The Minutes of the Extraordinary General Meeting of Shareholders 1/2013 of Khonburi Sugar Public Company Limited

Transcription

1 Enclosure No. 1 The Minutes of the Extraordinary General Meeting of Shareholders 1/2013 of Khonburi Sugar Public Company Limited Date, Time and Venue The Meeting was held on Tuesday, February 5, 2013 at hr. at Bu-nga Room, Golden Tulip Sovereign Hotel at 92 Soi Saengcham, Rama 9 Road, Bangkapi, Huay Kwang, Bangkok Attending Directors 1. Mr. Suthep Wongvorazathe Chairman of the Board, and Chairman of the Executive Committee 2. Dr. Tawatchai Nakhata Chairman of Audit Committee and Independent Director 3. Mr.Chusak Prachayangprecha Audit Committee and Independent Director 4. Mrs. Suvimol Krittayakiern Audit Committee and Independent Director 5. Mr. Takon Tawintermsup Director, Executives Director and Managing Director 6. Mr. Sran Smutkochorn Chairman of Risk Management Committee and Independent Director 7. Mr. Somkiat Twiltermsup Director, Executive Director and Risk Management Committee 8. Mr. Issara Twiltermsup Director, Executive Director and Risk Management Committee 9. Mr. Amnart Rumpoeypong Director and Risk Management Committee Attending Executives 1. Associate Prof Sahaton Rattanapijit Legal Advisor 2. Mr. Somtawin Boonbanyen Assistant Managing Director, Production and Raw Materials 3. Mrs. Pornpun Boonchaisri Assistant Managing Director, Accounting and Finance 4. Mr. Rathvudh Sae-Tang Director of Sale and Marketing 5. Mr. Thanthit Kasemsup Director, Business Development 6. Ms. Surawee Puangthong Accounting and Finance Manager 7. Mr. Manawin kongto Internal Audit Manager 8. Mr. Sophon Permsirivallop Auditor 9. Ms. Punyaporn Vaiyangkul Auditor 10. Mr. Annop Sangvanich Financial Advisor, OptAsia Capital Co., Ltd. 11. Mrs. Pornpinun Assawawatthanaporn Legal Advisor, Baker & McKenzie Co., Ltd. 12. Ms. Punwadee Ratisoonthorn Legal Advisor, Baker & McKenzie Co., Ltd. 13. Ms. Thanathorn Sukaram Company Secretary 7

2 The Meeting started at hr. Mr. Suthep Wongvorazathe, the Chairman, acting as the Chairman of the Meeting, informed that Khonburi Sugar Public Company Limited has held 500,000,000 common shares at a par value of Baht 1 per share, and the Company s paid-up registered capital totaled Baht 500,000,000. In this Extraordinary General Meeting of Shareholders 1/2013, there were 117 shareholders and 107 representatives by proxy present at the Meeting totaling 224 shareholders holding 334,389,552 shares or it is accounted for % of the total issued capital shares which were higher than one-thirds of total issued capital shares of the Company. This constituted a quorum according to Section 103 of the Public Company Limited Act B.E (1992) and Section 38 of the Articles of Association of the Company. The Chairman, therefore, called the Extraordinary General Meeting of Shareholders 1/2013 to consider matters under the agenda stated in the Invitation Letter for this Meeting. Before the Meeting convened, the Chairman assigned Mrs. Pornpun Boonchaisri, Assistant Managing Director, Accounting and Finance, to inform the shareholders of the meeting and voting procedure. Mrs. Pornpun Boonchaisri informed that, for the registration and counting of votes in this Meeting, in order to facilitate the shareholders attending the Meeting and to obtain accurate and transparent results of vote counting, the Company used the barcode system and service provided by Quidlab Co., Ltd. to count the votes. The voting and vote counting procedure are as follows: 1. One share is entitled to one vote. Each shareholder has votes equal to the number of shares he/she holds. A shareholder may cast the vote approve, disapprove or abstained votes according to the total votes held, which shall not be split for voting differently in the same matter, except in case of the proxy of foreign shareholders who have custodian in Thailand only. 2. Providing that any shareholder casts disapproved or abstained votes, he/she can use the voting slip provided by the Company for voting, and sign his/her name on it. The Company will collect the voting slips from the shareholders who cast disapproved and abstained votes, and deduct them from all the qualified votes at the Meeting of which the remainder would be counted as approved votes in that agenda. The voting result will be announced to the shareholders in the following agenda. The Company will keep the voting slips as evidence. 3. In case that any shareholder are not present at the meeting room on any agenda of the Meeting, he/she must inform his/her absence at the registration desk so that his/her votes will be deducted. When such shareholder returns to the Meeting, he/she must inform the officer to include their votes to the voting results. 4. The representatives by proxy presented need not write down on the voting slip at the Meeting. Then, the Chairman preceded the Meeting with the following agenda. Agenda 1: To consider and adopt the minutes of the Annual General Meeting of Shareholders No.2/2012 held on April 26, 2012 The Chairman proposed the Meeting to adopt the Annual General Meeting of Shareholders No.2/2012 held on April 26, The copy of the minutes of the meeting has already been sent to the shareholders for consideration along with the Invitation Letter for this Meeting. The details were stated in Enclosure No.1. The Chairman allowed the shareholders to inquire and show opinions about the above issue. 8

