SET Announcements

The companies are in the process of restructuring debts with a financial institution. NOTE 16 - COMMITMENTS AND CONTINGENCIES 1) As at June 30, 2000, the Company had commitments resulting from project construction agreements of Baht 81.02 million and Baht 79.31 million in the consolidated and the Company's financial statements, respectively, and from letters of guarantee issued by bank of Baht 6.72 million and Baht 2.69 million, in the consolidated and the Company's financial statements, respectively. As at December 31, 1999, the Company had commitments resulting from project construction agreements of Baht 2.46 million and Baht 0.75 million in the consolidated and the Company's financial statements, respectively, and from letters of guarantee issued by bank of Baht 4.27 million and Baht 2.43 million, in the consolidated and the Company's financial statements, respectively. 2) As at December 31, 1999 the Company had commitments resulting from purchase and sales land and construction agreements of Baht 185.67 million. The Company already paid on January 25, 2000. 3) On December 20, 1999, a subsidiary company entered into the purchase and sales land and construction agreement with a person in the amount of Baht 19.82 million. The land has been under the servitude, which was registered under the letter of servitude on October 19, 1990. The Company and the seller agreed to transfer the right on April 26, 2000 by changing the owner's right from the subsidiary to the Company. 4) As at June 30, 2000, the Company, as co-defendant, had contingent liabilities from lawsuits for repayment of principal and interest in the amount of Baht 18.24 million on the basis that the creditor of the Company has breached the agreement. The case is now under trial. The contingent liability has been recognized in the financial statements in full amount. 5) As at June 30, 2000 , the parent company and subsidiaries had contingent liabilities arising from being sued by seven customers who are demanding a refund of both principal and interest, of approximately Baht 2.47 million and Baht 8.97 million, respectively, and the Company and subsidiaries, as co-defendant in the amount approximately of Baht 4.43 million, arising as a result, the companies have breached in the contract, defraud and thief. The litigation is under consideration of the court. The parent company and subsidiaries recognized the said contingent liabilities in the financial statements in full amount. 6) In March 1999, the Company had commitments resulting from a subscription agreement and a debt repayment agreement with Starwood Thailand Corporation. The said company can subscribe, or designated party, to subscribe for shares in the Company under the agreements and the Company's regulation, up to 51% of total issued shares by December 31, 2002. The significant descriptions in the subscription agreement are as follows: - First subscription shares will amount to 8,000,000 newly issued ordinary shares, at Baht 5 per share - Second subscription shares are subject to fulfillment or waiver of the applicable further conditions in the agreement and subject to the Debt Repayment Agreement. The subscriber subscribes 32.4 million ordinary shares at Baht 10 per share, which is equal to the amount of the principal component of the relevant indebtedness. The subscriber shall pay the said subscription share by transfer funds into the Company's Bank Account. - The subscriber can subscribe 8 million shares at Baht 5 per share for the third subscription shares. - Fourth subscription shares were subject to fulfillment or waiver of the applicable further conditions in the agreement. The subscriber can subscribe the remaining shares under the agreement by December 31, 2002. - In the case of the above subscription shares, the payment for those shares are transferred into the Company's bank account. If the Company is unable to issue a number of ordinary shares at Baht 5 per share. The Company and Starwood agree to issue any other securities instead. If the Company and Starwood can not agree for the issue of any securities to achieve the Commercial Goal. Starwood may subscribe the ordinary shares at Baht 10 per share (or the minimum par value (not being less than Baht 5) permitted by the Listing Rules of the SET). If Starwood applies for a subscription of shares, the Company shall, subject to all applicable laws, be liable to provide the economic benefit equal to the excess of the total subscription price paid by Starwood to achieve the Commercial Goal. As stated in the agreement, the Company agrees that a juristic company under the agreement shall hold all of the equity interests in an asset company (Assetco). From the date of its formation, the Asset company shall pay an annual asset management fee to the Company equal to 0.375% of asset company's gross invested amount (equity and debt), as the same shall vary from time to time provided however that, for the first year, and, if Starwood shall have subscribed for 8,000,000 shares, then also for the second year, the Annual Management Fee shall be equal to the aforesaid sum, less Baht 40,000,000 (but in no case less than zero). The significant descriptions in the Debt Repayment Agreement are as follows: 1) Starwood propose to accept the transferred debt of the Company, according to the loan agreements between the Company or its subsidiaries and the financial institutions. 2) Starwood has the right to request the Company to issue the ordinary shares for sale to Starwood totaling in the amount equal to the total of the transferred debt, under the condition that the Company will repay the transferred debt to Starwood after Starwood has completed to subscribe the above shares. 