Opinion of the Independent Financial Advisor on Tender Offer

127 Pages·2017·2.34 MB·English

-Translation-

Opinion of the Independent Financial Advisor on
Tender Offer
of

C.P.L. Group Public Company Limited
Offeror

for
Shareholders of C.P.L. Group Public Company Limited

Prepared by

S14 Advisory Company Limited
Independent Financial Advisor

1 February 2017
(Revised)
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
Table of Content
Executive Summary 6
1. Details of the Tender Offer 12
2. Appropriateness of the Offer Price 23
3. Reasons to accept and/or reject the Tender Offer 57
4. Benefits and impacts from the Plans and Policies Indicated in the Tendor Offer 64
5. Benefit obtainable and impact on the shareholders in case of rejecting the Tendor Offer
(For Delisting cases only) 72
6. Summary of the Opinions of Independent Financial Advisor 73
7. Appendix 1 – Information of CPL Group Public Company Limited 78
8. Appendix 2 – Information of Pangolin Safety Products Company Limited 95

2
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
Abbreviations and Definitions
Company, CPL, Business C.P.L. Group Public Company Limited
PSP Pangolin Safety Products Company Limited
SEC, The office of SEC Securities anD Exchange Commission of Thailand
SET Stocks Exchange of Thailand
Independent Financial Advisor, IFA S14 Advisory Company Limited
Wongcharoensin Group, the Offeror Consists of (1) Charoensin Holding Company Limited, (2) Charoensin
Asset Company Limited (3) Mr. Vivat Woncharoensin, (4) Mr.
Manoch Wongcharoensin, (5) Mrs. Thidaporn Wongcharoensin, (6)
Miss Nutnapa Wongcharoensin, (7) Mr. Natthakit Wongchaoroensin,
(8) Mr. Rattanachai Wongcharoensin, (9) Mrs. Usa Wongcharoensin,
(10) Mr. Puvasith Wongcharoensin, (11) Mr. Wuttichai
Wongcharoensin, (12) Mr. Natthajak Wongcharoensin, (13) Mr.
Theerawat Wongcharoensin, (14) Mr. Thavatchai Wongcharoensin,
(15) Mrs. Somsuk Wongcharoensin, (16) Mr. Suwatchai
Wongcharoensin, (17) Miss Ratchanee Wongcharoensi, (18) Mr.
Kitichai Wongcharoensin, (19) Mr. Veerachai Wongcharoensin, (20)
Mr. Napattavat Wongcharoensin, (21) Mr. Manit Wongcharoensin,
(22) Mrs. Payao Wongcharoensin, (23) Mr. Issara Wongcharoensin
Individuals in Wongcharoensin Consists of (1) Mr. Vivat Woncharoensin, (2) Mr. Manoch
Group Wongcharoensin, (3) Mrs. Thidaporn Wongcharoensin, (4) Miss
Nutnapa Wongcharoensin, (5) Mr. Natthakit Wongchaoroensin, (6)
Mr. Rattanachai Wongcharoensin, (7) Mrs. Usa Wongcharoensin, (8)
Mr. Puvasith Wongcharoensin, (9) Mr. Wuttichai Wongcharoensin,
(10) Mr. Natthajak Wongcharoensin, (11) Mr. Theerawat
Wongcharoensin, (12) Mr. Thavatchai Wongcharoensin, (13) Mrs.
Somsuk Wongcharoensin, (14) Mr. Suwatchai Wongcharoensin, (15)
Miss Ratchanee WongcharoensiN, (16) Mr. Kitichai Wongcharoensin,
(17) Mr. Veerachai Wongcharoensin, (18) Mr. Napattavat
Wongcharoensin, (19) Mr. Manit Wongcharoensin, (20) Mrs. Payao
Wongcharoensin, (21) Mr. Issara Wongcharoensin
Individuals of Wongcharoensin Consists of (1) Charoensin Holding Company Limited (2) Mr. Vivat
Group who are shareholders of Woncharoensin (3) Mrs. Nutnapa Wongcharoensin (4 Mr. Natthakit
PSP, and will receive shares Wongchaoroensin (5) Mr. Puvasith Wongcharoensin (6) Mr. Wuttichai
Wongcharoensin (7) Mr. Natthajak Wongcharoensin (8) Mr. Theerawat
Wongcharoensin (9) Mr. Suwatchai Wongcharoensin (10) Miss
Ratchanee Wongcharoensin (11) Mr. Kitichai Wongcharoensin (12)
Mr. Veerachai Wongcharoensin (13) Mr. Napattavat Wongcharoensin
(14) Mr. Manit Wongcharoensin (15) Mrs. Payao Wongcharoensin
(16) Mr. Issara Wongcharoensin
3
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities

