News Detail

Date/Time
01 Jun 2021 17:05:00
Headline
Disclosure of Connected Transaction - Technical Service Agreement ( concerning magnesium product) (revised the disclosure reported on 21 April 2021)
Symbol
TMW
Source
TMW
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                Connected transaction

Disclosure of Connected Transaction - Technical Service Agreement ( concerning  
magnesium products)
1.    Date of Transaction
After approval by Annual General Meeting of shareholders 2021 of the Company 
which the company expects the meeting  to be held in July 2021 and will notify
the date of the meeting later.

2.    Relationship between the Company and Mitsuwa Electric Industry
Name of business contract    :    Technical Services Agreement (for magnesium parts)
Service receiver    :    Thai Mitsuwa Public Company Limited ("TMW")
Service provider    :    Mitsuwa Electric Industry Company Limited ("MEI")
Relationship between contract  parties    :    Mitsuwa Electric Industry Company 
Limited is the major shareholder of TMW.     According to the shareholder book
as at 31 March 2021, MEI holds 23,640,300 shares or 59.25% of issued and fully
paid-up and registered share capital of TMW.
           At present, Mitsuwa Holding Co;Ltd.("MEI-HD")  is the major 
shareholder of Mitsuwa Electric Industry Co; Ltd. , holding 300,000 shares  or
100% of  issued and fully paid-up and registered share capital of MEI.    MEI-HD
was established on 1 April 2020 by the group of "Ultimate Shareholders"  :
Yamada family group.
          MEI's existing shareholders including the ultimate shareholder group 
purchased MEI-HD shares through setting up the  holding company.
          According to the new shareholding structure as mentioned above, the 
connected transaction between TMW and MEI have connected persons as TMW's
shareholders as follows:
1.    Mr.Hiroshi  Yamada (shareholding 16.52% in ME-HD and 8.79% in TMW)
2.    Mr.Hiroto  Yamada (shareholding 8.73% in MEI-HD and 2.69% in TMW)
3.    Ms.Haruka  Yamada (shareholding 6.47% in MEI-HD and 0.15% in TMW)
4.    Mrs.Yukako  Yamada (shareholding 14.13% in MEI-HD)
                All  hold 11.63% in TMW 's issued and fully paid-up
     and registered share capital of TMW and  hold  45.85% in
     MEI-HD.
            In addition, the connected transaction between TMW and
 MEI has the connected persons as TMW's directors as follows:
1.    Mr. Hiroshi Yamada (Director of MEI and Director of TMW)
2.    Mr. Naoki Yamada (Director of MEI and Director of TMW)
        
        
The transaction above is a connected transaction as specified in Category 4 
transaction pertaining to assets or services according to Notification of the
Capital Market Supervisory Board No. Tor Chor 21/2551 Re: Rules on Connected
Transactions and Notification of the Stock Exchange of Thailand Re: Disclosure
of Information and Other Acts of Listed Companies Concerning the Connected
Transactions BE 2546.

3.    Characteristic of Transaction
    In accordance with the resolution of the Board of Directors Meeting No. 1/2021 
held on April 21, 2021, the Board of Directors has approved TMW to renew the
technical service agreement. (concerning magnesium products) with MEI, a
connected person, as a major shareholder of the company. The agreement has a
5-year contract, commencing from August 1, 2021 to July 31, 2026, and proposing
to the shareholders' meeting for consideration and approval of the technical
service agreement in the next order.
According to the Board's resolution No.1/2021 on 21 April 2021, it approved TMW 
to have sign the Technical Service Agreement with MEI is major shareholder of
TMW to continually renew it  from the date of August  1, 2021 to July 31, 2026
for five-year term  and put forward the transaction into TMW's AGM for
consideration.
Matter of the contract
Name of business contract        Technical Services Agreement (concerning magnesium 
products)
Date of signing the contract        After receiving approval from the Annual General 
Meeting of     
                    Shareholders for 2021, which will be held in July 2021, and
                    MEI 's  approving the transaction.
Dates of starting & ending            August 1, 2021 - July 31, 2026
Contract term                5 years (five years)
Essence of the contract            1)  MEI shall provide technical services to TMW, 
including
                            consultation and training on production and marketing.                             Moreover, 
it shall provide support on personnel to  transfer                             its experience and
knowledge to its employees as well.
                            2)   The agreement cannot be transferred or assigned to                             other 
people without prior consent in writing from the other
                            Parties.
                    3)   In case there is a revision in this contract, it shall be 
                        executed in writing and signed by the both parties.
                                  In the services, MEI shall provide and support TMW with 
                            information and  advice as follows :        
                            *   Business related to the products, including the sale of the 
products and manufactured, purchase of materials and                             procurement
of materials.
                    *    Procurement, installation, commissioning and operation
                    of the machinery including  maintenance.
                    *    Production, organization, solution, improvement on                         production, 
techniques and efficiency and other technical                         advice.
                    *    New products and product development, including                         supporting on 
drawings and new moldings.
                    *   Personnel training and management.
Remuneration                At the rate of 3% of monthly net sales of magnesium 
products, excluding costs of insurance, sales tax, duty stamps                     and
other expenses.
Payment                It shall be paid quarterly and due within 30 days from the end of 
each quarter, by transferring the amount in baht currency or in yen
                        currency and/or other currencies as the both parties agreed.
                        (In practice Payment date or transfer date will use the
                        compensation calculated in Thai baht converted to the desired
                        currency at the Counter Rate exchange rate on the date of transfer).
Transaction worth                Estimated remuneration over the 5-year contract based on 
sales                         estimates estimated by TMW's management during 2021 - 2026 is
                        equal to 162.42 million baht.

