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Report Regarding the Acquisition of Licenses to Use Allocated Frequencies for National Commercial Digital Television Services An

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Report Regarding the Acquisition of Licenses to Use Allocated Frequencies for National Commercial Digital Television Services An Supporting documents for AGM 2014, Agenda 3: ≠≠≠Considering to ratify the participation of the auction for License to use Allocated Frequencies for National Commercial Digital Television Services and the execution of the Digital Television Network Services Agreement, including, the acquisition of related asset. Report regarding the Acquisition of Licenses to use Allocated Frequencies for National Commercial Digital Television Services and Opinion of the Independent Financial Advisor on Acquisition of Assets BEC World Public Company Limited Supporting documents for AGM 2014, Agenda 3: Considering to ratify the participation of the auction for License to use Allocated Frequencies for National Commercial Digital Television Services and the execution of the Digital Television Network Services Agreement, including, the acquisition of related asset. - Translation – Report regarding the Acquisition of Licenses to use Allocated Frequencies for National Commercial Digital Television Services 1. Date of acquisition January 13, 2014 BEC-Multimedia Co. Ltd. (“BECM”) , a subsidiary company, in which the Company hold 99.99% of shares, has been notified by National Broadcasting and Telecommunications Commission (“NBTC”) that BECM won an auction for Licenses to use Allocated Frequencies for National Commercial Digital Television Services (“Digital TV License”) for 3 categories, 1) High-Definition for Variety Category; 2) Standard-Definition for Variety Category; and 3) Standard-Definition for Kids and Family Category. BECM is required to 1) pay the 1 st installment of the license fees, and 2) submit an application for using television network services from the authorized digital television network service provider within 30 days upon receiving the notification of winning auction result, and to file the application for business operation license within 45 days upon receiving the notification of winning auction result. February 10, 2014 BECM paid the 1 st installment of the license fees for all 3 categories of the said license, in the total amount of 1,561.237 Million Baht and submitted a 5,362.733 Million Baht bank guarantee to secure the outstanding payment, provided that VAT is already included in such payment and bank guarantee. February 10, 2014 BECM entered into the digital television network services agreement with Thai Public Broadcasting Service (“Thai PBS”) . February 21, 2014 BECM already filed the application for telecommunications business license for the above 3 categories license. Upon the completion of the license’s precondition, NBTC shall consider issuance of “Digital TV License” and “Telecommunication Business License” to BECM. 2. The relevant parties and relationship with the company 2.1 The acquisition of Digital TV License Grantee of License: BECM Grantor of License: NBTC There are no relationship between NBTC and BECM which could be constituted as “a Connected Person ” under regulations of The Capital Market Supervisory Board and The Stock Exchange of Thailand (“ SET ”). 2.2 The execution of digital television network services agreement Client: BECM Network Services Provider: Thai PBS Page 1 of 21 Supporting documents for AGM 2014, Agenda 3: Considering to ratify the participation of the auction for License to use Allocated Frequencies for National Commercial Digital Television Services and the execution of the Digital Television Network Services Agreement, including, the acquisition of related asset. There are no relationship between Thai PBS and BECM which could be constituted as “a Connected Person ” under regulations of The Capital Market Supervisory Board and SET. 2.3 The purchasing of television studio equipment Purchaser: BECM Seller: The ordinary television studio seller with no relationship with BECM which could be constituted as “a Connected Person” under regulations of The Capital Market Supervisory Board and SET. 3. Details and size of transaction Details of transaction There are 3 main essential parts to conduct as a TV Provider, digital terrestrial television broadcasts services provider (“DTTV”) (National Service) i.e. 1) being a grantee of Digital TV License terrestrial base (National Service); 2) entering into digital television network services agreement with the NBTC’s license digital television network service provider; and 3) providing television equipment and studio to produce and send television signal to network services provider to broadcast television signal on national wide. Therefore, BECM, as a business operator in DTTV has 3 operating costs, having details as follows: 1.) The Digital TV License fees for 3 categories in the total of 6,471 Million Baht (Exclusive of VAT), having the detail as follow: 1) High-Definition Variety Category, at the bidding price of 3,530 Million Baht. 2) Standard-Definition Variety Category, at the bidding price of 2,275 Million Baht. 3) Standard-Definition for Kids and Family Category, at the bidding price of 666 Million Baht. 2.) Rental fee for network service for 1 high-definition channel and 2 standard-definition channels with Thai PBS for fulltime television signal broadcasting. Such rental fee shall be paid until June 16, 2038, in the total of 3795.55 Million Baht (Exclusive of VAT). 