The recipients of tender offer Consists of Mr. Vivat Wongcharoensin, Mr. Natthajak
shares Wongcharoensin, Mr. Veerachai Wongcharoensin and Mr. Manit
Wongcharoensin

4
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities

S14 A d v i s o r y Co m p an y L i m i t e d

1 February 2017
Title: Opinion of the Independent Financial Advisor on the Tender Offer of C.P.L. Group Public
Company Limited’s Securities
Attention: Shareholders of C.P.L Group Public Company Limited
C.P.L Group Public Company Limited (“Company” or “CPL”) was notified of the intention to make the
mandatory Tender Offer to purchase the securities of CPL from the Wongcharoensin Group, which consists of
(1) Charoensin Holding Company Limited (2) Charoensin Asset Company Limited (3) Mr. Vivat Woncharoensin
(4) Mr. Manoch Wongcharoensin (5) Mrs. Thidaporn Wongcharoensin (6) Miss Nutnapa Wongcharoensin (7)
Mr. Natthakit Wongchaoroensin (8) Mr. Rattanachai Wongcharoensin (9) Mrs. Usa Wongcharoensin (10) Mr.
Puvasith Wongcharoensin (11) Mr. Wuttichai Wongcharoensin (12) Mr. Natthajak Wongcharoensin (13) Mr.
Theerawat Wongcharoensin (14) Mr. Thavatchai Wongcharoensin (15) Mrs. Somsuk Wongcharoensin (16)
Mr. Suwatchai Wongcharoensin (17) Miss Ratchanee Wongcharoensin (18) Mr. Kitichai Wongcharoensin (19)
Mr. Veerachai Wongcharoensin (20) Mr. Napattavat Wongcharoensin (21) Mr. Manit Wongcharoensin (22)
Mrs. Payao Wongcharoensin ( 2 3 ) Mr. Issara Wongcharoensin (the “Tender Offeror”, “Offeror”, or
“Wongcharoensin”) on 11 January 2017. The total amount of tendered shares is 12,863,755 shares, at the
offer price of 34.28 Baht per share, and lasting a total of 45 working days from 13 January to 17 March 2017.
Nevertheless, the Offerror has no intention to delist the securities from its listed status in the SET, nor do they
intend to change the main objective of the Company significantly.
The Company will hold a shareholders’ Extraorrdinary General Meeting No.01/2017 to consider the
receipt pertaining to the entire business transfer (“EBT”) of PSP, to restructure PSP’s business into CPL, by
issuing 15,489,842 new ordinary shares. This will result in the Offeror having an increased shareholding
percentages equal to 69.92% of the paid-up shares and voting rights of the Company after the EBT of PSP.
S14 Advisory Company Limited (“Independent Financial Advisor”, “IFA”), as the IFA that is approved
by the SEC, was appointed as the IFA of the shareholders of CPL in order to provide an opinion to the
shareholders regarding this Tender Offer. The IFA has reviewed:
 The resolutions of the Company’s Board of Director’s Meeting No.1/2017 on 10 January 2017
 Draft of the invitation letter for the shareholders’ Extraordinary General Meeting No.1/2017 on 23
February 2017.
 Information Memorandum on the Acquisition of Assets and Connected Transaction of CPL by
acquiring the entire business of Pangolin Safety Products Company Limited (“PSP”).
 Capital Increase Form (F53-4)
 Information Memorandum on the Private Placement of CPL’s shares.
 Disclosure report concerning additional information (Form 56-1)
 Financial statements of CPL, audited by CWWP Company Limited as at year end 2013 to 2015
and as at 30 September 2016.
5
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
 Financial statements of Pangolin Safety Products (Register no. 0205558035411) audited by
CWWP Co., Ltd. from 28 December 2015 (Amalgamation Date) – 31 December 2015, and from 1
January 2016 to 30 September 2016.
 Financial statements of Pangolin Safety Products (Register No. 0105554065308) audited by
CWWP Co., Ltd. from 1 January 2015 – 28 December 2015. (Amalgamation Date)
 Financial statements of Pangolin Safety Products (Register No. 0105554065308) audited by
CWWP Co., Ltd. for 2013 – 2014.
 Financial statements of Pangolin Safety Products (Register No. 0105554065308)audited by
Alliance Office Co., Ltd. from 2013 to 2014.
 Financial statements of Safety Shoes Co., Ltd audited by Alliance Office Co., Ltd. from 2013 to
2014.
 Announcement of Intention to Make a Tender Offer Form (Form 247-3)
 Tender Offer for Securities Form (Form 247-4)
 Draft of letter of consent for the Entire Business Transfer and the issuance of capital-rasing shares
by the Offeror.
 4 Appraisal Reports of CPL’s asset by Agency for Real Estate Affairs Company Limited, dated
28 December 2016.
 12 Appraisal Reports of PSP’s asset by Siam Appraisal and Service Company Limited, dated 21
- 28 December 2016.
 Pro Forma Consolidated Financial Statement as at 30 September 2016 prepared CWWP
Company Limited
 Draft of Entire Business Transfer Agreement between CPL and PSP.
 Contracts and Agreement pertaining to the business operations of CPL and PSP, such as rent
contracts and loan agreements.
 Company’s certification, memorandum of association, and other documents received from the
Company, Offeror, Tender Offer Agent, information obtained while interviewing the Company’s
management, along with industry and economic outlook to help in formulating the IFA’s analyzes
and opinion.
The opinion of the IFA rests on the assumption that the information regarding the Tender Offer,
every documents received from the Company, the interviews with the Company’s staffs and management are
complete, and true. Furthermore, the opinion was based only on the economic conditions and information
available at the time, and any significant changes to the above-mentioned factors may affect the business
operations, financial projections, the opinion of the IFA, and Shareholders’ response to the Tender Offer. In
any case, the opinion of the IFA is not liable to any changes, or revisions, nor does it affirms the effects that
may arise in the future.