3 Shareholders opinions Mr. Hangchai Akkawasakul, Shareholder present at the Meeting, shared his opinion that all names of shareholders should be recorded in the minutes of the meeting. Mr. Sakchai Sakulsrimontri, Shareholder present at the Meeting, expressed his opinion that the Company should give some souvenirs to the shareholders, and the meeting place should be changed because travelling to attend the Meeting here was inconvenient. He also proposed that the Company should arrange the Company visit at the factory. Mr. Suppakorn Chinpongpaiboon, Shareholder present at the Meeting, expressed his opinion that the Company should arrange the Company visit during the crushing season so that the shareholders could observe the entire production process. s The Chairman explained that the Management would consider if the Shareholder s advice could be implemented. When no question or no more opinion was raised from shareholders, the Chairman proposed the Meeting to vote for this agenda. Resolution: After consideration, the Meeting adopted the minutes of the Annual General Meeting of Shareholders No. 2/2012 held on April 26, 2012 by the majority of votes of shareholders present at the Meeting and casting their votes as follows: Approved 334,321,006 votes, equal to % Disapproved 23,046 votes, equal to % Abstained 310,000 votes, equal to % Total 334,654,052 votes, equal to % Agenda 2: To consider and approve the increase of registered capital of the Company from Baht 500,000,000 to Baht 600,000,000 by issuance of capital-increase ordinary shares totaling 100,000,000 shares at a par value of Baht 1 per share, and the amendment of Clause 4 of the Memorandum of Association of the Company to be in line with to the Company s capital increase The Chairman assigned Mr. Takol Tawintermsup, Managing Director, and Mr. Annop Sangvanich, Financial Advisor from OptAsia Capital Company Limited, to report to the Meeting the background of this capital increase, and joining the business alliance with the Mitsui Group. Mr. Takol Tawintermsup, Managing Director, reported that, the Board of Directors of the Company held the meeting on December 17, 2012, and passed the resolution to approve such capital increase, issuance and offer for sales of warrants to purchase ordinary shares of the Company. The Company has signed the Share Subscription Agreement and the Strategic Alliance Agreement with Mitsui & Co., Ltd and Mitsui Sugar Company Limited on December 17, 2012 pursuant to details sent to every shareholder together with the Invitation Letter for this Meeting. 9