3.) Now BECM is in the process of considering building studio and purchasing television equipment the total budget, around 852.63 Million Baht (Exclusive of VAT). However, in the initial phase of business operation, BECM will lease the studio and television equipment from the Company’s affiliates which operating in studio and television equipment services. Category and size of transaction Under the criteria of the Notification of the Board of Governors of SET Re: Disclosures of Information and Practices of Listed Companies in Acquisition or Disposal of Assets B.E. 2547, having compared the abovementioned 3 transactions in Clauses 1.) – 3.), having total value of 11,119.18 Million Baht, with the Company’s total asset value calculated from the audited consolidated financial statement on December 31, 2013, of 12,196.07 Million Baht, the size of the transaction is equal to 97.17% of the total asset value of the Company, which constituted as “ Class 1 transaction ”. Therefore, the Company is required to disclose transaction information to SET and to obtain the rectification and approval for such transaction from the shareholders’ meeting as well as to appoint an independent financial advisor to provide an opinion on the appropriateness of the transaction and fairness of the price and conditions of the transaction to the shareholders for their consideration. Page 2 of 21 Supporting documents for AGM 2014, Agenda 3: Considering to ratify the participation of the auction for License to use Allocated Frequencies for National Commercial Digital Television Services and the execution of the Digital Television Network Services Agreement, including, the acquisition of related asset. 4. Details of the acquired assets 1.) “Digital TV License” and “Telecommunication Business License” for National Business Service for 3 channels in 3 categories, i.e. (1) High-Definition Variety Category, (2) Standard-Definition Variety Category and (3) Standard-Definition for Kids and Family Category, for the period of 15 years upon receiving the authorization. 2.) Network services in nationwide for 1 high-definition channel and 2 standard-definition channel with Thai PBS for fulltime television signal broadcasting. The commencing of the said services fees will be charged until June 16, 2038 in the total of 3795.55 Million Baht. 3.) Studio and television equipment. 5. Total value of consideration and term of payment Total value of consideration (Unit: Million Baht) No. Description Value of Consideration 1. Digital TV License for High-Definition Variety Category 3,530.00 2. Digital TV License for Standard-Definition Variety Category 2,275.00 3. Digital TV License for Standard-Definition for Kids and Family Category 666.00 Total 6,471.00 Term of Payment: The fees payment for the “Digital TV License” is in installments as follows: Installment 1 : Paying 1,256.1 Million Baht (after deducted the bidding guarantee, which BECM has paid on October 2013, in the amount of 203 Million Baht) within 30 days upon receiving the notification of winning auction result. Installment 2: Paying 1,053.1 Million Baht within 30 days from the date of completion of 1 year upon receiving the Digital TV License. Installment 3: Paying 1,091.2 Million Baht within 30 days from the date of completion of 2 year upon receiving the Digital TV License. Installment 4: Paying 1,091.2 Million Baht within 30 days from the date of completion of 3 year upon receiving the Digital TV License. Installment 5: Paying 888.2 Million Baht within 30 days from the date of completion of 4 year upon receiving the Digital TV License. Installment 6: Paying 888.2 Million Baht within 30 days from the date of completion of 5 year upon receiving the Digital TV License. Remark: 1.) The above fees payment is exclusive of VAT. 2.) For each installment payment, BECM is required to submit the bank guarantee to guarantee the payment of the outstanding fees. Page 3 of 21 Supporting documents for AGM 2014, Agenda 3: Considering to ratify the participation of the auction for License to use Allocated Frequencies for National Commercial Digital Television Services and the execution of the Digital Television Network Services Agreement, including, the acquisition of related asset. Total value of consideration for network services (Unit: Million Baht) No. Description Value of Consideration
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