such proportion of 72 % is determined based upon the proportion of the appraised leasehold value of the Sub-Leased Assets to the total leasehold value of the Central Plaza Ladprao Project as appraised by two independent asset appraisers employed by the SRT. 2. Reasonableness of the Stream of Annual Leasehold Payment to be Made by CPN to CID As the New Sub-Lease Agreement to be entered into between CPN and CID is a long-term lease agreement in which CPN as the sub-lessee is obligated to make annual leasehold payment to CID as the sub-lessor on an installment basis throughout the term of the New Sub-Lease Agreement, in providing its opinion regarding fairness on the stream of annual leasehold payment to be made by CPN to CID, the Independent Financial Advisor will provide the opinion in two aspects: 1. Fairness of the implied interest rate of the annual leasehold payment. In providing the opinion,the Independent Financial Advisor will make the comparison between the financing cost associated with the stream of annual leasehold payment to be made for the Sub-Leased Assets and the cost of long-term debt financing of CPN; 2. Fairness on the leasehold value of the Sub-Leased Assets to be used as the basis for determining annual leasehold payment. In providing the opinion, the Independent Financial Advisor will make the comparison between the leasehold value of the Sub-Leased Assets that will be used as the basis for determining annual leasehold payment to be made by CPN to CID and the fair leasehold value of the Sub-Leased Assets as appraised by the Independent Asset Appraiser of CPN. Fairness on the Financing Cost Associated with the Stream of Annual Leasehold Payment to be Made for the Sub-Leased Assets The Independent Financial Advisor made a comparison between the financing cost associated with the stream of annual leasehold payment to be made by CPN throughout the term of the New Sub-Lease Payment and CPN's cost of long-term debt financing. This is because stream of annual leasehold payment to be made by CPN to CID is made in reference to that to be made by CID to the SRT, both of which are made on an installment basis throughout the term of the long- term lease agreement. Thus, making leasehold payment on an annual basis is similar to making leasehold payment on an installment basis throughout the lease term, with cost of financing associated with such stream of annual leasehold payment equal to the discount rate that when used to discount such stream of annual leasehold payment will make the sum of the discounted annual leasehold payment equal to the leasehold value of the Sub-Leased Assets of Baht 9,185 million that was appraised by the Independent Asset Appraiser of CPN. The Independent Financial Advisor determines that the discount rate that equates the sum of the discounted annual cash flows in the form of annual leasehold payment to be made by CPN to CID throughout the term to the appraised leasehold value of the Sub-Leased Assets of Baht 9,185 million is 5.62 %, with duration of the stream of annual leasehold payment to be made by CPN throughout the sub-lease term equal to 9.42 years. Thus, the cost of financing (implied interest rate) associated with the stream of annual leasehold payment to be made by CPN throughout the sub-lease term is 5.62 %. Such implied interest rate of 5.62 % is regarded as the cost of financing CPN has to bear in exchange for the leasehold right in the Sub-Leased Assets while CPN is allowed to make annual leasehold payment to CID on an installment basis. When comparing the cost of financing (implied interest rate) associated with the stream of annual leasehold payment to be made by CPN for the Sub-Leased Assets (approximately 5.62 %) with CPN's cost of long-term debt financing that falls in the range between 5.0 % and 5.7 % (Determined based upon CPN's weighted average cost of interest for the Years 2006 and 2007 and for the first nine months of 2008 and average yield on debentures with term to maturity of more than 5 years and with the credit rating of A+ that is the same as credit rating of CPN), the Independent Financial Advisor found that CPN's cost of financing associated with the stream of annual leasehold payment to be made by CPN to CID for the Sub-Leased Assets falls within the range of CPN's cost of long-term debt financing. Thus, it is the opinion of the Independent Financial Advisor that CPN's cost of financing (implied interest rate) associated with the stream of annual leasehold payment to be made throughout the sub-lease term for the Sub-Leased Assets as well as the stream of annual leasehold payment is reasonable. Fairness on the Leasehold Value of the Sub-Leased Assets that to Be Used as the Basis for Determining Annual Leasehold Payment In providing the opinion regarding fairness on the leasehold value of the Sub- Leased Assets that will be used as the basis for determining annual leasehold payment to be made to CID, the Independent Financial Advisor will make the comparison between such leasehold value and its fair value. The leasehold value of the Sub-Leased Assets that will be used as the