BANYAN TREE HOLDINGS LIMITED (Company Registration Number 200003108H) SALE OF ASSETS BY THAI SUBSIDIARIES THE PROPOSED DISPOSAL 1. The Board of Directors of Banyan Tree Holdings Limited ("BTH") wishes to announce that its subsidiary, Laguna Resorts & Hotels Public Company Limited ( LRH ), incorporated in Thailand and listed on the Stock Exchange of Thailand ( SET ), together with LRH s wholly-owned subsidiaries Phuket Resort Development Limited and Laguna Grande Limited (together with LRH, the Sellers ), today entered into an Asset Purchase Agreement ("Asset Purchase Agreement") with Dusit Thani Public Company Limited ( Purchaser ) for the disposal (the "Proposed Disposal" or "Transaction") of certain assets including but not limited to certain plots of land located at Tambon Cherngtalay, Amphoe Thalang, Phuket Province, Thailand, the buildings, structures and other improvements located on or affixed to the land (collectively, the Property ), owned collectively by the Sellers. The Property is presently used by or for the hotel operating under the name of Dusit Thani Laguna Phuket in Phuket, Thailand ( Hotel ). The Property to be sold includes the hotel management agreement and certain leases and other contracts entered into in connection with the Hotel and certain assets and inventory related to the Hotel. 2. LRH has also made an announcement on the SET today regarding the Proposed Disposal. A copy of LRH s announcement is attached to this announcement. 3. LRH is required to seek shareholders approval of the Proposed Disposal under the rules of the SET and the Public Limited Company Act of Thailand. The shareholders approval threshold required to be met by LRH for the Proposed Disposal is 75%. BTH's interest in the voting shares of LRH is presently 54.85%. BTH will be able to vote on the resolution for the approval of the Proposed Disposal. 4. As required by the rules of the SET, LRH has appointed Capital Advantage Co., Ltd., a financial advisor approved by the Office of the Securities and Exchange Commission of Thailand ( SEC ), as its independent financial advisor to advise LRH and its shareholders on the Proposed Disposal. BUSINESS OF LRH GROUP 5. LRH and its subsidiaries are principally engaged in the business of owning and operating hotels and property development. LRH and its subsidiaries presently own six hotels, namely Laguna Beach Resort, Sheraton Grande Laguna Phuket, Laguna Holiday Club Resort, Banyan Tree Phuket, Outrigger Laguna Phuket Resort and Villas at Laguna Phuket, and the Hotel, all located in Phuket province, Thailand, as well as one hotel, the Banyan Tree Bangkok, located in Bangkok, Thailand. LRH s subsidiaries also own a golf club (Laguna Phuket Golf Club), and are engaged in sales of merchandise (Banyan Tree Gallery), office, retail and resort rental and sale of holiday club memberships at the properties owned by them.
2 CONSIDERATION AND KEY TERMS OF THE TRANSACTION 6. The aggregate purchase price for the Property payable to the Sellers is Thai Baht ( THB ) 2.62 billion ( B ) ("Purchase Price"). This was the highest offer received in response to a closed tender carried out by the property marketing agent appointed by LRH to manage the sale of the Property. 7. The Purchase Price will be paid by the Purchaser in three parts: an initial payment of THB262 million ( M ) within 5 working days from the execution of the Asset Purchase Agreement, THB2,331,800,000 on 30 September 2010 and the remainder of the Purchase Price on completion. On 30 September 2010, there will be an adjustment to the Purchase Price and the payment due on completion to inter alia prorate certain revenue and expense items between the period up to 30 September 2010 and the period thereafter. 8. Under the Asset Purchase Agreement, the conditions precedent to the obligations of the Sellers to sell the Property include the following: approval of the board of directors and/or general shareholders meeting of each of the Sellers (as applicable) of the Transaction; and the Purchaser having entered into: (i) a service agreement with Laguna Service Co., Ltd. (a subsidiary of LRH); (ii) a centralised excursion agreement with Laguna Excursions Limited (also a subsidiary of LRH); (iii) a licence agreement with LRH for the use of the Laguna trade name and marks; (iv) a shared facilities agreement with LRH in relation to the use of and allocation of costs for certain shared facilities; (v) prior written consent of the hotel manager Dusit Thani Corporation Limited ( Hotel Manager ) to LRH s transfer of its rights and obligations under the hotel management agreement to the Purchaser; (vi) a novation agreement with LRH and the Hotel Manager relating to the novation of the hotel management agreement; and (vii) a charter with LRH and several other parties in relation to the cooperation and coordination within the integrated resort complex known as Laguna Phuket, and the Purchaser having registered certain servitudes as set out in the Asset Purchase Agreement, and the conditions precedent to the obligation of the Purchaser to purchase the Property include the following: (i) (ii) (iii) the Sellers having completely released the current mortgage on the Hotel building and land with Siam Commercial Bank PLC; the Sellers having made a full and comprehensive list of all current licenses in relation to the Hotel detailing certain information, and of all the fixed assets, the equipment lease and service agreements, and all bank guarantees; and the board of directors meeting and the general shareholders meeting of the Purchaser having approved the transactions contemplated by the Asset Purchase Agreement. 9. Under the Asset Purchase Agreement, there are also mutual conditions precedent to the obligations of the Purchaser to purchase and the Sellers to sell the Property, including the following: (c) there being no applicable law enjoining any of the parties from consummating the Transaction; the other party(ies) having performed in all material respects their obligations on or prior to completion; and the other party(ies) s warranties being true and correct in all material respects on completion.
