Re: Invitation to the Extraordinary General Meeting of Shareholders No. 1/2011

Transcription

1 August 30, 2011 Re: Invitation to the Extraordinary General Meeting of Shareholders No. 1/2011 To: Shareholders of Thainox Stainless Public Company Limited (the Company ) Enclosures: 1. Copy of the minutes of the 2011 Annual General Meeting of Shareholders, held on April 28, Information Memorandum regarding the connected transaction and Company Profile 3. Opinion of Independent Financial Advisor 4. The Company s Articles of Association (amendment version to be considered in the agenda item no. 3) 5. The Company s Articles of Association relating to the meeting of shareholders 6. Proxy forms A, B and C in the form determined by the Department of Business Development, Ministry of Commerce 7. Names and profiles of independent directors whom the Company proposes that shareholders may appoint as a proxy 8. Clarification on how to appoint proxy, and documents/evidences required to be presented at the meeting 9. Procedure for participating in the Extraordinary General Meeting of Shareholders No. 1/ Map to the meeting venue Whereas the Board of Directors Meeting of the Company No. 5/2011, held on July 19, 2011, resolved to convene the Extraordinary General Meeting of Shareholders No. 1/2011 on September 14, 2011 at 9.30 hrs. at Ball Room III, Conrad Bangkok Hotel, All Seasons Place, 87 Wireless Road, Bangkok 10330, to consider the following agenda items. Agenda item no. 1 To consider and certify the minutes of the 2011 Annual General Meeting of Shareholders, held on April 28, 2011 The Company prepared the minutes of the 2011 Annual General Meeting of Shareholders, held on April 28, 2011, and submitted copies of the minutes to the Stock Exchange of Thailand ( SET ) within 14 days from the meeting date, the details were publicly disclosed on the Company s website ( and sent to the Ministry of Commerce, as required by the law. The details are as appear in Enclosure 1. Thus, it is proposed to the meeting of shareholders to certify the minutes of the 2011 Annual General Meeting of Shareholders. Opinion of the Board of Directors : The Board of Directors opine that the minutes of the 2011 Annual General Meeting of Shareholders, held on April 28, 2011 were correctly and completely recorded and deem it appropriate to propose that the meeting to certify such minutes. 1

2 Remark : Resolution in this agenda item shall be approved by a majority vote of the shareholders attending the meeting and having the right to vote. The matters in the agenda item nos. 2 and 3 related to the sale and purchase of ordinary shares between the majority shareholders: Mr. Prayudh Mahagitsiri ( Khun Prayudh ), Mrs. Suvimol Mahagitsiri ( Khun Suvimol ), Miss Ausanee Mahagitsiri, Mr. Chalermchai Mahagitsiri ( Khun Chalermchai ) and Miss Ausana Mahagitsiri ( Majority Shareholders Group ) and Posco ( POSCO ), and the sale of plots of land and assets which are not the core assets of the Company ( Non-Production Land and Assets ); these matters are related to one another. In this regard, the agenda item nos. 2 and 3 are conditional upon one another, and as a result, if any of these agenda items are not approved by the Extraordinary General Meeting of Shareholders No.1/2011, the other agenda items, having been formerly approved, shall be cancelled and no further agenda items shall be considered by the meeting. Agenda item no. 2 To consider and approve the sale of plots of land and assets which are not the core assets of the Company (Non- Production Land and Assets) to an interested purchaser On July 6, 2011, POSCO gave notice of its intention to make a voluntary tender offer stating that it had executed the agreement to sell and purchase ordinary shares with the Majority Shareholders Group at the price of Baht 2.20 per share and informed to the Board of Directors of the Company that it would make a voluntary tender offer at the price of Baht 2.20 per share, subject to the key condition that the Company should arrange a Board of Directors Meeting and/or a shareholders meeting to approve to sell the plots of land and assets which are no the core assets of the Company (Non-Production Land and Assets), and they are not the assets used in the business promoted under the certificate of the Board of Investment ( Non-Production Land and Assets of the Company ). If POSCO will hold more than 51% ordinary shares of the Company s registered capital after the tender offer has been made, the Company will become a foreign company under the definition of the Land Act. In respect to the sale of the Non-Production Land and Assets of the Company, the Company must commence the proceedings to seek approval from the Board of Directors Meeting and/or the shareholders meeting on the sale of the Non- Production Land and Assets as necessary and appropriate within 15 days from the date of the POSCO letter, the last day of which was on July 21, 2011 ( POSCO Original VTO Letter ). In addition, on July 19, 2011, POSCO has sent a letter to the Company requesting for amendment of details of the POSCO Original VTO Letter dated July 6, 2011 with respect to details of the Non-Production Land and Assets ( POSCO Amendment Letter ). According to such POSCO Amendment Letter, the sale of the Non-Production Land and Assets shall not include the plots of land located in Rayong Province as POSCO plans to seek an approval of the Board of Investment for holding such plots of land as these plots of land may be eligible to be used as assets in the business promoted by the certificate of the Board of Investment. In this regard, the Non-Production Land and Assets, which POSCO requires the Company to sell under the POSCO Original VTO Letter and the POSCO Amendment Letter, are as follows: 2

