Information Memorandum MCOT PUBLIC COMPANY LIMITED (MCOT) Head Office: No. 63/1 Rama IX Road, Kwaeng Huaykwang, Khet Huaykwang, Bangkok 10320 Tel. 0-2201-6000 Fax. 0-2245-1851 Website: http:www.mcot.net Listing Date As at 17 November 2004 (Trading commencement on 17 November 2004) Listing Securities No. 767,000,000 of ordinary shares. 5 Baht par value per share. Total registered capital 3,835,000,000 Baht. No. 687,099,210 of paid up ordinary shares. 5 Baht par value per share. Total paid up capital 3,435,496,050 Baht. Secondary Market Stock Exchange of Thailand Offering Price 22 Baht Details are as follows: - MCOT Public Company Limited offers its 70,000,000 new ordinary shares, or 10.2 per cent, of the total fully-paid up shares post-offering - The Ministry of Finance offers its 51,000,000 existing ordinary shares of MCOT Public Company Limited, or 7.4 per cent of the total fully-paid up shares post-offering - Phatra Securities Company Limited allocates the over-allotment shares in an amount of 18,000,000 shares by borrowing the whole amount of over-allotment shares from the Ministry of Finance for delivering to persons whom are allotted the over-allotment shares Type of Business and Nature of Operation MCOT Public Company Limited ("MCOT") is a large mass communications operator with its own television, radio, and electronic medias providing mass communication services through its various medias: Modernine TV and 62 MCOT network radios in the central and regional areas. Moreover, MCOT has a news agency (Thai News Agency) to offer news services, and functions as the Company's major program producer. In addition, it has also co-operated with other private operators under joint operation programs in two major businesses : namely, Thai TV Channel 3 and a Pay TV service with UBC Group. The Company has also signed a long-term agreement with a private sector operator to rent airtime for broadcasting programs and ads on its F.M. 105.5 MHz. Environmental Impacts - None - Summary of Material Contracts There are 4 main agreements relating to the Company's businesses which can be summarized as follows: 1. The Color TV Joint Operation Agreement with Bangkok Entertainment Company Limited ("BEC") dated 28 April 1978, the 1st Amended Agreement dated 13 September 1982, the 2nd Amended Agreement dated 16 July 1987 and the 3rd Amended Agreement dated 2 May 1989 Contract value : BEC agrees to pay approximately 3,356 million Baht to MCOT for the joint color TV operations Objective of the Agreement : MCOT and BEC jointly agree to manage the broadcast in central and provincial regions using the constructions, premises and equipment for a total of 40 years starting from 26 March 1980 to 25 March 2020. Summary of material contents of the Agreement 1.1 Scope of joint operation and joint investment BEC has joined the TV broadcast operations with Thai Television Co., Ltd., since 1968. The rights to operate a color TV channel were transferred to the Mass Communications Organization of Thailand in 1977 according to the Royal Decree Establishing the Mass Communications Organization of Thailand, B.E 2520. In 1985, the cabinet resolved to allow MCOT to expand its service in the provincial area. BEC played a part in this expansion with MCOT as BEC agreed to build TV broadcast station to transmit signals from MCOT's central station to 22 provincial stations. In 1989, the cabinet passed a resolution to allow MCOT to expand its regional TV service to 9 provinces as well as to invest, install, control and maintain the equipment so that MCOT could broadcast programs. In return for the investment, MCOT has agreed to let BEC join the broadcast in the provincial areas using the constructions, premises and equipment for 40 years starting from 26 March 1980 to 25 March 2020. 1.2 Construction of stations and procurement of station equipment BEC completed the construction of a central broadcasting station to broadcast Channel 3 color TV in 1970. The station was later transferred to MCOT together with the transfer of Thai Television Co., Ltd.'s businesses to MCOT. BEC was responsible for the investment and the construction of a color TV transmission station to transmit signals from MCOT's central station as well as the procurement of equipment for 31 stations in which MCOT was responsible for the determination of the details and conditions of stations. 