) IFA's Opinion regarding the connected transaction of TTW

production and distribution business and expand the service areas to Bangpa-in Industrial Estate in Phra Nakhon Si Ayutthaya province, as well as diversify into a new business line, waste water treatment services. Therefore, by not entering into this Transaction, the Company will lose an opportunity to tap a new service area and new business line that will be beneficial to the Company in overall. 2. A loss of opportunity to boost income The tap water supply to PWA has been the only income source of the Company and PTW. An increase of such income is subject solely to a growing demand for tap water and/or an upward adjustment of the minimum off- take quantity guaranteed by PWA and/or an adjustment of the tap water fees under the specified criteria. Thus, by Page 45 of the total 92 pages The Opinion Report of the Independent Financial Advisor not making this Transaction, the Company will lose an opportunity to boost its income from the operation and management of treated water and waste water for customers in Bangpa-in Industrial Estate for a period of 30 years. 3. Risk from sole dependence on PWA If not making this Transaction, the Company and PTW will continue to rely solely on PWA as their only customer. Given that PWA will in the future change its tap water business management policy and/or terminate or discontinue the tap water purchase agreement made with the Company and PTW, this will adversely affect the Company's working performance in overall. 2.3 Comparison of making the Transaction with a connected person and with an independent third party Advantages of making the Transaction with a connected person 1. The connected person is TTW's director and his related persons and close relatives are also the Company's directors and shareholders, all of whom have had a good relationship with the Company. This can therefore ensure that the Transaction can be promptly concluded with the terms and conditions in favor of the Compay or, at least, no less inferior to that made with an independent third party. 2. The benefit from the Company being allowed to pay for the Operating Rights in three installments over a three-year period from the agreement signing date (see Item 1.7 for details of the payment method) is that the actual value of the payment will be lower than the agreed Transaction price of Bt. 1,400 million, based on the financial principle that the same amount to be paid in the future virtually is less in value than when paid at present. Accordingly, the present value of the Transaction price of Bt. 1,400 million, calculated with a basic discount rate of 11.20%, is equal to Bt. 1,341.60 million, which is lower than the said Transaction price by Bt. 58.40 million or 4.17%. Moreover, the Company can save inerest expenses as a result of the gradual loan disbursement from financial institutions for the installment payment to BLDC under the above payment terms, whereas it will obtain the entire Operating Rights from the very first date on which the agreement is signed, thereby enabling it to instantly recognize the income and results of this business. Disadvantages of making the Transaction with a connected person 1. The Transaction made with a connected person may lead to a suspicion that it is a means of transfer of benefits to the connected person or that the bargaining of the deal or the terms and conditions is not made in the best interest of the Company, unlike the Transaction made with a third party, hence a disadvantage to the minority shareholders. Nevertheless, TTW management well understands the regulations and is aware of the negative impact from the making of this Transaction with a connected person such that if the Transaction value is not reasonable or the Transaction brings no benefit to the Company, the small shareholders will then be affected accordingly. Page 46 of the total 92 pages The Opinion Report of the Independent Financial Advisor Advantages of making the Transaction with an independent third party 1. Normally, making the Transaction with an independent third party would not be considered or have doubted on transparency or transfer benefit from the Company. Disadvantages of making the Transaction with an independent third party 1. The Company may have to bear extra costs and take time to find and study other industrial estate projects as there might not be any other industrial estate owners interested in selling the rights to operate and manage the treated water and waste water systems to other party. 