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ALERT Dusit Thani Laguna Phuket Sold THB 2.62 Billion

Category: Hotels, Posted:11 Aug 2010 | 07:06 am

Leading Thai listed resort developer Laguna Resort and Hotels Plc. have disclosed to the Stock Exchange of Thailand (SET) a transaction of the Dusit Thani Laguna Phuket for an amount of THB 2.62 billion. The buyer is Dusit Thani Public Company Limited.
The transaction comes in at approximately USDD81 million or USD358,000 a key which in terms hotel valuations by several industry sources is considered to be at the upper end of the scale. The publically listed LRH detailed in the 'Information Memorandum' on the divestment that the company had concerns over too much exposure in Thailand. As for the use of the proceeds this will be used to pay down debt, pay dividends and expand in investment abroad. It's thought that some of the funds will be used for the new Laguna Hue destination resort in Vietnam which the company is developing.
The 226 room upscale property was first opened in 1987 and was the first hotel developer K.P Ho built in what would become one of Asia's leading resort destinations – Laguna Phuket.
Adjacent to the resort are 28 pool villas which are branded and operated by the chain but are individually owned.
According to information on the Laguna Resort and Hotels Plc. website the management agreement with the Dusit chain will expire in approximately 2 years hence the valuation on a premise of a relatively short term vacant possession generated greater market interest.
This transaction marks the 3rd significant hospitality asset to be sold in Thailand this year. In Koh Samui Baan Taling Ngam traded to a Thai group and anther property in Phuket the Novotel Beach Resort in Panwa also went to a domestic buyer. The Dusit and Baan Taling Ngam deals were brokered by international firm Jones Lang LaSalle out of Singapore.
The Stock Exchange of Thailand Information Memorandum is as listed below:
No. L028/2010

10 August 2010
Subject: Information Memorandum on the Disposition of Assets of Laguna

Resorts & Hotels Public Company Limited
To: President

The Stock Exchange of Thailand
The meeting of the Board of Directors of Laguna Resorts & Hotels Public
Company Limited (the "Company" or "LRH") No. 4/2010 held on 10 August 2010
passed a resolution to approve the disposition of Dusit Thani Laguna Phuket

(the "Hotel") which consists of land, buildings, plant and machinery,
furniture, fixtures and equipment and inventory owned by LRH and its
wholly-owned subsidiaries, by way of closed bid tender (the "Disposition" or

"Transaction") at the total consideration of THB 2,620,000,000 (Thai Baht Two
Billion Six Hundred and Twenty Million).
The Company plans to use the net proceeds from the Disposition (the

"Proceeds") to invest in a hotel or hotel related project located outside the
borders of Thailand, repay bank loans, and/or pay dividends.The amount of the
Proceeds to be allocated to each of the uses shall be determined by the Board
of Directors.
The overseas investment is aimed at reducing the Company's present operations
in Phuket which presently forms the majority of the Company's income. In
2009, LRH's combined revenues generated by its operations in Phuket amounted
to almost 82% of the Company's overall revenue. In terms of the Company's
hotel revenue, just over 82% is attributed to hotels located in Phuket.
The global financial crisis which started in 2008 and the ensuing global
recession severely impacted the tourism and hotel industry in Thailand as a
whole and LRH's hotels and other tourism related businesses in Laguna Phuket
were not spared.The global financial meltdown was exacerbated by the prolonged
Thai political turmoil which deterred tourists who could afford the luxury of
travel during the recession from selecting Thailand as their holiday
destination. These unfortunate events in the last two years revealed the
Company's vulnerability and confirmed the Company's concerns that it has too
much exposure in Phuket and in Thailand. As a result, the Company has decided
to accelerate its plans to reduce its investment portfolio in Phuket and after
much deliberation came to the conclusion of disposing the Hotel.
The Transaction falls under "Transaction Type 1" and requires the disclosure
of information to the Stock Exchange of Thailand ("SET") and the approval from
the shareholders' meeting in accordance with the Notification of the Capital
Market Supervisory Board No. Thor Jor 20/2551 Re: Rules on Entering into
Material Transactions Deemed as Acquisition or Disposition of Assets, which
refers to the Notification of the Board of the Stock Exchange of Thailand Re:
Disclosure of Information and Other Acts of the Listed Company Concerning the
Acquisition and Disposition of Assets, 2004.
1. Date of Occurrence of the Transaction
Assuming the Transaction is approved by the Company's shareholders at the
Extraordinary General Meeting No. 1/2010 which will be held on September 29,
2010, the Transaction is expected to be completed on 30 November 2010 or such
other date as mutually agreed by the Parties in writing which shall not
be later than 30 December 2010 ("Completion Date").
2. Parties Involved
Sellers : Laguna Resorts & Hotels Public Company Limited ("LRH"),

