PTC INTEREST/COUPON (%)

Transcription

1 PTC INTEREST/COUPON (%)

2 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL BACKGROUND INFORMATION 1(A) Issuer Name ACE POLYMERS (M) SDN BHD ( APM or Company ) Address Tingkat 3, Kompleks Kemajuan No. 2, Jalan 19/1B Petaling Jaya Selangor Darul Ehsan Business Registration No V Date/Place of Incorporation 3 January 1995 / Kuala Lumpur, Malaysia Date of Listing Not applicable Status Resident controlled company Bumiputera controlled company Principal Activities APM and its subsidiary, Ace Polymers Industries Sdn Bhd ( API ) are principally involved in the manufacturing of engineering polymer products. R.A.T Design Sdn Bhd ( R.A.T ), which is a wholly-owned subsidiary of API is mainly involved in the research and development of automotive components and industrial products. Page 1 of 23

3 Board of Directors Yg. Bhg. Tan Sri Datuk Asmat Bin Kamaludin ~ Chairman Haji Mohd Salleh Bin Zakaria ~ Deputy Executive Chairman Wan Muhamad Ibrisam Bin Wan Ibrahim ~ Group Managing Director Mahiran Binti Wan Ahmed ~ Director Structure of shareholdings and names of shareholders (as at 31 May 2004) Type of Share Holder No of Issued Shares Ordinary Haji Mohd Salleh Bin Zakaria 3,550, Ordinary Wan Muhamad Ibrisam Bin Wan Ibrahim % 900, Ordinary Shuaib bin Abu Bakar 50, Note: Under the proposed restructuring exercise of Sateras Resources (Malaysia) Berhad ( Sateras ), the shareholders of APM have conditionally agreed to dispose 4,500,000 ordinary shares of APM representing the entire issued and paid up capital of APM to Salwan Corporation Sdn Bhd ( Salwan ) for a purchase consideration of RM140,000,000 to be satisfied via the issuance of 140,000,000 new Salwan Shares at par. Sateras is proposed, inter alia, to be delisted from the Official List of the Main Board of Bursa Malaysia and Salwan will, in turn, be listed on the Main Board of Bursa Malaysia in place of Sateras. On 31 March 2004, the proposed restructuring exercise was approved by the SC. The restructuring exercise only affect the shareholders of APM, while the Board of Directors, principal activities, authorized and paid-up capital shall not be affected by the restructuring exercise. However, APM is considering to increase its issued and paid-up capital up to RM16.5 million by way of capitalization of reserve. Authorised and paid-up capital (as at 31 May 2004) Type of Share Authorised : Ordinary shares of RM1 each No. of Shares : 5,000,000 Authorised Capital(RM) : 5,000,000 Paid-up Capital (RM) : 4,500,000 Page 2 of 23

4 PRINCIPAL TERMS AND CONDITIONS 2. Names of parties in the proposed transaction (where applicable) i) Principal Adviser(s) / Lead Arranger(s) KAF Discounts Berhad ( KAF ) (20657-W) ii) Arranger(s) Not applicable iii) Valuers Not applicable iv) Solicitors Messrs. Azmi & Associates, Advocates & Solicitors v) Financial Adviser Not applicable vi) Technical Adviser Not applicable vii) Guarantor Not applicable viii) Trustee Bumiputra-Commerce Trustee Berhad ( BCT ) (Co no M) ix) Facility Agent KAF x) Primary Subscriber(s) and Amount subscribed (where applicable) Primary Subscriber KAF Amount Subscribed RM70.0 million (Nominal Amount) Page 3 of 23

5 xi) Underwriter(s) and amount underwritten Not applicable xii) Syariah Adviser Muamalah Financial Consulting Sdn Bhd (Company no H) xiii) Central Depository Bank Negara Malaysia ( BNM ) xiv) Paying Agent BNM xv) Reporting Accountant Messrs. Shamsir Jasani Grant Thornton, Chartered Accountants (Company no. AF-737) xvi) Others (please specify) BCT has been appointed as the Security Trustee 3 Principle Islamic 4. Facility Description Al-Bai` Bithaman Ajil Serial Debt Securities ( BaIDS ) To facilitate the sale and purchase transaction under the Syariah principle of Al-Bai` Bithaman Ajil for the issuance of the BaIDS, KAF as the sole Primary Subscriber of the BaIDS shall first enter into an Asset Purchase Agreement with the Issuer to purchase the Asset at the Asset Purchase Price. Also, in accordance with the financing procedure under the Syariah principle of Al- Bai` Bithaman Ajil, the Asset shall subsequently be sold to APM at the Asset Sale Price on the terms of the Asset Sale Agreement. The obligation of APM to settle the Asset Sale Price shall be securitised through the issuance of the BaIDS (constituting Primary BaIDS denoting the Asset Purchase Price and Secondary BaIDS denoting the profit margin). APM shall settle the Asset Sale Price by instalments over an agreed period coinciding with the maturity dates of the relevant Al-Bai` Bithaman Ajil BaIDS whether Primary or Secondary BaIDS. The Secondary BaIDS are redeemable six-monthly with the first redemption to commence six (6) months from the date of issue of the BaIDS. The Primary BaIDS shall be redeemed at the end of the maturity period of each relevant series. Page 4 of 23

