC shares under the Share Pledge Agreement, but any claim which the Fund is entitled to obtain and for which BTSC is exercising its rights or is about to deliver to the Fund remains, the Company agrees to guarantee the obligations of BTSC to deliver to the Fund the payment obtained or to be obtained by BTSC. The Company (including its affiliates) will grant the Fund the right to purchase and the right of first refusal to purchase the projects in relation to the mass transit system in Bangkok and its vicinity, in the same manner as BTSC. (3) The Share Pledge Agreement, to be entered into between the Company and the Fund, has the following material terms and conditions: (a) (b) The Company shall pledge all of its BTSC shares (currently 97.46%) to the Fund in order to secure its obligations under the Sponsor Support and Guarantee Agreement. To enforce the share pledge, the parties agree to set a condition for the public auction that the third-party awarded bidder is required to enter into an agreement in the form and substance substantially similar to the Sponsor Support and Guarantee Agreement. (4) The Agreement to Purchase and to Sell Shares, to be entered into between the Company and the Fund, has the following material terms and conditions: (a) (b) The Company agrees to sell its BTSC shares to the Fund upon the occurrence of an event of default under the Net Revenue Purchase and Transfer Agreement and the exercise notice being delivered by the Fund. The exercise of the right to purchase shares is for setting off the purchase price against the Company s obligations under the Sponsor Support and Guarantee Agreement. 11

12 2. Unit Subscription Transaction The Company will subscribe for one-third of the total investment units of the Fund. Moreover, the Company may have an agreement with the underwriters that it will not sell or dispose of any investment units for a certain period in order to give investors confidence in the Fund. The Company will finance its subscription through a bridge loan from a commercial bank, and when BTSC receives the proceeds from the sale of the net farebox revenue and distributes such proceeds to the Company in the form of an intercompany loan, the Company will use that intercompany loan to repay the bridge loan to the commercial bank. 3. Legal Issues in Entering into the IFF transaction and Concession Agreement Weerawong, Chinnavat and Peangpanor Limited, as the legal advisor, provided its opinions to the SEC and BTSC, which can be summarized as follows: (1) Having reviewed the concession agreement and the agreements in connection with the IFF Transaction, the legal advisor views that this transaction is the sale of net farebox revenue, and does not constitute any amendment to the concession agreement. As a result, it is not required to comply with the law on private sector participation in a government undertaking. (2) Having reviewed the concession agreement and the agreements in connection with the IFF Transaction, the legal advisor views that the IFF Transaction does not constitute any breach to the concession agreement entered into between BTSC and the BMA. BTSC is entitled to collect the farebox revenue under the concession agreement and therefore, as the owner of the asset, BTSC can manage its asset in whatever manner it wishes, including selling the net farebox revenue to the Fund. 4. Events of Default for Termination of the Concession Agreement by BMA The concession agreement may be terminated in any of the following three circumstances. The first circumstance is in relation to system testing, which was already conducted and completed. The remaining two circumstances are as follows: (1) BTSC becoming bankrupt; or (2) BTSC s willful breach of the concession agreement in a material and continuing nature. The BMA is required to give one month s prior notice of termination if the default cannot be remedied. If the default is capable of being remedied, then not less than six months prior notice of termination must be given. In an emergency case, to ensure that the system continues to provide service to the public, the BMA in cooperation with BTSC s creditors may operate the core BTS SkyTrain system on a temporary basis. If BTSC is unable to cure the default within the specified period, BTSC s creditors (represented by the Fund as notified to the BMA pursuant to the instructions given to the BMA) will be entitled to procure another party to accept an assignment of the rights and obligations under the concession agreement within 6 months of the date of the BMA s written notice to the representative of the creditors. If the creditors can procure a party to accept the assignment of the rights and obligations within the specified period, the BMA is required to accept the assignment and not to terminate the concession agreement. 5. Conditions Precedent for the Sale and Transfer of the Net Farebox Revenue (1) The shareholders meeting of BTSC and the shareholders meeting of the Company resolve to approve the entry into the transaction. In this regard, the shareholders meeting of BTSC convened earlier this morning already approved the transaction. 12