Phuket Resort Development Limited ("PKRD"), and;

Laguna Grande Limited ("LGL").
Buyer : Dusit Thani Public Company Limited, the successful bidder in

the closed bid tender is not a connected party to the Sellers.
3. General Characteristics of the Transaction
The Transaction was done by way of a closed bid tender (the "Tender") of the
assets detailed in Clause 4. Jones Lang LaSalle (Thailand) Limited was
appointed as the exclusive property advisor and marketing agent for the
Disposition.
The Transaction is considered to be a Disposition of Assets in accordance with
the Notification of the Capital Market Supervisory Board No. Thor Jor 20/2551
Re: Rules on Entering into Material Transactions Deemed as Acquisition or
Disposition of Assets, which refers to the Notification of the Board of the
Stock Exchange of Thailand, Re: Disclosure of Information and Other Acts of
Listed Companies Concerning the Acquisition and Disposition of Assets, 2004.
Since the highest transaction size as calculated by the "Net Profit After Tax"

(calculated from the reviewed/audited financial statement based on the
12-month period from 1 July 2009 to 30 June 2010) method is over 50%, it is
classified as "Transaction Type 1", and therefore requires the disclosure of
information to the SET and the approval from the shareholders' meeting with a
vote of not less than 75% of total voting right of shareholders who attend the
meeting and are eligible to vote.
4. Details of the Assets to be Disposed
4.1 Summary of Dusit Thani Laguna Phuket Hotel
Property Name Dusit Thani Laguna Phuket Hotel (assets under LRH)
Location Bang Tao Beach, Phuket

390/1 Moo1 Srisoonthorn Road, Cherngtalay, Thalang, Phuket

83110
Description of the Hotel -A 5-star luxury hotel comprising 226 rooms and

various facilities in low-rise buildings

– Situated on 6 contiguous land plots, totaling

33.66 rai or 13,462.7 square wah owned by LRH
and its wholly-owned subsidiaries (PKRD and LGL)

– Facilities include six dining outlets, four

conference
rooms, business centre, spa, swimming
pool, two tennis courts, retail shops, water
sport centre, kids club, beachside and garden
wedding venues, fitness centre, and car parking.
Asset Items Land, buildings, plant and machinery, furniture, fixtures

and equipment, and inventory
Obligation Land and buildings are mortgaged to a local bank. The
release of the mortgage is expected to be completed by the occurrence date of
the Transaction.
4.2 Financial Information
Apart from the Hotel, LRH owns and operates other hospitality related
businesses including investments in a number of hotels through subsidiary
companies. As the Hotel is one of the businesses owned by LRH, the Hotel does
not have its own reviewed/audited financial statement. The financial
information used in the transaction size calculation is therefore based on
management accounts and other financial information extracted from LRH's
reviewed/audited financial statements. The financial information used in the
calculation of the transaction size is summarized as follows:
Summary of Financial Information for Transaction Size Calculation

(Unit: Million Baht) As at As at As at As at

31 March 2010 30 June 2010 31 December 2009 31 December 2008
Total assets(a) 1,092.19 1,024.27 1,096.85 1,818.18
Total liabilities(b) 95.88 98.82 143.21 119.71

(Unit: For the 3 months For the 12 months For the 12 months For the 12
Million ended 31 March 2010 from 1 July 2009 ended 31 December months ended
Baht) to 30 June 2010 2009 31 December

2008
Total revenues(c) 232.13 525.12 474.09 488.44
Total expenses(c) 121.22 387.3 372.04 353.10
Profit before tax 110.90 137.77 102.05 135.34
Net profit(d) 83.01 102.66 76.11 101.56

(a) Includes cost of land which are co-owned with subsidiaries of LRH

(b) Includes only accounts payable and other liabilities items, excluded bank
loans