4 Mr. Annop Sangvanich, Financial Advisor from OptAsia Capital Co., Ltd., presented the details about business alliance. The key issues are summarized below. The Company and the Mitsui Group have been the business partners for a certain period. Both parties have agreed to join hands as business alliances. The Company also foresees the Mitsui Group s potential, including its experience in operating the sugar business in local and global markets, manufacturing technologies, trademark as well as good reputation and achievements in operating diverse businesses for a long time. The Mitsui Group is ready to give the capital support for the Company s business expansion. Furthermore, the Company would obtain some technical assistance in terms of production, and sales and purchase of sugar between both. To elaborate, the Mitsui Group would sell some raw sugar to the Company whereas the Company would sell white sugar to the Mitsui Group. Both parties would also have the marketing cooperation in distributing the high-quality sugar in overseas markets in order to enrich the Company s profitability. Therefore, the Company plans to increase the capital of Baht 100 million to Baht 600 million (par value of Baht 1 per share), and to allocate the total capital-increase shares in a private placement to 2 companies in the Mitsui Group; namely, Mitsui & Co., Ltd.; and Mitsui Sugar Company Limited. The first 50 million shares would be promptly allocated to the Mitsui Group at the price of Baht per share. Then, the Mitsui Group would be allocated for 50 million warrants to be converted into 50 million new ordinary shares within a period of 2 years (1 warrant per 1 new ordinary share). The warrant price is Baht 0.05 per warrant whereas the exercise price is Baht per share. Consequently, the Company gets the first portion of capital increase fund amounting to Baht 515 million, which would be spent for the Company s operating expansion, improvement of manufacturing efficiency, and revolving capital. As the result of the subscription of the first portion of shares, the Mitsui Group s shareholding will be accounted for 9.1% and this shall be increased to 16.7% after the conversion of all warrants, to which the Company will receive more capital increase fund for Baht 635 million. The Company shall get the capital-increase sum totaling Baht 1,150 million. This transaction is not categorized as entering into a connected transaction in accordance with Section 89/12 of the Securities and Exchange Act B.E and other related regulations, and it is not categorized as the offer for sales of shares at a low price as prescribed by the SEC (lower than 90% of the market price) by considering the weighted average market price of the Company s ordinary shares traded on the SET during 15 consecutive business days prior to the date the Board of Directors passed the resolution to propose this matter to the Meeting of Shareholder to approve the Company s offer for sales of capital-increase shares (from November 22, 2012 to December 14, 2012) when the price was equivalent to Baht per share. The Chairman added that, in allowing the Mitsui Group to be the business alliance and joint investor with the Company, the Company had to increase its registered capital, and amend Clause 4 of the Memorandum of Association of the Company to be relevant to such capital increase. By the 100 million capital increase, it would be divided into 100 million ordinary shares at a par value of Baht 1 per share. The existing registered capital amounting to Baht 500 million would be increased to be Baht 600 million, divided into 600 million ordinary shares at a par value of Baht 1 per share. The detail of the increase of registered capital as well as the amendment of Clause 4 of the Memorandum of Association of the Company were specified in the Invitation Letter sent to all shareholders earlier. 10

5 The Chairman proposed the Meeting to pass the resolution for this agenda. The approval required not less than three-fourths (3/4) of affirmative votes of total votes from all shareholders who were present at such Meeting and were eligible to vote. The Chairman allowed the shareholders to inquire and show opinions about the above issue. Mr. Supoj Uachailertkul, Shareholder present at the Meeting, raised questions: 1) whether the Mitsui group would delegate its people to join the Company s management team or not; 2) if there were any conditions that the Mitsui Group would hold the Company s shares forever; 3) the Management should advice on benefits the Company would obtain from this transaction; and 4) if there was any analysis on potential risk factors of this strategic alliance. The Chairman explained that: 1) there were not any conditions on delegating Mitsui s people to join the management team because, at the initial stage, the Mitsui Group held a small portion of shares; 2) there were not any conditions on the length of holding of shares, but, normally, the Mitsui Group prefers long-term investment; 3) one obvious benefit from this joint investment was the inter-trading. In addition, there will be and co- planning to initiate additional joint investment opportunities in the future; and 4) there may be 2 risks, that is, i) financial risk however, this was not the high risk for the Company because Mitsui was the one to put money and invest into the Company, and ii) business competition risk the Mitsui Group has operated 2 other sugar mills, but they are located so far from Khonburi sugar mill. Therefore, the Company would have minimal encounter any risk from competition over raw materials. On marketing side, since the sugar market is the commodity market in the perfect competition, the competition over market share would also be limited. Ms. Sitthirat Tanjararak, Shareholder present at the Meeting, asked what the use of proceed from this joint investment would be. Mr. Takol Tawintermsup explained that, the management focused on future prospect when considering the joint venture with the Mitsui Group. The actual benefits from joint venture might not be materialized in short-term, but the joint venture with Mitsui would lead to business growth in long term because the Company can access to more distribution channels in overseas markets, especially in the Japanese market whose purchasing power was good with a wide variety of sugar product demand, including super-refined sugar and sugar in innovative packaging. However, successful penetration into the Japanese market also depended on the change of the government policy prescribing the measures on sugar importing. In addition, the manufacturing had to conform to the Japanese hygiene standards. The Company could learn about these matters from Mitsui. Ms. Pacharin Charnmetha, Shareholder present at the Meeting, asked what the company s growth directions would be after Mitsui become KBS s shareholder. 11