1.3 Station maintenance by BEC BEC is required to continually update and modernize equipment. BEC must conduct its own mechanical work and must maintain its own equipment and facilities including antennas and other joint-operated equipment. BEC must repair parts upon expiration or replace them to ensure that they remain in good conditions all the times. MCOT or the designated person shall have rights to check and request for technical repair at any time. (1) BEC must take out an all-risk insurance for its properties and properties it jointly shares with MCOT for an insured sum and under insurance conditions with an insurance company approved by MCOT whereby MCOT is the beneficiary throughout the contract term. (2) MCOT will deliver compensation from defective or lost properties it receives to BEC for the latter to provide, build or replace. In the event that the compensation amount falls short, BEC will be solely responsible for that. 1.4 Transfer of property ownership (1) Ownership of all properties and premises employed by BEC for the operations of the Channel 3 broadcast service or the central broadcast service has already been transferred to MCOT. (2) All structures built on 31 properties plus all properties (except capital) which BEC has made or procured for the operations have been transferred to MCOT starting from the day it so built or procured. 1.5 BEC's rights after the ownership transfer (1) MCOT has extended BEC's right to broadcast in the central region to end on 25 March 2020. (2) MCOT has allowed BEC to jointly broadcast for the provincial areas using premises and equipment built by BEC where BEC will pay operation expenses and the term will end at the same time as the broadcast term in the central area. (3) With regard to properties built and transferred to MCOT, should there be any one intervening such rights, BEC will be the responsible person to protect, intervene or defend the rights for MCOT at its own costs. 1.6 Collection of payments and shared revenues BEC must pay an annual remuneration to MCOT as per the rate stated in the agreement. BEC and MCOT equally share public utilities expenses, e.g., road which cannot be concretely allocated. 1.7 Termination of the Agreement In the case that BEC cannot comply with any clause of the Agreement, MCOT will notify BEC in writing to duly comply therewith by granting it a reasonable time. However, if BEC fails to rectify it within the said period, BEC must inform MCOT its reason in writing. After MCOT considers the clarification, it will notify BEC to rectify and comply therewith once again within a due time. If BEC still cannot rectify it within the latter schedule, MCOT is entitled to demand damages and/or suspend the broadcast and/or terminate the Agreement immediately. 1.8 Dispute Settlement Should there be any dispute or conflict relating to this Agreement between MCOT and BEC, the two parties agree to refer the case to the arbitration. The arbitrator's award shall be final and binding the two parties. 2. The Pay TV Joint Operation Agreement with United Broadcasting Corporation Public Company Limited ("UBC") dated 17 April 1989, the 1st Amended Agreement dated 19 May 1994 and the 2nd Amended Agreement dated 17 April 1998 Contract Value: UBC agrees to pay a remuneration for the joint operation of Pay TV service to MCOT throughout the term of the Agreement for at least 420.44 million Baht (excluding value-added tax) Summary of material contents of the Agreement 2.1 Scope of the joint operation and joint investment MCOT agrees to let UBC jointly operate the Pay TV service where UBC must pay at least 50 million Baht operation expenses to procure equipment necessary for the service under MCOT's behalf before transferring the ownership thereof to MCOT. MCOT will seek approval for two more communication frequencies from the National Commission on Coordination and Management of Radio Frequencies (the "Commission") totaling five frequencies for use in the operations. Originally, UBC has a right in three communication frequencies approved by the Commission. 2.2 Joint Operation period The total period is 25 years starting from 1 October 1989 to 30 September 2014. UBC may not let others operate on its behalf unless otherwise approved in writing by MCOT. 2.3 Payment of remunerations UBC agrees to pay 6.5 percent of the total annual revenues before any expense deduction as a remuneration of the joint operation to MCOT. However, this shall not be lower than the minimum remuneration each year, which, throughout the agreement, the remuneration will not be lower than 420,440,000 Baht (excluding value- added tax). Besides, UBC also agrees to pay remuneration for the permission to expand its service according to the 1st Amended Agreement for a total of 20 million Baht (excluding value-added tax). 2.4 Fines In the case that UBC fails to pays the remuneration on the due date, UBC is required to pay an interest at the rate of 15 percent per annum to MCOT and if the delay is more than 60 days, MCOT is entitled to terminate the Agreement. 2.5 Property insurance UBC shall insure the properties relating to its operations under this Agreement upon MCOT's approval where MCOT will be the beneficiary throughout the term of the Agreement. 