The opinion of the IFA on the Tender Offer are as follows:

6
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
Executive Summary
On 10 January 2017, the Company received the Announcement of Intention to Make a Tender Offer
(Form 247-3). On 11 January 2017, the Company received a Tender Offer of Securities Form (Form 247-4)
from the Offeror, consisting of (1) Charoensin Holding Company Limited (2) Charoensin Asset Company Limited
(3) Mr. Vivat Woncharoensin (4) Mr. Manoch Wongcharoensin (5) Mrs. Thidaporn Wongcharoensin (6) Miss
Nutnapa Wongcharoensin (7) Mr. Natthakit Wongchaoroensin (8) Mr. Rattanachai Wongcharoensin (9) Mrs.
Usa Wongcharoensin (10) Mr. Puvasith Wongcharoensin (11) Mr. Wuttichai Wongcharoensin (12) Mr. Natthajak
Wongcharoensin (13) Mr. Theerawat Wongcharoensin (14) Mr. Thavatchai Wongcharoensin (15) Mrs. Somsuk
Wongcharoensin (16) Mr. Suwatchai Wongcharoensin (17) Miss Ratchanee Wongcharoensin (18) Mr. Kitichai
Wongcharoensin (19) Mr. Veerachai Wongcharoensin (20) Mr. Napattavat Wongcharoensin (21) Mr. Manit
Wongcharoensin (22) Mrs. Payao Wongcharoensin (23) Mr. Issara Wongcharoensin (the “Tender Offeror”,
“Offeror”, or “Wongcharoensin”). The Tender Offer of the Company (Form 247-4) is a Mandatory Tender Offer.
Since Mr. Vivat Wongcharoensin had acquired ordinary shares of the Company across the 50%
trigger point of the Company’s voting rights in 2013 (details as shown in the table below, depicting the
shareholding structures of the Offeror at the point of crossing the 50% trigger until the case where they obtain
all the tender offered shares), the Wongcharoensin Group, therefore, has the obligation to announce a tender
offer according to ThorJor.12/2554 on the Rules, Conditions, and Procedures for the Acquisition of Securities
for Business Takeovers by the Capital Market Supervisory Board. (This does not include the newly issued
securities to be offered to PSP, which are 15,489,942 newly issued shares in compensation for the Entire
Business Transfer (“EBT”)) However, after receiving PSP’s entire business, if the Company is able to issue
the new shares to PSP at 34.28 Baht per share, which is equal to the Offer Price, within the tender offer period
(17 March 2017), the Wongcharoensin Group (legislative persons, individuals, or collectively) will not have the
obligation to announce another Tender Offer. Nevertheless, if the issuance of new shares to PSP in
compensation to the EBT is not completed within the tender offer period, and if some of the individuals of
Wongcharoensin Group who are shareholders of PSP and will receive distributed shares from the liquidation
of PSP, which results in the total number of shares held by Wongcharoensin Group cross 75% of the
Company’s total voting rights, the Wongcharoensin Group (legislative persons, individuals, or collectively) will
have the obligation to announce another tender offer.
On 11 January 2017, the Offeror had submitted the Tender Offer of Securities Form (Form 247-4) to
the Company, during which the Offeror holds collectively 13,536,240 shares or 51.273646% of the paid-up
shares and voting rights of the Company. Therefore, the Offeror shall tender offer the remaining 12,863,755
shares or 48.726354% of the the paid-up shares and voting rights of the Company. Nevertheless, there are 8
shareholders (see details in thetable showing the shareholding information of the individuals who do not intend
to accept the Tender Offer) who, as of 30 November 2016, held altogether 613,060 shares or 2.32% of the
paid-up shares and voting rights of the Company, had issued statements of intention not to sell their shares
during the Tender Offer period by signing 8 respective statements of intention. Thus, the remaining shares on
tender offer (excluding the 613,060 shares of the 8 shareholders) is equal to 12,250,695 shares or 46.40% of
the paid-up shares and voting rights of the Company, and will be tendered for 45 working days from 13 January
2017 to 17 March 2017.

