Opinion of the Independent Financial Advisor Regarding the Voluntary Delisting of Securities from the Stock Exchange of Thailand

Transcription

1 Enclosure 9 -TRANSLATED VERSION- Opinion of the Independent Financial Advisor Regarding the Voluntary Delisting of Securities from the Stock Exchange of Thailand of Proposed to Shareholders of Prepared by I V Global Securities Public Company Limited 28 February 2018 The English Translation of the Opinions of the Company has been prepared solely for the convenience of foreign shareholder of and should not be relied upon as the definitive and official document. The Thai language version of the Opinion of the Company is the definitive and official document and shall prevail in all aspects in the even of any inconsistency with this translation

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3 Table of Content Glossary Page Part 1 Background and Details of Delisting from the Stock Exchange of Thailand Facts and Reasons for Delisting Information Summary of 8 Part 2 The Opinion of Independent Financial Advisor about the Appropriateness of Voluntary Delisting of the Shares of the Company Reasons for Delisting Condition Precedent for Delisting The impact on the Company and Minority Shareholders after Delisting of Ordinary Shares of the Company 12 Part 3 The Opinion of Independent Financial Advisor on the Tender Offer Price The appropriateness of Tender Offer Price 17 (1) Book Value Approach 18 (2) Adjusted Book Value Approach 18 (3) Volume Weighted Average Price Approach 20 (4) Market Comparable Approach 22 (5) Discounted Cash Flow to Equity Approach Summary of The appropriateness of Tender Offer Price 42 Part 4 Conclusion of Opinion of Independent Financial Advisor 47 Appendix A Appendix B Information Summary of CS Loxinfo Public Company limited Summary of the Asset Appraisal Report by the Independent Asset Appraiser

4 GLOSSARY Abbreviation Company or Business or CSL Form 10-6 Opinion Report of the Independent Financial Advisor or Opinion Report Tender Offeror Independent Financial Advisor or IVG SEC SET Independent Property Appraiser Regulation of SET Regulation of SET: Listing Notification on Acquisition of Securities for Business Takeover ThorJor. 44/2556 Letter of Intention ADVANC AWN INTUCH Singtel THCOM TMC ADV DTV DCF Enterprise Value (EV) Equity Value EV/EBITDA Free Cash Flow to Firm (FCFF) P/BV P/E Sensitivity Analysis Terminal Value WACC Meaning Form of Report on Delisting of Shares Opinion Report of the Independent Financial Advisor to provide opinion to the shareholders of the Company on the Tender Offer Advanced Wireless Network Company Limited I V Global Securities Public Company Limited The Securities and Exchange Commission The Stock Exchange of Thailand Landmark Consultant Company Limited The regulation of the Stock Exchange of Thailand Re: Delisting of Securities, 1999 The regulation of the Stock Exchange of Thailand Re: The Repeal of the Provisions in relation to Listing of Ordinary Shares or Preferred Shares as Liste Securities B.E (2015) Notification of the Capital Market Supervisory Board No. TorJor 12/2554 Re: Rules on Acquisition of Securities for Business Takeover (as amened) dated 13 May 2011 Notification of the Capital Market Supervisory Board No. ThorJor. 44/2556 Letter of Intention with respect to the making of a tender offer for the entire securities of the Company for delisting the securities of the Company from the Stock Exchange of Thailand Advanced Info Service Public Company Limited Advanced Wireless Network Company Limited Intouch Holdings Public Company Limited Singapore Telecommunication Limited Thaicom Public Company Limited Teleinfo Media Public Company Limited AD Venture Public Company Limited DTV Service Company Limited Discounted Cash Flow A measure of a company s total value Value of a company available to owners or shareholders Enterprise Value to Earning before interest tax and depreciation The residual cash available to pay investors Price to Book Value Ratio Price to Equity Ratio Technique used to determine how different values of an independent variable impact a particular dependent variable under given assumption Value of expected cash flow beyond the explicit forecast horizon Weight Average Cost of Capital

5 Ref: IB 21/2561 February 28, 2018 Re: To: Opinion of the Independent Financial Advisor regarding a Voluntary Delisting of Securities from the Stock Exchange of Thailand The Board of Directors and Shareholders of Attachment: A. Business Overview and Operating Result of B. Summary of the Appraisal of Properties of Independent Property Appraiser References: 1. Letter of Intent regarding tender offer for delisting the securities of CS Loxinfo Public Company Limited from the Stock Exchange of Thailand, dated February 5, Resolution of the Board of Directors meeting No. 3/2018 held on 6 February 2018 of CS Loxinfo Public Company Limited 3. Financial statement of audited or reviewed by the auditor for the year ended 31 December Annual Report and Annual Disclosure (Form 56-1) of for the year Report of Property Appraisal by Landmark Consultant Company Limited dated 11 October Related documents and agreements 7. Information from an interview of the executive and officer of the Company 8. Relevant information and documents from and its subsidiary Disclaimers: 1. The result of the study by I V Global Securities Public Company Limited ( Independent Financial Advisor or IFA ) in this report (or the IFA Report ) is based on the information and assumptions provided by the executive of, and the information disclosed to the public through the website of the Securities and Exchange Commission of Thailand (the SEC ) ( the Stock Exchange of Thailand (the SET ) ( and Business Online Public Company Limited ( 2. The opinion of the IFA in this report is based on the assumptions that all the information and documents received are accurate and complete, and reflects the operating environment and most up- I V Global Securities Public Company Limited Page 1