6 5. Issue Size (RM) RM70.0 million divided into 6 (six) tranches. 6. Issue Price (RM) RM70.0 million (to be issued at par) 7. Tenor of the facility/issue Up to seven (7) years from issue date of the BaIDS (single drawdown). The BaIDS shall be divided into six (6) tranches as follows: Tranche Amount (RM) Maturity (years from Issue Date) 1 5,000, ,000, ,000, ,000, ,000, ,000,000 7 TOTAL 70,000, Interest / Coupon / Profit or equivalent rate (%) Tranche Profit Rate (% p.a.) Maturity (years from Issue Date) Page 5 of 23

7 The profit rates above are mutually agreed by the Issuer and Primary Subscriber for issuance on or before 31 August In the event the BaIDS are issued after 31 August 2004, the profit rates shall be subject to a renegotiation between the Issuer and the Primary Subscriber. 9. Interest/Coupon/ Profit Payment frequency Payable semi-annually in arrears with the first profit payment commencing six (6) months from the date of issue of the respective BaIDS with the last profit payment for each tranche of BaIDS to be made on the respective maturity dates of each tranche. 10. Interest/Coupon/ Profit Payment basis On actual/actual days basis. 11. Yield to Maturity (%) Tranche Yield (% p.a.) Maturity (years from Issue Date) The yield shown above are mutually agreed by the Issuer and Primary Subscriber for issuance on or before 31 August In the event the BaIDS are issued after 31 August 2004, the yield-to-maturity shall be subject to a renegotiation between the Issuer and the Primary Subscriber. 12. Security/Collateral (if any) The obligations of APM in respect of the BaIDS shall be secured by the following security:- (a) (b) A principal debenture incorporating fixed and floating charges on all assets, both present and future belonging to the Issuer including any rights, benefits and interest under any agreements, contracts or other arrangements; Assignment of all benefits and contractual rights of the APM Group under the Project Contracts (hereinafter defined) including rights to Page 6 of 23

8 (c) (d) (e) revenue, proceeds and all other monies due and payable to APM Group under the Project Contracts; Assignment of all relevant insurances in respect of fire, burglary and equipment but not limited to third party liabilities and property takaful/insurance; Principal charge over Designated Accounts namely DA, FSRA, RA and OA; and First fixed legal charge over all that piece of land known as GM203, Lot No 1570, Mukim Batu, District of Gombak, State of Selangor ( the Said Land ). The charge over the Said Land will be created after the completion of the acquisition of the assets. Project Contracts collectively refers to: (i) (ii) the letters of appointment/awards/instruction issued to APM Group by Naza Automotive Manufacturing Sdn Bhd ( NAM ) Group, Perusahaan Otomobil Nasional Berhad ( PROTON ) Group and Perusahaan Otomobil Kedua Sdn Bhd ( PERODUA ) Group for a certain job/services; and/or the contracts/agreements entered and to be entered into between APM Group and NAM Group, PROTON Group and PERODUA Group respectively. 13. Details on utilization of proceeds The proceeds from the proposed BaIDS shall be utilised as follows:- Description RM Million i. Repayment of existing borrowings of up to ii. Purchase of land and building* of up to iii. Defraying fees and expenses incurred in connection with 1.00 the issuance of the BaIDS of up to iv. Pre-fund the FSRA of up to 3.00 v. Working capital requirements 11.50** Total of * All that piece of land known as GM203, Lot No 1570, Mukim of Batu, District of Gombak, State of Selangor **Any amount unutilised under items (i), (ii), (iii) and (iv) will be channelled to item (v). 14. Sinking fund (if any) Not applicable. The BaIDS does not have any sinking fund provision. Page 7 of 23