3 The Non-Production Land and Assets, under the POSCO Original VTO Letter, which POSCO requires the Company to sell are as follows: Three different plots of land located on Rama IV Road, Narathiwas Road, and Rayong Province as well as the entire business conducted by the Company related to the development and operation of a golf course and resort and related facilities, including the plots of land and buildings (including right, title and interest of the Company on the plots of land and buildings), employees, assets (including right, title and interest of the Company on the assets), intellectual properties, liabilities and membership contracts of the golf course located in Nakornratchasrima Province. The Non-Production Land and Assets, under the POSCO Amendment Letter, which POSCO requires the Company to sell are as follows: Two different plots of land located on Rama IV Road, and Narathiwas Road, as well as the entire business conducted by the Company related to the development and operation of a golf course and resort and related facilities, including the plots of land and buildings (including right, title and interest of the Company on the plots of land and buildings), employees, assets (including right, title and interest of the Company on the assets), intellectual properties, liabilities and membership contracts of the golf course located in Nakornratchasrima Province. (The POSCO Original VTO Letter and the POSCO Amendment Letter as mentioned above shall be altogether called hereinafter the POSCO VTO Letters ) After the Company received the POSCO VTO Letters, the Company received a notice from Khun Prayudh stating his intention to purchase the Non-Production Land and Assets. In the notice of his intention to purchase the Non-Production Land and Assets ( Offer Letter from Khun Prayudh ), Khun Prayudh himself, or juristic persons, or persons to be designated by Khun Prayudh, has offered to purchase the Non-Production Land and Assets according to the conditions set out in the POSCO VTO Letters in order to assist the Company to meet the conditions precedent as required by POSCO. Khun Prayudh has offered to purchase the Non-Production Land and Assets at the amount equivalent to the aggregate amount of 1) 95% of the book value of the Non-Production Land and Assets as contained in the Company s audited balance sheet as of December 31, 2010 and 2) 100% of any other actual investment made or to be made by the Company and any other actual costs incurred and to be incurred by the Company in connection with the Non-Production Land and Assets from December 31, 2010, to the closing date of the purchase and sale of the Non-Production Land and Assets between the Company and Khun Prayudh ((1) and (2) are collectively referred to as the Purchase Price ). Payment of the Purchase Price for the Non-Production Land and Assets shall be made on the third business day following the closing date of the purchase and sale of the Non-Production Land and Assets between the Company and Khun Prayudh. Nevertheless, in order to ensure the benefit to the Company and its shareholders, the Board of Directors Meeting had previously resolved to accept such 3

