Grande Asset Hotels and Property Public : Report on the significant legal dispute

		31 May 2022
Subject	:	Report on the significant legal dispute
To	:	Director and Manager
		The Stock Exchange of Thailand

Pursuant to Clause 20 of the Notes to the interim financial information for the interim period ended 31 March 2022, for the purpose of clarifying the information, Grande Asset Hotels and Property Public Company Limited ("the Company") would like to inform that the Company has significant legal disputes as follows:

1. On 12 April 2022, the Company, as the plaintiff, filed a lawsuit against Bangrak Company Limited ("BANGRAK") and Bangsue Company Limited ("BANGSUE") as the joint defendants in a civil case with the Minburi Civil Court for the offence of breach of contract and demand for performance of the contract, whereby the Company requested the Court to pass judgement or issue an order to both defendants to perform according to the terms of the existing land lease agreement, whereby the said land is where the Westin Grande Sukhumvit Hotel is located. This allows the Company to continue to lease the said land for another 20 years commencing upon the expiration of the lease terms under the existing land lease agreement and allows the Company to pay the lease compensation and monthly rental for the renewal lease terms in accordance with the terms and conditions under the existing land lease agreement, as well as ordering both defendants to perform the registrations of the land lease with particular portions of both defendants, to the Company and other joint ownership. As for the said lawsuit, the Court fixed the day for settlement of issues and specify the courses for the prosecution or examination of the plaintiff's witnesses on 23 August 2022. And if there is any further significant development in such dispute, the Company will further inform the investors and the Stock Exchange of Thailand.
2. On 23 April 2022, the Company received the civil complaint, whereby BANGRAK and BANGSUE, as the plaintiffs, filed a lawsuit against the Company with the Civil Court of Southern Bangkok for the ejectment, breach of contract and damages claims. Whereby such complaint states that the Company breached the contract of the existing land lease agreement, whereby the said land is where the Westin Grande Sukhumvit is situated and the plaintiffs have informed the termination of the said land lease agreement, therefore requested the Court to pass judgement or issuing order to the Company to vacate all their property and attendants from the land and the buildings, and pay for the damages in the amount of 378,383,437.- Baht, with interest thereon at the rate of 5 percent per annum of the said amount commencing from the day that lawsuit was filed, as well as pay the damages on a daily basis in the amount of 1,216,667.- Baht commencing from the lawsuit was filed until the Company has vacated all their property and attendants from the land and the buildings. As for the said lawsuit, the Court fixed the day for settlement of issues and specify the courses for the prosecution or examination of the plaintiff's witness on 20 June 2022. And if there is any further significant development in such dispute, the Company will further inform the investors and the Stock Exchange of Thailand.

Furthermore, the Company would like to inform other significant information as follows:

1. BANGRAK and BANGSUE are the joint ownership of the land where the Westin Grande Sukhumvit is located, having 25 percent of ownership and other two joint ownership having another 75 percent of ownership of land, have agreed to let the Company extend the lease terms of the said land lease agreement. In accordance with the details in the complaint and as shown in the juristic person registration at the Bangkok Office of the Central Company and Partnership Registration, BANRAK, having Miss Renu Prangsri and Mrs. UdomSri Promthaveesith as the directors and majority shareholders, and for the BANGSUE, having Mr. Vidhya Promthaveesith and Miss Peerada Promthaveesit as the directors and the majority shareholders, in which all four persons are not the connected person of the Company by any means.
2. Presently, the Company has 5 hotels under the management of the Company and its subsidiaries. Whereas, in 2021, the Westin Grande Sukhumvit Hotel had revenues accounting for 22.60% of the total revenue of the Company's hotel business. At present, the Westin Grande Sukhumvit Hotel is still operating for services under the Company's management. And according to the existing lease agreement, both parties have pledged that upon the expiration of the lease term, if the lessee does not owe any debts to the lessor and there is no breach of contract, both parties agree to extend the existing lease agreement for another 20 years and the Company already sent a request letter for the exercise of rights to renew the lease agreement to the lessor before the expiration of the existing lease term. The Company believes that it has negotiated for the renewal of the land lease agreement with all co-owners transparently and lawfully, with only two co- owners holding 25% of the land still deflected. The Company, therefore, has to file a lawsuit against BANGRAK and BANGSUE to protect the legal rights and benefits of the Company. However, the Company believes in honesty and considers a direction in negotiating with the other parties to seek the settlements which will most benefit the Company and the shareholders of the Company.

In addition, in the event of the Court has passed final judgement or issued final order to enforce the Company as in accordance with complaints of other parties. It will affect the Company as follows:

1. Effects on Assets, Liabilities, and Shareholders' Equity

1. No effect on the Assets from the impairment because the Company has written off all depreciation expenses according to the existing lease agreement.
2. No effect on the Liabilities from the employee termination compensation because the Company has set up a provision for employee benefits as assessed by independent experts in full amount.
3. Since the owners of 75 percent ownership of the land have agreed to renew the said land lease, therefore, the Company will not be affected by the non-payment of rent in respect of the renewal of the lease agreement at the rate of 75% of the total land ownership. However, as for the owners of the remaining 25% ownership of the land, which have not yet agreed to the Company to renew the lease of the land, the Company will estimate the potential rental fee which such rental will be recorded as an expense in the same period that the space is being used (since the second quarter of 2022 onwards).

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1. If the court has a final judgment or order that the company pays damages to the parties in which the parties sued the Company to pay damages in the amount of 378,383,437 baht, representing 8.62% of the shareholders' equity according to the interim consolidated financial statements ended 31 March, 2022. However, the court must consider such amount of damages and daily damages as requested by the parties and issue an order based on the actual damage (if any), which may not be in accordance with the parties' claim. In addition, the Company does not record any contingent liability from such lawsuit in the financial information because the Company believes that the Company did not act in violation of the lease agreement and expects that there will be no material damages to the Company.
2. As the Company has paid compensation for the renewal of the land lease of 56,250,000 baht to the joint owners of the 75 percent land ownership, if the lease cannot continue as a result of the court's judgment, the lessor agrees to refund such compensation to the Company in part and for the period in which the lease cannot be continued.
3. As mentioned in (3) to (5) above, the effect will decrease the shareholders' equity. Although the profit from the normal business will increase from a decrease in the operating loss (EBITDA) of the Westin Grande Sukhumvit Hotel in 2021 as the Company has to pay the rental fee to the 25% ownership of the land who has not agreed to renew the lease of this land and the damages from the litigation in the amount stated above.

2. Effects on Revenues and Profits from Business

1. There will be an impact on the reduction of revenues and profits from the hotel business. In 2021, the Westin Grande Sukhumvit Hotel had revenue of 98,477,905.- Baht or equivalent to 19.13% of total revenue. However, in 2021, the Westin Grande Sukhumvit Hotel had an operating loss (EBITDA) of 70,303,615.- Baht due to the impact of the COVID-19 epidemic situation.
2. There will be an impact on the reduction of revenues and profits from the rental business. In 2021, the revenue was 9,408,168.- Baht, or equivalent to 1.83% of total revenue and had an operating profit (EBITDA) of 9,391,056.- Baht.
3. There will be an impact on the reduction of EBITDA due to litigation damages for the amount mentioned above.

In addition, the Company has disclosed the risk that the lease agreement may not be renewed in the form 56-1 One Report for the year 2021.

Please be informed accordingly.

Yours sincerely,

-Signature-

Mr. Vitavas Vibhagool

Chief Executive Officer

Real Estate and Hotel Business

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