Confirmation of indicative proposal to TSI Fund

Transfield Services notes the announcement made today by Transfield Services Infrastructure Fund (TSI Fund) stating that it has received a non-binding, indicative approach from Thailand based Ratchaburi Electricity Generating Holding PCL (RATCH).

The proposal is for the acquisition by RATCH of the stapled securities in TSI Fund not owned by Transfield Services for a price of $0.85 per security, by way of schemes of arrangement.

As part of the proposal, RATCH would also acquire a majority of Transfield Services’ holding in TSI Fund for $0.851 per security, subject to downward adjustment if certain performance criteria are not met during a deferred payment period, such that Transfield Services reduces its holding from 43.8 per cent to 20 per cent.

Transfield Services has signed a Co-operation Agreement with RATCH to negotiate in good faith and to work together to finalise a series of ancillary but inter-conditional transactions between Transfield Services and RATCH relating to the ongoing ownership and management of TSI Fund.

The proposal also includes the sale of Transfield Services’ development business including its portfolio of wind farm and other development opportunities. Under these arrangements, as the owners of the TSI Fund, RATCH and Transfield Services (through TSI Fund) would work together to jointly develop these opportunities. Transfield Services would be the preferred provider of operations and maintenance services.

The proposal and the supporting transactions have the in-principle support of the Transfield Services Board, subject to execution of documentation, recommendation by the TSI Fund Board and the parties obtaining all necessary regulatory and shareholder approvals. It is intended that the purchase of the stapled securities in TSI Fund not owned by Transfield Services and series of ancillary but inter-conditional transactions will be completed before the end of FY11.

RATCH is a company incorporated in Thailand and listed on the Stock Exchange of Thailand trading under the code RATCH. RATCH is a leading Thai power generation company. It was established in March 2000 as part of the privatisation of the Electricity Generating Authority of Thailand (EGAT).

RATCH currently has a total capacity of 4,500 MW, which represents approximately 14 per cent of the installed electricity generation capacity in Thailand. Its operations principally consist of a number of thermal and hydro-power plants through its subsidiaries and affiliates in Thailand and Lao PDR.

EGAT is a Thai state-owned enterprise that invests and operates electricity, power and related businesses in Thailand and holds approximately a 50% market share. EGAT has a 45% interest in RATCH, and also has 3 representatives on RATCH’s 13-member board of directors. RATCH is focussed on investment in and the development of high quality thermal, hydro, wind and solar generation assets, with a preference towards long-term contracted off-take arrangements.

Transfield Services has engaged Macquarie Capital Advisers as financial adviser and Baker & McKenzie as legal adviser.

1 The price paid to Transfield Services will be adjusted for notational distributions during the deferred payment period.

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