6 to-date information at the time of issuance of this report. However, there may be any incident having material impact on the Company s business operations and plans, as well as decision of the shareholders. The Independent Financial Advisor expresses its opinion under the current circumstance. If there is a significant change in the circumstance or any information, the result of the study may be affected. 3. The IFA shall not be responsible for the profits or the losses and any impacts resulting from this transaction. 4. In rendering its opinion in this report, the IFA has considered the reasonableness of conditions of the transaction as well as other related factors thoroughly and rationally in accordance with the professional judgments. According to the event that ("CSL" or the "Company") has received the Letter of Intention dated 5 February 2018 from Advanced Wireless Network Co., Ltd. ("AWN" or the "Offeror"), a subsidiary company of Advanced Info service Public Company limited ("ADVANC") held by percent, and a major shareholder of the Company by holding 476,196,534 shares or equivalent to percent of total issued and paid-up shares of the Company, AWN has declared its intention to make a tender offer for the entire securities of the Company of 118,318,235 shares or equivalent to percent of the total issued and paid-up shares of the Company for the delisting of the securities of the Company from the Stock Exchange of Thailand (the SET ). Due to the fact that the Company has no need to raise capital via the SET and in case that the Company desires to raise the capital in the future, the Company will be able to find a source of funds by securing debt financing from the financial institutions, as well as, the Company will be able to obtain additional financial support from AWN. Other reasons to delist the Company's securities from being listed in the SET, including to reduce expenses and fees associated with maintaining the status of a listed company in the SET, and to reduce burdens and obligations of the Company in compliance with the relevant law and regulations. In addition, the Company may have risk of not meeting the qualifications as required to maintain the status of a listed company in accordance with the regulation of the SET Re: Listing of Ordinary Shares or Preferred Shares as listed Securities B.E (and its amendments), Clause 6, maintaining the status of a listed company in the SET, which requires the listed company to maintain not less than 150 minority shareholders, whose shares in aggregate shall not be less than 15 percent of total issued and paid-up shares of the listed company (the Criteria ). For a list of shareholders of the Company whose names appeared on the shareholder register as at 26 January 2018, the Company had minority shareholders holding shares in aggregate of approximately percent of total issued and paid-up shares of the Company. The number of shares held by the minority shareholders of the Company at present is relatively low, nearly equivalent to the minimum requirements of the Criteria which requires the minority shareholders to hold shares in aggregate of not less than 15 percent of total issued and paid-up shares of the Company. As a result, the securities of the Company may not I V Global Securities Public Company Limited Page 2

7 be able to maintain the status as a listed company. In addition, AWN, a major shareholder of the Company, has an intention to acquire additional shares of the Company in the future. Therefore, the Company has risk of not being able to meet the requirements of the SET in regard to maintaining the status as a listed company according to the regulations of the SET. According to the aforementioned reasons, the meeting of the Board of Directors No. 3/2018 held on 6 February 2018 has resolved to propose to the shareholders meeting for approval the voluntary delisting of the Company s securities from being the listed securities in the SET. Advanced Wireless Network Co., Ltd., the major shareholder of the Company, will be the Offeror who makes a tender offer for the entire securities of the Company for the delisting. In obtaining an approval of the delisting of the securities from the shareholders s meeting of the Company, the transaction must be approved by the shareholders votes of not less than three - fourths of total issued and paid-up shares of the Company and there must not be shareholders who oppose the transaction of more than 10 percent of total issued and paid-up shares of the Company. Independent Directors of the Company had appointed I V Global Securities Public Company Limited as the independent financial advisor (the "IFA" or "I V Global") to provide an opinion to the shareholders of the Company regarding the delisting of the securities of the Company from being the listed company in the SET. Shareholders of the Company should carefully study the details of the disclosure of information related to the transaction at this time, the opinion of the Independent Directors, report of the IFA s opinion, along with the documents attached to an invitation letter of the Annual General Meeting of Shareholders No. 1/2018 for consideration of the delisting of the Company's securities from being the listed securities in the SET. In providing an opinion to the minority shareholders, the IFA has considered the appropriateness of the price. Reasons that support the decision of shareholders to consider and approve the delisting of the Company's securities from being the listed securities in the SET could be summarized as follows; I V Global Securities Public Company Limited Page 3

