/12 - 12 - 11. INVESTMENT IN OTHER COMPANYS NAMES TYPE OF PAID-UP OWNERSHIP INVESTMENT INVESTMENT BUSINESS CAPITAL (%) COST METHOD EQUITY METHOD DIVIDENDED 1998 1997 1998 1997 1998 1997 Baht Baht Baht Baht Baht Baht Asia Investment (1995) Co., Ltd. Explore and US$ 200,000 20.00 1,018,200 1,018,200 1,018,200 1,018,200 - - Produce Zinc Asean Potash Holding Co., Ltd. Produce and 395,967,000 2.52 10,010,000 10,010,000 10,010,000 10,010,000 - - distribute Potash mineral mineral Millennium Gold Corporation Explore and CAN $ 9,917,857 7.56 4,441,626 4,441,626 4,441,626 4,441,626 - - Co., Ltd. Gold mineral Canal National Fertilizer Public Co., Ltd. Produce and 4,744,561,390 2.65 125,737,100 125,737,100 125,737,100 125,737,100 - - distribute Fertilizer Less Unrealized loss on non-current marketable security (85,501,228) (82,986,486) (85,501,228) (82,986,486) - - 40,235,872 42,750,614 40,235,872 42,750,614 - - Total investment in other companies 55,705,698 58,220,440 55,705,698 58,220,440 - - .../13 - 13 - 12. PROPERTY, PLANT, AND EQUIPMENT - NET Property, plant and equipment - net consist of the following: CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Land 260,924,099 261,024,098 254,434,036 254,434,036 Land improvement 170,146,237 168,483,121 165,567,248 165,567,247 Buildings 1,640,534,665 1,919,532,972 1,467,925,991 1,467,740,991 Buildings improvement 4,081,870 8,664,484 - - Machinery 3,860,074,996 4,330,971,008 3,484,182,776 3,472,371,747 Heavy equipment 131,343,792 133,631,059 116,132,512 116,132,512 Equipment, furniture and fixtures 312,558,141 296,132,574 285,621,257 265,090,607 Vehicles 34,927,182 37,119,570 29,795,440 28,585,377 Mine improvement and development 2,415,573 2,415,573 2,415,572 2,415,573 Other structures 295,052,720 255,045,261 295,052,720 255,045,261 6,712,059,275 7,413,019,720 6,101,127,552 6,027,383,351 Less Accumulated depreciation and depletion (3,305,270,538) (2,907,439,178)(2,819,170,215) (2,494,887,689) 3,406,788,737 4,505,580,542 3,281,957,337 3,532,495,662 Buildings and equipment under construction 59,560,444 62,965,849 59,560,444 50,596,080 3,466,349,181 4,568,546,391 3,341,517,781 3,583,091,742 Depreciation and depletion for the year 413,706,774 415,731,540 330,881,970 331,413,759 The value of certain items of property, plant and equipment of subsidiaries and associated companies in the 1998 consolidated accounts above include provisions for diminution (see Note 24). 13. OTHER ASSETS Other assets consist of the following: CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Start-up cost (net) 15,993,520 23,609,097 15,993,520 23,609,097 Excess of development stage expenses over revenues (net) 13,172,902 42,756,040 13,074,531 24,477,253 Assets and data from other companies (net) 411,401 822,802 411,401 822,802 Deposits and installment payments for condominium units 74,932,723 - - - Less Provision for diminution of deposits and installment payment for condominium units (74,932,723) - - - 29,577,823 67,187,939 29,479,452 48,909,152 /14 - 14 - CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Deposits and Government enterprise bonds 6,807,160 28,398,221 3,592,233 1,557,284 Financial advisory fees - 25,922,161 - 25,922,161 Special prospect license fee 16,986,510 10,812,381 - - Exploration expenditures 145,113,530 222,699,269 - - Others 7,956,515 62,426,491 7,521,847 50,817,323 176,863,715 350,258,523 11,114,080 78,296,768 206,441,538 417,446,462 40,593,532 127,205,920 Baht 75 million deposits and installment payments for condominium units as at December 31, 1998, as shown above, is of a subsidiary company. Construction of such condominium units was suspended due to the countrys unstable economy and decline in the real estate property market, a full valuation provision has been be provided against such amount by such subsidiary in the year ended December 31, 1998. The consolidated financial statements as at 31 December 1998 include exploration expenditures of a subsidiary that have been deferred and will be written off as expenses when the outcome of the mineral area exploration are known. In 1998 and 1997 the exploration expenditures and special prospect license fee of Puthep Co., Ltd amounting to Baht 162 million was suspended. The company is currently searching for joint venture partners to provide funding for continuation of exploration. The recoverability of deferred exploration expenditure is dependent upon the successful result of future exploration, the result of which is not known at the date of this report. The exploration expenditures and special prospect license fee of a subsidiary in the consolidated financial statements as at December 31, 1997 amounting to Baht 62 million which are deferred and will be written off or amortized as expenses when the outcome of exploration is known. In the year ended December 31, 1998 the subsidiary has written off such deferred expenses in full due to such mineral area exploration can not be successfully developed. At December 31, 1998, the following exploration and deferred expenditures were written off: CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Capitalised exploration expenditure 93,572,375 - 31,302,794 - Other deferred costs 11,995,058 - 11,995,058 - Capitalised financing expenditure of former arrangements 12,870,152 - 12,870,152 - Total 118,437,585 - 56,168,004 - /15 - 15 - 14. BANK OVERDRAFTS AND SHORT TERM LOANS FROM FINANCIAL INSTITUTIONS CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Bank overdrafts 27,993,460 69,471,847 - 2,508,190 Promissory notes 30,098,212 1,163,693,104 - 1,078,676,000 Trust receipts 218,223,401 660,946,863 218,223,401 557,308,222 276,315,073 1,894,111,814 218,223,401 1,638,492,412 Short-term borrowings are unsecured. 