(-Translation -) Ref. BTS 2272/2010 September 3, 2010 Subject: Capital reduction & increase, amend MOA, issue debentures, amend Articles and call EGM no. 2/2010 To: President The Stock Exchange of Thailand Enclosure: Capital Increase Form (Form F53-4) Whereas BTS Group Holdings Public Company Limited ("the Company") had the Board of Directors' Meeting No. 8/2010 on September 3, 2010 at 14.30 hrs. The Meeting passed the significant resolutions which will be further proposed to the shareholders' meeting for consideration and approval as follows: Executive Summary Matters Principles and Rationale 1. Reduction of registered The Company has capital of the Company from approximately Baht 4.6 Billion Baht 65,142,190,902 to Baht retained loss and approximately 41,691,002,177.28 and the paid- Baht 16.8 Billion share discount up capital of the Company from in its separate financial Baht 55,889,275,885 to Baht statements. According to the 35,769,136,566.40 by reducing law, the Company can make the par value of shares from dividend payment only when it Baht 1 per share to Baht 0.64 makes profits and has no per share retained loss. The reducing paid-capital resulting from the par reduction will be used to written off the share discount and retained loss. The reduction of retained loss would create the ability of the Company to make dividend payment to the shareholders in the future. The Company's plans to make good of retained loss are by means of (i) capital reduction, (ii) dividend income from subsidiaries, and/or (iii) other operating profits. 2. Issuance and offering of Being an alternative for funding convertible debentures and/or which could reduce the debentures in the amount up Company's interest expense to Baht 10,000,000,000 or in from loan facilities with the the equivalent amount of other commercial bank incurred from currencies the acquisition of Bangkok Mass Transit System Plc. ("BTSC"). At present, the Company still has approximately 8,753.7 MB outstanding loan and carries rather high floating interest rate. The reduced interest expense shall result in high liquidity, more stable financial status of the Company, more flexible manner in managing cash flow and higher generation of operating result. 3. Reduction of the registered To enable the Company to capital of the Company in the increase the registered capital in amount of 4,225,914,569 shares, order to accommodate the at the par value of Baht 0.64 per conversion of the convertible share, from the existing debentures, as required by registered capital of Baht Section 136 of the Public 41,691,002,177.28 to Baht Company Limited Act B.E. 38,986,416,853.12, by canceling 2535 (as amended). the Company's unissued shares 2 4. Increase of the registered To issue up to 16,302,867,837 capital of the Company by Baht new ordinary shares of the 10,433,835,415.68, from the Company to (1) accommodate existing registered capital of the conversion of the Baht 38,986,416,853.12 to Baht Company's convertible 49,420,252,268.80 by issuing debentures and (2) offer to the 16,302,867,837 newly issued shareholders of BTSC ordinary shares at the par (excluding the Company). value of Baht 0.64 per share 5. Amendment of the Articles of To accommodate the conversion Association of the Company of convertible debentures by the foreign investors by restricting the shareholding of all non-Thai persons to up to 30 percent. For the proportion in excess of 30 percent but not over 49 percent, such shall be reserved for the conversion of convertible debentures. The details of significant resolutions 1) Resolved to propose for the consideration and approval of the shareholders' meeting to (1.1) reduce the registered capital of the Company from Baht 65,142,190,902 to Baht 41,691,002,177.28 and the paid-up capital of the Company from Baht 55,889,275,885 to 2 Baht 35,769,136,566.40 by reducing the par value of shares from Baht 1 per share to Baht 0.64 per share and (1.2) amend Clause 4. of Memorandum of Association of the Company to be in line with the reduction of the Company's registered capital and paid-up capital. 2) Resolved to propose for the consideration and approval of the shareholders' meeting to amend Agenda Item No. 8.2 (3) of the resolution of the Extraordinary General Meeting of Shareholders No. 1/2010, held on April 29, 2010 in order to amend the amount of shares issued to accommodate the exercise of the warrant representing right to purchase the Company's newly issued ordinary shares and the par value of shares of the Company, by replacing "To allocate up to 5,111,610,256 newly issued ordinary shares of the Company at the par value of Baht 1 per share" with "To allocate up to 5,027,000,448 newly issued ordinary shares of the Company at the par value of Baht 0.64 per share". The amendment of Agenda Item No. 8.2 (3) of the resolution of the Extraordinary General Meeting of Shareholders No. 1/2010, held on April 29, 2010 because (1) the reduction of the registered capital and paid-up capital of the Company by reducing the par value of shares from Baht 1 per share to Baht 0.64 per share; and (2) at the present the Company has already determined an actual amount of warrant representing right to purchase the Company's ordinary shares at 5,027,000,448 units. 