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9 Executive Summary According to the event that ("CSL" or the "Company") has received the Letter of Intention dated 5 February 2018 from Advanced Wireless Network Co., Ltd. ("AWN" or the "Offeror"), a subsidiary company of Advanced Info service Public Company limited ("ADVANC") held by percent, and a major shareholder of the Company by holding 476,196,534 shares or equivalent to percent of total issued and paid-up shares of the Company, AWN has declared its intention to make a tender offer for the entire securities of the Company and for the delisting of the securities of the Company from the Stock Exchange of Thailand (the SET ). According to the aforementioned reasons, the meeting of the Board of Directors No. 3/2018 held on 6 February 2018 has resolved to propose to the shareholders meeting for approval the voluntary delisting of the Company s securities from being the listed securities in the SET. Advanced Wireless Network Co., Ltd., the major shareholder of the Company, will be the Offeror who makes a tender offer for the entire securities of the Company for the delisting at the price of THB 7.80 per share. Independent Financial Advisor is of opinion that voluntary delisting of the Company from Stock Exchange of Thailand is appropriate and tender offer price of THB 7.80 per share is appropriate. The reasons supporting for delisting are as follows: 1. First of all, the Company has no need to raise capital via the SET as shown by the Company s historical performance; the Company managed liquidity in the business operation by borrowing money from financial institutions to be used as working capital over the past year. Moreover, the Company has financial support from AWN, the major shareholder of the Company, and the channel of ADVANC to raise capital via the SET. Secondly, there is a risk that the Company may ineligible for meeting the qualifications as required to maintain the status of a listed company in accordance with the regulation of the SET; that is, if the minority shareholders of the Company sell additional shares to AWN until AWN has a shareholding in the Company of more than 85 percent of total issued and paid-up shares of the Company, the Company will be immediately unqualified to maintain the status of a listed company in the SET regarding the distribution of shares in accordance with the regulation of the SET in a topic of listing of securities. Thirdly, the company is able to reduce expenses associated with maintaining the status of a listed company in the SET, reduce burdens and obligations of the Company in compliance with the relevant law and regulations, resulting on more flexibility, ease, resilient in administration and management 2. For the part of tender offer price, IFA views that the appropriate valuation method of CSL is Discounted Cash Flow Approach, which results in fair value of THB 6.56 per share according to base case scenario. Such mentioned fair value is THB 1.24 per share lower than tender offer price of THB 7.80, or accounted to 15.90% of tender offer price. Moreover, the IFA has conducted sensitivity analysis to absorb major factors that influences fair value, resulting in price range of THB per share, which is THB per share lower than tender offer I V Global Securities Public Company Limited Executive Summary Page 5

10 price or 3.08% 26.15% lower than tender offer price. In conclusion, IFA is of the opinion that the tender offer price of THB 7.80 per share is the appropriate price Based on all reasons and information of this report, IFA has suggested that shareholders should vote for delisting of ordinary shares of the Company from the Stock Exchange Nonetheless, in deciding whether to approve or disapprove the said Transaction, the shareholders can make consideration thereon based on the above reasons and opinion rendered by the Independent Financial Advisor. The final decision depends on the shareholders individual judgment. The Independent Financial Advisor s opinion is based on the assumptions that all information in consideration was complete and accurate, and reflects the operating environment and most up-to-date information at the time of issuance of this report. Any changes in the information used to formulate an opinion could have a significant impact on the valuation, the Independent Financial Advisor s opinion and the decision of the shareholders. The purpose of this report is to provide a recommendation to shareholders of the Company and the opinion of the IFA should not be misconstrued as an endorsement to enter into the Transaction, or a guarantee of the outcome of the Transaction I V Global Securities Public Company Limited Executive Summary Page 6

11 Part 1: Background and Details of the Delisting of the Securities from being the Listed Securities 1.1 Facts and Reasons of Delisting of Securities According to the event that has received the Letter of Intention dated 5 February 2018 from Advanced Wireless Network Co., Ltd., a subsidiary company of Advanced Info service Public Company limited held by percent, and a major shareholder of the Company by holding 476,196,534 shares or equivalent to percent of total issued and paid-up shares of the Company, AWN has declared its intention to make a tender offer for the entire securities of the Company for the delisting of the securities of the Company from the SET in accordance with its business plan regarding the status of CSL after the previous voluntary tender offer. Thus, the delisting of the Company s securities from being the listed securities from the SET has objectives as follows; (1) The Company has no need to raise capital via the SET and in case that the Company desires to raise the capital in the future, the Company will be able to find a source of funds by securing debt financing from the financial institutions, as well as, the Company will be able to obtain additional financial support from AWN. (2) To reduce expenses and fees associated with maintaining the status of a listed company in the SET (3) To reduce burdens and obligations of the Company in compliance with the relevant law and regulations. (4) Due to AWN has an intention to acquire additional shares of the Company in the future, the Company may have risk of not meeting the qualifications as required to maintain the status of a listed company and there may be additional fees burden. According to the regulation of the SET Re: Listing of Ordinary Shares or Preferred Shares as listed Securities B.E (and its amendments), it requires the listed company to maintain not less than 150 minority shareholders, whose shares in aggregate shall not be less than 15 percent of total issued and paid-up shares of the listed company. AWN has no plans to reduce its shareholding in the Company. AWN, as the Offeror, will be able to make a tender offer for the entire securities of the Company for the delisting of the Company s securities from being the listed company in the SET under the condition that the following conditions percedent are satisfied or waived: (1) The shareholders meeting of the Company resolves to approve the delisting of the Company s securities from being the listed securities in the SET. The Annual General Meeting of Shareholders I V Global Securities Public Company Limited Part 1 Page 7