9 15. Rating Credit Rating Assigned : Indicative rating of A ID (A flat, Islamic Debt) Name of Rating Agency : Malaysian Rating Corporation Berhad ( MARC ) 16. Form and Denomination The BaIDS will be represented by global certificates to be deposited with BNM and shall be issued in bearer form and will be prescribed under the Rules on Fully Automated System for Tendering ( FAST ) and/or the Malaysian Scripless Securities Market under the Real Time Electronic Transfer of Funds and Securities ( RENTAS ) system and/or by any other guidelines issued by the relevant authority(ies). The BaIDS shall be issued in the denomination of RM1.0 million each and in multiples of RM1.0 million each or such other denomination as agreed between Issuer and Facility Agent and approved by the SC. 17. Mode of Issue The BaIDS will be issued without prospectus on a bought deal basis to the Primary Subscriber. 18. Selling Restrictions The BaIDS shall not be issued, offered for subscription or purchase, nor can any invitation to subscribe for or purchase the BaIDS be made to persons other than persons whose ordinary business is to buy or sell shares or debentures whether as principal or agent falling within any one of categories of persons specified under Section 4(6) of the Companies Act, 1965 (as amended). 19. Listing Status The BaIDS will not be listed on any stock exchange. 20. Minimum Level of Subscription (RM or %) 100% 21. Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained None Page 8 of 23

10 22. Additional information for Islamic PDS Islamic principle Syariah principle of Al-Bai` Bithaman Ajil Identified assets The identified assets/leases for the Islamic transaction are as follows:- No Description of Assets Value (RM) 1. APM Group s fixed assets as per audited accounts dated 31 Dec Factory in Gurun situated on Lot 55, Kawasan Perindustrian Berat Gurun, Mukim Gurun, District of Kuala Muda 34,854,708 7,500, Machinery - Dongshin Plastic Inj Moulding - DIMA1600TON 2,068, Machinery - Dongshin Plastic Inj Moulding - DIMA3000TON 4,045, Factory in Gurun situated on Lot 62, Kawasan Perindustrian Berat Gurun, Mukim Gurun, District of Kuala Muda 6. Land and factory held under all that piece of land known as GM203, Lot No 1570, Mukim Batu, District of Gombak, State of Selangor 8,300,000 14,500,000 SUB-TOTAL 71,268,346 No Description of Leases Value (RM) 1. All that piece of land situated in Lot 55, Kawasan Perindustrian Berat Gurun, Mukim Gurun, District of Kuala Muda 1,377, Machineries - Haitian Plastic Inj Moulding - HTF1600X 1,398, All that piece of land situated in Lot 62, Kawasan Perindustrian Berat Gurun, Mukim Gurun, District of Kuala Muda 1,265,490 SUBTOTAL 4,040,904 GRAND TOTAL 75,309,250 Purchase and selling price/rental Purchase Price: RM70,000, million representing the nominal value of the BaIDS. Page 9 of 23

11 Selling Price: RM98,730, which details are as follows:- Tranche Tenure (years) Total Selling Price (RM) Profit Rate (p.a.) Nominal Value of Primary BaIDS (RM) Nominal Value of Secondary BaIDS (RM) 1 2 5,625, % 5,000, , ,025, % 10,000,000 2,025, ,900, % 10,000,000 2,900, ,875, % 10,000,000 3,875, ,335, % 15,000,000 7,335, ,970, % 20,000,000 11,970,000 98,730,000 70,000,000 28,730,000 The Selling Prices above are based on the agreed profit rates for issuance on or before 31 August In the event the BaIDS are issued after 31 August 2004, the profit rates shall be subject to a renegotiation between the Issuer and the Primary Subscriber. The Purchase Price and the Selling Price of the identified assets/leases shall be in compliance with the Securities Commission s SAC Pricing Guidelines issued on 31 December 2003 at the point of transacting the Al-Bai` Bithaman Ajil transaction. 23. Conditions Precedent Including but without limitation to the following:- i) All necessary legal documentation shall have been completed and executed in form and substance acceptable to the Facility Agent and/or the solicitors to the legal documentation; ii) the opening of Islamic bank accounts in respect of the Designated Accounts; iii) the release and reassignment of the Asset (rights title and interests of the APM Group in the Identified Assets listed in the PTC) by the Security Trustee under the Existing Financing Facilities, if any; iv) the consent of the existing banks under the Existing Financing Facilities (all existing financing facilities of the Issuer) to the sale and thereafter buy back by APM of the Asset to create indebtedness in the underlying transaction for the issue of the BaIDS, if any; v) Redemption statement from APM s financier(s) under the Existing Financing Facilities confirming all amount outstanding detailing the principal sum and interest or principal sum and profit margin with respect to the repayment of the relevant Existing Financing Facilities to be refinanced; vi) All prescribed security shall be in full force and effect except for the 1 st legal charge over the Said Land and discharge of the existing security under APM s Existing Financing Facilities; Page 10 of 23