2.6 Letter of Guarantee UBC must place a bank's guarantee worth 5 million Baht to MCOT on the signing date as a performance bond for the agreement to deliver tools and equipment as the ownership of MCOT. 2.7 Exercise of the rights to terminate the Agreement MCOT may terminate the Agreement in the case that UBC fails to comply with any clause of the Agreement where MCOT will notify UBC in writing to duly comply therewith by granting a reasonable time. If UBC fails to rectify it within the said period, MCOT is entitled to demand for damages and/or suspend the service and/or terminate the Agreement immediately. 2.8 Effect of the end of the Agreement Upon the end of the Agreement by any reason, UBC must return all properties as well as transmission equipment to MCOT within 60 days in a good condition without any defect and still operational. If UBC fails to do so within the period, UBC agrees to compensate 20,000 Baht daily to MCOT or 0.2 per cent of the value of properties not yet returned thereto, whichever is higher, until the return is completed. 2.9 Dispute Settlement Should there be any dispute or conflict relating to this Agreement, each party agrees to appoint arbitrators to give a final award to such dispute or conflict. The arbitrator's award shall be final and binding the two parties. 2.10 Approval to resolve UBC's loss According to the 2nd Amended Agreement, MCOT approves solutions to resolve losses suffered by UBC and UBC Cable Network Public Company Limited, (formerly named Thai Cable Vision Public Company Limited), another MCOT's joint cable TV operator by allowing the two companies to share the administration, resources, investment and services to their members. 3. The Pay Cable TV Joint Operation Agreement with UBC Cable Network Public Company Limited ("UBC Cable") dated 6 June 1994, the 1st Amended Agreement dated 7 September 1994, the 2nd Amended Agreement dated 9 November 1994 and the 3rd Amended Agreement dated 17 April 1998 Contract Value: UBC Cable agrees to pay a remuneration for the joint operation of the Pay Cable TV service to MCOT worth 575 million Baht (excluding value-added tax) Summary of material contents of the Agreement: 3.1 Scope of the joint operation and joint investment MCOT agrees to allow UBC Cable to jointly operate the Pay TV service where UBC Cable must pay at least 100 million Baht operation expenses to procure equipment necessary for rendering the service under MCOT's behalf and to transfer the ownership thereof to MCOT. The equipment whose the ownership must be transferred to MCOT prior to the operation under the Agreement must be valued at not less than 50 million Baht. 3.2 Joint Operation period The total period is 25 years starting from 1 October 1995 to 31 December 2019. UBC Cable may not assign its rights and obligations thereunder, unless otherwise approved in writing by MCOT. 3.3 Payment of remunerations UBC Cable agrees to pay 6.5 per cent of the total annual revenues before any expense deduction as a remuneration of the joint operation with MCOT. However, this shall not be lower than the minimum remuneration each year, which, throughout the agreement, shall not be lower than 575 million Baht. 3.4 Fine and penalty In the case that UBC Cable fails to pay the remuneration to MCOT on the due date, UBC Cable shall pay an interest at the rate of 15 percent per annum to MCOT and if such failure has clasped for more than 60 days, MCOT is entitled to terminate the Agreement. 3.5 Property insurance UBC Cable shall purchase an all-risk insurance, which shall remain effective through as the term the agreement, for properties UBC Cable has transferred or will transfer the ownership thereof to MCOT with an insured sum, and insurance conditions, and with an insurance company as approved by MCOT, to which MCOT will be the beneficiary. 3.6 Letter of Guarantee On the execution date, UBC Cable shall deliver to MCOT a letter of guarantee issued by a bank in the form specified by MCOT amounting to 10 million Baht as a performance guarantee for the agreement. UBC Cable agrees to allow MCOT to terminate the agreement and foreclose the guarantee immediately. 3.7 Exercise of rights to terminate the Agreement MCOT may terminate the Agreement in the case that UBC Cable fails to comply with any clause of the Agreement. MCOT will notify UBC Cable in writing to duly comply therewith by granting a reasonable time and if UBC Cable fails to rectify it within the period, MCOT is entitled to demand damages and/or suspend the service and/or terminate the Agreement immediately. 3.8 Effect of the end of the Agreement Upon the end of the Agreement by any reason, UBC Cable must return all properties and equipment as well as transmission equipment to MCOT within 60 days in a good condition without any defect and still operational . If UBC Cable fails to do so within the period, UBC Cable agrees to compensate 20,000 Baht daily to MCOT or 0.2 percent of the value of property not yet returned thereto, whichever is higher, until the return is completed. 