12 No. 1/2018 will be held on 27 March 2018 at 14:00 hours at Vibhavadee Ballroom, Centara Grand, Central Plaza Ladprao. (2) The delisting of the Company s securities from being the listed securities in the SET shall be approved and/or waived from the relevant authority, including the SET, financial institutions, and other contractual parties with respect to the relevant contracts (if required). The Offeror intends to make a tender offer for the entire securities of the Company at the price of THB 7.80 per share, which is subject to (If any) price adjustment as a result of (1) the Company distributes dividend to its shareholders, (2) the Company changes the par value of its shares, (3) the Company grants the rights to purchase the newly-issued shares for right offering or issuance of the transferrable subscription right in accordance with Section 40 of the Notification of the Capital Market Supervisory Board No. TorChor. 12/2554 Re: Rules, Conditions and Procedures for the Acquisition of Securities for Business Takeovers (as amended) (the Notification TorChor. 12/2554 ). In addition, such offer price is not lower than the highest price calculated based on the criteria on the determination of offer price with respect to the delisting of securities, pursuant to the criteria prescribed under Notification TorChor. 12/2554. In addition, according to the Regulation of SET Re: Delisting of Securities B.E dated 9 December 1999 (the Notification of the SET regarding Delisting of Securities ), subsequent to the Company being approved to delist securities, the Company must finish the period of tender offer within the maximum period imposed by the SEC which is set at 45 working days. If the tender offer is completely approved, AWN will make an offer to purchase shares and other securities which may convert the right of shares of the Company from shareholders and securities holders in general. 1.2 Information Summary of CL Loxinfo Public Company Limited Details are shown in Appendix A of this Independent Financial Advisor s Opinion report. I V Global Securities Public Company Limited Part 1 Page 8

13 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company Part 2: Independent Financial Advisor s Opinion on the Delisting of Securities 2.1 Reasons and Appropriateness No necessity of Raising Fund through the Stock Exchange The Company has no need to raise capital via the SET. Over the past years, the Company managed liquidity in the business operation by borrowing money from financial institutions to be used as working capital. In addition, currently, the Company has AWN as the major shareholder with the shareholding of percent of total issued and paid-up shares of the Company. Therefore, if there is necessity to raise capital in the future, AWN, as the major shareholder of the Company, will be able to support the working capital of the Company. Furthermore, if the Company desires to raise capital via the SET, the Company can use funding channel through ADVANC, which is a listed company in the SET and an indirect major shareholder of the Company in which ADVANC holds AWN s shares in a proportion of percent of total issued and paid-up shares of AWN Reduce costs and fees associated with maintaining a listed company status In the past, the Company has to pay expenses associated with maintaining the status as a listed company in the SET. Most of expenses came from annual fees, expenses of the arrangment of shareholders meetings, and expenses of disclosure of information to the shareholders. If the Company delists its securities from being the listed company, these expenses will be reduced Reduce the responsibility, duty, and obligation in compliance with related law and regulation Being a listed company in the SET, the Company is required to disclose the information and comply with the regulations of the SEC, the SET, and other relevant agencies, for example, the compliance with the criteria for acquisition and disposition of assets, entering into the transaction with connected parties, disclosure of financial position and operating results of the Company, and disclosure of shareholding report of directors, management and auditors. As a result, the delisting of securities from being the listed company in the SET can reduce burdens and obligations of the Company in compliance with the relevant law and regulations. However, since the company is still public company, the company must disclose and deliver information in accordance with Limited Public Company Act B.E. 2535; for example, sending invitation to the Meeting of Shareholders, copy of Minutes of Shareholders Meeting, annual report with balance sheet and income statement etc The company may unable to fulfill the qualification to maintain the status of listed company The Company has risk of not meeting the qualifications as required to maintain the status of a listed company in accordance with the regulation of the SET Re: Listing of Ordinary Shares or Preferred Shares I V Global Securities Public Company Limited Part 2 Page 9