7
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
Summary of the Opinions of the Independent Financial Advisor
The IFA had reviewed the Tender Offer for Securities Form 247-4 and other relevant documents of
the Company. The opinion of the IFA has taken into account the appropriateness of the Offer Price, and the
reasons for which the shareholders should accept and/or reject the tender offer. This can be summarized as
follows:
1) If the shareholders approve the EBT of PSP, the IFA is of the view that the shareholders should
reject the Tender Offer.
1.1) The value of CPL shares after the EBT of PSP is higher than the Offer Price
From the valuation of CPL shares after the EBT of PSP by using Sum of the Parts method from
the discounted cash flow of both CPL and PSP, the value of CPL shares is 36.87 Baht per share, which is
higher than the Offer priced of 34.28 Baht per share by 2.59 Baht per share, or equivalent to 7.56% higher
than the offer price. Details are in Case 2: CPL shareholders approve the EBT of PSP under Discounted Cash
Flow base-case.
1.2) Possibility of receiving dividends in the future
CPL’s business operations had been good and it allowed CPL to payout dividends to the
shareholders consistently as of 30 September 2016, the Company still has unappropriated retained earnings
of 446.44 MB. The Company has a policy to pay 60% of the yearly net profit. Thus, under going concern basis
without any significant changes, it is expected that the Company is still able to be profitable. The shareholders
who reject the Tender Offer still stand a chance to receive dividend payment from the Company.
In case that the shareholders’ EGM No. 1/2017 approve the EBT of PSP, the Company is inclined
to generate profit. As of 30 September 2016, CPL has a net loss, but when combining PSP’s business, the
Company’s net loss will turn into net profit.
2) If the shareholders disapprove the EBT of PSP, the IFA is of the view that the shareholders
should accept the Tender Offer.