12 vii) Confirmation from APM to the Facility Agent that there is no outstanding and unpaid indebtedness for borrowed monies apart from the indebtedness to the financier(s) under the Existing Financing Facilities and such other indebtedness as permitted or excluded under the Transaction Documents (hereinafter defined); viii) the solicitors in charge of the documentation shall have confirmed that:- (a) the BaIDS and the creation of the Security Documents (hereinafter defined) will not constitute a breach by APM of any limit imposed by its Memorandum and Articles of Association on its borrowing powers; (b) the creation of any 3 rd party security by any of the APM Group in relation to the BaIDS will not constitute a breach by such subsidiary within the APM Group of any limit imposed by its Memorandum and Articles of Association on its powers to offer collateral security; (c) the Transaction Documents have been executed and are in the possession of the solicitors; (d) the relevant legal documents are in order, enforceable and binding on all parties; and (e) all the Conditions Precedent have been met and all necessary approvals have been given and search have been conducted and perused by the solicitors. ix) Receipt by Facility Agent of the following: - (a) Certified true copy of APM s Memorandum & Articles of Association and other statutory forms as may be required by the solicitors to the documentation; (b) Certified true copy of APM s Board of Directors Resolution authorising (1) the acceptance of the BaIDS, (2) the carrying out of all its obligations under the legal documents in connection with the Transaction Documents, (3) the opening of the Designated Accounts and (4) the appointment of authorised signatory(ies) to accept and to operate the accounts referred to above; (c) Certified true copy of Board of Director s Resolution of the subsidiaries within the APM Group authorizing the offering of 3 rd party securities for the BaIDS; (d) the execution of all the Transaction Documents; (e) Certified true copies of APM's Forms 24, 44 and 49 and any other statutory forms as may be required by the solicitors to the documentation; (f) Specimen signatures of APM s respective authorised signatories; (g) Certified true copies of documents considered necessary by the Lead Arranger and its legal counsel; and (h) Certified true copy of all relevant takaful/insurance policies. The takaful/insurance policies shall cover all insurable risks for Page 11 of 23

13 fire, burglary and equipment including but not limited to third party liabilities and property takaful/insurance; (i) Letter of undertaking from the relevant financier to refund the redemption sum if the discharge of charge in relation to the land to be purchased and financed by the BaIDS cannot be registered for any reason whatsoever x) The BaIDS shall have been approved by the SC and the SC s Syariah Advisory Council and/or other relevant authorities (if any), and shall also be at all times governed by guidelines issued and to be issued from time to time by the SC or any other authorities having jurisdiction over matters pertaining to the BaIDS; xi) All other necessary approvals for the BaIDS shall have been obtained, including governmental approvals; xii) The BaIDS shall be subject to a minimum long-term credit rating of A2 (or its equivalent) by MARC; xiii) All documents evidencing the establishment of the Designated Accounts have been forwarded to Facility Agent; and xiv) All fees due by the issue of the BaIDS shall have been settled in full. 24. Representations and Warranties Standard representations and warranties for a facility of this nature which shall include, but not limited to: a) APM is a company duly established and existing under Malaysia law and it has the power and authority to enter into the business in which it is or proposed to be engaged; b) APM has the power to enter into, exercise its rights under and perform its obligations under the Transaction Documents; c) All necessary actions, authorisations and consents required by that date under the Transaction Documents have been taken, fulfilled and obtained and remain in full force and effect; d) The Transaction Documents create valid and binding obligations which are enforceable on and against APM subject to the provisos set out to be given prior to drawdown; e) APM s entry into, exercise of its rights under and performance of the Transaction Documents do not and will not violate any existing law or documents to which it is a party; f) APM s audited accounts are prepared in accordance with generally accepted accounting principles and standards. The accounts fairly represent APM s financial position as at the date of the accounts; and g) To the best of APM s knowledge, no litigation or arbitration is current or threatened, which if adversely determined would have a Material Adverse Effect (hereinafter defined) in APM s ability to comply with the Transaction Documents. Page 12 of 23

