22 Oct 2020 17:15:00
Clarification of news or information requested by SET
SET requests to clarify news or information Subject : Clarification of news or information requested by SET Description : -Translation- SET. 033/2020 22 October 2020 Subject: Clarification information by letter No. BorJor.192/2020 dated 8 October 2020 To: Directors and the Manager The Stock Exchange of Thailand Reference: Letter No. BorJor.192/2020 dated 8 October 2020 In reference to the Stock Exchange of Thailand's letter No. BorJor.192/2020 dated 8 October 2020 requesting company for the 2020 second quarter financial statements clarification which had been reviewed by the Certified Public Accountant, the auditor had a qualified opinion on investments in bill of exchange (B/E) and short-term loans of 412 million baht which the company continues to change the due date. The latest due date was on 30 September 2020 and remarks about company prosecutions, including the key items in those financial statements. The investors have also been informed of important information for decision investment making in the company securities of stock market. It is therefore requested that the Company provide additional information and clarification to propagate through the system for the Stock Exchange of Thailand as follows. 1. Investments in bill of exchange and short-term loans, totaling 1,484 million baht. With reference to notes 6, 8 to the financial statements, the company statement indicated that a Bill of Exchange investment of Planet Energy Holding Pte., Ltd. (Planet) amounted to 1,072 million baht in 2017. (Ultimate shareholders are Khun Supasit Pokinjarurat and Khun Aung Thiha) and short-term loan to Krungthai Land Development Company Limited (Krungthai Land) in the amount of 412 million baht (Ultimate shareholder group is Laohapongchana). The Board of Directors have resolved the company to renew the Bill of Exchange period and short-term loan agreement for 9-10 times and the Board of Directors resolved the renewal of Bill of Exchange period latest date on 24 September 2020. In this regard, the company has informed the Stock Exchange of Thailand that the company does not have a need to use such funds. The Board of Director has provided additional risk policies protection such as monitoring the operating situation of invested company, short-term loans closely, negotiated collateral and/or additional guarantees and investments in other companies, as detailed in the letter that refer to 2. However, the auditor's report for the annual year 2020 second quarter provided a qualified opinion on the adequacy of an allowance for doubtful accounts of investments in the bill of exchange and short-term loans, totaling 1,484 million baht from the 2018 financial statements to the current period. For reasons that are not supported by evidence and how to determine the other, the auditor's report stated the latest Planet's Financial Statements received by the company (Financial statements had not been audited by the auditor for the year 2018) that assets of Planet Company amounted to USD 170.43 million and shareholders' equity of USD 113.59 million. The Company believes that the property of authorized persons and ultimate shareholder of such companies totaled 1,810.76 billion baht, according to an analysis of debt securities on 5 May 2020. As for Krungthai Land, the 2020 annual financial statements audited by the auditor, which was shareholders' equity of 100.53 million baht and a temporary construction freeze. In both cases, the Company's management believes that it can be fully charged. Therefore, the allowance for doubtful accounts was not considered. The Stock Exchange of Thailand requests the company to clarify the following information. 1.1 Opinion of the Board of Directors on extending the term of bill of exchange, loan agreement and such company's ability to repay the loan by providing information and explaining the criteria used to consider as well. Answer: - The Board of Director meeting was held by the company on 24 September 2020, which resolved to extend the term of bill of exchange and loan agreement to the date of 31 December 2020 by considering their ability to repay debts and the debtor's assets proposed enough value to cover debts. The Company uses the asset value criteria in consideration. - The debtor was contacted for an extended period of time to make a repayment plan in September 2020. Management has requested a resolution of the Board of Directors due to the debtor has made many plans as an option for the company while the company has been constantly monitoring the quality of debtor's assets and hired financial advisers to consider the plan. 1.2 Explanation of risk prevention policies of the Board of Directors as described in such Company's letter referred to 2 such as monitoring the operating situation of invested company, short-term loans closely, negotiated collateral and/or additional guarantees and investments in other companies including the implementation such company policy of determined Board. Answer: - At present, the company has not been received any collaterals or guarantees from debtors. At this time, the debtor has proposed a repayment plan to the company and the company has hired a financial advisor to analyze the payment plan, which the company expects to be completed by the end of 2020. 1.3 Guidelines for conducting a search in up-to-date evidence about the financial position and the operating results of Planet and Krungthai Land so that the auditors can express opinions on the Company's financial statements. Answer: The company has hired an appraisal company to analyze the Planet Energy Holdings Company Limited and analyzed in accordance with the Attachment 1 Re: Debt Securities Analysis. The Company only has analyzed the debt securities due to the Planet Energy Holdings Company Limited is a fund in Singapore that does not have to prepare the financial statements. The Board of Director has an opinion if the repayment plan analysis is completed then the auditor will be able to express an opinion on the company financial statements, which is expected to be completed by the end of 2020. 1. Investments in shares of The Tarna Align Resort Company Limited (The Tarna) 125 million baht. On 29 August 2019, the Board of Directors had approved an offer for all ordinary shares of the Tarna Company, which operated hotels and resorts in Koh Tao, Phangan District, Suratthani total 1,387,500 shares to 125 million baht with an opinion that is a reasonable purchase price because of lower price than book value (For details please refer to the Company's letter 3) and the notes to the financial statements 10.3 and 25.2.4 states that the Tarna Company received a subpoena for payment not exceeding 45 million baht as well as the company is considering an impairment of the Tarna's investments. Summarize the sequence of important events as follows: Date Situation 2 September 2019 The Company entered into an agreement to purchase shares in the Tarna with Ms.Sunisa Sethapanit by gradual deposit payment of 63 million baht for the shares completed on 11 July 2019 and the remaining 62 million baht. The Company issued promissory notes (P/N) to the seller, aged 6 months without interest. The company gradually payment based on P/N completion date of 9 April 2020. 