sells "Thani" franchise unit to Royal Princess

Dusit Thani Plc (DTC) will enter into a connected transaction, selling its "Thani" franchise unit to Royal Princess Plc, its affiliate. DTC said that the franchise unit operates the franchise business under the name "Thani", which licenses the hotel business under the name "Thani", gives consultant services in operating the hotel business and assistance in setting up the hotel management system, and renders hotel reservation services though the reservation system for the member hotels. The assets to be sold comprise the licensing contract with 14 hotels in the Thani chain, 6 officials in the unit, and the assets of the franchise business. DTC said that the selling price is expected to be at least Bt12.049 million. The payment date will be determined on the contract date which the company will report later. The criteria used in setting the price, said DTC, comprises firstly the appraised value of the income worth Bt11,366,845 using discounted cash flow. The projection period of the income is 13 years which are the remaining period of the contract license and the 5-year extended period of the contract. The discounted cash flow used is 15.89%, which is an average return on investment in the hotel stocks in the Stock Exchange of Thailand. Another criteria used is the book value of the assets of the franchise unit worth Bt682,826. Royal Princess Plc is an affiliate company in the Dusit Thani Plc group. The company was set up on November 17, 1992 with a registered capital of Bt750 million, paid up by Bt600 million. Royal Princess operates a four-star hotel and hotel management business. DTC holds 47,789,945 shares in Royal Princess Co, representing its 79.65% stake. DTC said it expected to receive benefits from the sales by receiving the proceeds whihc will be used for its working capital. DTC added that in selling the franchise unit to Royal Princess Plc, DTC can restructure its business to be more appropriate. That is, the target group of the franchise unit is closed to the target group of Princess group. The services standard of the hotels in the franchise unit is also different from those of Dusit Thani group of hotels. In addition, the management and policy planning of the franchise unit and of the Princess group of hotels will be more effective. Finally, the sales will help support the business of Royal Princess which will in turn be beneficial to DTC in the long run. Translated by the Nation