3) Resolved to propose for the consideration and approval of the shareholders' meeting for the issuance and offering of convertible debentures and/or debentures in the aggregate amount of up to Baht 10,000,000,000 or in the equivalent amount of other currencies. The details of the convertible debentures and/or debentures are as follows: 1) Details of convertible debentures Type : Convertible debentures in name certificate form or issued to bearer which grant the right to convert into ordinary share(s) of the Company Offering Size : Not exceeding Baht 10,000,000,000 or its equivalent amount in other currencies Term : Not exceeding 5 years from the issue date Exercise Period : Approximately 30-45 days or working days after the issue date to 15 days or working days before maturity date, except during closed periods which is in accordance to the terms and conditions of the convertible debentures approved by the Company Conversion Ratio : Principal amount of the convertible debentures divided by the conversion price Initial Conversion : To be calculated from the market price Price of the Company's shares traded on the SET during the period before the date of price determination plus premium. However, the conversion price maybe adjusted downwards at a certain rate or method to be determined. Accordingly the Board of Directors or Executive Committee shall be empowered to determine the conversion price and market price. Number of Ordinary : Not exceeding 12,500,000,000 shares Shares Reserved for the Conversion 4 Allocation Method : Foreign investors and/or domestic institution investors. The issuance and offering can be made in foreign currencies or Thai Baht currency and on one occasion or several occasions. Impact on : In the case all the debentures are fully Shareholders exercised, the Company expects that: Price Dilution The impact on the market price of shares (price dilution) will not incur or will be minimal because the Conversion Price is not less than the prevailing market price at the time the convertible debentures are issued. Control Dilution In the case where all the conversion right under the convertible debentures is exercised, the number of shares arising from such exercise will be up to 12,500,000,000 shares. After combining such shares arising from the conversion with the existing shares, including ordinary shares after the capital increase for the group of specific investors who are the shareholders of Bangkok Mass Transit System Public Company Limited and the exercise of warrants (BTS-W2), the total shares of the Company, after the conversion right under the convertible debentures is being exercised, will be equal to up to 77,219,144,170 shares. Therefore, the voting rights of the existing shareholders will be reduced by up to 12,500,000,000 / 77,219,144,170 or up to 16.19 percent of the paid-up capital after the capital increase. Events Requiring : Upon the occurrence of circumstances as the Company to prescribed in the Notification of the Issue New Shares to Capital Market Supervisory Board Accommodate a relating to the Application for and Change of the Approval of Offer for Sale of Newly Exercise of Issued Debentures. Conversion Right In addition, such events shall also include the event that shares reserved to 5 accommodate the exercise of conversion right under the convertible debentures are insufficient due to the occurrences such as the adjustment of conversion price. 2) Details of Debentures Type : Debentures in name certificate form or issued to bearer, subordinated or unsubordinated, secured or unsecured debentures and with or without debenture holder representative Offering Size : Up to Baht 10,000,000,000 or in the equivalent amount of other currencies Par value : Baht 1,000 per unit Term : Not exceeding 5 years from the issue date Allocation method : To be offered domestically and/or overseas to the public and/or institution investors and/or specific or general investors, on one or several occasions. Early redemption : The debenture holders have or do not have the right to request the Company for early redemption of the debentures and/or the Company has or does not have the right to redeem the debentures prior to maturity, as agreed and prescribed in the terms of debentures at each issuance. And resolved to propose to the shareholder's meeting to empower the Board of Directors and/or the Executive Committee to consider the market condition upon the issuance and offering of convertible debentures and/or debentures so as to provide the best interest to the shareholders, and to consider the economic situation, advantages and disadvantages and overall interest of the Company and the shareholders upon the issuance and offering of convertible debentures; And resolved to propose to the shareholder's meeting to empower the Board of Directors and/or the Executive Committee to take the following actions: a) to determine or amend the details, procedure and other conditions related to the issuance and offering of convertible debentures as it is deemed appropriate, such as the issue date, par value, offering price, interest rate, calculation and payment method of interest payment, conversion ratio, exercise period, redemption period, the last date for exercise of right, or to determine events requiring the Company to issue new shares to accommodate a change of the exercise of conversion right and conditions for adjustment of rights; b) to determine the details and other conditions in connection