3 10. The Asset Purchase Agreement also contains the following: a provision for an automatic termination of the Asset Purchase Agreement if the competent Land Registry Office in Thailand does not approve the purchase of the real property comprising part of the Property by the Purchaser, after an extension of the date of completion for revision by the Purchaser of its qualifications and documents to meet the requirements of the Land Registry Office; and a right of first refusal granted to the Purchaser if the Sellers would like to sell the remaining two pieces of land under title deeds no. 42110 and 11953, and if the Sellers wish to develop any hotel related operations on the two pieces of land. FINANCIAL IMPACT OF THE PROPOSED DISPOSAL 11. The book value of the Property based on the latest announced financial statements of LRH (i.e. for the 6 months ended 30 June 2010) and adjusted to comply with Singapore Generally Accepted Accounting Principles (GAAP) is Singapore Dollars ( S$ ) 40.4M. No recent valuation report has been issued in respect of the Property. 12. The expected gain on disposal (before tax and minority interests) for BTH is S$68.4M (based on exchange rate of THB1 to S$0.042 as at 6 August 2010, quoted in the Singapore business daily, The Business Times). The excess of the sale proceeds over the book value is expected to be S$69.6M based on sales proceeds of S$110.0M. On this basis, the sale proceeds amount to about 2.7 times the book value of the Property. As a comparison, based on BTH s market capitalisation of S$645.0M at BTH s closing share price on the Singapore Exchange Securities Trading Limited ( SGX-ST or the Exchange ) on 6 August 2010 of S$0.85 and net asset value of BTH based on its audited accounts for the financial year ended 31 December 2009 ( FY2009 ), BTH s market capitalisation is only 1.3 times the net asset value of BTH. 13. For illustration purposes only, the proforma financial effects of the Proposed Disposal on the net tangible assets ("NTA") and earnings per share ("EPS") of BTH based on the audited consolidated financial statements of BTH for FY2009 are as follows: NTA per share Assuming the Proposed Disposal had been completed on 31 December 2009, the Proposed Disposal would have the following impact on the NTA of the BTH and its subsidiaries ( Group ) for FY2009: NTA of the Group NTA per share of BTH (S$million) (cents) Before the Proposed Disposal 481.4 63.5 After the Proposed Disposal 511.8 67.5
4 EPS Assuming the Proposed Disposal had been completed on 1 January 2009, the Proposed Disposal would have the following impact on the EPS of the Group for FY2009: Net profit of the Group attributable to Shareholders (S$million) EPS of BTH (cents) Before the Proposed Disposal 3.0 0.4 After the Proposed Disposal 33.7 4.5 The computation of the proforma financial effects of the Proposed Disposal on the NTA and EPS of BTH is based on the latest announced financial statements of LRH (i.e. for the 6 months ended 30 June 2010) and adjusted to comply with Singapore Generally Accepted Accounting Principles (GAAP). RATIONALE FOR AND EXPECTED BENEFITS OF THE TRANSACTION 14. LRH is presently heavily reliant on its operations in Phuket and is therefore vulnerable to any adverse events which may impact the Thai tourism industry. By entering into the Transaction, LRH will be able to reduce its exposure in Phuket and thereby reduce its country risk which is also in line with BTH s strategy of diversifying its assets away from Thailand given the increased political risk in Thailand and the heavy representation of Thai hotel properties amongst the Group s assets. 