Information of Memorandum on Connected Transaction
1. Disclosure on Connected Transaction
1. Date of the Transaction
Subject to other terms and conditions to be agreed by all parties and Shareholder's approval on the Transaction and compliance with relevant legal requirements, which are the corporate approval processes of Bumrungrad Hospital Public Company Limited ("the Company" or "BH"), Bumrungrad International Company Limited ("BIL"), Asia Financial Holdings Limited or its wholly-owned subsidiary ("AFH"), and the existing shareholders of BIL prior to entering into the Transaction.The Company, AFH and existing shareholders of BIL are in the process of making amendments to the various contracts relating to the Transaction, including Shareholders Agreement and Share Subscription Agreement, which is expected to be executed within 90 days from the Board of Directors' approval for the Company to enter into the transaction.
2. General characteristics of the Transaction
2.1 Waiver of future rights by the Company to subscribe to 3,714,283 shares in BIL in order to allow AFH to subscribe to the shares.
2.2 BIL offers 3,714,283 new shares to AFH.
Details of the Transaction are as follows:
BIL, a 51% owned subsidiary of the Company, is responsible for BH's international operations. BIL holds equity investments in hospital operations overseas and also provides management services to hospital operations overseas. Presently, BIL owns 43.25% of Asian Hospital, Inc. in the Philippines, 49% of Bumrungrad Hospital Dubai LLC in Dubai, the United Arab Emirates, and seeks to further expand its international business and network. As of 30 September 2006, BIL has registered capital in the amount of 11,764,701 ordinary shares at a par value of Baht 100 per share, totaling Baht 1,176,470,100. The paid-up capital is Baht 744,117,525.
In the future, BIL may, from time to time, be required to issue sizable capital increase for its future investments such as acquisitions in international healthcare facilities. The remaining funds that BIL will receive from the first capital increase of approximately Baht 432 million may not be sufficient for future investments. For new share offerings by BIL in an amount up to 7,282,908 new shares which will be offered to the BIL's shareholders on a pro rata basis at Baht 153.52 per share, BH will waive all its rights to subscribe to the new shares (equivalent to 3,714,283 shares) to allow the new shares to be fully subscribed by AFH at Baht 153.52 per share. The waiver of the rights will allow BIL to have another strategic partner, and AFH is internationally well known and has strong presence in its respective region, thereby providing important sources of new investment opportunities and referral network especially in China and North Asia
Consequently, when 7,282,908 new shares have been fully issued, BH's shareholding in BIL will reduce from 51.0% to 31.5% of the diluted share capital and AFH's shareholding will increase from 0% to 19.5% of the diluted share capital. As a result, the Company's management and control will be proportionate to its shareholding in BIL, with AFH and Bangkok Bank Public Company Limited as the Company's alliances.
BIL's shareholders as of 29 January 2007
| Names |
Shares |
% |
| 1.Bumrungrad Hospital Public Company Limited |
5,999,997 |
51.0% |
| 2.Istithmar PJSC |
2,294,117 |
19.5% |
| 3.V-Sciences Investment Pte Ltd |
2,294,117 |
19.5% |
| 4.Bangkok Bank Public Company Limited |
1,176,470 |
10.0% |
| Total |
11,764,701 |
100.0% |
BIL's Board of Directors as of 29 January 2007
| Names |
Title |
| 1. Mr. Curtis John Schroeder |
Director |
| 2. Mr. Carl Vincent Stanifer |
Director |
| 3. Mr. Sandesh Pandhare |
Director |
| 4. Mr. Tan Cheong Hin |
Director |
| 5. Mr. Chong Toh |
Director |
BIL's Financial Figures Summary
| Baht |
2004 |
2005 |
September 2006* |
| Total Assets | 777,693 | 771,113,752 | 1,168,058,955 |
| Total Liabilities | 754,103 | 50,009,867 | 51,840,022 |
| Registered capital | 600,000,000 | 600,000,000 | 1,176,470,100 |
| Paid-Up capital | 1,000,000 | 600,000,000 | 744,117,525 |
| Share premium | - | - | 308,526,798 |
| Total shareholders'Equity | 23,590 | 721,103,885 | 1,116,218,933 |
| Total revenue | - | 58,210,178 | 15,649,164 |
| Total expenses | 305,531 | 46,076,575 | 55,830,685 |
| Net income (loss) | (305,531) | 12,133,603 | (40,181,521) |
| Basic earnings (loss) per share | (30.55) | 2.23 | (3.42) |
* Un-audited financial statement
The completion of the Transaction will be subject to the following conditions:
1. The approvals of the Board of Directors' meetings of AFH. At present, AFH notified that the Transaction has been approved by its Investment Committee, which was appointed by the Board of Directors, and the Investment Committee has informed the Executive Committee and AFH's Board of Directors;
2. The execution of the amendment to definitive agreements in relation to the Transaction, including the Shareholders Agreement and Share Subscription Agreement, by the Company, AFH, and all existing shareholders of BIL, to be in accordance with details of the Transaction as shown above;
3. The Shareholders' meeting of the Company shall approve the Transaction with the votes of not less than three-fourths of all votes of the shareholders or proxy present at the meeting and having the right to vote, excluding the shareholders having interest therein;
4. The Company, AFH, and all existing shareholders of BIL shall obtain all necessary regulatory approvals/permissions, which are the corporate approval process, for the Transaction.
