Clarification- Assets' Acquisition&Connected Transection

- Translation - No. TTW/0482/08 October 31, 2008 Subject : Clarification of Concerning the Acquisition of Assets and Connected Transaction Attention : President The Stock Exchange of Thailand Regarding the report to the Stock Exchange of Thailand ("SET") No. TTW/0516 on October 24, 2008, Thai Tap Water Supply Public Company Limited ("the Company") would like to Clarify the notify number 2, 3, 4, and 5 which concerned the Acquisition and Disposition of Assets as follow: According to current operations, the Company is under negotiation with the Provincial Waterworks Authority ("PWA") on entering into a new Water Purchase Agreement. The Company expects this transaction to conclude by end of 2008, therefore the Company needs to prepare a plant enhancement construction project to increase its existing production capacity from 320,000 m3/day to 440,000 m3/day at investment cost not exceed Baht 1,300 million. The Company has complied with the requirement of relevant laws by calculating the value of the transaction as stipulated in the Notification of the Board of Governors of the Stock Exchange of Thailand, Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, B.E. 2547 (2004). As a result, the value of the transaction is 7.07 percent of the Company's and its subsidiaries' total asset stated in the Company's Consolidated Financial Statement, as of 30 June 2008, which is not obligate to execute as stipulated in such Notification. The investment costs, Baht 1,300 million, comprise of civil construction cost, mechanical & electrical cost, and other related costs. However, part of the project involves a connected transaction. The details of the project are as follows: 1. A contract with CH. Karnchang Public Company Limited ("CH. Karnchang") for relevant civil works at the contract price of not exceeding Baht 640 million (excluding VAT). In this regard, the contract will be based on a standard agreement of the International Federation of Consulting Engineers - FIDIC. The engagement with CH. Karnchang, which is a major shareholder of the Company, is considered a connected transaction relating to assets or service in accordance with Section 89/12 of the Securities and Exchange Act B.E. 2535 (1992) (as amended) (the "Securities Act") and the Notification of the Board of Governors of the Stock Exchange of Thailand regarding Disclosure of Information and Other Acts of Listed Companies concerning the Connected Transactions B.E. 2546 (2003) (as amended). Therefore, this transaction requires an approval from the shareholders which must consist of at least three-fourths of the total votes of shareholders attending the meeting and having voting right, excluding interested shareholders' equity. The details of connected transaction are as follows: 1.1 Date of Transaction and Related Parties 1.1.1 Date of Transaction : within December 2008 1.1.2 Name of Related Parties : Employer : Thai Tap Water Supply Public Company Limited Contractor : CH. Karnchang Public Company Limited, a company which operates construction business of large scale infrastructures requiring use of advanced technology and invests in the large basic infrastructures of the government such as construction of Mae Fah Luang University, Second Stage Expressway System, Rama IX Bridge, etc. 1.2 General Characteristics and Details of Connected Transaction The Company, as producer and distributor of tap water to PWA in the areas of Nakhon Pathom and Samut Sakhon Provinces, will engage CH. Karnchang to carry out the construction for plant enhancement in order to increase the Company's existing production capacity from 320,000 m3/day to 440,000 m3/day, in the amount not exceeding Baht 640 million (excluding VAT) and the total volume of such transaction is 12.36 percent of net tangible assets according to the consolidated financial statements of the Company and its subsidiary ending June 30, 2008. The above engagement of CH. Karnchang, as a major shareholder of the Company, is considered a connected transaction relating to assets or service in accordance with Section 89/12 of the Securities and Exchange Act B.E. 2535 (1992) (as amended) (the "Securities Act") and the Notification of the Board of Governors of the Stock Exchange of Thailand regarding Disclosure of Information and Other Acts of Listed Companies concerning the Connected Transactions B.E. 2546 (2003) (as amended). 1.3 Total Value and Basis Used in Determining Transaction's Total Value 1.3.1 Total Value of Consideration : not exceeding 640 million Baht (excluding VAT) 1.3.2 Method of Payment : By cheque upon completion of installment of works 1.3.3 Condition : The execution of the engagement contract with CH. Karnchang would occur on the condition that the Company has already entered into the Water Purchase Agreement with PWA. 1.3.4 Basis of Price Determination : Arranged to have a consultant engineer to examine and estimate the price of works. 1.4 Details of Connected Persons 1.4.1 CH. Karnchang is a major shareholder of the Company, holding 1,408,777,400 shares, or 35.3 percent of the registered capital, according to the Company's share register book as at September 30, 2008. 1.4.2 Name of Interested Directors and Connected Persons are listed as follow Connected Persons Position in the Company Position in CH. Karnchang Mr. Plew Trivisvavet Chairman of the Board of Directors President and Chief Executive Officer Mr. Narong Sangsuriya Director and the Chairman of the Senior Executive Vice President Executive Committee Mr. Prasert Marittanaporn Director Director and an Executive Vice President Mr. Sombat Kitjalaksana Director and an Executive Director Director and an Executive Vice President (Business Development) 1.5 Characteristics and Scope of Interests of Connected Person CH. Karnchang is a major shareholder of the Company holding 1,408,777,400 shares, or 35.3 percent of the registered capital according to the Company's share register book as at September 30, 2008. 1.6 Source of Funds and Adequacy of Working Capital The funds will come from the working capital and issuance of debentures by the Company which will not affect the Company's financial position. 1.7 Interested Directors and Connected Persons The interested Directors and connected persons as listed in 1.4.2 did not attend the Meeting and did not exercise the right to vote in the Meeting in consideration of the agenda concerning the entering into connected transaction. 1.8 Opinions of the Company's Board of Directors and The Audit Committee The Board of Directors' Meeting approved the entering into such transaction as it was deemed reasonable with following reasons: In order to select this Contractor to operate the civil construction, the Company considered that the Contractor previously used to operate the project of civil construction with respect to the water production and distribution system in the areas of Nakhon Pathom and Samut Sakhon Provinces as it is an expert in the field of construction of infrastructure system. Upon consideration of its knowledge and ability, The Company deemed that CH. Karnchang is qualified.Regarding the payment of remuneration, the Company negotiated with the Contractor in accordance with the method for engagement in the normal course business. Upon comparing with the price estimated by consultant engineer, it was found the transaction price is reasonable. 2. A contract with S. Napa (Thailand) Co., Ltd. ("S. Napa") for relevant mechanical and electrical works at the contract price of not exceeding Baht 422 million (excluding VAT). In this regard, the contract will be based on a standard agreement of the International Federation of Consulting Engineers or FIDIC. S. Napa is a leading mechanical and electric company in water and wastewater business and is not a related person or connected person of the Company. Therefore, it is not obligate to get approval from shareholders. Please be informed accordingly. Very truly yours, (Sompodh Sripoom) Managing Director