14 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company as listed Securities B.E (and its amendments), Clause 6, maintaining the status of a listed company in the SET, which requires the listed company to maintain not less than 150 minority shareholders, whose shares in aggregate shall not be less than 15 percent of total issued and paid-up shares of the listed company (the Criteria ). For a list of shareholders of the Company whose names appeared on the shareholder register as at 26 January 2018, the Company had minority shareholders holding shares in aggregate of approximately percent of total issued and paid-up shares of the Company. The number of shares held by the minority shareholders of the Company at present is relatively low, nearly equivalent to the minimum requirements of the Criteria which requires the minority shareholders to hold shares in aggregate of not less than 15 percent of total issued and paid-up shares of the Company. As a result, the securities of the Company may not be able to maintain the status as a listed company. In addition, AWN, a major shareholder of the Company, has an intention to acquire additional shares of the Company in the future. If the minority shareholders of the Company sell additional shares to AWN until AWN has a shareholding in the Company of more than 85 percent of total issued and paid-up shares of the Company, the Company will be immediately unqualified to maintain the status of a listed company in the SET regarding the distribution of shares in accordance with the regulation of the SET in a topic of listing of securities. According to the current distribution of shares of the Company and the plan of AWN on behalf of the Offeror, the Company has risk of not being able to meet the requirements of the SET in regard to the maintaining status as a listed company in accordance with the regulations of the SET. Therefore, the delisting of securities from being the listed securities at this time will reduce the risk of maintaining status as a listed company in according with the regulations of the SET More ease and flexibility for business administration Delisting from being a listied company in the SET will allow the Board of Directors and/or the management of the Company to administrate the business more flexibly due to the Company is not required to comply with the rules and/or regulations of the SEC and the SET. This will help speed up the decision process on investment or expansion of investment, as well as, the consideration of entering into transactions, which will increase the competitive advantages of the Company. However, as a public company, the company still has duty to follows rules and regulation in accordance with Limited Public Company Act B.E Conditions Precedent for delisting securities Obtaining the approval from the shareholders s meeting of the Company In order to delist the Company s securities from being the listed securities, the Company must be approved by the resolution of the shareholders meeting or proxies of shareholders (if any) who attend the meeting and are entitled to vote with the votes of not less than three - fourths of total issued and paid- I V Global Securities Public Company Limited Part 2 Page 10

15 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company up shares of the Company and there must not be shareholders who oppose the transaction of more than 10 percent of total issued and paid-up shares of the Company. The Company will collaborate with the IFA to arrange a meeting for presentation to the shareholders meeting in order to provide an opinion on the delisting of the Company s securities. The Annual General Meeting of Shareholders will be held on on 27 March 2018 at 14:00 hours at Vibhavadee Ballroom, Centara Grand, Central Plaza Ladprao, Bangkok, 1695 Phaholyothin Road, Chatuchak, Bangkok Obtaining the approval of delisting securities from the SET After the shareholders meeting has resolved to approve the delisting of the Company s securities from being the listed securities in the SET, the Company is required to apply for the delisting of serurities to the SET Board of Governor for consideration and approval of the delisting of the Company s securities. The SET Board of Governor will consider the request and announce the result of consideration to the Company within 30 days from the date that the SET received the accurate and complete documents from the Company Tender offer According to the regulations of the SET Re: Delisting of Securities B.E. 2542, the Notification of the SET regarding Delisting of Securities, subsequent to the Company being approved to delist securities, the Company must finish the period of tender offer within 45 working days which is the maximum period determined by the SEC or Capital Market Supervisory Board. According to the Letter of Intention to make a tender offer for the Company s securities for the delisting of securities from being the listed securities in the SET from Advanced Wireless Network Co., Ltd. dated 5 February 2018, AWN, the major shareholder of the Company (with a shareholding of 476,196,534 shares, or equivalent to percent of total issued and paid-up shares of the Company), has declared its intention to make a tender offer for the entire securities of the Company of 118,318,235 shares, or equivalent to percent of total issued and paid-up shares of the Company for the delisting of the Company s securities from being the listed securities in the SET. The Offeror intends to make a tender offer for the entire securities of the Company at the price of THB 7.80 per share, which is subject to (If any) price adjustment as a result of (1) the Company distributes dividend to its shareholders, (2) the Company changes the par value of its shares, (3) the Company grants the rights to purchase the newly-issued shares for right offering or issuance of the transferrable subscription right in accordance with Section 40 of the Notification of the Capital Market Supervisory Board No. TorChor. 12/2554 Re: Rules, Conditions and Procedures for the Acquisition of Securities for Business Takeovers (as amended) (the Notification TorChor. 12/2554 ). In addition, such offer price is not lower than the highest price calculated based on the criteria on the determination of offer price with I V Global Securities Public Company Limited Part 2 Page 11