3. Value of the transaction and basis used to determine value of the transaction
The value of the Transaction is approximately Baht 570,216,726.16, all of which will be paid to BIL by cash payments subject to terms and conditions to be agreed by the parties, which are BH, BBL and AFH.
The subscription price of Baht 153.52 per share is substantial premium to BIL's book value per share of Baht 94.88 (including minority interest attributable to minority shareholders of subsidiaries) as of 30 September 2006. This subscription price is also equal to the subscription price approved by shareholders' meeting dated 15 May 2006 to allow 3 strategic shareholders, namely Istithmar PJSC, V- Sciences Investment Pte Ltd and Bangkok Bank Public Company Limited to subscribe to new shares of BIL.
4. Connected person
Asia Financial Holdings Limited ("AFH") was incorporated in 1990 and listed on the Hong Kong Stock Exchange. Its main subsidiary,Asia Insurance, is a top five player in the local general insurance market. AFH focuses on expanding its insurance business and to explore opportunities in the related field of healthcare.
Mr. Robin Yau Hing Chan is authorized director and controlling person of AFH. He is brother of Mr. Chatri Sophonpanich and Mr. Chai Sophonpanich who are directors of the Company. Therefore, AFH is a connected person of the Company and the Transaction is regarded as a Connected Transaction.
With the Transaction size of more than Baht 20 million and more than 3 percent of the net tangible assets of the Company, the Company has to seek an approval to enter into the Transaction from the Shareholders' meeting with not less than three-fourths of the total votes of the attending shareholders and eligible votes, excluding the shareholders who have conflict of interests on such transaction.
*Remark: 3% of Net Tangible Assets value of the Company as of 30 September 2006 was Baht 73.49 million.
5. Characteristics and scope of the interests of connected person
The Transaction will increase AFH's ownership in BIL from 0% to 19.5% and reduce BH's ownership in BIL from 51% to 31.5%.
As AFH has an authorized director and controlling person who is a connected person of the Company's director, the purchase of new ordinary shares of BIL by AFH may be considered a potential conflict of interest. In any event, there shall be no conflict of interest which may arise in the future because BIL business does not directly compete with that of the Company. BIL only invests and manages hospital operations outside of Thailand, while BH operates hospital operations in Thailand.
6 Source of fund
- Not applicable -
7 Statement confirming that directors with interests or who is a connected person did not attend and vote at the Board of Directors' meeting
Mr. Chatri Sophonpanich and Mr. Chai Sophonpanich did not attend and vote at the Board of Directors' meeting.
8. Opinions of the Board of Directors
The Board of Directors' Meeting views that the Transaction is reasonable and will be made at the highest benefits to the Company since:
1. BIL is pursuing new investment opportunities in its near future which would require sizable funding. Sustaining the 51.0% shareholding level would create too much burden on the Company. However, refraining from capital increase would obstruct BIL's expansion.
2. As BIL has a clear strategic direction of making regional investments and acquisitions in regional healthcare facilities, a 31.5% shareholding in a fast growing company is more valuable than a larger stake in a company which is unable to grow.
3. AFH as the strategic partner is internationally well known and has strong presence in its respective region, thereby providing important sources of new investment opportunities and referral network especially in China and North Asia.
4. The subscription price of Baht 153.52 per share is substantial premium to BIL's book value per share (including minority interest attributable to minority shareholders of subsidiaries) of Baht 94.88 as of 30 September 2006. This subscription price is also equal to the subscription price approved by shareholders' meeting dated 16 May 2006 to allow 3 strategic shareholders namely Istithmar PJSC, V-Sciences Investment Pte Ltd, and Bangkok Bank Public Company Limited to subscribe to new shares of BIL.
