Ref: COR:MS/EL06022e/ms
20 December 2006
Subject: Disclosure of Information Regarding Two New Vessel Acquisitions
To: The President of the Stock Exchange of Thailand
Thoresen Thai Agencies Public Company Limited ("TTA") confirms that Thor Fortune Shipping Pte. Ltd. and Thor Friendship Shipping Pte. Ltd., which are wholly owned subsidiaries of Thoresen Shipping Singapore Pte. Ltd., which, in turn, is a subsidiary of TTA, have entered into construction and sale contracts (each a "Contract") to both acquire a Handymax vessel at a purchase price of Japanese Yen 4,085,000,000 as follows:
1. Date of Transactions:
Thor Fortune Shipping Pte. Ltd. and Thor Friendship Shipping Pte. Ltd. signed the two Contracts on 20 December 2006.
2. The Parties Involved:
New Vessel Buyer: Thor Fortune Shipping Pte. Ltd.
Thor Friendship Shipping Pte. Ltd.
New Vessel Seller: Sumitomo Corporation, Japan ("Sumitomo") New Vessel Builder: Oshima Shipbuilding Co., Ltd., Japan ("Oshima")
Relationship between New Vessel Buyer and New Vessel Seller: None
Relationship between New Vessel Buyer and New Vessel Builder: None
3. General Characteristics of the Transactions/Details of the Acquired Assets:
Pursuant to the Contracts between Sumitomo and Thor Fortune Shipping Pte. Ltd. and Thor Friendship Shipping Pte. Ltd., Sumitomo, which acts as the marketing and sales agent for Oshima, has engaged Oshima to build, equip, and complete at Oshima's shipyard in Japan and to sell and deliver two identical 53,350 deadweight tons semi-open box-shaped bulk carriers (the "Vessels"). Upon delivery, the Vessels will be chartered out to increase TTA's profitability.
Thoresen Thai Agencies Public Company Limited
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The first Vessel, owned by Thor Friendship Shipping Pte. Ltd., is expected to be delivered around December 2009, while the second Vessel, Thor Fortune Shipping Pte. Ltd., is expected to delivered around September 2011.
Thor Fortune Shipping Pte. Ltd. and Thor Friendship Shipping Pte. Ltd. are incorporated in Singapore. Each company currently has registered and paid-up capital of SGD 5 million. Their share capital will increase over time as instalment payments are made to Sumitomo.
4. Total Value of Consideration
The purchase price of each Vessel is Yen 4,085,000,000, or Yen 8,170,000,000 in total. The total purchase price equals approximately Baht 2,482,454,500, using a Yen/Baht exchange rate of 0.30385.
Payment terms are as follows:
Yen 408,500,000 will be payable within three business days after signing the Contract Yen 408,500,000 will be payable within three business days after signing the Contract Yen 408,500,000 will be payable in March 2011 Yen 408,500,000 will be payable on 20 December 2007 Yen 408,500,000 will be payable in June 2011 Yen 408,500,000 will be payable in August 2009 Yen 2,859,500,000 will be payable upon delivery of the Vessel, which is expected to occur in September 2011 Yen 408,500,000 will be payable in November 2009 -
Yen 2,451,000,000 will be payable upon delivery of the Vessel, which is expected to occur in December 2009 The purchase price includes a number of significant upgrades to the basic Oshima vessel specifications. These upgrades were requested to increase the Vessel's durability and to enhance its trading capabilities and attractiveness to our client base.
Thoresen Thai Agencies Public Company Limited
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The size of the transactions equals 10.71% of the total assets of TTA and its subsidiaries as of 30 September 2006 (the total assets of TTA and its subsidiaries as of 30 September 2006 amounted to Baht 23,168,270,363).
When these transactions are included with other asset acquisition transactions in the past six months, there has been a 22.13% increase in the total assets of TTA and its subsidiaries as of 30 September 2006. Regulations consider these acquisitions as Class 2 transactions in accordance with the Rules, Procedures, and Disclosure of Information of the Stock Exchange of Thailand 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 Stock Exchange of Thailand.
5. Basis Used to Determine the Value of Consideration:
The terms and conditions have been agreed on normal commercial terms following arm's length negotiations between the New Vessel Buyers and the New Vessel Seller. The purchase price fairly reflects the current market price of a new Handymax vessel.
6. Benefit Expected to be Generated from the Transaction:
TTA's principal activities include vessel chartering and ownership. The Vessels are Handymax in size. The acquisitions are part of TTA's strategy to sustain a fleet of young and modern fleet of box-shaped bulk carriers to serve the growing needs of our client base.
TTA currently owns forty-five (45) general cargo and dry bulk carriers and is waiting for one second-hand vessel to be delivered in January 2007. With this acquisition, TTA will also have two newly built vessels to be delivered in 2009 and 2011.
7. Source of Funds:
The purchase price of each Vessel will be payable in Japanese Yen. A significant majority of the acquisition price will be funded by US Dollar-denominated loans from foreign banks. Operating cash flows will fund the remaining equity portion.
8. Board of Directors' Opinions For The Transactions:
The Board of Directors considers that these terms and conditions are fair and reasonable in the current market situation and in TTA's best interests. TTA believes that it is an opportune time to renew the fleet, since the Vessels will likely replace some older vessels upon delivery. Furthermore, the Vessels will enhance TTA's market position in terms of modern open-hatch box-shaped vessels.
Thoresen Thai Agencies Public Company Limited
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9. Audit Committee/or Directors' Opinions, Which Are Different From The Board of Directors
None
Yours faithfully
Thoresen Thai Agencies Public Company Limited
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---------------------------------------- M.L. Chandchutha Chandratat Managing Director |
---------------------------------------- Ms. Nuch Kalyawongsa Director, Group Finance/Accounting |
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