16 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company respect to the delisting of securities, pursuant to the criteria prescribed under Notification TorChor. 12/ The Impact on the Company and Minority Shareholders after Delisting of Ordinary Shares of the Company Impact on the Company Subsequent to the delisting of the Company s securities from being the listed securities, the Company still operates the business of providing services in regard to internet computer and communications to corporate customers under the major shareholding of AWN. The delisting from being a listed company in the SET may impact on the business operation and administration of the Company in the following issues; (1) Unable to raise fund through Stock Exchange Subsequent to the delisting from being the listed company in the SET, the Company will no longer be able to raise capital via the SET or the offering of securities to the public for the expansion of investments or the use of fund raising as working capital of the Company. However, according to the information presented in the financial statements of the Company as at 31 December 2017, the Company's Interest Bearing debt to equity Ratio was equal to [xx] times which is lower than the industry average of [xx] times and also lower than the conditions specified in the long-term loan agreement which specified that the Company s Interest Bearing Debt to Equity Ratio must not exceed 2 times throughout the agreement period. According to the aforementioned information shows that the Company did not have problems in terms of liquidity. In addition, according to the information presented in the financial statements of the Company as at 31 December 2017, the Company and its subsidiaries have credit facilities which have not yet been withdrawn in an amount of THB 1,626 million. If the Company has necessity to search for working capital, the Company is able to use the remaining credit facilities. However, if the Company has necessity to raise additional capital in the future, the Company may request financial support from AWN as the major shareholder of the Company or raise funds through ADVANC, its indirect major shareholder, which is a listed company in the SET. (2) More ease and flexibility for business administration Due to the Company is not required to disclose information in accordance with the regulations of the SEC and the SET after delisting from being a listed company, such as merger and acquisition, entering into investments, or the cancellation of joint venture, the acquisition or disposition of assets, the disclosure of financial statements and operating results of the Company to the supervising I V Global Securities Public Company Limited Part 2 Page 12

17 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company agencies or the request for resolution of the shareholders meeting (if any). As a result, the Company will be able to administrate the business more flexibly since the Company can decide to enter into transactions more quickly and also increase the competitive advantages of the Company. (3) Less information distributed to investors and outsiders after delisting Subsequent to the delisting from being the listed company in the SET, investors and/or third parties will recognize and receive the Company s information less than when the Company is being the listed company. Therefore, there may be an impact on the image of the Company from not being the listed Company in the SET. But it will not affect the core business of the Company significantly due to the Company is still engaging in the services provider of internet computer and communications to corporate customers in which the Company s products and services are well accepted by the market and well known to people in general. In addition, the Company still has marketing plans and public relations plans encourage consumers to receive the Company s information continuously Impact on the shareholders (1) Lack of liquidity in trading of securities When the Company delists from being the listed company in the SET, the Company s shares will no longer be traded in the SET, which is a secondary market. Therefore, the shareholders who wish to trade the Company s shares will not be able to trade flexibly. Moreover, the awareness about the adjustment of share prices or liquidity of the Company's shares will no longer be extensively prevalent. (2) Not receiving tax benefits In case that the Company is still a listed company, the Company s shares is listed in the SET and capital gains from the sales of shares will be considered as tax-exempt income. The seller has no obligation to include capital gains from the sales of shares in the calculation for filing personal income tax in accordance with the ministerial regulation No. 126 (B.E. 2509) 1. However, subsequent to the delisting from being the listed company in the SET, individual shareholders will no longer receive tax benefits for the exemption of capital gains tax. Individual shareholders who trade the Company s shares after the Company s securities are delisted from being the listed securities in the SET have to include capital gains from the sales of shares in the calculation for filing personal income tax at progressive rate. In addition, subsequent to the delisting from being the listed company in the SET and Thailand Securities Depository Company Co., Ltd. is no longer a securities 1 Ministerial Regulation No. 126 (B.E. 2509) issued under the Revenue Code Governing Exemption from Revenue Taxes dated 23 February 1966, Clause 2 (23). I V Global Securities Public Company Limited Part 2 Page 13

18 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company registrar of the Company, the transferor of the Company s ordinary shares, both individuals and juristic persons, will not be exempted from stamp duty of 0.1 percent of the share s book value or the price on the transfer instrument (whichever is greater) as announced in the Royal Decree issued under the Revenue Code Governing Exemption from Revenue Taxes (No. 10) B.E and amendments by the Royal Decree (No. 351) B.E (3) Shareholders receive less information Subsequent to the delisting from being the listed company in the SET, the Company will no longer have obligations to disclose information in accordance with the Notification of the SET in a topic of practices regarding the disclosure of information and other acts of listed company or the disclosure of any information applicable to listed company which impacts directly to the shareholders of the Company in terms of limited access to the Company s news and information. Moreover, if, after this delisting tender offer, other shareholders, who are not the Offeror, persons acting in concert and related persons under Section 258, hold a shareholding in an aggregate of not more than 5% of total issued and paid-up shares of the Company or the total number of shareholders is not over 100, the Company terminates the obligation to prepare and submit its financial statements and reports on its financial position and operating results to the SEC pursuant to the Capital Market Supervisory Board s Notification No. TorChor. 44/2556 Re: Rules, Conditions and Procedures for Disclosure of Financial Position and Operating Performance of Securities Issuing Companies. At the same time, the Company s directors, the management and auditor will not be required to prepare and submit a report on their holding of the Company s securities in accordance with the SEC Notification No. SorChor. 12/2552. However, the Company is still required to disclose and submit information due to the Company is still a public company in accordance with the Public Limited Companies Act B.E. 2535, such as data and information to be disclosed to the shareholders meeting of the Company, annual report, and if the minority shareholders desire to know about the company affidavit, list of shareholders, and the annual financial statements of the Company, they can make a copy of the Company s information at the Ministry of Commerce. (4) Less degree of monitoring and balancing the business management of major shareholders According to the shareholding information of the Company as at 26 January 2018, AWN, which is the major shareholder of the Company, held the Company s shares of 476,196,534 shares, or equivalent to percent of total issued and paid-up shares of the Company which showed that AWN has an 2 Royal Decree issued under the Revenue Code Governing Exemption from Revenue Taxes (No. 10) B.E and amendments by the Royal Decree (No. 351) B.E. 2542, effective from 26 March 1999 onwards. I V Global Securities Public Company Limited Part 2 Page 14