15. With the proceeds from the Proposed Disposal, LRH plans to invest in a hotel or hotel-related project overseas, repay its bank loans, and/or pay dividends to its shareholders. These will directly or indirectly benefit BTH, as the majority shareholder of LRH. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS 16. The direct and deemed interests in the shares of BTH ( Shares ), of the directors and controlling shareholders of BTH, as at the date of this announcement, are as follows: Directors Direct Deemed Total Total Interest Interest Interest Interest % (1) Ho KwonPing (12) - 286,232,582 286,232,582 37.72 (2) Ariel P Vera 767,300 706,400 (3) 1,473,700 0.19 Chia Chee Ming Timothy 253,500 3,500 (4) 257,000 0.03 Dilhan Pillay Sandrasegara 503,500 3,500 (4) 507,000 0.07 Elizabeth Sam 153,000 3,000 (4) 156,000 0.02 Fang Ai Lian - - - -
5 Direct Deemed Total Total Interest Interest Interest Interest % (1) Controlling Shareholders (13) Bibace Investments Ltd 270,460,582 9,772,000 280,232,582 36.93 ( Bibace ) (12) Ho KwonCjan (12) 16,000,000 286,726,582 302,726,582 39.89 (2) Chiang See Ngoh Claire (12) - 286,232,582 286,232,582 37.72 (2) Recourse Investments Ltd. (12) 6,000,000 280,232,582 286,232,582 37.72 (2) KAP Holdings Ltd. (12) - 280,232,582 280,232,582 36.93 (2) Qatar Holding LLC - 190,934,443 (5) 190,934,443 25.16 Qatar Investment Authority - 190,934,443 (6) 190,934,443 25.16 Citigroup Global Markets Limited ( CGML ) and the following entities by virtue of their interest in CGML: Citigroup Inc., Citigroup Global Markets Holdings Inc., Citigroup Financial Products Inc. and Citigroup Global Markets Europe Limited - 149,103,943 149,103,943 19.65 (7) Ho MinFong (12) - 10,000,000 (8) 10,000,000 1.32 Ho Lien Fung (12) - 37,494,000 (9) 37,494,000 4.94 Wah-Chang Offshore (Hong 31,000,000-31,000,000 4.09 Kong) Company Limited (12) Freesia Investment Ltd (12) 10,000,000-10,000,000 1.32 International Development Limited (12) Commercial Company - 31,000,000 (10) 31,000,000 4.09 Platinum Enterprise Limited (12) - 31,000,000 (10) 31,000,000 4.09 Li-Ho Holdings (Private) - 6,494,000 (11) Limited (12) 6,494,000 0.86 Notes: (1) As a percentage of the current issued share capital (excluding 2,564,300 treasury shares) of BTH, comprising 758,837,980 Shares. (2) Ho KwonPing is deemed to have an interest in the Shares held by Recourse Investments Ltd., Bibace and Citibank Nominees Singapore Pte Ltd (acting as nominee for Bibace). KAP Holdings Ltd. and Recourse Investments Ltd. are each deemed to have an interest in the Shares held by Bibace and Citibank Nominees Singapore Pte Ltd (acting as nominee for Bibace). Chiang See Ngoh Claire is deemed to have an interest in the Shares held by Recourse Investments Ltd., Bibace and Citibank Nominees Singapore Pte Ltd (acting as nominee for Bibace). Ho KwonCjan is deemed to have an interest in the Shares held by Bibace, Citibank Nominees Singapore Pte Ltd (acting as nominee for Bibace) and HSBC (Singapore) Nominees Pte Ltd (acting as nominee for Li-Ho Holdings (Private) Limited). (3) BTH granted an initial award of 358,000 Shares to Ariel P Vera under the Banyan Tree Performance Share Plan. A conditional award of up to 308,500 Shares may be granted if the performance conditions are exceeded. The Shares if conditions are met will vest on a date in the future. Ariel P Vera is also entitled to another 39,900 Shares under the Banyan Tree Performance Share Plan which will vest subject to certain terms and conditions. (4) Chia Chee Ming Timothy and Dilhan Pillay Sandrasegara are each entitled to 3,500 Shares as well as Mrs Elizabeth Sam to 3,000 Shares under the Banyan Tree Performance Share Plan which will vest subject to certain terms and conditions. (5) Qatar Holding LLC is deemed to have an interest in the Shares held by its nominee, Citibank Nominees Singapore Pte Ltd.
