Investment In A Shipping Company in Indonesia
Ref: COR:MS/EL07028e/ms
1 November 2007
Subject: Investment In A Shipping Company in Indonesia
To: The President of the Stock Exchange of Thailand
Thoresen Thai Agencies Public Company Limited ("TTA") would like to confirm that on 1 November 2007, M.V. Thor Sailor (the "Vessel") was sold and delivered to P.T. Perusahaan Pelayaran Equinox ("Equinox"), which is based in Jakarta, Indonesia. The sale of the Vessel, combined with the plan to invest in Equinox, enhances TTA's strategic plan to become a leading regional maritime business group. The investment in Equinox, in particular, expands and develops additional maritime businesses within South East Asia, supports TTA's growing and profitable liner shipping activities in Indonesia, and strengthens the range of maritime services offered to clients. Details of the sale of the Vessel and investment in Equinox are as follows:
Investment in Equinox/Sale of M.V. Thor Sailor
The transactions will be explained in two sequences:
A. Sale of M.V. Thor Sailor
1. The Parties Involved:
| Seller: | Thor Sailor Shipping Co., Ltd. |
| Buyer: | P.T. Perusahaan Pelayaran Equinox ("Equinox") |
| Relationship between Buyer and Seller: | None |
2. Details of the Asset Disposed:
M.V. Thor Sailor is a general cargo vessel with a rated capacity of 16,248 DWT and was built in 1986.3. General Characteristics of the Transaction:
M.V. Thor Sailor was sold at a price of USD 7,011,000 (United States Dollars Seven Million and Eleven Thousand), or Baht 237,564,930.60 (Baht Two Hundred Thirty Seven Million Five Hundred Sixty Four Thousand Nine Hundred Thirty and Sixty Satang using a USD/THB exchange rate of 33.8846), which is the current market price.
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4. Net Book Value:
The net book value of M.V. Thor Sailor as of 31 October 2007 was approximately Baht 88.67 million. After deducting expenses from selling the Vessel, the accounting gain from the sale is approximately Baht 143.39 million.After the sale of M.V. Thor Sailor, the Thoresen fleet will consist of 43 vessels with an average size of 28,535 DWT and an average age of 18.04 years (excluding the new build vessels which will be delivered in 2009 and 2011).
5. Information about Equinox:
Equinox is a licensed Indonesian "National Shipping Company" established in 2001 and is based in Jakarta, Indonesia. Equinox is engaged in shipping and offshore services, commercial and technical ship management, crewing, and ship agency. Equinox holds ISM, ISO 9001, 14001 and OHSAS 18001 accreditations issued by Den Norske Veritas ("DNV").6. Benefit from the Transaction:
The sale is in line with TTA's policy of gradually lowering the average age of the fleet and increasing the average vessel size. The sale, combined with the planned investment in Equinox, is in line with TTA's strategic plan to expand its business footprint in the region and strengthen its existing operations and services.The proceeds from the sale will be used to make long-term investments, such as new build vessel or younger second-hand vessel acquisitions.
7. Term of Payment:
The Buyer and the Seller have mutually agreed that Equinox will pay for the Vessel through an instalment sale agreement maturing in seventy-two (72) months at a monthly payment of USD 120,000. This monthly payment has been calculated to ensure that the Buyer can fully repay the purchase price without default in case the investment by TTA in Equinox does not occur. The sale of the Vessel to the Buyer is not conditional on any investment by TTA in Equinox.However, upon completion of the planned investment in Equinox by TTA, Equinox shall fully prepay the outstanding instalments of the Vessel to the Seller. It is currently expected that the planned investment in Equinox by TTA will be completed around December 2007 upon execution of the Shareholders Agreement between TTA and Equinox. Details of the planned investment by TTA are described in the item of investment in Equinox.
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8. Size of the Transaction:
The total amount received from selling the Vessel (based on the assumption that Equinox will pay seventy-two instalments to the Seller) equals USD 8,640,000 (United States Dollars Eight Million Six Hundred and Forty Thousand), or Baht 292,762,944 (Baht Two Hundred Ninety Two Million Seven Hundred Sixty Two Thousand Nine Hundred and Forty Four using a USD/THB exchange rate of 33.8846). The size of the transaction equals 1.16% of the total assets of TTA and its subsidiaries as of 30 June 2007 (the total assets of TTA and its subsidiaries as of 30 June 2007 amounted to Baht 25,327,855,829).When this transaction is included with other asset dispositions in the past six months, it is not subject to the Rules, Procedures and Disclosure of Information of the Stock Exchange of Thailand regarding the Connected Transactions or the Acquisition and Disposition of Assets of Listed Companies.