6 Mr. Vicha Chokepongpan, Shareholder present at the Meeting, opined that the Company should pay more dividend after the capital increase. He also required the information as to the use of proceeds as well as whether the Company would borrow more to invest. Mr. Takon Tawintermsup informed that the investments would consist of 3 areas: 1) The Mitsui Group and the Company would set up the joint committee to conduct a study whether the manufacturing capacity could be boosted or not; 2) the power plant project which is currently under progress; and 3) it is a possibility that the company would set up new additional sugar factory, which is subject to the acquisition of suitable land plot, thorough investment feasibility study, and the presence of relevant licenses. With regard to the borrowing, the Company has a conservative borrowing policy to maintain D/E ratio not more than 1:1. Mr. Sakchai Sakulsrimontri, Shareholder present at the Meeting, inquired whether the Company had to pay the royalty fee to the Mitsui Group or not. Mr. Takon Tawintermsup informed that the Company needed not to pay the royalty fee to the Mitsui Group. Mr. Thara Cholpranee, Shareholder present at the Meeting, requested more information with respect to the agreement with the Mitsui Group as specified in Enclosure to the Meeting, in particular, the purchase of raw sugar from Kumphawapi Sugar Mill and Kaset Phol Sugar Mill, as well as the agreement to sell sugar to the Mitsui Group. Mr. Rathvudh Sae-Tang explained that the sale and purchase of raw sugar between the Company and Kaset Phol Sugar Mill and Kumphawapi Sugar Mill are deemed as normal business activities. The raw sugar volume the Company has bought from this group in the past accounted for 10% of manufacturing capacity of each sugar mill. Apart from purchasing raw sugar from this group, the Company might purchase the raw sugar from other mills as well. Mr. Takon Tawintermsup added that the agreement to sell 40% of sugar produced by the Company to the Mitsui Group was the operating framework between both parties only. The Company might sell sugar to other customers if they offer better prices. Therefore, this agreement actually benefits the Company. The shareholders expressed the following opinions on the fact that Mitsui Group would have the rights to get the upcoming dividend payment (paid from operating results for Year 2012): 12

7 Mr. Suriyon Jitrapan, Proxy, raised the question that since the Mitsui Group would become the Company s shareholder in February 2013, it should not be entitled to receive the dividend payment to be approved by the upcoming Annual General Meeting of Shareholders. The Company should set up a condition that the Mitsui Group would not be entitled to receive the 2012 dividend or the registration as a shareholder should be done after the announcement XD sign. Mr. Vallop Charoenchimpleekul, Shareholder present at the Meeting, and Mr. Hangchai Akkawasakul, Proxy, disagreed that the Mitsui Group would receive the dividend to be paid from the operating results of Year Mr. Thara Cholpranee, Shareholder present at the Meeting, disagreed that the Mitsui Group would receive the dividend to be paid from the operating results of Year He also proposed the interim dividend payment by posting the XD sign before the Mitsui Group s holding of shares. Mr. Vicha Chokepongpan, Shareholder present at the Meeting, asked about the possibility of dividend payment for Year at the rate greater than the original policy, for example 50%, to compensate for the shareholders. Mr. Issara Twiltermsup explained that several issues have been taken into consideration in the negotiation with the Mitsui Group. The dividend was one issue that has been addressed a part of price formula in the final agreement. The negotiation team has worked very hard and has always negotiated at best interest of the Company. He wanted all shareholders to consider the big picture that the dividend dilution might affect shareholders in the short run. However, the benefits when the Company became the business alliance with the Mitsui Group were greater in the long term. The Chairman added that the capital increase and strategic alliance with the Mitsui Group is the issue related to the Company s long-term development. The partners will have to work together to make the Company grow. The emphasis on dividend could jeopardize trust between the alliances. The negative effect from damaged trusts would take greater effect to the shareholders than slight increase in dividend that the shareholders might get. Furthermore, such dividend payment was previously negotiated and included in the pricing formula. The Chairman thanked every shareholder who gave his/her opinions, ideas, knowledge and support. For the matters proposed for improvements, the Company would carry on the improvements subject to implementation practicality. When no question or no more opinion was raised from shareholders, the Chairman proposed the Meeting to vote for this agenda. Resolution: After consideration, the Meeting approved the increase of registered capital of the Company from Baht 500,000,000 to Baht 600,000,000 by issuance of capital-increase ordinary shares totaling 100,000,000 shares at a par value of Baht 1 per share, and the amendment of Clause 4 of the Memorandum of Association of the Company to be relevant to the Company s capital increase as follows: 13