13 (2) The approval or consent required under the relevant agreements has been obtained. BTSC set the date of the meeting of debentureholders on December 19, 2012 and will procure a letter of guarantee to the debentureholders by placing the proceeds received from the sale of net farebox revenue with the bank in an amount equal to the principal and interest to be repaid throughout the term of debentures to secure the issue of the letter of guarantee. BTSC will seek approval of the amendment of the terms and conditions of the debentures. If the meeting of the debentureholders approves the amendment, BTSC will give the debentureholders a put option for early redemption, to be exercised by January 2013, regardless of whether or not the IFF Transaction takes place. Upon the letter of guarantee being effective, certain conditions and restrictions will be cancelled or amended so that BTSC has the flexibility to operate the business, such as capital reduction or loans to be granted to its parent company. (3) The SEC approves the establishment of the Fund. (4) The offering of investment units is successful. In addition, on the closing date for the sale and transfer of the net farebox revenue, which will occur after the offering of investment units and the establishment of Fund have been completed, BTSC shall amend its Articles of Association by setting out certain reserved matters to the extent permitted by law, register the appointment of directors representing the Fund to the board of directors of BTSC, register the share pledge, and deliver share certificates to the Fund or a person designated by the Fund. Miss Rutchanee, the Independent Financial Advisor from Sage Capital Company Limited, expressed the financial advisor s opinion on the following transactions: the Net Revenue Sale Transaction, the Security Transaction, and the Unit Subscription Transaction. The opinions consist of two parts: 1) an opinion on the fairness of entering into the transactions, meaning whether or not the value of the sale of the net farebox revenue at the minimum price of Baht 50,000 million is fair; and 2) an opinion on the reasonableness for the entry into those transactions. The key details of this opinion can be summarized as follows: 1. Fairness of the Sale Price of the Net Revenue With regard to the fairness of the price of the net farebox revenue to be sold to the Fund, the Independent Financial Advisor assessed the fair value of this transaction as if all of the assets of the business of the core BTS SkyTrain system had been sold to the Fund, using the following four approaches: (1) Net Book Value of Assets: Based on BTSC s reviewed carve-out financial statements as of September 30, 2012, the book value of assets of the core BTS SkyTrain system is Baht 43,162.5 million. (2) Market Comparables: The assessment using this approach was made by making a comparison to Bangkok Metro Public Company Limited ( BMCL ), which is the only company listed on the SET whose business is similar to that of BTSC. The ratios used by the Independent Financial Advisor in the comparison are: 1) Price to Earnings Ratio (P/E Ratio); and 2) Price to Book Value Ratio (P/BV Ratio). However, the P/E Ratio could not be used, as BMCL reported a loss in its 4 previous quarters. Although the P/BV Ratio of BMCL could be used, the result is quite high compared to the industry or the P/BV Ratio of companies listed on the SET. As BMCL has continued making loss in its operating results, its book value is quite low, while the market price of BMCL shares is quite stable. As a result, the P/BV Ratio of BMCL is quite high. The Independent Financial Advisor, therefore, was of the opinion that it is not appropriate to use this approach as a benchmark for this valuation. 13

14 (3) Enterprise Value of Assets: Under this approach, the market price of the Company s shares will be used to determine the Company s business value, and the value of other businesses which form part of the Company will then be assessed. In regard to the media business, as VGI is a company listed on the SET, the market price of VGI shares was used to assess the value of VGI s business. In regard to the property business, the value appraised by the independent appraiser for all land and buildings owned by the Company and its subsidiaries was assessed. The book value of the service business was applied as there is no market value to be used for this assessment. Consequently, the value of the core BTS SkyTrain system is ranging from Baht 42,262.2 to Baht 45,402.4 million. (4) Discounted Cash Flow: The Independent Financial Advisor estimated the cash flow from the core BTS SkyTrain system business throughout the remaining concession term (17 years). The estimate of the net farebox revenue was conducted by Systra MVA (Thailand) Limited ( MVA ), while the estimate of the expenses was conducted by PB Asia Limited ( PB ). Both MVA and PB are consulting firms to domestic and international transportation companies with expertise in the transportation business, and are reliable internationally. Under this approach, the net present value of the net farebox