4 offer from Khun Prayudh for further consideration and has waited to see if there was any person who offered to purchase the Non-Production Land and Assets within the scope, conditions and limited period as specified by POSCO as well as in the advertisement published by the Company offering to sell the Non-Production Land and Assets of the Company in a daily newspaper. However, from July 6, 2011 until the date of the Board of Directors Meeting on July 19, 2011, no offer was received by the Company to purchase the Non-Production Land and Assets. Therefore, the Board of Directors considered the offer to purchase the Non-Production Land and Assets by Khun Prayudh (pursuant to the POSCO VTO Letter, the Company must commence the proceedings to seek approval from the Board of Directors Meeting and/or the shareholders meeting on the sale of the Non-Production Land and Assets as necessary and appropriate within 15 days from the date of the POSCO Original VTO Letter, the last day of which was on July 21, 2011). (Note: On July 21, 2011, there was no other person contacted the Company for purchase of the Non-Production Land and Assets.) After considering the Offer Letter from Khun Prayudh, the Board of Directors Meeting (attended by the directors who have no conflict of interest) opined that, if the voluntary tender offer by POSCO is finalized, it will benefit shareholders and the Company in general because POSCO, as one of the majority shareholders of the Company, is a company which is an expert in the steel industry and is the 5th largest manufacturer in the world. Accordingly, if POSCO became the majority shareholder of the Company, holding more than 51% of the total issued shares of the Company, the capability and reputation of POSCO in the world steel industry will help the Company to become the leading company in the steel industry in Thailand. In addition, as the offer received from Khun Prayudh has met the terms and conditions specified by POSCO, together with the limitation on the ownership of the land by a foreigner as stated above, the Board of Directors opined that the Company should proceed with the sale of the Non-Production Land and Assets by proposing this matter to the shareholders meeting for consideration and approval as follows: 1) to propose that the shareholders meeting consider and approve the sale of the Non-Production Land and Assets to Khun Prayudh, which is deemed a connected transaction pursuant to the Notification re Connected Transaction (to be defined below). 2) to propose that the shareholders meeting consider and approve to assign the Board of Directors, or the Executive Committee, or the authorized directors pursuant to the Company's Affidavit, who are not in the same group of the Majority Shareholders Group, to have the power to (1) negotiate, agree and execute the documents and agreements relating to the sale of the Non-Production Land and Assets based on the terms and conditions specified by POSCO; (2) execute other documents and evidence necessary for and related to the sale of the Non-Production Land and Assets as well as to contact the government agency or any agency involved in the sale of the Non- Production Land and Assets; and (3) proceed with any action necessary for and relating to the sale of the Non-Production Land and Assets. 4

5 Please note that the sale of the Non-Production Land and Assets of the Company to Khun Prayudh has value equivalent to 14.76% (calculated by using the information in the consolidated financial statements reviewed by the Company s auditor as of March 31, 2011) so this transaction is not considered as the sale of assets, and the transaction information is not required to be disclosed by the Notification of Capital Market Supervisory Board No. TorChor. 20/2551 re: Rules on Entering into a Material Transaction Deemed as an Acquisition or Disposal of Assets; and the Notification of the Security and Exchange Commission re: Disclosure of Information and Other Acts of a Listed Company Concerning the Acquisition and Disposition of Asset B.E ( Notification re Acquisition or Disposal Transaction ). However, such transaction falls into the category of a connected transaction under the Notification of the Capital Market Supervisory Board No. TorChor 21/2551 re: Rules on Connected Transaction; and the Notification of the Security and Exchange Commission re: Disclosure of Information and Other Acts of Listed Company Concerning the Connected Transactions B.E ( Notification re Connected Transaction ) because the sale of the Non-Production Land and Assets is a transaction with Khun Prayudh who is a major shareholder of the Company within the definition in the Notification re Connected Transaction. After considering the consolidated financial statements of the Company as of March 31, 2011 reviewed by the Company s auditor, the value of the transaction is equivalent to 20.52% of the net assets value of the Company which is higher than 3% of the net assets value of the Company (Please see the details of the sale of the Non- Production Land and Assets to Khun Prayudh in Enclosure 2 Information Memorandum regarding the acquisition and disposal transaction and the connected transaction. Please also see opinion of an independent financial advisor ( IFA ) with respect to the transaction in Enclosure 3). Opinion of the Board of Directors : The Board of Directors deem it appropriate to propose the shareholders meeting consider and approve the sale of the Non-Production Land and Assets to Khun Prayudh, which is deemed a connected transaction pursuant to the Notification re Connected Transaction, and assign the Board of Directors, or the Executive Committee, or the authorized directors pursuant to the Company's Affidavit, who are not in the same group of the Majority Shareholders Group, to have the power to proceed all relevant matters as per the details mentioned above, due to: 1) The sale of the Non-Production Land and Assets to Khun Prayudh is a necessity according to the conditions specified by POSCO. Only if the Company is able to sell the Non-Production Land and Assets and fulfill other conditions of POSCO, POSCO will proceed with the tender offer of the Company s shares which will benefit shareholders and the Company in general. 2) The Offer Letter from Khun Prayudh has complied with the terms and conditions specified by POSCO 5