9. Opinion of the Audit Committee and/or directors which are different from the opinion of the Board of Directors under 8
The meeting of the Audit Committee was held to consider the Transaction on 7 February 2007. The Audit Committee has considered the Transaction and agreed with the opinion of the Board of Directors. In addition, other directors of the Company have no conflicting opinion.
2. Additional Disclosure to Shareholders
(a) Brief information concerning the company and its business operation
Bumrungrad Hospital Public Company Limited ("the Company" or "BH") operates private hospital business in Bangkok with 554 beds and is one of the leaders in healthcare provider in Thailand and in the Southeast Asia region. The Company provides complete healthcare services including both outpatient and inpatient.
The Company has always emphasized the importance of quality healthcare and experienced physicians. The Company is the first hospital in Asia and the only hospital in Thailand to receive the US standard accreditation from Joint Commission International Accreditation (JCIA).
(b) List of the directors and management and list of the first 10 shareholders as at the date of close of share register book
List of directors as of 31 January 2007
|
Name |
Position |
| 1. Mr. Chai Sophonpanich | Chairman |
| 2. Dr. Chanvit Tanphiphat | Vice Chairman |
| 3. Mrs. Linda Lisahapanya | Director, Managing Director |
| 4. Mr. Chatri Sophonpanich | Director |
| 5. Dr. Dhanit Dheandhanoo | Director, Chairman of the Medical Director |
| 6. Dr. Anant Tejavej | Director |
| 7. Dr. John Yangphichitt, | M.D. Director |
| 8. Dr. Swanya Dej-Udom | Director |
| 9. Mrs. Kultida Sivayathon | Director |
| 10. Mr. Chong Toh | Director |
| 11. Mr. Curtis John Schroeder | Director, Group Chief Executive Officer |
| 12. Sultan Ahmed Bin Sulayem | Director |
| 13. Miss Sophavadee Uttamobol | Independent Director, Chairman of the Audit Committee |
| 14. Mr. Soradis Vinyarat | Independent Director, Audit Committee |
| 15. Mr. Boonpakorn Chokvatana | Independent Director, Audit Committee |
Miss Suthinee Tevidhaya is the secretary of the board of the directors
List of management as of 31 January 2007
|
Name |
Position |
| 1. Mrs. Linda Lisahapanya | Managing Director |
| 2. Dr. Dhanit Dheandhanoo | Chairman of the Medical Director |
| 3. Mr. Curtis John Schroder | Group Chief Executive Officer |
| 4. Dr. Sinn Anuras | Group Medical Director |
| 5. Dr. Karoon Mekanontchai | Medical Director |
| 6. Dr. Chamaree Chuapetcharasopon | Senior Associate Medical Director |
| 7. Mr. Carl Stanifer | Group Chief Financial Officer and Director of International Development |
| 8. Mr. James Matthew Banner | Chief Executive Officer |
| 9. Mrs. Khor Yow Lee Chan | Chief Financial Officer |
| 10.Ms. Janice Chan Mun Yee | Chief Operating Officer |
Top 10 Shareholders as of 19 February 2007
Top 10 Shareholder 1.Bangkok Insurance Public Company Limited 2.HSBC (Singapore) Nominees Pte. Ltd 3.Sinnsuptawee Asset Management Company Limited 4.Istithmar PJSC 5.Thai NVDR Company Limited 6.UOB Kay Hian Private Limited 7.Wattanasophonpanich Company Limited 8.Littledown Nominees Limited 9 9.Citibank Nominees Singapore Pte. Ltd-Aranda Investments Pte. Ltd 10.Tls Alpha Pte.ltd., (c) Inter-transactions in 2005 (ended 31 December 2005) and 2006 (Ended 30 September 2006)
Please see Enclosure 3
(d) Summary of financial statements during the past 3 years and 2006 (ended 30 September 2006), and management discussion and analysis for 2005 (ended 31 December 2005) and 2006 (ended 30 September 2006)
|
30 September | ||||
| Figures in Baht million |
2003 |
2004 |
2005 |
2006 |
| Total Revenues |
4,620.31 |
5,809.30 |
6,806.78 |
5,953.84* |
| Net Sales |
4,540.85 |
5,686.06 |
6,646.52 |
5,760.65* |
| Gross Profit |
1,669.10 |
2,020.45 |
2,500.93 |
2,186.37* |
| Net Profit |
666.49 |
934.55 |
1,052.74 |
842.11* |
| Total Assets |
4,456.28 |
5,021.09 |
5,727.52 |
6,414.14 |
| Total Liabilities |
3,196.78 |
2,960.89 |
3,031.73 |
3,006.63 |
| Total Equity |
1.259.51 |
2,060.20 |
2,695.79 |
3,407.51 |
| Paid-up Capital |
1,326.82 |
730.05 |
730.05 |
730.05 |
*Income statement for the nine-month periods ended 30 September 2006
Please see Enclosure 4 for management discussion and analysis.