2.4 Risk factors to make the Transaction 2.4.1 Fee collection on the use of raw water The Ministry of Natural Resources and Environment has drafted a water resources legislation and, after an array of public hearings, has completed a final draft of the Water Act, the Ministry of Natural Resources and Environment Version, which currently is still under consideration of the Council of State of Thailand. Hence, there is no specific state agency with the power to approve the use of raw water pumped from rivers. However, as BLDC will employ a tap water production system using a surface water resource to produce and supply tap water to customers in Bangpa-in Industrial Estate by procuring raw water from the Chao Phraya River, it accordingly sought permission in writing from the Department of Water Resources for the use of such water resource. In response to this, the Office of Water Resources Policy and Planning, under the Department of Water Resources, sent a letter No. ThorSor 0604.2/354 dated July 24, 2007 permitting BLDC to use the said raw water resource. Thus far, no fee for the use of such water resource has yet been collected. Therefore, if the above mentioned water law has come into force and a regulation on raw water fee collection is applicable, TTW, as the assignee of the Operating Rights, may be affected from the operations of this business. The Company believes that it may take a period of time before the decision on the said fee collection could be finalized as this will broadly affect the water users in general. The Company further believes that, such fee, if applicable, will be collected on a yearly lump sum basis rather than by basing on the pumped amount of raw water, due to the technical constraints on measurement of the raw water pumping quantity. However, it has not been clearly defined in the Operating Rights Agreement as to who shall be held liable and to what extent of the liability if such an incident occurs. As such, the extent of risk incidental to this event could not yet be identified as the amount or rate of the said fee collection is still unknown. Nonetheless, the Company is confident that once the raw water fee collection is applicable, it will be able to negotiate for service charge adjustment with IEAT and customers in Bangpa-in Industrial Estate, as was the case when BLDC Page 47 of the total 92 pages The Opinion Report of the Independent Financial Advisor successfully urged for upward adjustment of water selling prices to customers in Bangpa-in Industrial Estate when it was charged a rising fee for the use of groundwater. 2.4.2 Contract renewal with the other agencies To operate the tap water business at Bangpa-in Industrial Estate, TTW needs to apply for permission to use some spaces for water transmission pipelining between the water pumping station and the tap water production plant from four agencies: the Phra Nakhon Si Ayutthaya Land Office, the State Railway of Thailand, the Office of Royal Irrigation (North Rangsit), and the Department of Highways. Presently, permission has already been granted by the four agencies for a period of 3-5 years (except for the Department of Highways from which the permission is required only during the construction). The details are as follows: Concerned agency Description of works Permission date Duration Fee Phra Nakhon Si Ayutthaya Laying of raw water pipelines Nov 16, 2006 5 years Bt. 10,000 Land Office under public ways State Railway of Thailand Laying of raw water pipelines Sep 20, 2007 3 years Yr 1 = Bt. 65,703 under the railways between Yr 2 = Bt. 80,904 Khlong Phutsa Station and Yr 3 = Bt. 96,104 Bangpa-in Station Office of Royal Irrigation Laying of raw water pipelines Nov 27, 2006 3 years Bt. 500 (North Rangsit) under Prem Prachakon Canal Department of Highways Laying of raw water pipelines Oct 13, 2005 Not specified None under Highway No. 3309, (during Bangpa-in - Bang Sai Road construction only) Given that the above permission is not renewed by the concerned agencies, the Company may have to bear additional costs in removing or shifting the pipelining to link the pipelines between the pumping station and the tap water plant. TTW management expects that this is very unlikely to happen as the pipelines have been laid underground and thus will not affect the ground level usage by the concerned agencies. The Company may also risk being charged a higher fee upon renewal of the permission (the total fee payable at present is not over Bt. 100,000). However, TTW management believes that the fee, if adjusted, will be based on the market rate, which is acceptable. The Company must also seek permission from the Ministry of Defence for possession of liquefied chlorine, gas mask with compressed air cylinder, and gas mask with filter. The permission is valid for one year from the granting date, which is November 3, 2008, and requires a yearly renewal, but costing only around Bt. 100/year/permit. Page 48 of the total 92 pages The Opinion Report of the Independent Financial Advisor 2.4.3 Risk from increasing the service charge In case that the Company would like to increase the charge on selling tap water and water treatment, the Company must send a writing notice to IEAT specifying the rational of increasing the service charge and the new service charge. IEAT has the right to object the new service charge if IEAT considers that it would not be suitably. Therefore, the Company expose the risk that IEAT would not approve the increased rate of selling tap water or water treatment, this would affect to the performance of the Company. However, BLDC clarified that over the past, BLDC would increase the service charge as per requested. IEAT fully grant an independency to BLDC for administering and managing utilities. Therefore, the Company believes if there is a reason to increase the service charge, IEAT would possibly approve. 