15. TRADE ACCOUNTS CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht 61,444,585 209,240,946 146,334,385 247,089,942 61,444,585 209,240,946 146,334,385 247,089,942 16. BORROWINGS CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Current portion of Long term loans 1,527,899,675 1,065,088,071 1,275,399,674 753,838,071 Non Current portion of long term loans 1,497,627,456 1,728,868,200 1,497,627,456 1,728,868,200 3,025,527,131 2,793,956,271 2,773,027,130 2,482,706,271 16.1 The Company has entered into an Override Agreement dated October 7, 1998 with 9 financial institutions consisting of 4 local long-term loan lenders and 5 overseas short-term loan lenders. The agreement is that the terms of payment will be amended to repay the amount of US$ 50,475,000 and Baht 1,282,190,000 within the periods from 1998-2002. The repayments are divided into two parts as follows: Part A: Repayment Date Amount (Baht) Amount (USD) February 28, 1999 65,314,834 2,571,198 March 31, 1999 65,314,834 2,571,198 July 31, 1999 277,588,037 10,927,601 /16 - 16 - Part B: Repayment Date Amount (Baht) Amount (USD) March 15, 1999 55,985,000 2,201,000 September 15, 1999 55,985,000 2,201,000 March 15, 2000 114,399,000 4,500,000 September 15, 2000 114,399,000 4,500,000 March 15, 2001 133,468,000 5,252,000 September 15, 2001 133,468,000 5,252,000 March 15, 2002 114,873,295 4,541,003 The Company mortgaged its land, structures, plant and machinery at Rayong and Tak as collateral. In addition to funds from operating income, the other sources of funds for repayment of principals in accordance with the agreement are from subscriptions to the remainder of the increased capital of 81,630,442 shares at Baht 14 per share under the Share Subscription Agreement with Western Metals Limited and Western Metals International Pty Ltd. of Australia dated October 7, 1998 which supersedes the previous agreement of July 23, 1998. (See Note 1) The schedule of Share Subscriptions called is as follows: Date No. of Shares Issued Amount (Baht) October 9, 1998 6,530,435 91,426,090 February 28, 1999 13,060,870 182,852,180 March 31, 1999 13,060,870 182,852,180 July 31, 1999 48,978,267 685,695,738 81,630,442 1,142,826,188 In addition, the Company entered into the Supplementary Agreement with Western Metals Limited, Western Metals International Pty Ltd., Chase Manhattan Asia Limited and the nine financial institution lenders, and the Escrow Agreement with Western Metals Limited, Western Metals International Pty Ltd., Siam Commercial Bank Public Company Limited, and Chase Manhattan Asia Limited (See Note 1). These agreements support the lender banks to follow up and control the sales of the remainder of the increased capital and repayment of loans in accordance with the terms specified in the Override Agreement . Significant conditions in the Override Agreement are as follows: 1. Maintaining of debt to equity ratio at 2:1, effective on the financial statements as at July 31, 1999 onward. 2. Maintaining of interest coverage ratio as specified in each year. 3. Declaration of dividend, which is allowed once the Company has sufficient cash as specified in the agreement and /17 - 17 - 1) Principals per the agreement decrease under 50% of the total debts as at October 7, 1998 and; 2) Unappropriated retained earnings exceed the dividends and the dividend declared is not over 25% of net profit in the previous year. 4. The Company and its subsidiaries shall not incur other debts including working capital on trade credit exceeding more than the Baht equivalent of USD 25,000,000 in the ordinary course of their business. 5. The Company and its subsidiaries shall not sell, lease, and transfer its revenue or assets except the sale of Padaeng Poongsan Metals Co., Ltds assets. 6. The Company shall not make any loan to any person, grant any credit to any person, give any guarantee or indemnity to or for the benefit of any person other than to or for the benefit of governmental authorities of Thailand as is necessary in the ordinary course of business. 7. Investment in Capital Expenditure shall not exceed the amount as specified in the agreement. Additionally, the Company entered into an agreement to appoint Chase Manhattan Asia Limited as a facility agent and a security agent appointment agreement with The Industrial Finance Corporation of Thailand. These two agreements support the Override Agreement. On February 24, 1999, Western Metals Limited rescinded it subscription agreement which will cause the Company to be in noncompliance with the Override Agreement (see Note 1). The Company presented the long term liabilities under the current liabilities pending a waiver or amendment of covenant violations in order to comply with generally accepted accounting principles. 16.2 Financing Arrangements CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Baht Baht Baht Baht Bank overdrafts 115,000,000 180,000,000 100,000,000 110,000,000 Promissory note 120,000,000 1,246,232,000 100,000,000 1,178,676,000 Trust receipt 455,000,000 900,000,000 455,000,000 740,000,000 Bank loan facilities Padaeng Industry Public Co., Ltd. 3,144,212,750 3,771,002,086 3,144,212,750 3,771,002,098 Padaeng Poongsan Metals Co., Ltd. 470,000,000 470,000,000 - - Total facilities 4,304,212,750 6,567,234,086 3,799,212,750 5,799,678,098