(e) Other information that may materially affect the decision of investors (if any)
- None -
3 Statement indicating that connected persons and/or shareholders having interests shall have no right to vote whereby names and number of shares held by shareholders having no voting rights shall be indicated.
Shareholders having interests shall have no right to vote at the Extraordinary Shareholders' Meeting No. 1/2007 and are listed in the table below. The persons having conflict of interest are close relatives of Mr. Robin Yua Hing Chan and therefore other shareholders have the independence in casting their own votes.
Shareholders having interests as of 19 February 2007
| Shareholder |
Number of Shares |
% Shareholding* |
| 1.Mr. Chatri Sophonpanich |
3,666,035 |
0.50 |
| 2.Mr. Chai Sophonpanich |
7,608,060 |
1.04 |
| 3.Mr. Chote Sophonpanich |
245,000 |
0.03 |
| 4.Mr. Charn Sophonpanich |
3,050,500 |
0.42 |
| 5.Mr. Choedchu Sophonpanich |
1,682,775 |
0.23 |
| 6.Khun Ying Chodchoi Sophonpanich |
3,984,375 |
0.55 |
| 7.Mr. Rabil Sophonpanich |
562,500 |
0.08 |
| 8.Wattanasophonpanich Company Limited |
25,121,875 |
3.44 |
4 Appraisal of asset price by an independent appraiser in case of acquisition or disposal of asset having fundamental significance in a form of asset value such as immovable property.
- Not applicable -
5 Opinions of independent financial advisors
Please see Enclosure 5 for opinions of Independent Financial Advisor.
6 Proxy form with at least one name of a member of the Audit Committee being nominated as shareholder's proxy
The Company nominated Miss Sophavadee Uttamobol as shareholder's proxy. Please see Enclosure 9 for proxy form.
7 Opinion of the Board of Directors about a decision to enter into a connected transaction specifying reasonableness and the highest benefit to the listed company comparing with a decision to enter into a transaction with independent third party.
Mr. Chatri Sophonpanich and Mr. Chai Sophonpanich did not attend and vote at the Board of Directors' meeting.
The Board of Directors' Meeting views that the Transaction is reasonable and will be made at the highest benefits to the Company since:
1. BIL is pursuing new investment opportunities in its near future which would require sizable funding. Sustaining the 51.0% shareholding level would create too much burden on the Company. However, refraining from capital increase would obstruct BIL's expansion.
2. As BIL has a clear strategic direction of making regional investments and acquisitions in regional healthcare facilities, a 31.5% shareholding in a fast growing company is more valuable than a larger stake in a company which is unable to grow.
3. AFH as the strategic partner is internationally well known and has strong presence in its respective region, thereby providing important sources of new investment opportunities and referral network especially in China and North Asia.
4. The subscription price of Baht 153.52 per share is substantial premium to BIL's book value per share (including minority interest attributable to minority shareholders of subsidiaries) of Baht 94.88 as of 30 September 2006. This subscription price is also equal to the subscription price approved by shareholders' meeting dated 16 May 2006 to allow 3 strategic shareholders namely Istithmar PJSC, V-Sciences Investment Pte Ltd, and Bangkok Bank Public Company Limited to subscribe to new shares of BIL.
8 Opinions of the company's Audit Committee and/or directors which are different from the opinion of the Board of Directors under 7.
The meeting of the Audit Committee was held to consider the Transaction on 7 February 2007. The Audit Committee has considered the Transaction and agreed with the opinion of the Board of Directors. In addition, other directors of the Company have no conflicting opinion.
As a representative of the Company, the Board of Director has verified the correctness and the completeness of the information.
Yours sincerely,
Mrs. Linda Lisahapanya
Managing Director