Tanayong Announces Plan to Acquire Bangkok Mass Transit System (BTSC)


Bangkok, March 23, 2010 – Tanayong Public Company Limited (“TYONG” or the “Company”) announced the acquisition plan of Bangkok Mass Transit System (“BTSC”) and to negotiate and enter into agreements to acquire shares of BTSC from its existing shareholders. The announced transaction is aimed at enhancing the Company’s competitiveness in the real estate development business, increasing the attractiveness of the Company’s shares through increased market capitalization and liquidity as well as reaping benefits from the strong performance and high growth potential of BTSC’s skytrain business.

Mr. Keeree Kanjanapas, Chairman of the Board of Directors of TYONG, today announced that TYONG’s Board of Directors has approved the BTSC acquisition plan, in which the Company will negotiate and enter into agreements to acquire 15,022.3 million shares or 94.60% of total paid-up shares in BTSC for total consideration value of Baht 40,034.53 million. Under the plan, the Company will acquire BTSC shares from Siam Capital Developments (Hong Kong) Limited, Keen Leader Investments Limited and Mr. Keeree, and carry out the entire business transfer from Siam Rail Transport and Infrastructure Limited. Out of the total consideration value, Baht 20,655.71 million (approximately 51.59% of the total consideration) will be paid in cash while the remainder will be paid with 28,166.88 million newly-issued shares of TYONG at Baht 0.688 per share or equivalent to Baht 19,378.81 million (approximately 48.81% of the total consideration) instead of cash. The Company will borrow Baht 22,000 million from a financial institution to finance the amount of cash consideration and use the remainder as working capital.

After the acquisition of BTSC shares, the Company plans to do a Rights Offerings of Baht 12,000 million to partially repay the loan. In case there are unsubscribed rights, the Company will offer the remaining portion through a Private Placement. To make the offering more attractive and to encourage shareholders to subscribe to the Rights Offering, the Company will also issue warrants at no charge to those who subscribe to the Rights Offering or Private Placement. These warrants will have a maturity of 3 years, exercisable from the end second year with the exercise price of Baht 0.70. The share acquisition and the entire business transfer are expected to be completed within early May 2010, subject to the approval from the Extraordinary General Meeting of Shareholders to be held on 29 April 2010 (the “EGM”) and related authorities and the fulfillment of other conditions precedent.

Mr. Keeree further added, “The acquisition of BTSC shares will broaden the Company’s scope of business and greatly increase its asset size. Currently, BTSC has the total asset of Baht 55,401.50 million or approximately 7.3 times the size of TYONG’s total assets. The decision to acquire BTSC shares is made on the basis that the acquisition will enhance both companies’ competitiveness in the real estate business by leveraging TYONG’s experience in developing and managing real estate projects to BTS properties, increase the attractiveness of its shares with the increased market capitalization and liquidity, as well as reap benefits from the strong performance and high growth potential of BTSC’s skytrain business. The Company believes that this acquisition will strengthen the Company’s operating performance, and hence, greatly benefits its shareholders.”

“The Company’s management believes that BTSC’s skytrain business is a great business with high growth potential. Since the commencement of its operation in 1999, BTSC’s revenue and the number of passengers has continued to grow over the years. Presently, BTS provides service to over 450,000 passengers per weekday. And to support the increasing demand of its skytrain service, BTS has a plan to increase its capacity by almost 50%, allowing it to serve more passengers, especially during the rush hour. In addition, BTS will directly benefit from the future government mass transit projects as these projects will feed more passengers into the skytrain system currently operated by BTS under the concession with BMA. Furthermore, BTS, as a single operator, has an advantage in operating these extension routes as it will be able to operate more efficiently and provide better service to the passengers. Therefore, we believe that BTSC will be able to strengthen the operating performance of the Company and generate stable return to the Company’s shareholders.”

As for the cooperation in real estate development business between TYONG and BTSC, Mr. Keeree further added, “The Company could also leverage its extensive experience and expertise in real estate development, ranging from project feasibility study and planning, project management, construction to post-construction operation, to BTSC’s property projects, all of which are situated in high-potential locations in central Bangkok, along the BTS route.”

After the acquisition of BTSC shares, TYONG’s shareholding structure will change. While Khun Keeree and Mr. Kavin Kanjanapas will still be the major shareholding group with 41.46% of total paid up shares of TYONG, there will be two new groups of major shareholders, namely funds managed by Ashmore Investment Management Limited and Funds managed by Farallon Capital Management, L.L.C., both of which are the existing shareholders of BTSC. At a later stage, the Company also plans to acquire the remaining 5.4% of BTSC shares held by the minorities by issuing newly issued shares as payment consideration at the price not less than Baht 0.60.