19 Independent Financial Advisor s Opinion on Delisting the Securities from being the Listed Company absolute control in the Company. Moreover, subsequent to the delisting from being the listed securities, AWN wishes to acquire additional shares of the Company. If the minority shareholders of the Company sell additional shares to AWN until AWN has a shareholding in the Company of more than 90 percent of total issued and paid-up shares of the Company, AWN will be able to set policies regarding the business administration, such as the adjustment of the structure of the business operation of the Company and its subsidiaries, the policy on dividends. During the aforementioned control, the minority shareholders will not be able to vote for inspecting or balancing the administrative power in accordance with the law due to the Articles of Association, Article 29, stating that in the arrangement of the shareholders meetings other than the Annual General Meeting, one or several shareholders holding shares in an amount of not less than 10 percent of total issued and paid-up shares can make a request in writing to the Board of Directors to summon an extraordinary meeting on every occasion. I V Global Securities Public Company Limited Part 2 Page 15

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21 Part 3: Opinion of Independent Financial Advisor on Offer Price 3.1 The appropriateness of Tender Offer Price In consideration of the offer price, the Company received an offer to purchase all of the company shares for delisting the securities of the company from the Stock Exchange of Thailand (SET), from Advanced Wireless Network Co., Ltd., a major shareholder of the company (who holds 476,196,534 shares or equivalent to percent of the total issued shares of the company). The offeror has declared its intention to make a tender offer for the entire securities of the company, 188,318,235 shares or equivalent to percent of the total issued shares of the company. The IFA has determined the Company s share price by using the following approaches: 1. Book Value Approach 2. Adjusted Book Value Approach 3. Volume Weighted Average Price Approach or VWAP 4. Market Comparable Approach 4.1 Price to Book Value Ratio Approach or P/BV Ratio 4.2 Price to Earnings Ratio Approach or P/E Ratio 4.3 Enterprise Value to EBITDA Approach or EV/EBITDA Ratio 5. Discounted Cash Flow to Equity Approach or DCF The IFA s opinions are based on the assumptions that the information and documents provided to the IFA are accurate and correct without any significant changes, as well as considering the current situation and available information. Any significant changes to those factors may impact the Company and the Company s transaction as well as the opinion rendered by the IFA. I V Global Securities Public Company Limited ( Independent Financial Advisor, or IVG ), appointed by the Board of Directors of the Company to be an independent financial advisor, providing opinion to the Company s shareholders on the Tender Offer by considering the information received by the Company, publicly available information such as resolution of the Board of Directors, other related information of the Company, audit report and financial statement of the Company and other related companies, including information from the interview of the executive of the Company and other related companies for preparation of this Opinion Report of the Independent Financial Advisor. I V Global Securities Public Company Limited Part 3 Page 17

22 1. Book Value Approach This valuation approach will show the overall Company s value at any point of time. As for this valuation of the Company by book value approach, the Company s value is based on the financial statements as of 31 December 2017 which is the most up-to-date financial statement, audited by the auditor approved by the SEC. Under this approach, the Company s value is calculated from the shareholders equity divided by the total issued and paid-up shares. The Company s total issued and paid-up shares are 594,514,769. The calculation is shown as follows: Shareholders' Equity Unit Price as of 31 December 2017 Registered Capital Baht million Par value Baht per share 0.25 Registered Paid-Up Capital Baht million Share premium Baht million Allocated Retained Earnings - Reserved Baht million Unallocated Retained Earnings (Loss) Baht million Shareholders' Equity Baht million Number of Issued and Paid-Up Ordinary Shares Baht million Book Value Baht per share 1.33 Source: Company s financial statement as of 31 December 2017, approved by the auditor approved by the SEC. According to the book value approach, the Company s share price is equivalent to Baht 1.33 per share, which is Baht 6.47 or percent lower than the Offer Price of Baht 7.80 per share. The IFA views that the book value approach reflects the financial position of the Company as of 31 December 2017 only. Nevertheless, it reflects neither the current market value of the assets, Company s profit generating ability in the future, nor the competitiveness of the Business. The IFA, therefore, opines that this valuation approach is not suitable for the valuation. 2. Adjusted Book Value Approach The adjusted book value approach is calculated from the Company s total assets deducted by the total liabilities including the commitments and contingent liabilities based on the financial statement as of 31 December 2017 and adjusted by the items which may have significant impacts after the date of the financial statement. The aforementioned items are such as the increase or decrease in the revaluation of the Company s assets which have not been booked in the financial statement, the reversal of allowance of doubtful account or bad debt, tax saving from Tax Loss Carryforward, the contingent liabilities from legal cases, and etc. The purpose of the I V Global Securities Public Company Limited Part 3 Page 18