25 June 2020 - The Tarna Company received a subpoena to pay 37 million baht and interest not exceeding 8 million baht, totaling no more than 45 million baht (The court ruled on 8 April 2020). As a result of being lawsuit filed since 5 July 2019 but the company did not know because in the process of preparing sale and purchase agreement. - The Tarna Company recorded as an administrative expense in full amount. The Company is currently appealing a court order. 30 June 2020 The Company tests goodwill for impairment of investments in the Tarna Company and recognized a loss on impairment of 8 million baht. The Stock Exchange has requested that the Company provide additional information as follows. 2.1 Information and criteria used by the Board of Directors in conducting a due diligence audit and considerations for investing in the Tarna Company, coordinator name or introducing companies to invest as well as sale and purchase agreement defines the terms on liability for damages resulting from the lawsuit. Answer: - The Board of Director had a methodology for business process auditing by the law office conducting to investigate the case of the Tarna Company on 25 April 2019 and no lawsuit. The company had hired a company appraisal and evaluation assets were worth more than the purchase price. In this regard, the responsible agency reviewed the information on debt obligations, assets and receivables completely as shown in the financial statements for the year 2019 ended 31 January 2019 on August 31, 2019. The management team traveled and inspected such place of business operation. - The lawsuit was filed at the Tarna Company after the due diligence completed. The company had a lawsuit before entering into the purchase and sale agreement on 5 July 2019. - On 2 September 2019, the Company received notice of the judgment dated 30 April 2020. The Company made an appeal and notified the seller regarding this lawsuit to prevent damage in the case. In case of the company is damaged, compensation will be made from the seller under the purchase and sale agreement stating that the parties did not breach the agreement right is entitled to compensation based on actual damage. - Coordinator name or recommended as a broker to sell a business. 2.2 Reasons for the impairment of investment in the Tarna Company Answer: - As a result of the Tarna Company was filed a civil suit, the Court of First Instance ordered the Tarna Company to repay a debt of 45.32 million baht by dividing the principal amount of 37.34 million baht and interest of 7.98 million baht. Since the Court of First Instance had already sentenced, the auditor had considered the damage provision form litigation in the financial statements of the Tarna Company. Thus, AQ Public Company Limited considered the impairment of investment in the Tarna Company as shareholders 99.82%. 3 Sale of land sublease rights and building of the Bangkok Free Trade Zone project at a price of 100 million baht. According to notes 13 to the financial statements stating that on 29 May 2020, Free Zone Company Asset Limited (the company holds 100% shares) made an agreement with a company not related to sell land sublease rights and 14 buildings of Bangkok Free Trade Zone was a net price of 100 million baht when such sublease rights were equal to 146 and 144 million baht according to the accounts as of 31 March 2020 and 30 June 2020. For the purpose that memorandum of such agreement was scheduled to sign a purchase agreement by 15 September 2020. The stock exchange would like to acknowledge the opinion of the Board of Directors in determining the appropriateness and reasonableness for sale price of land sublease rights that the Company has set a value lower than the book value. Answer: The Board of Director considered a form of the old warehouse and in a neighborhood with modern warehouses for rent including facilities to transport goods from the containers. In the warehouse for rent of the company's subsidiaries must be renovated and dismantled for new construction. The company must make a large amount of investment for the renovation and demolition which compared to the remaining lease term will cost the company to invest in a rental warehouse cheap and repair costs and expenses to be responsible by tenants. The company expects to make cash flows to be received from rental future project which are less than the current project sales. The Board of Directors therefore approved the sale of leasehold rights and warehouses at a price of 100 million baht. The current extension of time from the date of memorandum signed an agreement on 15 September 2020 was extended to 16 November 2020. 4 Progress on the revocation of the property management agreement and benefit sharing. On 16 October 2015, the Company entered into a property management and benefit sharing (agreement) with the Golden Technology Industrial Co., Ltd. (Golden Company) and Progress Property Management Co., Ltd. (Progress Company). The company agreed to comprehensive power of compound a debt including sale management of land as collateral for debts repayment to Krung Thai Bank. Both parties have agreed not to claim the debt and exercise of recourse against each other as collateral under the agreement and operational flexibility. The Progress Company has transferred its shares of Golden Company 5.44 million shares, representing 68% of the company. The company reported that progress had been filed with the Civil Court to revoke the contract, which the company has fought not a breach of contract. The court verdict was on 18 March 2019 by a judge to dismiss the plaintiff and the case is being considered by the Court of Appeal (For details please refer to the Company's letter 4) However, the notes to the financial statements 1.1 states that the Court of Appeal verdict was read on 4 June 2020. The judge returned the company to transfer its shares of the Golden company 5.44 million shares to plaintiff. Subsequently, the Company filed a petition for extension period in the Supreme Court, which the court granted an extension of time until 3 September, 2020. Progress lawsuit: The Company is currently awaiting the court of appeal in order to transfer the shares back to the Progress Property Company Limited. In this case, the company transferred the shares back to the Progress Property Company Limited, it will not affect the auction of land collateral. Please be aware and please spread further. Yours Sincerely, (Mr. Suthad Chankingthong) (Ms. Ranchana Rajatanavin) Director Director Signature ___________________________ ( Mr.Suthad Chankingthong Ms.Ranchana Rajatanavin ) Director Director Authorized to sign on behalf of the company ______________________________________________________________________ This announcement was prepared and disseminated by listed company or issuer through the electronic system which is provided for the purpose of dissemination of the information and related documents of listed company or issuer to the Stock Exchange of Thailand only. The Stock Exchange of Thailand has no responsibility for the correctness and completeness of any statements, figures, reports or opinions contained in this announcement, and has no liability for any losses and damages in any cases. 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