14 25. Events of Default Standard events of default for a facility of this nature which shall include but not limited to: (a) Non-payment: APM fails to pay cost, profit, fees or any amount due from it under any of the Transaction Documents on the due date or on demand, if so applicable. If the non-payment above is not remedied within fourteen (14) days from the due date, then the Trustee shall declare an automatic event of default; or (b) (c) (d) (e) (f) Breach of obligations : APM fails to observe or perform any of its obligations under the BaIDS Issue Documents (hereinafter defined) or Security Documents (hereinafter defined) or under any undertaking or arrangement entered into in connection therewith, and if the failure is in the reasonable opinion of the Trustee, capable of remedy, but not remedied to the satisfaction of the Trustee, within twenty one (21) days from the date of written notice of such failure or such longer period as agreed by the Trustee; or Misrepresentation : any representation, warranty, covenant or statement which is made (or acknowledged to have been made) by APM in the BaIDS Issue Documents or the Security Documents or which is contained in any certificate, statement, legal opinion or notice provided under or in connection herewith or therewith proves to be untrue, inaccurate or incorrect in any material respect, or if repeated at any time with reference to the facts and circumstances subsisting at such time would not be accurate in all material respects; or Breach of Covenants : any covenants which is made by APM in the BaIDS Issue Documents or the Security Documents is, in the reasonable opinion of the Trustee, being breached and such breach is not remedied within twenty-one (21) days from the date of written notice of such a breach or such longer period as agreed by the Trustee; or Cessation of business : APM changes the nature or scope of its business, suspends a substantial part of the present business operations which it now conducts directly or indirectly, or any governmental authority expropriates or proposes to expropriate all or part of its assets and the result of any of the foregoing, in the determination of the BaIDS Holders by an Extraordinary Resolution (i.e. a resolution passed at a meeting of the BaIDS Holders duly convened by a majority consisting of seventy-five percent (75%) or more in value of votes cast thereon), materially and adversely affect the financial condition of APM or its ability to observe or perform its obligations under the BaIDS Issue Documents or Security Documents; or Indebtedness Not Paid : any borrowings or indebtedness of APM is not paid when due or becomes due and payable or any guarantee or indemnity given by APM in respect of such borrowings is not honoured when due and called upon save and except for any legitimate dispute to Page 13 of 23

15 the claim which in the opinion of the Trustee, has a material adverse effect on APM s ability to pay; or (g) (h) (i) (j) Disposal of Substantial assets : APM and/or its subsidiaries, transfers or disposes of, or threatens to transfer or dispose of its assets which in the reasonable opinion of the Trustee is a substantial transfer or disposal which would affect APM s ability to perform any its obligations under the BaIDS Issue Documents or the Security Documents; or Withdrawal of Licences : at any time, any act, condition, thing, approvals, licences or consents required to be done, fulfilled, performed or obtained by APM in relation to their business is not done, fulfilled, performed or obtained or is withdrawn revoked, suspended or otherwise cease for any reason to remain in full force and effect which in the reasonable opinion of the Trustee will materially and adversely affect their operations and/or APM s ability, to pay any sum due and payable or perform any of its obligations, under the BaIDS Issue Documents or Security Documents; or Invalidity : any provision of the BaIDS Issue Documents or the Security Documents is or becomes, for any reason, invalid or unenforceable; or Illegality : it becomes unlawful at any time for APM to perform all or any of its obligations under the BaIDS Issue Documents or the Security Documents or due to the fault or omission of APM, the BaIDS Issue Documents or the Security Documents becomes unenforceable against APM, as the case may be; or (k) Repudiation : APM repudiates or terminates the BaIDS Issue Documents or the Security Documents; or (l) (m) (n) (o) Nationalisation of Asset : all or a material part of the undertaking(s), assets, rights or revenues of, or shares or other ownership interests in, APM is seized, nationalised, expropriated or compulsorily acquired by or under the authority of any governmental body save where adequate compensation has been paid; or Attachment : a warrant of attachment or execution or similar process against any substantial part of APM s assets is issued which in the reasonable opinion of the Trustee will affect APM s ability to perform any of its obligations under the BaIDS Issue Documents or the Security Documents; or Appointment of receiver, legal process : an encumbrancer takes possession of, or a trustee, receiver or similar officer is appointed in respect of, all or any substantial part of the business or assets of APM; or Insolvency : APM becomes insolvent or is unable to pay its debts as they fall due, stops or suspends payment of all or a material part of its Page 14 of 23