9. Delivery Date:
1 November 2007B. Investment in Equinox
1. Date of Transaction
TTA has signed a Memorandum of Understanding ("MOU") with Equinox on 1 November 2007.2. Name of the New Company to Invest
PT Perusahaan Pelayaran Equinox ("Equinox")3. Country of Incorporation
Indonesia4. Relationship between TTA and Equinox
None5. Type of Business
Shipping Business
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6. Registered and Paid-up Capital before and after Acquisition by TTA
| Before Acquisition by TTA | After Acquisition by TTA | |
| Rupiah | 12,500,000,000 (or Baht 50,382,500) | 24,510,000,000 (or Baht 98,790,006) |
| Divided into | 12,500 shares | 24,510 shares |
| Par Value/Share | 1,000,000 (or Baht 4,030.60) | 1,000,000 (or Baht 4,030.60) |
Note: 1) Exchange rate of Baht 4.0306/1,000 Rupiah 2) New share capital of Equinox is the maximum amount to be issued by Equinox as agreed in the MOU. TTA will confirm the new share capital in due course once due diligence is finalised, and the Shareholders Agreement is signed.
7. List of Shareholders Before and After Acquisition by TTA
| Before | After | |
| a) PT Pesona Sentra Utama | 99.99% | 51.00% |
| b) Others | 0.01% | 0.00% |
| c) TTA | 0.00% | 49.00% |
| 100.00% | 100.00% |
8. General Characteristics of the Transaction
Under the MOU, TTA or its subsidiary will invest in Equinox, which is engaged in shipping and offshore services, commercial and technical ship management, crewing, and ship agency services in Indonesia, by acquiring newly issued shares and by investing in newly issued convertible bonds.Equinox will increase its share capital from Rupiah 12,500,000,000 (or Baht 50,382,500) to Rupiah 24,510,000,000 (or Baht 98,790,006) by issuing new 12,010 ordinary shares at par value of Rupiah 1,000,000 per share (or Baht 4,030.60 per share) using an exchange rate of Baht 4.0306/1,000 Rupiah. TTA will subscribe for all newly issued shares of Equinox for a total maximum investment of Rupiah 32,067,000,250 (or Baht 129,249,251.21) and TTA will become a 49% shareholder in Equinox.
Equinox will also issue convertible bonds up to Rupiah 31,032,000,000 (or Baht 125,077,579.20) to TTA. TTA will report the terms and conditions of the convertible bonds to be issued by Equinox in due course once Equinox concludes them.
The total investments in Equinox are not expected to exceed Rupiah 63,099,000,250, or Baht 254,326,830.41. The shareholding ownership by TTA in Equinox will not exceed 49%, even though TTA may convert the convertible bonds into shares in the future.
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TTA will confirm the new share capital and terms and conditions of the convertible bonds to be issued by Equinox in due course once due diligence is finalised, and the Shareholders Agreement is signed.
On receipt of funds from TTA under the transactions, Equinox will apply the proceeds received to fully pay for the purchase price of M.V. Thor Sailor.
9. Source of Funds
From working capital of TTA10.Book Value of Equinox as of 31 December 2006
The book value as of 31 December 2006, which is the latest audited financial statement date of Equinox, was Rupiah 730,103.58 per share, or Baht 2,942.76 per share.11. Basis used to Determine the Value of Consideration
Equinox shares were valued using a variety of different methods, including net asset value analysis and market multiples (including price to future earnings ratio). TTA believes that the acquisition price is fair and should generate a good return on our investment.12. Rationale
By entering this MOU with Equinox, TTA will expand its business footprint in the region and enhance its existing operations and services. TTA considers Equinox to be one of its primary investment platforms in Indonesia.13. Total Value of Consideration
The investments in Equinox, which include the investment in the newly issued shares of Equinox and its convertible bonds, will not exceed Rupiah 63,099,000,250, or Baht 254,326,830.41. The investment transactions equal 1.00% of the total assets of TTA and its subsidiaries as of 30 June 2007 (the total assets of TTA and its subsidiaries as of 30 June 2007 amounted to Baht 25,327,855,829).When the transaction is included with other asset acquisition transactions in the past six months, there has been a 36.29% increase in the total assets of TTA and its subsidiaries as of 30 June 2007. Regulations consider these acquisitions as Class 2 transactions in accordance with the Rules, Procedures, and Disclosure of Information of the Stock Exchange of Thailand ("SET") regarding the Acquisition and Disposition of Assets of Listed Companies. TTA is required to disclose the information immediately and send a circulation to shareholders within 21 days from the date of disclosure to the SET.
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14. Board of Directors' Opinions For The Transaction:
The Board of Directors considers that the investment in Equinox is fair and reasonable in the current business environment and is in line with TTA's business strategy to increase the contribution from non-dry bulk shipping operations.15.Audit Committee/or Directors' Opinions, Which Are Different From The Board of Directors
None
Yours faithfully,
Thoresen Thai Agencies Public Company Limited
| _____________________________ M.L. Chandchutha Chandratat Managing Director | _____________________________ Ms. Nuch Kalyawongsa Director, Group Finance/Accounting |