3) After complying with the condition in the Agreement, Starwood or the Company may send a prior notice to inform the other to pay or receive a payment for transferred debt. In the case that the Company requests Starwood to repay the transferred debts, Starwood has the right to request the Company to repay to Starwood instead of applying for subscription. 4) Starwood agreed not to request the Company or its subsidiaries to pay debts to Starwood or to take any legal action for the debts, provided that the Company must not breach the above Subscription Agreement or Debt Repayment Agreement. NOTE 17 - LONG-TERM LEASE AGREEMENT 1. On December 20, 1999 the Company made a lease contract of land and construction with a person, covering 15 years between January 1, 2000 and December 31, 2014, with total value of Baht 54 million. On the annual basis, payment of rent is made on the 10th of January according to the following details: 1. Rent of the period between January 1, 2000 and December 31, 2004 is Baht 3.0 million per annum. 2. Rent of the period between January 1, 2005 and December 31, 2009 is Baht 3.6 million per annum. 3 Rent of the period between January 1, 2010 and December 31, 2014 is Baht 4.2 million per annum. The lessor postponed registration of the lease for 80 days as the name of the owner of partial construction had not yet replaced with that of the lessor. whereby the construction under lease was possessed by the existing lessee, therefore on December 20, 1999 the Company and the existing lessee, made a memorandum of understanding in a way that the existing lessee was requested to prematurely terminate the building lease contract made with the lessor so that the Company would rent property and land in the vicinity from the lessor. Then the Company agreed to compensate the existing lessee for the lost benefit from prematurely terminating the building lease contract made with the lessor and the Company agreed to purchase the property used in subleasing the rooms for rent in the amount of Baht 1.07 million and will pay partial compensation of Baht 0.2 million on the date of contract. As at March 31, 2000 the Company had already paid in full amount. On April 5, 2000, the Company made an agreement to lease partial land 2. The Company entered into a rental agreement with a related company for office accommodation and for rent for a period of 30 years from June 1, 1994 to May 31, 2024. At the date of signing the agreement the Company paid total rental amount in amount of Baht 548.57 million. At the end of the contract, the Company must return the assets to the lessor. The Company can not request anything from the lessor under the agreement. 3. A subsidiary company entered into a land rental agreement with the Royal Palace Office for construction of condominium for the Baan Sansiri Project for a period of 30 years from November 1, 1993. At the date of signing the agreement, the Company had made a lumpsum payment for rental in amount of Baht 117.70 million. NOTE 18 - RECLASSIFICATION Certain transactions in the 1999 financial statements have been reclassified to conform to the 2000 financial statements presentation. NOTE 19 - YEAR 2000 ISSUES (UNREVIEWED BY THE AUDITOR) As of August 7, 2000 the Company has not experienced any significant disruptions to the financial or operating activities caused by failure of the Company's computerized systems resulting from Year 2000 issues. The Company's management does not expect Year 2000 issues to have a material adverse effect on the Company's operations or financial results in 2000. NOTE 20 - SEGMENT INFORMATION FOR SIX-MONTH PERIOD ENDED JUNE 30, 2000 (Amounts : Thousand Baht) Real estate Land under Management Total Eliminated Total development and decoration for rent building Revenue Revenue from project sales - - - - - - Revenue from leasehold rights 15,959 - - 15,959 - 15,959 Revenue from business management 42,249 - 19,348 61,597 (3,666) 57,931 Rental income 18,290 1,800 - 20,090 (95) 19,995 Total 76,498 1,800 19,348 97,646 (3,761) 93,885 Expenses Cost of sales and services 28,632 - 41,862 - 41,862 Leasehold and development costs written off 10,223 - - 10,223 - 10,223 Total 38,855 - 13,230 52,085 - 52,085 Gross profit 37,643 1,800 6,118 45,561 (3,761) 41,800 Fixed assets 427,769 - 1,408 429,177 - 429,177 NOTE 21 - SUBSEQUENT EVENT The Company established Sansiri Home Network Co., Ltd. with a registered capital of Baht 1 million and 100% of the share capital is owned by the Company. This company was registered on July 14, 2000 with 10,000 shares at Baht 10 par value. On July 26, 2000, the Company received a letter from a financial institution regarding conditions on the restructuring of debt. Details of the relaxation and extension of debt payment period is summarized as follows: 1. Transfer of the land of subsidiary company pledged as collateral for full payment of Baht 11.18 million principal with exemption of interest on the whole amount. 2. The Company's right to repurchase the land and consent sale to third party. On July 26, 2000, a subsidiary received a letter from a financial institution regarding conditions on the restructuring of accrued debt. Details of the relaxation and extension of debt payment period is summarized as follows: 1. Transfer of lease right for the Lang Suan Soi 2 Project and shares of the parent company for debt payment in the total amount of Baht 160.97 million. 2. Relaxation of debt payment conditions. 3. The Company's right to repurchase the land and consent sale to third party. 4. Cash payment in the amount of Baht 5 million. On July 28, 2000, the Company entered into an agreement to buy and sell alnd with construction with the landowner that procured the land adjacent to such land. The obligation under this agreement is approximately Baht 99 million. Transfer and payment must be completed by August 2000 and May 2001.