6 and at present, there was no other person offered to purchase the Non-Production Land and Assets of the Company. 3) The sale of the Non-Production Land and Assets to Khun Prayudh will help to solve the problems of the Company which may occur due to the Company s limitation under the law in respect of the ownership of the land by a foreigner after POSCO s acquisition of more than 51% of shares of the Company s registered capital. However, although the transaction may have pros as mentioned above, the Board of Directors (attended by the directors who have no conflict of interest) opine in accordance with the IFA s opinion about pros and cons including risks of the transaction. Therefore, the shareholders meeting should take into account such IFA s opinion when considering this agenda item. Remark : Resolution in this agenda item shall be approved by not less than three-quarters (3/4) of the total number of votes of the shareholders attending the meeting and having the right to vote, exclusive of votes of interested shareholders as follows: Shares % 1) Miss Ausana Mahagitsiri 2,152,589, ) Mr. Chalermchai Mahagitsiri 1,981,000, ) POSCO Limited 1,200,000, ) Miss Ausanee Mahagitsiri 452,181, ) Mrs. Suvimol Mahagitsiri 50,000, ) Mr. Prayudh Mahagitsiri 36,197, Agenda item no. 3 To consider and approve the amendment of the Company s Articles of Association POSCO has executed the agreement to sell and purchase ordinary shares with the Majority Shareholders Group at the price of Baht 2.20 per share and informed the Board of Directors of the Company that it will make a voluntary tender offer at the price of Baht 2.20 per share subject to the key condition that the Company shall obtain approval from the Board of Directors Meeting and/or the shareholders meeting of the Company in respect of the amendment of Articles 32 and 39 of the Company s Articles of Association. Therefore, in order to fulfill the 6

7 condition made by POSCO, which will benefit the shareholders and the Company in general, the Company should amend the Company s Articles of Association. The Board of Directors, therefore, propose the shareholders meeting consider and approve the amendment of Article 32 and the deletion of Article 39 of the Company s Articles of Association as follows: 1) Article 32 Current context The Chairman or the Vice Chairman or the Chief Executive Officer shall sign and affix the Company s seal or two other directors shall jointly sign and affix the Company s seal to bind the Company. The Board of Directors may determine and amend the names of the authorized directors empowered to sign and bind the Company and affix the Company s seal. Proposed amended context The authorized directors of the Company are any two directors who shall jointly sign and affix the Company s seal. The Board of Directors may determine and amend the names of the authorized directors empowered to sign and bind the Company and affix the Company s seal. 2) The entire Article 39 shall be deleted. The current context of Article 39 of the Company s Articles of Association is as detailed below: The Chairman or the Vice Chairman shall keep the Company s seal. Accordingly, the number of the Company s Articles of Association will be reduced from 51 Articles in the Articles of Association to 50 Articles. The details of the amendment are in Enclosure 4. Opinion of the Board of Directors : The Board of Directors deem it appropriate to propose the shareholders meeting consider and approve the amendment of Article 32 and the deletion of Article 39 of the Company s Articles of Association as per the details mentioned above. Remark : Resolution in this agenda item shall be approved by not less than three-quarters (3/4) of the total number of votes of the shareholders attending the meeting and having the right to vote, exclusive of votes of interested shareholders as follows: 7