basis for determining annual leasehold payment,determined based on the cost plus basis,is the sum of: -The leasehold value of the Central Plaza Ladprao Project of Baht 11,580 million as appraised by the independent asset appraisers employed by the SRT; -Leasehold right registration fee equivalent to 1 % of the sum of the annual leasehold payment to be made by CID to the SRT throughout the 20- year term of the New Main Lease Agreement; -A profit margin of approximately 5 % From the sum of the three figures above, CID will allocate approximately 72 % of the sum (that is the proportion of the appraised value of the Sub-Leased Assets to the total appraised value of the CentralPlaza Ladprao Project) as the annual leasehold payment to be made by CPN to it throughout the term of the New Sub-Lease Agreement. Such determination indicates that the leasehold value of the Sub-Leased Assets that will be used as the basis for determining annual leasehold payment to CID is Baht 8,900 million. On the other hand, the fair leasehold value of the Sub-Leased Assets as appraised by the Independent Asset Appraiser of CPN is Baht 9,185 million. Making comparison between the leasehold value of the Sub-Leased Assets that will be used as the basis for determining annual leasehold payment (Baht 8,900 million) with the fair leasehold value of the Sub-Leased Assets (9,185 million) indicates that CPN will earn benefits from entering into this transaction. Fairness of Conditions of the Connected Transaction It is of the opinion of the Independent Financial Advisor that the conditions under the New Sub-Lease Agreement to be entered into between CPN and CID are fair and do not put CPN in a disadvantaged position.This is because major conditions under the New Sub-Lease Agreement are made in reference to those under the New Main Lease Agreement. Allowing CPN to make annual leasehold payment to CID on an installment basis will also help to relieve CPN's financial burden that may result from one-time lease payment. Allowing CPN to make annual leasehold payment on an installment basis will also allow CPN to match its stream of annual cash outflows in the form of annual leasehold payment with future cash inflows in the form of annual rental and services revenues generated by the Sub-Leased Assets. CPN's cost of financing (implied interest rate) associated with the stream of annual leasehold payment to be made throughout the sub-lease term also falls in the range of CPN's cost of long-term debt financing. In regard to sharing of common expenses, they will be allocated to each sub-lessee on a fair basis. 2. Characteristics and Details of the Connected Transaction and the Asset Acquisition Transaction The details of the transaction of entering into the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex are as follows: 2.1 Date of the Transaction and the Involved Parties 2.1.1 Date of the Transaction The meeting of the Board of Directors of Central Pattana Public Company Limited No.1/2009 held on February20, 2009 reached a resolution to approve the Company to enter into the Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex after it obtains an approval resolution from the Extraordinary Shareholders' Meeting No.1/2009 to be held on March 25, 2009. 2.1.2 Involved Parties Sub-Lessor: Central International Development Company Limited ("CID") Sub-Lessee: Central Pattana Public Company Limited ("CPN") 2.1.3 Relationship between CPN and CID -CPN and CID have a common major shareholder, namely the Chirathivat Group, and some common directors who are from the Chirathivat Group as well. The Chirathivat Group holds a shareholding stake in both companies as follows: 1) Directly and indirectly holding a 59.89 % stake in CPN 2) Directly and indirectly holding a 100.00 % stake in CID -CPN and CID have some common directors as follows: 1) Mr. Vanchai Chirathivat 2) Mr. Suthichai Chirathivat 3) Mr.Suthikiati Chirathivat 4) Mr.Suthichart Chirathivat 5) Mr.Sudhisak Chirathivat 6) Mr. Prin Chirathivat 2.2 Characteristics of the Transaction 2.2.1 Category of the Transaction The transaction in which CPN as the sub-lessee will enter into the Agreement to Sub-Lease the Assets of the CentralPlaza Ladprao Shopping Complex (the "New Sub-Lease Agreement") with CID as the sub-lessor is classified as a class-4 connected transaction regarding assets and services under the Stock Exchange of Thailand Notification Re: Disclosure of Information and Other Acts of Listed Companies concerning the Connected Transactions, 2003 and the Amendment as per the Notification of the Capital Market Supervisory Board Tor.Jor. 21/2008. Re: Connected Transaction Rules. The main purpose of entering into the New Sub-Lease Agreement is to extend the original Agreement to Sub-Lease the Assets of the Central Plaza Ladprao Shopping Complex (the "Original Sub- Lease Agreement") that was expired on December 18, 2008 so that CPN could continue operating the Central Plaza Ladprao Shopping Complex that is currently one of the largest shopping complexes in Bangkok and one of CPN's existing flagship shopping complexes. The transaction is also