2.1) The value of CPL shares if it maintains its current business as-is (Shareholders disapproves the
EBT of PSP)
From the valuation of CPL shares under the assumption that CPL maintains its current business as-is
(shareholders disapproves the EBT of PSP) using discounted cash flow approach, the value of CPL shares is
equal to 33.84 Baht per share, which is lower than the Offer Price of 34.28 Baht per share by 0.44 Baht per
share, or quivalent to 1.28% lower than the Offer Price. Details are in Case 1: CPL maintains its current
business as-is (shareholders disapproves the EBT if PSP).
2.2) Accepting the tender offer can be viewed as an option for the minority shareholders to mitigate
any risks or impacts that may arise in the future
Accepting the tender offer can be viewed as an option for the minority shareholders to mitigate any
risks or impacts that may arise after the end of Tender Offer such as the risk of losing influences to check and
balance in the Company if the Offeror controls more than 75% of the paid-up shares and voting rights of the
Company, risk of maintaining the listed status in the SET, and risk of lower liquidity.
8
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
3) Other factors to consider
To respond to the tender offer, the shareholders can consider the reasons and opinions on various
issues presented by the IFA. The final decision, however, is at the discretion of the shareholders.
Plans to sell Company’s shares
The Offeror does not intend to sell or transfer the securities received from the tender offer to other
individuals in significant amount within the 12-month period following the end of Tender Offer. The IFA is of
the opinion that if the shareholders’ EGM approves the EBT of PSP, the Offeror will collectively hold 69.29%
of the total number of shares after the EBT of PSP, and may receive more shares from the Tender Offer,
resulting in this percentage increasing to more than 69.29% of total shares. The IFA is of the opinion that after
the tender offer, the shareholders will have the risk that the Offeror may sell the shares of the Company to a
certain percentage no less than 50% of the total shares after EBT. This may reduce the market price of the
shares.
Company’s Future Business Plan
The IFA is of the view that the Offeror having no intention to significantly change the main business
of CPL, and in the case that the EBT is approved by the shareholder’s EGM, the Company will be a
manufacturer and distributor of personal protective equipment, which the Offeror has no plans or policies as of
yet, to change the main objective of PSP, are beneficial to the Company as it can continuously and smoothly
maintain both CPL and PSP’s operations. In case where the Offeror wishes to make any significant changes,
other than those stated during the Tender Offer, the Offeror will have to seek approval from the Board of
Director’s meeting and/or shareholders meeting in accordance, and/or other approvals in accordance with the
relevant laws, rules, and regulations in effect at the moment. Additionally, the Offeror has been having
controlling power of the Company all along, the shareholders should not have any increased risks arising from
the changes in operations from this Tender Offer.
Maintaining The Status of Listed Company and Free-Float on the Exchange
The IFA is of the view that if there are a lot of minority shareholders who accept the tender offer,
resulting in the Company having less than 150 minority shareholders, holding less than 15% of the paid-up
capital of the Company, this will result in the Company failing to satisfy the minimum free float criteria of the
listed company. The Company will then be required to rectify the issue within 1 year, and failing to do so may
result in additional fees paid to the SET on top of the regular fees, and faces a risk of delisting. Nevertheless,
the Offeror has no intention to delist the Company from SET. The IFA expects that, should such event happens,
the majority shareholders or the Offeror will proceed to rectify the issues. However, if the Offeror desires to
delist the Company from SET, the Offeror will have to announce another Tender Offer to allow the security
holders to tender their shares again.
In issuing new ordinary shares in compensation to the EBT of PSP, the Company will have to comply
with the SET’s Notification on the Rules, Conditions and Procedures Governing the Listing of Ordinary or
Preferred Shares Issued for Capital Increase B.E. 2558 (2015) (Bor.Jor./Ror.01-09) on the silent period for the
private placement shares, if the Company has a private placement at an offer price lower than 90% of the
market price (market price refers to the weighted average price of the traded shares in the SET in the past 7
to 15 working days, counting back from the day of the private placement.). Before the SET accepts and
9
Opinion of the Independent Financial Advisot on the Tender Offer of C.P.L. Group Public Company Limited’s Securities
registers the newly issued shares the Company need to prevent the individuals who receive the shares from
the private placement from selling the the received shares within 1 year, starting from the day the private
placement shares are traded in the SET. 6 months afterward, counting from the day the private placement
shares are traded in the SET, the individuals can sell 25% of the total number of shares on silent. This will
affect the liquidity of the Company’s securities for 1 year from the day the private placement shares are traded
in the SET. Thus, PSP shareholders who receive capital-raisign shares of CPL from the EBT of PSP will not
be able to sell the shares in this said period, and will not result in the risks of a drop in trading prices of CPL
shares arising from the selling of capital raising shares.
Check and Balances in the Company
The IFA is of the view that the Offeror receives a certain amount of tendered shares, resulting in the
Offeror holding more than or equal to 75% of the paid-up shares and voting rights of the Company, other
majority shareholders may risk being less likely to rally votes for check and balance on most key agendas and
decisions that requires more that ¾ of the total voting rights, such as increasing and decreasing capital or
acquisition and disposal of assets.
Other Essential Information
In case that the shareholders’ EGM No. 1/2017 resolves to approve the EBT of PSP, the Company
shall, in compensation for PSP’s entire business, issue 15,489,942 new ordinary shares, which will result in
the Offeror’s shareholding percentages increasing to 69.29% of the paid-up shares of the Company.
The IFA is of the opinion that the advantages and disadvantages of the EBT of PSP are as follows:
Advantages of Engaging in the EBT of PSP: (See details in 3.3 Other Considerations, Benefit of engaging in
the EBT of PSP)
1) Chance to invest in a Business with growth potential and high returns
2) Revenue, Net Profit, and Size of CPL will increase immediately
3) Diversification reduces CPL’s dependency on one business
4) Shareholders will not be affected by Price Dilution
Advantages of Engaging in the EBT of PSP: (See details in 3.3 Other Considerations, Disadvantage of
engaging in the EBT of PSP)
1) Control Dilution Effect from the Private Placement of newly issued capital raising shares.
Risks from Engaging in the EBT of PSP: (See details in 3.3 Other Considerations, Risks from engaging in the
EBT of PSP)
1) Risks from the conditions precedent not being fulfilled
2) Risk of conflict of interest from transferring rent and purchasing agreements between connected
parties of CPL
3) Risks of maintaining listed status and the liquidity of the Company’s shares
4) Risks from the market price of CPL dropping because Wongcharoensin Group sells off some shares
after the EBT of PSP after the Tender Offer.
5) Risks from uncertainties in the performance PSP arising from exchange rates
10