revenue of the core BTS SkyTrain system is Baht 51,608.0 million for the base case. In addition, the Independent Financial Advisor conducted a sensitivity analysis by adjusting the ridership estimated by MVA at the rate of 2.5% (upwards and downwards) and by adjusting the SET market return at the rate of approximately 1% (upwards and downwards), which resulted in the net present value of the net farebox revenue of the core BTS SkyTrain system ranging from Baht 47,027.9 to Baht 56,644.9 million. It is of the Independent Financial Advisor s view that the Net Book Value of Assets approach is not suitable, as it does not reflect either the fair value of BTSC s liabilities or assets, nor the operating results and ability to generate profits in the future. With regard to the Market Comparables approach, it is common and appropriate to use this approach for valuing a business if there is more than one company in a similar industry and of comparable size to be used as a benchmark. However, in the case of BTSC, BMCL is the only company listed on the SET having a business similar to BTSC. The Independent Financial Advisor believes that using only one company might not be appropriate for establishing an industry benchmark to be used for comparison and for determining the value of BTSC s business. Moreover, BMCL has sustained a loss, and its P/E Ratio could not be determined, while its P/BV Ratio is too high compared to the overall industry and the SET. Therefore, the Independent Financial Advisor believes that the Market Comparables approach is not suitable for determining the value of the core BTS SkyTrain system. As to the Enterprise Value of Assets approach, the Independent Financial Advisor found that only the market value of the Company and VGI is available, while other businesses which are components of the Company do not have a market price and do not reflect the appropriate value of such businesses. As a result, it is not appropriate to use this approach to determine the fair value. The last approach proposed by the Independent Financial Advisor as the appropriate one for assessing the fair value of the core BTS SkyTrain system business is the Discounted Cash Flow approach. This approach will take into account the operating results and the ability to generate profits in the future, and the valuation is based on assumptions made by reliable advisors which are internationally recognized MVA and PB. As a result, the appropriate value of the core BTS Sky Train system business is between Baht 47,026.9 and Baht 56,644.9 million, while the minimum sale price of the net farebox revenue proposed by the Company to the Meeting is Baht 50,000 million, which is in the range assessed by the Independent Financial Advisor. 14

15 2. Reasonableness of the entry into IFF Transaction The Independent Financial Advisor believes that entering into these transactions would benefit the Company and BTSC in the following ways: (1) The proceeds obtained from the IFF Transaction can be used as a capital base for the Company or BTSC for bidding for the new SkyTrain projects that the Group considered it has an advantage in the investment compared to other operators, which will enhance the chances of winning the bid. (2) The ability to generate profits of the Group will increase if the Group wins the bid for the new SkyTrain projects. (3) The profit from the sale of the net farebox revenue as of the transaction date will not be subject to corporate income tax, but BTSC will gradually recognize the revenue as taxable income throughout the concession period. In the past, the Revenue Department considered a transaction similar to BTSC s net revenue sale transaction as a financing transaction, so the consideration received by BTSC from the sale of the net farebox revenue will be deemed debt financing borrowed from the Fund. If the Revenue Department considers this transaction a financing transaction, as of the transaction date BTSC will not have to recognize the profit from the sale of the net farebox revenue. Therefore, that profit will not be subject to corporate income tax as of the transaction date. In addition, dividends and capital returns to be obtained by the Company from holding investment units in the Fund will not be subject to corporate income tax. (4) BTSC will have a saving on the corporate income tax throughout the remaining concession period if the Revenue Department considers the sale of the net revenue to be a financing transaction. As a result, the money to be delivered by BTSC to the Fund throughout the concession term will be deemed the repayment of principal and interest on a loan. Such interest can be recorded as BTSC s tax deductible expense, and BTSC will benefit from the tax shield on the interest payments at its present value of approximately Baht 6,450 million. In regard to the specific business tax of 3.3% of the interest payment which BTSC agrees to reimburse to the Fund if the specific business tax is not exempted, the present value of the specific business tax is approximately Baht 1,065 million. 