(c) Includes revenue and shared expenses from Dusit Villas

(d) After deducting corporate income tax from taxable profit at the rate

25%
4.3 Details of Assets
4.3.1 Land
6 continuous land plots, totaling 33.66 rai or 13,462.7 square wah owned by
LRH and its wholly-owned subsidiaries (PKRD and LGL), situated at Cherngtalay
Sub-District, Talang District, Phuket Province, details as follows:
Title Deed No. Location Owner
1. 4210 Bang Tao Beach, Phuket LRH
2. 42110 (Partial, in 2 subdivided plots) Bang Tao Beach, Phuket LRH
3. 5917 Bang Tao Beach, Phuket LGL and LRH
4. 11956 Bang Tao Beach, Phuket LGL and LRH
5. 5971 (Partial) Bang Tao Beach, Phuket PKRD and
LRH
4.3.2 Hotel Buildings

Description Location Owner
1. Low-rise buildings consisting Dusit Thani Laguna Phuket Hotel LRH
of 226 rooms and facilities
4.3.3 Plant & Machinery

Description Location Owner
1. Power supply system,
generators, air-conditioning systems,
cold and hot water systems, waste
water systems, fire protection systems,
lifts, PABX system, MATV system. Dusit Thani Laguna Phuket Hotel LRH
4.3.4 Furniture, Fixtures & Equipment and Inventory

Description Location Owner
1. Furniture, fixtures, building
improvements, all equipment and inventory
used in the operations of the Hotel.

Dusit Thani Laguna Phuket Hotel LRH
5. Total Value of Consideration and Payment Conditions
Total Consideration : THB 2,620,000,000 (Thai Baht Two Billion Six

Hundred and Twenty Million). All fees and taxes payable for the
transfer of the Assets Disposed shall be borne by the Buyer.
Payment method : The Buyer shall pay as follows:

– An initial amount equivalent to 10% of the Total Consideration within
5 working days from the execution of the Asset Purchase Agreement;

– A further 89% of the Total Consideration on 30 September 2010

and;

– The final 1% of the Total Consideration on the Completion Date.
6. Value of the assets Disposed
As of 30 June 2010, the value of the disposed assets is approximately THB
962.59 million (total book value of buildings, plant and machinery, furniture,
fixtures and equipment and inventory of the Hotel is approximately THB 417.30
million and total book value of land on which the Hotel is located and owned
by LRH, LGL and PKRD is approximately THB 545.29 million).
Asset items Book Value (Million Baht)

as at 30 June 2010
Land 545.29

– No. 42109 276.26

– No. 42110 (partial, in 2 subdivided plots) 12.54

– No. 5917 33.72

– No. 11956 3.20

– No. 5971 (partial) 219.57
Others 417.30

– Buildings 292.11

– Plant & Machinery, Furniture,

Fixtures & Equipment and Inventory 125.19
Total 962.59
7. The Criteria in Setting the Value of Consideration
The highest price offered by bidders in the Tender.
8. The Rationale in Entering the Transaction and Expected Benefits
As explained in the preamble of this letter, the Company is presently too
reliant on its operations in Phuket and is therefore vulnerable to any adverse
events which impact the Thai tourism industry. By entering into the
Transaction, the Company will be able to reduce its exposure in Phuket and
therefore reduce its country risks.
9. Plans for Use of Proceeds from the Assets Disposition
The Company plans to use the Proceeds to invest in a hotel or hotel related
project overseas, repay bank loans, and/or pay dividends to its shareholders.
The Board of Directors shall have the discretion to examine and ascertain the
appropriateness of each of the aforementioned uses and the amount of the
Proceeds to be allocated, if any, to each of them.
10. Opinion of the Board of Directors on the Transaction
As the Total Consideration is higher than the book value of the assets to be
disposed, the Company will immediately realize a gain from the Disposition
and at the same time reduce the Company's exposure in Phuket.
With the Proceeds, the Company will have the financial means to explore
investment opportunities overseas, repay bank loans and/or pay dividends to
shareholders. If the Company is able to make a successful investment
overseas, this would enable the Company to achieve a more diversified
investment portfolio and reduce any adverse impact to its income when there
are problems in the Thai tourism industry. In the event that the Company
decides to repay some of its bank loans, the Company would be able to reduce
its interest expense and preserve its borrowing ability for future investment
opportunities. Shareholders of the Company would potentially benefit from a
dividend payment should this be declared by the Company.
11. Opinion of the Audit and Risk Committee or the Director of the
Company that is Different from the Opinion of the Board of Directors of the
Company
The Audit and Risk Committee concurs with the opinion of the Board of
Directors of the Company.
Please be informed accordingly.
Sincerely yours,
Laguna Resorts & Hotels Public Company Limited

(Mr. Michael Ramon Ayling) ( Mr. Stuart David Reading)
Directors

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