02 Jun 2021 13:12:00
Disclosure of Connected Transaction - Technical Service Agreement ( concerning magnesium product) (revised the disclosure on June 1,2021 no.6 (4)
Connected transaction Disclosure of Connected Transaction - Technical Service Agreement ( concerning magnesium products) revised the disclosure report on June 1,2021 at no.6 - (4) 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.Yukako 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) ______________________________________________________________________ This announcement was prepared and disseminated by listed company or issuer through the electronic system which is provided for the purpose of dissemination of the information and related documents of listed company or issuer to the Stock Exchange of Thailand only. The Stock Exchange of Thailand has no responsibility for the correctness and completeness of any statements, figures, reports or opinions contained in this announcement, and has no liability for any losses and damages in any cases. In case you have any inquiries or clarification regarding this announcement, please directly contact listed company or issuer who made this announcement.