2.4.4 Risk associated with the waste water treatment business TTW has accumulated dependable experience and skill in the tap water service, but never engaged in the waste water treatment business. It will accordingly bear risk in this business, as IEAT has established criteria for quality control of the treated water for environmental conservation. The Company also is to abide by the Notification of the Ministry of Science, Technology and Environment, No. 3 (B.E. 2539), Re: Control Standards for Water Discharge from Industrial Plants and Industrial Estates and the Notification of the National Environment Board, No. 8 (B.E. 2539), issued by virtue of the Enhancement and Conservation of National Environment Quality Act B.E. 2535, pertaining to the water quality standards for surface water sources. Failure to comply with these regulations may result in the Company breaching the Operating Rights Agreement made with BLDC, which will further affect the joint operation agreement between BLDC and IEAT. If a remedy is not completed within a specified timeframe, BLDC shall be entitled to terminate the Operating Rights Agreement and to confiscate the remaining fee, as well as file a claim for actual damage from the Company. However, the Company believes that this is unlikely to happen because under the existing treatment system the BOD has been within the specified limit. Besides, BJT, a PTW subsidiary, is skillful in the waste water treatment service at Amata City Industrial Estate and can provide assistance for the Company. If necessary, the Company may alternatively seek for help from BLDC or hire BLDC employees responsible for waste water treatment so as to prevent any such problem. 2.4.5 Risk from termination of the Operating Rights Agreement as a result of the joint operation agreement between IEAT and BLDC being revoked or terminated BLDC is the direct party to the agreement made with IEAT, obtaining the rights to manage and procure public utilities in Bangpa-in Industrial Estate, and also to provide tap water and waste water treatment services. In this respect, BLDC agrees to assign to the Company the rights to manage and operate the tap water supply and waste water treatment services. IEAT then sent a letter no. OrKor 5102.1.1/1910 dated May 28, 2009, notifying that Page 49 of the total 92 pages The Opinion Report of the Independent Financial Advisor BLDC has the right to assign other skilled and experienced party to undertake the management of public utilities and other facilities in Bangpa-in Industrial Estate subject to a condition that the obligations of BLDC shall remain in effect under the joint operation agreement made with IEAT. As such, the Company's operations under the Operating Rights Agreement will rely on the enforceability of the joint operation agreement between BLDC and IEAT. If during the 30-years agreement term of the Operating Rights there occurs any event that causes the said joint operation agreement to be revoked or terminated, the Operating Rights Agreement will then be terminated accordingly. This is because it is stipulated in the joint operation agreement that IEAT is entitled to terminate the agreement and BLDC must agree to all immovable properties, equipment, public utilities and facilities becoming under the ownership of IEAT for continued operations at Bangpa-in Industrial Estate, whereby IEAT shall not be obliged to pay any compensation and expenses to BLDC, if any of the following events takes place: 1) BLDC is amalgamated or purchased or there is a change in the power to manage BLDC business, unless IEAT has approved the said amalgamation or change in management; or 2) IEAT deems that BLDC has become insolvent and unable to repay the debt or rehabilitate the business within a reasonable period of time; or 3) BLDC dissolves its business or perform any other act to have the business dissolved; or 4) BLDC faces a bankruptcy filing by its creditor or its assets are placed, by a court order, under either temporary or absolute receivership; or 5) BLDC amends or changes its objectives or amount of registered capital which thereby leads to IEAT and BLDC being unable to continue the joint operation; or 6) There is a reasonable ground for IEAT to believe that BLDC is unable to improve and develop the land or to procure the public utilities and other facilities for customers in Bangpa-in Industrial Estate completely within the specified period of time. Where the above event occurs and does not arise from TTW's default, the Company will become unable to continue the business operations at Bangpa-in Industrial Estate since IEAT will take over the Operating Rights and the said operations in its stead. The Company will thereore suffer from a loss because it has already paid for the Operating Rights in advance to BLDC. Under the drafted Operating Rights Agreement, it has provided for the events of default that will