3. Issues to be taken into Consideration The Independent Financial Advisor explained to the Meeting the issues to be taken into consideration in entering into the Net Revenue Sale Transaction, the Security Transaction, and the Unit Subscription Transaction. The key details of these transactions are summarized as follows: (1) Change in the structure of revenue and expenses after the transfer of the net revenue to the Fund: From the accounting perspective, there are two possible ways to recognize the sale of the net farebox revenue, but neither is conclusive. The first way is to treat the transaction as a true sale of the assets. The second way is to treat the transaction as a financing transaction as mentioned previously. If the sale of the net farebox revenue is considered a true sale, BTSC will recognize the profits from the sale as of the transaction date, and will not recognize revenue and expenses in relation to the core BTS Sky Train system after the sale of the net farebox revenue to the Fund. The Company will recognize the revenue arising from dividends received from the investment of one-third of the total investment units, and BTSC will recognize the revenue from the management fee and/or incentive fee. However, if the Net Revenue Sale Transaction is considered a financing transaction, the revenue and expenses in connection with the core BTS Sky Train system will be recognized by BTSC as per the current practice, except for the interest payable, which will increase, 15

16 as the sale of the future net farebox revenue is considered long-term debt financing obtained from the Fund, and BTSC is required to pay interest until the concession agreement expires. (2) Risks from a loss of opportunity to enjoy full benefits from the core BTS SkyTrain system if actual ridership is higher than the estimation by MVA: This might occur as BTSC will sell the net farebox revenue to the Fund. However, the Company will benefit indirectly if BTSC can generate more revenue and transfer it to the Fund, and the Fund can then pay more dividends to the Company, as a holder of one-third of the total investment units. Moreover, BTSC may receive more management fees and/or incentive fees if BTSC generates more revenue than projected. (3) Change in the structure of assets and shareholders equity: This will be the case if this transaction is considered a true sale. The elevated rail project costs and assets in relation to the core BTS SkyTrain system will not be set out in the accounts, but cash proceeds from the sale of the net farebox revenue, with certain proceeds reserved for paying principal and interest to BTSC debentureholders and for investing in the Fund by the Company will be set out in the accounts instead. s equity will increase as the profit from the sale of the net farebox revenue is recognized. However, if the transaction is considered a financing transaction, the elevated rail project costs and assets in relation to the core BTS SkyTrain system will remain in the accounts and cash equal to the proceeds received from the sale of the net farebox revenue will increase. Therefore, the assets and liabilities equal to the value of the sale of the net farebox revenue will increase, while shareholders equity will not change. (4) Risks of the Company s shareholders from a possible change in return on investment in the form of a dividend: This depends on the ability to generate a profit from the new businesses or projects that the Company will invest in. For example, if the Group wins the bidding for the new SkyTrain projects, shareholders will have an opportunity to receive more dividends in the future. However, if the Group cannot win the bidding for the SkyTrain projects, but invests in another business, then it shall consider the return from the potential operating result of those projects instead. (5) If there is an event of default caused by BTSC in the future, it may have a material effect on the financial conditions and results of operation of the Group: If BTSC breaches the agreement, and this results in the transfer of all BTSC shares held by the Company to the Fund, it may have a material adverse effect on the financial condition and results of operation of the Group. From all of the benefits mentioned above and the reasonableness of the appraised price, the Independent Financial Advisor was of the opinion that the Meeting should approve the entry into these three IFF transactions. However, the decision is at the shareholders discretion. The details of the opinion of the Independent Financial Advisor are set out in Enclosure 5 of the Invitation. The Secretary to the Meeting gave the Meeting the opportunity to express opinions and make inquiries about the IFF Transaction (Agenda 3 through Agenda 5). The shareholders expressed their opinions and made inquiries, and the replies to those inquiries can be summarized as follows: IFF Transaction (Agenda 3 5) Comments/ Inquiries/ Replies Mrs. Tassaneeya Kongsuwan raised the following questions: (1) Will BTSC have any risk associated with revenue to be received in the next 17 years as projected? (2) Will the value of the Fund at Baht 50,000-60,000 million cover the revenue of the next 17 years, has the 16