4.    Total Worth and Criteria to Determine Total Worth
Total consideration value for technical service (concerning magnesium products),
TMW is to pay MEI at the rate of 3% of the magnesium product sales in
accordance with the terms of the Technical Service Agreement (concerning
magnesium products). The management estimates that there will be the sales of
magnesium products for 5 years of approximately 5,414 million baht according to
the table below.


Year
(1 August - 31 July )    Estimated the sales of magnesium products (Million 
Baht)    Remuneration at rate 3.00%
(Million Baht)
2021 - 2022    1,215.00    36.45
2022 - 2023    1,130.00    33.90
2023 - 2024    1,024.00    30.72
2024 - 2025    997.00    29.31
2025 - 2026    1,068.00    32.04
Total    5,414.00    162.42

From the table above, calculating the size of estimated remuneration  for over a
period of 5 years above between August 1, 2021 to July 31,2026, totaling 162.42
million baht approximately or 6.71% of net tangible assets (NTA) of TMW's
reviewed financial statement as of March  31, 2021 with  calculating NTA
amounting to 2,420.49 million baht.
NTA     = Total assets  minus  Total  liabilities  minus Intangible assets
    = 3,293.31 million baht minus 844.15 million baht  minus  28.66  million baht
    = 2,420.49 million baht
Calculating the transaction size  3% of 2,420.49 million baht  =  72.61 million 
baht.
Total estimated remuneration = 162.42 million baht  more than 72.61 million 
baht.

5.    Details and Scopes of interest of the Transaction
The connected transaction as specified in Category 4 transaction pertaining to 
assets or services. The transaction are estimated to be over 20 million baht or
more than 3 percent of Net tangible assets of the Company. The Company is thus
requires to disclose the transaction to the SET, and to obtain approval for
entering into the transaction from the shareholders' meeting with the votes of
at least three - fourth of the total votes of shareholders, excluding
shareholders with vested interest.  Moreover, The Company appoint an independent
financial advisor to give opinion in regards to reasonableness of entering into
the transaction and appropriateness of the price and conditions of entering
into the transaction to TMW's shareholders for consideration and approval of the
 transaction.

6.    Detail Concerning Connected Persons
MEI is the major shareholder with holding 23,640,300 shares or 59.25% of TMW's 
paid-up and registered capital as at March 31, 2021.   The connected persons are
TMW's director and TMW's shareholders are  Yamada family with details as
follows :
1).    Mr.Hiroshi Yamada    is managing director of TMW, holding 3,506,000 shares in 
TMW (as at March 31, 2021) or 8.79% of paid-up and registered capital and is
director in  MEI-HD, holding in  MEI-HD 49,550 shares (as at April 1, 2020) or
16.52% of  MEI-HD's paid-up and registered capital.  In addition, he is also a
director of MEI and the authorized director of TMW, MEI and MEI-HD.
2).    Mr.Hiroto Yamada    holding 1,075,000 shares in TMW (as at March 31, 2021) or 
2.69% of paid-up and registered capital and holding in MEI-HD 26,190 shares (as
at April 1, 2020) or 8.73% of  MEI-HD's paid-up and registered capital.
3).    Ms.Haruka Yamada    holding 60,000 shares in TMW (as at March 31, 2021) or 
0.15% of paid-up and registered capital and holding in MEI-HD 19,420 shares (as
at April 1, 2020) or 6.47% of  MEI-HD's paid-up and registered capital.
4).    Mrs.Haruka Yamada    No  shareholding  in TMW ; holding shares in MEI-HD 42,380
shares (as at April 1, 2020) or 14.13% of MEI-HD's issued and fully paid-up and
 registered capital.    In addition, she is also a director of MEI.

Yamada family holds total 4,641,000 shares or 11.63 % of TMW's issued and fully 
paid-up and registered capital and holds  total  137,540 shares  or 45.85% of
MEI-HD's fully paid-up and registered capital.
Currently, the company has a director who sits   in the director position who 
has the same surname as the Yamada family :  Mr. Naoki Yamada, who was appointed
as the Company's director at the 2019 AGM on July 26, 2019.   At that meeting,
Hiroshi Yamada clarified that Naoki Yamada had no relationship with the Yamada
family, he was just a person with the same surname and did not hold the shares
of the Company in any way. The said director is also a director of MEI, which is
also considered a connected person.Shiyamada clarified at the meeting that
Naoki Yamada was not related to the Yamada family, he was just a person with the
same surname and does not hold shares of the Company in any way. The said
director is also a director of MEI, who is considered a connected person.

7.    Board's Opinion
TMW's entering the transaction will be very beneficial for business operations 
that  require  assistance and factors including marketing, technology, product
quality development and skillful personnel from Japan to promote product
satisfaction  for  customers which will encourage the core business; and
considering the remuneration rate 3% of projected sales of magnesium products
for five-year term by the contract, amounting to 162.42 million baht , obliged
to pay to MEI according to the contract , is  appropriate  when compared with
the existing rate in the same industry.

8.    Audit Committee' s Opinion
There are no different opinions from the company Board.
    
        sign
    (Mr.Tetsuji  Takeguchi)
    (Company  Secretary)
______________________________________________________________________
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