with the issuance and offering of debentures such as determination of interest rate, 5 offering method, amount of debentures to be issued and offered on each occasion, type of debentures, security, offering price per unit, maturity, redemption period, early redemption, payment method of principal and interest, allocation method and details on the offering; and c) to enter into negotiations, agreements and execution of agreements, documents, applications for permission and necessary evidence required in relation to the convertible debentures and/or the debentures, as well as to communicate and submit such applications for permission or waiver, documents and evidence to the relevant authorities or agencies concerning the issuance and offering of convertible debentures and/or debentures and the listing of convertible debentures and/or debentures on domestic or overseas secondary stock exchange. 4) Resolved to propose for the consideration and approval of the shareholders' meeting to (4.1) cancel the allocation of 4,225,914,569 newly issued ordinary shares, and (4.2) to reduce the registered capital of the Company in the amount of 4,225,914,569 shares, at the par value of Baht 0.64 per share, from the existing registered capital of Baht 41,691,002,177.28 to Baht 38,986,416,853.12, by canceling the Company's unissued shares, and (4.3) to amend Clause 4. of Memorandum of Association of the Company to be in line with the reduction of the Company's registered capital. As at present, the Company has a plan to issue and offer the convertible debentures in the aggregate amount of up to Baht 10,000,000,000 as detailed in the item no. 3). As a result, it is required that the Company increases its registered capital. In addition, according to Section 136 of the Public Company Limited Act B.E. 2535 (as amended), the Company may increase the amount of registered capital by the issuance of new shares when all the shares have been completely issued and paid up in full; therefore, in order to comply with the law, the Company shall cancel the allocation of the said 4,225,914,569 newly ordinary shares and cancel such unissued shares, by reducing the registered capital of the Company. The 4,225,914,569 newly issued ordinary shares remained unallocated and yet to be allocated consist of: (1) 84,609,808 shares which are a part of the 5,111,610,256 newly issued ordinary shares to which the Company has allocated to accommodate the exercise of right under the warrants. At present, the Company has already determined the actual amount of the warrants representing right to purchase the Company's ordinary shares (BTS-W2) to be issued at the amount of 5,027,000,448 units and, therefore, the Company is required to reserve 5,027,000,448 newly issued ordinary shares to accommodate the exercise of right under the warrants while 84,609,808 shares are no longer required. (2) 338,436,924 shares which are the shares remained as a result of (i) the unallocated portion to the existing shareholders due to the fraction from calculation and the revoked rights shares (i.e. 295,736,313 shares) and (ii) the leftover portion available to offer to the group of financial institution investors or the group of clients of securities companies who are the Company's underwriters (i.e. 42,700,611 shares). (3) 3,802,867,837 shares which are to be allocated to the group of specific investors who are the shareholders of BTSC at a price of not less than Baht 0.60, as 6 approved in Agenda Item No. 8.3 of the resolution of the Extraordinary General Meeting of Shareholders No. 1/2010, held on April 29, 2010. 5) Resolved to propose for the consideration and approval of the shareholders' meeting (5.1) to increase the registered capital of the Company by Baht 10,433,835,415.68, from the existing registered capital of Baht 38,986,416,853.12 to Baht 49,420,252,268.80 by issuing 16,302,867,837 newly issued ordinary shares at the par value of Baht 0.64 per share, and (5.2) to amend Clause 4. of Memorandum of Association of the Company to be in line with the increase of the Company's registered capital. 6) Resolved to propose for the consideration and approval of the shareholders' meeting to allocate the Company's newly issued ordinary shares as follows; (6.1) To allocate up to 12,500,000,000 newly issued ordinary shares at the par value of Baht 0.64 per share in order to accommodate the exercise of conversion right at the aggregate value of up to Baht 10,000,000,000. (6.2) To allocate up to 3,802,867,837 newly issued ordinary shares at the par value of Baht 0.64 per share at the price of not less than Baht 0.80 per share to the group of specific investors who are BTSC shareholders (excluding the Company) whose name are in the list of shareholders as of the date the Company issues the new ordinary shares under this Agenda item, provided that such persons are not the connected persons of the Company, as a consideration for such BTSC shareholders using their ordinary shares held in BTSC as the substitute of cash payment for subscription price for the newly issued ordinary shares of the Company. The offering price of these newly issued ordinary shares is not lower than 90 percent of the market price. "Market Price" means the weighted average of the Company's share price trading on the Stock Exchange of Thailand ("SET"), 15 consecutive trading days prior to (more)