6 (6) Qatar Investment Authority is deemed to have an interest in the Shares held by Citibank Nominees Singapore Pte Ltd (acting as nominee for Qatar Holding LLC). (7) CGML is deemed to have an interest in the Shares held by Citibank Nominees Singapore Pte Ltd (acting as nominee for Qatar Holding LLC). (8) Ho MinFong is deemed to have an interest in the Shares held by Freesia Investments Ltd. (9) Ho Lien Fung is deemed to have an interest in the Shares held by Wah-Chang Offshore (Hong Kong) Company Limited and HSBC (Singapore) Nominees Pte Ltd (acting as nominee for Li-Ho Holdings (Private) Limited). (10) International Commercial Development Company Limited and Platinum Enterprise Limited are deemed to have an interest in the Shares held by Wah-Chang Offshore (Hong Kong) Company Limited. (11) Li-Ho Holdings (Private) Limited is deemed to have an interest in the Shares held by its nominee, HSBC (Singapore) Nominees Pte Ltd. (12) Ho KwonPing, his spouse Chiang See Ngoh Claire, his brother Ho KwonCjan, his sister Ho MinFong and his mother Ho Lien Fung, together with Bibace, KAP Holdings Ltd., Wah-Chang Offshore (Hong Kong) Company Limited, International Commercial Development Company Limited, Platinum Enterprise Limited, Freesia Investments Ltd, Recourse Investments Ltd. and Li-Ho Holdings (Private) Limited, have an aggregate interest (both direct and deemed) of 46.09%. (13) Excluding Ho KwonPing who is listed under "Directors" above. 17. Apart from their interest in LRH by way of their interest in BTH, BTH being the holding company of LRH, Ho KwonPing, Chiang See Ngoh Claire, Ho KwonCjan, Ho MinFong, Ho Lien Fung and persons and companies associated with them own a 26.7% stake in Universal Starch Public Company Limited which holds a 17.67% direct shareholding interest in LRH, based on the information set out in the share register of LRH. Additionally, 14.08% of the total issued shares in LRH is in the form of Investment Units of the Thai Trust Fund. Wah-Chang Offshore (Hong Kong) Company Limited has an interest through its nominees in 5,294,400 Investment Units of the Thai Trust Fund (being 3.18% of the total issued shares in LRH). 18. Save as set out in paragraphs 16 and 17 above, none of the directors or controlling shareholders of BTH have any interest, direct or indirect, in the Transaction. 19. There are no directors proposed to be appointed to the Board of Directors of BTH in connection with the Transaction. RELATIVE FIGURES UNDER CHAPTER 10 OF THE LISTING MANUAL (the Listing Manual ) OF THE SGX-ST 20. The relative figures computed on the bases set out in Rule 1006 of the Listing Manual, based on BTH s latest announced consolidated accounts, being the unaudited accounts for the first quarter ended 31 March 2010, are as follows: Rule 1006 Bases The net asset value of the assets to be disposed of, compared with the group s net asset value. The net profits attributable to the assets acquired or disposed of, compared with the group s net profits ( Profits Test ). Property (S$ million) 42.3 (being the net asset value of the Property) 4.7 (being the net profits attributable to the Property) Group (S$ million) Relative figure (%) 727.9 5.8 14.2 33.4
7 (c) The aggregate value of the consideration given or received, compared with the issuer s market capitalisation 1 based on the total number of issued shares excluding treasury shares. 110.0 (being the Purchase Price*) 644.3 17.1 (d) The number of equity securities issued by the issuer as consideration for an acquisition, compared with the number of equity securities previously in issue. N.A. N.A. N.A. *Based on exchange rate of THB1 to S$0.042 as at 6 August 2010, quoted in the Singapore Business Times. Please note that the Purchase Price is subject to adjustment as set out in paragraph 7 above. 21. The Exchange has confirmed that shareholders approval is not required for the Proposed Disposal under Rule 1014 of the Listing Manual, in response to the Company s application to seek confirmation from the Exchange that the Company is not required to seek such approval pursuant to the provisions of Chapter 10 read with Practice Note 10.1 of the Listing Manual. DOCUMENTS FOR INSPECTION 22. A copy of the Asset Purchase Agreement may be inspected at BTH s registered office at 211 Upper Bukit Timah Road, Singapore 588182 during normal business hours for a period of three months from the date of this announcement. Jane Teah Company Secretary 10 August 2010 1 determined by multiplying the number of Shares in issue by the weighted average price of such Shares transacted on the market day preceding the date of the Asset Purchase Agreement