result in the agreement being terminated by the Company as follows: 1) BLDC materially breaches the Operating Rights Agreement; or 2) BLDC materially breaches the joint operation agreement thereby causing the agreement to be terminated and/or violates any legal requirement relevant to the joint operation agreement, including, for example, failure to obtain a regulatory permission, etc.; or 3) Any state agency has disrupted or intervened in the business operations or the operations of the tap water production system, the groundwater pumping system and the tap water distribution or the provision of waste Page 50 of the total 92 pages The Opinion Report of the Independent Financial Advisor water treatment services for customers, without any legitimately reasonable ground, unless otherwise allowed under any provision of the Operating Rights Agreement provided that it is not a default of either the Company or BLDC. If any of the above incidents takes place and cannot be remedied within a specified period, TTW is entitled to terminate the agreement forthwith. If BLDC fails to comply with the provisions under the Operating Rights Agreement or liquidates the business or dissolves the business or faces a bankruptcy filing or is placed under receivership or lodges an application for business rehabilitation, the Company is also entitled to terminate the agreement forthwith. Upon the said agreement termination, BLDC must return the compensation under the Operating Rights Agreement pro rata with the remaining period of the agreement to the Company immediately and must indemnify for any shortfall of profits to the Company. However, in the event that TTW fails to produce the tap water or treat the waste water up to the specified standards, which does not fall under the force majeure or exception clauses and which may entitle IEAT to terminate the joint operation agreement, it is stipulated in the Operating Rights Agreement that if such incident is not remedied within a specified period, BLDC can terminate the Operating Rights Agreement forthwith and may confiscate all the remaining fee for the rights and file a claim for the actual damage incurred from the Company. TTW and BLDC believe that the events of default that will cause IEAT to terminate the joint operation agreement made with BLDC are less likely to happen as IEAT has set such condition from the beginning of business operations by BLDC to ensure the strong capability and financial soundness of BLDC management keyman in the operations at Bangpa-in Industrial Estate, hence helping to protect and build up confidence among potential customers. Thus, given any changes such as business amalgamation or takeover or changing management powers of BLDC take place and do not impact the management of Bangpa-in Industrial Estate, the Company and BLDC believe that IEAT will likely grant the approval and not exercise a veto right against any such incident, such as in the case where IEAT has permitted TTW to acquire the Operating Rights from BLDC to manage and operate the treated water and waste water business at Bangpa-in Industrial Estate. As well, there is a slim chance of BLDC becoming insolvent and unable to service the debt or successfully rehabilitate the business within a reasonable period or dissolving its business because BLDC has a policy to use part of funds receivable or loan repayment which will significantly reduce its debts (as of December 31, 2008 BLDC's total liabilities stood at Bt. 932.40 million). Moreover, BLDC does not plan to diversify into any new businesses in the near future other than the SPP project. The Company views further that there is very little chance of the Company failing to produce the tap water or treat the waste water up to the specified standards that will cause BLDC to terminate the agreement, considering that the Company is skillful in tap water production and BJT, a PTW subsidiary, has expertise in waste water treatment. Page 51 of the total 92 pages The Opinion Report of the Independent Financial Advisor 2.4.6 Risk associated with debt claims from BLDC in the event of agreement termination with BLDC being obliged to pay indeminity or the remaining fee for the Operating Rights to TTW Pursuant to the Operating Rights Agreement, the Company is entitled to terminate the agreement and claim the remaining fee for the Operating Rights according to the remaining period of the agreement, including an indemnity (if any), from BLDC. However, considering the debt service ability under the above obligations of BLDC, the Company might risk being unable to enforce the debt payment from BLDC because even though BLDC is the one to invest in the construction of Bangpa-in Industrial Estate and all public utilities, IEAT has the right under the joint operation agreement to take full ownership of all those assets and take over the operations when BLDC can no longer continue the operations. As a consequence, the Company may not seize those assets for debt enforcement and/or auction sale. Furthermore, taking into account BLDC's financial position, it has a paid-up capital of Bt. 240 (more)