8 Shares % 1) Miss Ausana Mahagitsiri 2,152,589, ) Mr. Chalermchai Mahagitsiri 1,981,000, ) POSCO Limited 1,200,000, ) Miss Ausanee Mahagitsiri 452,181, ) Mrs. Suvimol Mahagitsiri 50,000, ) Mr. Prayudh Mahagitsiri 36,197, Agenda item no. 4 To consider and approve the bonus payable to the directors for year 2011 The process of the voluntary tender offer will start and the Majority Shareholders Group will tender the Company s shares in the voluntary tender offer. As a result of this, POSCO will become a major shareholder in the Company and a change of control shall take place whereby, in practice, the nine existing directors of the Company (except for Khun Prayudh and Khun Chalermchai) will be requested to resign from the office of directors. Therefore, the bonus for directors for their performance in year 2011 (from January 2011 to the resignation date of each director) should be considered to be payable to the eight existing directors; consisting of Mr. Jean-Paul Thevenin, Mr. Young Sea Suh, Mr. Hitoshi Ito, Mr. Sornthep Gomutputra, M.R. Priyangsri Watanakun, Mr. Choon Jaruchaiyakul, Mr. Prakit Tienboon, and Mr. Jitender P. Verma. The directors bonus will be payable at Baht 3,000,000 for each director whereby the amount of bonus of each director shall be made pro rata to the number of attendances at Board of Directors Meeting. In this regard, Khun Suvimol Mahagitsiri declared her intention to waive her right to receive the said directors bonus for year Opinion of the Board of Directors : The Board of Directors deem it appropriate to propose the shareholders meeting consider and approve the payment of the directors bonus in year 2011 (from January 2011 to the resignation date of each director) to the eight existing directors as named above, as per the details as mentioned above. Remark : Resolution in this agenda item shall be approved by not less than two-thirds (2/3) of the total number of votes of the shareholders attending the meeting. Agenda item no. 5 To consider any other matters (if any) The shareholders of the Company are cordially invited to attend the Extraordinary General Meeting of Shareholders No. 1/2011 on September 14, 2011 at 9.30 hrs. at Ball Room III, Conrad Bangkok Hotel, All Seasons Place, 87 Wireless Road, Bangkok 10330, and are recommended to study the registration procedures and to prepare all documents that are required to be presented on the meeting date, 8

9 and to study the voting and meeting procedures as detailed in Enclosures 8 and 9. The Company will conduct the meeting in accordance with the Company s Articles of Association set out in Enclosure 5. In the event that any shareholder is unable to attend the meeting and would like to appoint the Company s independent directors as a proxy to attend the meeting and cast votes on his/her behalf, the shareholders can appoint any one of the independent directors of the Company whose names and profiles are as appeared in Enclosure 7 and deliver the proxy form as set out in Enclosure 6 together with supporting documents to Mr. Thirachai Charuwanakul at Thainox Stainless Public Company Limited, 31 st Floor, Unit , CRC Tower, All Seasons Place, 87/2 Wireless Road, Lumpini Subdistrict, Pathumwan District, Bangkok 10330, and such documents shall arrive at the Company no later than September 12, In order to allow the registration of the attendance of the Extraordinary General Meeting of Shareholders No. 1/2011 to be carried out smoothly and efficiently, the Company will commence the registration and allow the shareholders and/or proxies to register their meeting attendance from hrs. of the meeting date, at Ball Room III, Conrad Bangkok Hotel, All Seasons Place, 87 Wireless Road, Bangkok As the Company will use the barcode system for the registration and counting of the votes in this meeting, therefore it is required that the shareholders and proxy holders present and submit documents as detailed in Enclosure 8 on the meeting date. The Company has fixed the record date to determine the names of shareholders who have the rights to attend the Extraordinary General Meeting of Shareholders No. 1/2011 on August 16, 2011, and the date to collect the names of shareholders under Section 225 of the Securities and Exchange Act B.E (as amended) by closing the share register book and suspension of share transfer on August 17, Please be informed accordingly. Yours sincerely, Thainox Stainless Public Company Limited (Mr. Chalermchai Mahagitsiri) (Mr. Jitender P. Verma) Director Director 9