categorized as a class-2 transaction under the Notification of the Capital Market Supervisory Board Tor.Jor. 20/2008 regarding Disclosure of Information and Other Acts of Listed Companies concerning the Acquisition and Disposition of Assets and 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, 2004. In December 2008, CPN had entered into a memorandum of understanding ("MOU") with CID to confirm and preserve its right for the New Sub-Lease Agreement. In doing so, CID required CPN to make a payment of Baht 300 million to it as a guarantee for the right to sub-lease land and buildings of the Central Plaza Ladprao Shopping Complex on the date that CID entered into the New Main Lease Agreement with the SRT.The conditions of such guarantee are as follows: 1. In case that the meeting of CPN shareholders does not approve the entering into the New Sub-Lease Agreement with CID or CPN and CID cannot finalize the terms and conditions of the New Sub-Lease Agreement, CID will repay all of the guarantee with interest at the Minimum Lending Rate (MLR) to CPN. 2. In case that the meeting of CPN shareholders approves the entering into the New Sub-Lease Agreement with CID, the guarantee will be returned to CPN. Subsequently, CPN shall make scheduled annual leasehold payment to CID in accordance with the New Sub Lease Agreement. CPN had already informed and disclosed the transactions of entering into the MOU with CID to confirm and preserve its right for entering into the New Sub- Lease Agreement and of making a payment of Baht 300 million to CID as a guarantee for the right to sub-lease land and buildings of the Central Plaza Ladprao Shopping Complex to the Stock Exchange of Thailand on December 9, 2008. 2.2.2 Transaction Size For the whole term of the New Sub-Lease Agreement, the total amount of annual leasehold payment to be made by CPN to CID is Baht 16,178.32 million. The transaction of entering into the New Sub-Lease Agreement with CID, when combined with the sizes of other connected transactions taking place during six months prior to the day a decision to enter into the New Sub-Lease Agreement is made, will make the combined transaction size equal to Baht 16,565.32 million that accounts for 115.72 % of the net tangible asset value of CPN of Baht 14,315.24 million as per the latest audited consolidated financial statements as of December 31, 2008. Given the transaction size exceeds Baht 20 million and 3 % of the net tangible asset value of CPN as per the latest audited consolidated financial statements, CPN is required to seek for an approval resolution from the shareholders'meeting with the vote of at least three-fourths of the total number of votes of the shareholders or their proxies (if any) who attend the meeting and have the right to vote, excluding the connected shareholders who have conflict of interest. The size of the transaction of entering into the New Sub-Lease Agreement with CID, when combined with the sizes of other asset acquisition transactions taking place during six months prior to the day a decision to enter into the New Sub-Lease Agreement is made, is equal to 37.83 % (using the criterion of the total value of consideration paid that is equal to Baht 16,565.32 million, compared with the value of assets of CPN and its subsidiaries collectively that is equal to Baht 43,783.78 million), thus making the transaction of entering into the New Sub-Lease Agreement be classified as a class-2 transaction under the Notification of the Capital Market Supervisory Board Tor. Jor. 20/2008 regarding Disclosure of Information and Other Acts of Listed Companies concerning the Acquisition and Disposition of Assets and 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, 2004. When there is a decision to enter into a class-2 transaction, CPN is required to serve a written notice of its decision to enter into a class-2 transaction on its shareholders within 21 days from the date of disclosure of information to the Stock Exchange of Thailand. However, given the size of the connected transaction requires an approval from the meeting of shareholders, CPN will ask for an approval to enter into the asset acquisition transaction on the date of March 25, 2009 that is the same as the date of shareholders' meeting in which CPN will ask for approval to enter into the connected transaction. 2.2.3 Details of the Sub-Leased Assets In accordance with the New Sub-Lease Agreement to be entered into between CPN and CID, the assets that CPN will sub-lease from CID for the purpose of running shopping complex and office building businesses include: The Assets of the Central Plaza Ladprao Project that CPN Will Sub-Lease from CID 1) Land Some plots of land belonging to the Central Plaza Ladprao Project with the approximate area of 28 rais. The Sub-Leased Assets that are buildings are located on such plots of land. 2) Buildings Building Gross Leasable Area Net Leasable Area (Occupancy Rate) (%) (SQ.M.) (SQ.M.) As of December 31,2008 1) Shopping Complex 95,000 55,531* 97 % and Plaza 2) Office Building 23,000 17,719 97 % 3) Car Parking 90,000 - - *Note:The net leasable area