8 Article 4 Registered Capital of 600,000,000 Baht (Six hundred million Baht) Divided into 600,000,000 shares (Six hundred million shares) Each with a per par value of 1 Baht (One Baht) Categorized in to: Ordinary shares 600,000,000 shares (Six hundred million shares) Preference shares - shares (-) The Meeting passed the resolution to approve the matter proposed above by not less than threefourths (3/4) of affirmative votes of total votes from all shareholders who were present at such Meeting and were eligible to vote. Approved 326,272,746 votes, equal to % Disapproved 8,185,306 votes, equal to % Abstained 411,600 votes, equal to % Total 334,869,652 votes, equal to % Agenda 3 To consider and approve the issuance and offer for sales of warrants to purchase ordinary shares of the Company The Chairman proposed the Meeting to consider and approve the issuance and offering of a first series of warrants to purchase ordinary shares of Khonburi Sugar Public Company Limited ( W-1 ) in a private placement to: Mitsui Co., Ltd. for 33,333,333 warrants Mitsui Sugar Company Limited for 16,666,667 warrants Total 50,000,000 warrants in the price of Baht 0.05 per warrant. The exercise price was Baht per share. The essence of such warrant was detailed in Enclosure 4 earlier sent to every shareholder. Furthermore, the Board of Directors proposed to the Meeting of Shareholders to approve the empowerment to the Board of Directors or the Managing Director or any person empowered by the Board of Directors or the Managing Director to have authority to take any acts necessary or related to the issuance and offering of a first series of warrants until this matter was finalized, and to consider, contact, negotiate for, prepare, enter into, execute and/or amend any agreements or documents necessary or related to the issuance and offering of a first series of warrants, as well as to prepare and change terms and conditions on right and duties of the Company and the W-1 holders, any acts under the terms and conditions of the Warrants, fixing and/or changing any conditions and details about the offering such as offering period, etc. as well as other conditions and details in connection with the adjustment of rights under the terms and conditions. The Chairman allowed the shareholders to inquire and to show opinions about the above issue. When no question or no more opinion was raised from shareholders, the Chairman proposed the Meeting to vote for this agenda. 14

9 Resolution: After consideration, the Meeting approved the issuance and offering of a first series of total 50,000,000 warrants to purchase ordinary shares of Khonburi Sugar Public Company Limited ( W-1 ) in a private placement to Mitsui Co., Ltd. for 33,333,333 warrants and Mitsui Sugar Company Limited for 16,666,667 warrants in the price of Baht 0.05 per warrant and the exercise price was Baht per share, and also approved the empowerment to the Board of Directors or the Managing Director or any person empowered by the Board of Directors or the Managing Director to have authority to take any acts necessary or related to the issuance and offering of a first series of warrants until this matter was finalized. The Meeting passed the resolution to approve the matter proposed above by the majority of votes of total votes from all shareholders who were present at such Meeting and were entitled to vote as per the following details: Approved 326,320,806 votes, equal to % Disapproved 8,077,246 votes, equal to % Abstained 471,600 votes, equal to % Total 334,869,652 votes, equal to % Agenda 4 To consider and approve the allocation of capital-increase ordinary shares of the Company The Chairman informed the Meeting that, subject to Agenda 2 and 3 that the Meeting of Shareholders approved the Company s capital increase and allocation of warrants in a private placement or to the Mitsui Group, the Chairman proposed the Meeting to consider and approve the allocation of 100,000,000 capital-increase shares of the Company at a par value of Baht 1 per share as per the following details: 1. Allocation of 33,333,333 capital-increase shares of the Company in the private placement to Mitsui & Co., Ltd. at a price of Baht per share; 2. Allocation of 16,666,667 capital-increase shares of the Company in the private placement to Mitsui Sugar Co., Ltd. at a price of Baht per share; and 3. Allocation of 50,000,000 capital-increase shares reserved for the exercise of rights to purchase the ordinary shares of the Company in accordance with warrant W-1. and asked approval to empower the Board of Directors or the Managing Director or any person empowered by the Board of Directors or the Managing Director to have authority to take any acts necessary or related to the issuance, allocation, and offering for sale of capital-increase ordinary shares of the Company until this matter was finalized, which included: (a) consideration, contact, negotiation, agreement, preparation, entering into, execution and/or amendment any agreements or documents necessary or related to the issuance, allocation, and offering for sale of capital-increase ordinary shares, as well as fixing and/or changing other related terms and details such as offering period, etc.; and (b) Preparation, entering into, execution, and/or amendment or addition of any applications and/or documents necessary or related to registering the capital-increase shares of the Company for trading on the Stock 15