23 adjustments is to reflect the fair market value of the Company s assets. The adjusted book value is later divided by the Company s total issued and paid-up shares. The lists of adjustments are as follow: According to consolidated financial statement as of December 31, 2017, the Company s total assets are equivalent to 1, million baht with million baht of main current assets which are composed of cash and cash equivalent, account receivable, other receivables, inventories, and current tax asset totally accounted for 44.70% of total asset. Since most current assets are financial assets, the book value is close to fair value. The non-current assets are mainly composed of proper plant and equipment and other intangible assets which is million baht, accounted for 53.97% of total asset. Because equipment and intangible assets are adjusted by depreciation and amortization, the book value after adjustment is close to fair value. Thus, the fair value is appraised only for land and building. And according to consolidated financial statement as of 31 December, 2017, the Company s total liabilities are equivalent to 1, million baht with million baht of main current asset which is composed of short-term loans from financial institutions, accounts payable, other payables, deferred income, advance payment, current portion of long-term debt from financial institution, current portion of long-term debt from finance lease liability, and income tax payable, totally accounted for 81.21% of total liabilities. The non-current liabilities are mostly composed of finance lease liability, and provision for employee benefits which are million baht, accounted for 14.97% of total liabilities. Both current liabilities and non-current liabilities s book value are close to fair value. The IFA determines and adjusts the book value from CSL s latest financial statement as of 31 December 2017, considering the key issues as follows: Increase / Decrease from the Appraised Value Landmark Consultant Company Limited, An Independent Property Appraiser appraises the fair value of the Company s assets i.e. (1) land with building of the Cloud Data Center located in Bungkum district in Bangkok and (2) One commercial building located in Banglamung district in Chonburi. Details are as follows: Item 1. The Cloud Data Center - Land - Building 2.One Commercial building Book Value as of 31 December ,887, ,419, Appraised Value 165,100, ,840, Increase (Decrease) 50,212, ,420, Land and building 630, ,000, ,369, Total 215,936, ,940, ,003, Location Unit: Baht Ratchada-Ramindra Road, Nuanjan, Bungkum, Bangkok Pattaya 3 Road, Nongprue, Banglamung, Chonburi I V Global Securities Public Company Limited Part 3 Page 19

24 Source: The financial statement verified by the auditor as of 31 December 2017 and the appraisal report by the Independent Property Appraiser dated 11 October 2017 (The shareholders are able to review further information regarding the appraisal of properties in the Attachment B appended to this report.) The IFA opines that an increase of asset value of Baht million causes the fair value of CSL significantly increased. The IFA, therefore, has adjusted it with the shareholders' Equity of CSL as of 31 December 2017 which was verified by auditor approved by the SEC. Details are as follows: Shareholders' Equity Unit Book Value Before Adjustment Book Value After Adjustment Registered Capital Baht million Par value Baht per share Registered Paid-Up Capital Baht million Share premium Baht million Allocated Retained Earnings - Reserved Baht million Unallocated Retained Earnings (Loss) Baht million Shareholders' Equity Before Adjustment Baht million Adjustment Plus : Adding to the valuation of the property Baht million Shareholders' Equity After Adjustment Baht million Number of Issued and Paid-Up Ordinary Shares Share 594,514, ,514,769 Book Value (Baht per share) Source: Company s financial statement as of 31 December, 2017 verified by the auditor approved by the SEC. By using the adjusted book value approach to determine the Company s share price, the shareholders' equity value is equivalent to Baht 1.48 per share (after adjustment), which is Baht 6.32 or percent lower than the Offer Price. The IFA opines that the adjusted book value approach reflects the shareholders' equity value at certain point of time and adjusts value of the Company s core assets to reflect the current fair value, hench it does not reflect the Company s profit generating ability in the future. As a result, this approach may result in an incorrect price appraisal. 3. Volume Weighted Average Price Approach or VWAP This valuation approach uses volume weighted average price of the Company s ordinary shares in the SET by taking into account the value and trading volume of ordinary shares in the SET. I V Global Securities Public Company Limited Part 3 Page 20