of the Shopping Complex and Plaza includes the net leasable areas of both the theaters totaling 7,500 SQ.M. and the convention hall totaling 9,000 SQ.M. Source: Central Pattana Public Company Limited 2.3 The Basis Used to Determine the Value of Consideration The amount of annual leasehold payment to be made by CPN to CID is determined based on the cost plus basis.The basis for determining the amount of such annual leasehold payment is that it will be determined based upon the sum of the cost of acquiring leasehold right of the Central Plaza Ladprao Project as actually incurred by CID and a profit margin of 5 % of such leasehold right acquisition cost. The cost of acquiring leasehold right of the Central Plaza Ladprao Project as actually incurred by CID consists of stream of annual leasehold payment to be made by CID to the SRT throughout the term of the New Main Lease Agreement and the leasehold right registration fee equal to 1 % of the total amount of such annual leasehold payment to be made by CID to the SRT throughout the term of the New Main Lease Agreement. From the sum of the cost of acquiring leasehold right of the Central Plaza Ladprao Project as actually incurred by CID and the profit margin of 5 % of such leasehold right acquisition cost, approximately 72 % of the sum will be allocated as annual leasehold payment to be made by CPN to CID. Such 72 % figure is determined based upon the proportion of the appraised leasehold value of the Sub-Leased Assets to the total appraised leasehold value of the entire Central Plaza Ladprao Project that is approximately 72 % as well. 3. Profile of Central International Development Company Limited Company Name : Central International Development Company Limited ("CID") Date of Incorporation : May 10, 1978 Registered Address : 306 Silom Road, Suriwongse Sub- District, Bangrak District, Bangkok 10500 Type of Business : Property Development Shareholding Structure As of April 30, 2008, the shareholders of CID consist of: Shareholder % of Shareholding Harng Central Department Store Limited ("HCDS") 25.00 % (The Chirathivat Family holds a 100 % stake in HCDS.) The Chirathivat Family 75.00 % Source: Business Online (http://www.bol.co.th) Business Overview Central International Development Company Limited ("CID") was incorporated in 1978 to enter into a 30-year land lease agreement with the State Railway of Thailand ("SRT") for the purpose of construction, development and operation of the Central Plaza Ladprao Project. Such 30-year land lease agreement was expired on December 18, 2008. CID entered into the 20-year Agreement Granting the Right to Utilize the Shopping Center Located in the Area of Paholyothin Delta (the"New Main Lease Agreement") with the SRT in December 2008. The New Main Lease Agreement shall be effective from December 19, 2008 to December 18, 2028. CID will later enter into a New Sub-Lease Agreement with each sub- lessee consisting of Central Pattana Public Company Limited ("CPN"), Central Plaza Hotel Plc. ("CENTEL") and Harng Central Department Store Limited ("HCDS"). The Board of Directors As of April 30, 2008, the Board of Directors of CID consists of: Director Position Mr.Vanchai Chirathivat Director Mr.Suthiporn Chirathivat Director Mr.Suthichai Chirathivat Director Mr.Suthikiati Chirathivat Director Mr.Suthichart Chirathivat Director Mr.Sudhisak Chirathivat Director Mr.Suthiluck Chirathivat Director Mr.Tos Chirathivat Director Mr.Prin Chirathivat Director Source: Business Online (http://www.bol.co.th) Financial Performance and Condition CID's Financial Performance and Condition for the Years Ended December 31, 2004-2007 Unit: Baht 2004 2005 2006 2007 Total Revenue 17,835,484.12 16,486,598.05 17,524,293.39 20,073,171.31 EBIT 7,083,162.68 4,149,357.73 6,277,547.74 2,207,109.54 Net Profit 4,952,515.96 2,527,078.87 4,393,609.20 846,483.67 Total Assets 366,298,622.83 366,246,718.14 369,262,036.75 368,906,379.99 Total Liabilities 6,970,516.28 4,391,532.72 3,013,242.13 1,811,101.70 Paid-up Shares 370,000,000.00 370,000,000.00 370,000,000.00 370,000,000.00 Total Shareholders' Equity 359,328,106.55 361,855,185.42 366,248,794.62 367,095,278.29 Note:CID will record leasehold right to land and buildings of the Central Plaza Ladprao Project it obtained from entering into the New Main Lease Agreement with the SRT in its 2008 financial statements. Such leasehold right will be amortized on a straight-line basis over the period of 20-year New Main Lease Agreement. Source: Business Online (http://www.bol.co.th) 4. Summary of the New Sub-Lease Agreement and Opinion of the Independent Financial Advisor on the Transaction Table 1 Major Terms and Conditions under the New Sub-Lease Agreement Involved Parties Central International Development Company Limited ("CID") as the sub-lessor Central Pattana Public Company Limited ("CPN") as the sub-lessee Sub-Lease Term The term of the New Sub-Lease Agreement shall begin from December 19, 2008 and ends on December 18, 2028. Scheduled Annual Throughout the term of the New Sub-Lease Agreement, Leasehold Payment CPN is obligated to make annual leasehold payment (more)