10 Exchange of Thailand, as well as coordination and contact with the authorities or representatives of any related agencies. The Chairman allowed the shareholders to inquire and to show opinions about the above issue. When no question or no more opinion was raised from shareholders, the Chairman proposed the Meeting to vote for this agenda. Resolution: After consideration, the Meeting approved the allocation of 100,000,000 capital-increase shares of the Company at a par value of Baht 1 per share as follows: 1. Allocation of 33,333,333 capital-increase shares of the Company in the private placement to Mitsui & Co., Ltd. at a price of Baht per share; 2. Allocation of 16,666,667 capital-increase shares of the Company in the private placement to Mitsui Sugar Co., Ltd. at a price of Baht per share; and 3. Allocation of 50,000,000 capital-increase shares reserved for the exercise of rights to purchase the ordinary shares of the Company in accordance with warrant W-1. and also empower the Board of Directors or the Managing Director or any person empowered by the Board of Directors or the Managing Director to have authority to take any acts necessary or related to the issuance, allocation, and offering for sale of capital-increase ordinary shares of the Company until this matter is finalized. The Meeting passed the resolution to approve the matter proposed above by the majority of votes of total votes from all shareholders who were present at such Meeting and were entitled to vote as per the following details: Approved 326,201,806 votes or % Disapproved 8,079,246 votes or % Abstained 588,600 votes or 0.180% Total 334,869,652 votes or % Agenda 5 To consider other matters (if any) The Proxy inquired that: 1) What is the return on investment of the power plant project? 2) Several companies have used the bagasse to make the bio-gas in order to replace the NGV. Was the Company conduct the study whether using the ethanol to produce the bio-gas could give better returns? 3) Will the Company increase the budgets for its product development? 4) Pleases advice on more information regarding the super-refined sugar. 16

11 Mr. Takon Tawintermsup informed that: 1) For the power plant, the payback period is within 5 years. The investment in this plant amounted to approximately Baht 1,600 million; the Company has invested Baht 500 million only and the remaining investment will be financed by Bank loans. 2) For bio-gas, the study was conducted on a conclusion that the production of biogas is not viable for the Company because the wastewater from the sugar mill does not contain enough bacteria. 3) For product development, the Company has developed the sugarcane harvesters. At present, it is the third generation. In 2012, 8 harvesters were produced. For the sugarcane breeding, the Company has conducted the research on this matter almost 10 years and about Baht 30 million spending. There were 2 selected sugarcane breeds suitable for the land in Khonburi area. The sugarcane breeding plantation areas in the next year would be expanded to be 1,500 Rai. The Company would try to expand the breeding plantation until they are sufficient to supply to the sugarcane farmers in the Company s promoted areas. 4) This joint venture is aimed to develop the manufacturing, storage, and exporting of super-refined sugar to Japan, which would add to the Company s product value. As there were no more questions, opinions or comments from the shareholders, the Chairman thanked the Board of Directors and every participant for joining the meeting. The Meeting adjourned at hr. Signed. (Mr. Suthep Wongvorazathe) Chairman Signed (Ms. Thanathorn Sukaram) Company Secretary 17