3.9 Dispute Settlement Should there be any dispute or conflict relating to this Agreement, each party agrees to appoint arbitrators to give a final award to such dispute or conflict. The arbitrator's award shall be final and binding the two parties. 3.10 Approval to resolve UBC's losses UBC and UBC Cable, which is another Pay TV joint operator of MCOT, suffered huge losses from the Pay TV joint operation. MCOT approves the solutions to such operation losses. The two companies are allowed to share the administration, resources, investment and services to their members. 4. The Air Time Rental Agreement for the Production of Programs and Advertisement with Bangkok Entertainment Company Limited ("BEC") Summary material contents of the Agreement: 4.1 The party agrees to let BEC rent airtime to provide programs and offer advertisements at MCOT's Bangkok FM 105.5 MHz station where it shall be in accordance with regulations of the authorities and the station. 4.2 BEC must entirely improve technical efficiency of MCOT's radio station within 2 years starting from the signing date (22 September 1994). When this is completed, BEC must notify MCOT to deliver equipment it additionally procures or replaces to transfer the ownership thereof to MCOT after the latter completes the counting process by MCOT. 4.3 BEC will operate the following itself regarding the production of programs and advertisements where it may not dispose of its rights hereunder to anyone unless otherwise approved in writing by MCOT. - Station's airtime: every day as determined by the governmental authorities - Leased airtime: every day for 18 hours each day - Program production must be done on behalf of MCOT and according to program scheduling approved thereby or station manager - Program producers must be fully qualified according to the regulations of the governmental authorities and the station where contents, quality of programs and technical contents must be up to broadcasting standard approved by MCOT or station manager - Advertisement must be according to the regulations of the governmental authorities or the station - Should there be any technical problem in the broadcasting activity, BEC will not be entitled to any deduction of expenses, remunerations or airtime rentals unless MCOT approves so. 4.4 BEC will provide qualified staff and other personnel for the operation at its own costs. BEC must submit names, photos and resumes of the persons for MCOT or station manager for approval. Should the persons cause any damage to MCOT or the third party, BEC must be liable thereto. 4.5 BEC agrees to pay airtime rentals and expenses to MCOT as follows: (1) Operation expenses (2) Monthly rentals (excluding VAT) within the end of the broadcasting month. Monthly rental in February 1996 was 300,000 Baht a month and the rentals will be adjusted at a rate of 10 per cent per annum 4.6 BEC will have to place a bank' s guarantee in the form as determined by MCOT amounting to three times a monthly rental within 15 days from the day MCOT notifies in writing. 4.7 BEC shall perform the following: (1) Be responsible for repair and maintenance, fixing, change or replacement of tools, equipment, devices and properties of MCOT to ensure that they are in good condition throughout the term of the Agreement based on professional principles by skilled craftsmanship with the same or better quality parts and replacement upon MCOT's approval; and (2) Purchase insurance policy for MCOT's properties according to the insurance conditions and with the insurance company approved by MCOT where MCOT shall be a beneficiary for an amount of at least 3 million Baht throughout the term of the Agreement. 4.8 Should anyone intervene the rights to properties now belonging to MCOT, which is considered an interference to MCOT, or should the property be repossessed or taken away or claimed by any reason, BEC must be responsible for, protect, intervene or defend it on behalf of MCOT and pay the expenses thereof including all costs and expenses, lawyer's fees (if any) and all damages. 4.9 Pre-termination of the Agreement - If the Color TV Joint Operation Agreement between MCOT and BEC is terminated by any reason before the term thereof, this Agreement shall also be considered terminated. - If the renter breaches any clause hereof, MCOT is entitled to make a warning or terminate the Agreement as deemed appropriate and to foreclose all or part of the guarantees as MCOT deems appropriate and may legally demand damages from the renter. - During the term of the Agreement, should BEC have any juristic act with MCOT which still remains applicable between each other and it appears that BEC breaches any other agreements, it will be considered that BEC defaults the Agreement and MCOT is entitled to terminate it. Feasibility Study - None - Technical and Management Assistance - None - Future Projects 1. The building renovation and landscape refurbishment project (more)