16 debts, begins negotiations or takes any proceeding or other step with a view to readjustment, rescheduling or deferral of all of its borrowed money (or of any part of its borrowings which it will or might otherwise be unable to pay when due) or proposes to make a general assignment or an arrangement or composition with or for the benefit of its creditors or a moratorium is agreed or declared in respect of or affecting all or a part of the borrowings money of APM; or (p) (q) (r) (s) (t) Winding-Up : any party takes any action or any legal proceedings are started or other steps taken for (aa) APM to be adjudicated or found insolvent, (bb) the winding-up, dissolution of APM either by an order of a Court of competent jurisdiction or by way of voluntary winding-up save and except to effect a reorganisation of the business of APM (cc) the appointment of a liquidator, trustee receiver or similar officer of APM over the whole or any part of APM s or any of their respective undertaking(s), Concession, rights or revenues other than a winding-up of APM for the purpose of amalgamation or reconstruction which has been previously approved by the Trustee or any order of a court of competent jurisdiction; or Section 176 : the commencement of any proceedings pursuant to Section 176 of the Companies Act, 1965 in relation to APM (except for the purpose of and followed by a reconstruction, amalgamation or reorganisation which does not in the opinion of the Trustee have a material adverse effect); or Analogous events : anything analogous to any of the events specified in sub-paragraphs (n), (o), (p) or (q) occurs under the laws of any applicable jurisdiction; or Legal Process : any legal proceedings, suits, actions or investigations of any kind whatsoever shall be instituted against APM, which in the reasonable opinion of the Trustee, will have a material adverse effect; or Others : any other event occurs or circumstance arises which, in the reasonable opinion of the Trustee, is likely to materially and adversely affect the ability of APM, to perform all or substantial parts of its obligations under or otherwise to comply with the terms of the BaIDS Issue Documents or the Security Documents and which in the reasonable opinion of the Trustee is capable of being remedied but is not remedied to the satisfaction of the Trustee, within twenty-one (21) days from the date of a written notice from the Trustee to APM specifying the event; then, the Trustee may, without prejudice to any other rights of the BaIDS Holders, at any time after the happening of an Event of Default by notice to APM declare that all outstanding amounts under the BaIDS and all other sums payable under the BaIDS Issue Documents or the Security Documents shall, have become immediately due and payable or have become due and payable on demand, whereupon the same shall, immediately or in accordance with the terms of such notice, become so due and payable. Page 15 of 23

17 26. Principal terms and conditions for warrants (where applicable) Not applicable 27. Other principal terms and conditions for the issue Priority of Payments All revenue and all other income owing to APM shall be applied as follows:- i) All revenues and all other income shall be credited to the Revenue Account; Funds credited to the Revenue Account shall be applied in the following order of priority:- a) Tax payable; b) financing costs including payment of the Secondary BaIDS and redemption of the BaIDS; c) contributions to the FSRA d) purchase of the BaIDS (if the Issuer so elects); e) contributions to the OA; and f) making Permitted Investments. Designated Accounts The Issuer is required to open and maintain the following designated accounts with a Bank to be appointed by the Facility Agent as follows: a) Disbursement Account ( DA ) (operated solely by the Facility Agent); b) Finance Service Reserve Account ( FSRA ) (operated jointly by the Facility Agent and the Issuer); c) Revenue Account ( RA ) (operated solely by the Facility Agent); and d) Operating Account ( OA ) (operated solely by the Issuer). Upon enforcement of the security, the subscribers/financiers/baids Holders shall have priority in respect of the amount outstanding to the credit of all the Designated Accounts above, followed by other creditors of APM, if any. Disbursement Account ( DA ) APM shall open and operate an Islamic income bearing Disbursement Account for the purpose of remitting and/or depositing the disbursement proceeds under the BaIDS Facility. Amounts available in the DA shall only be utilised for the following purposes: a) Repaying part of Existing Financing Facilities of up to RM40.0 million; b) Purchase of land and building of up to RM14.5 million; Page 16 of 23

18 c) To defray fees and expenses incurred in connection with the issuance of the BaIDS of up to RM1.0 million; d) Financing of the FSRA of up to RM3.0 million; and e) Transferring the remaining balance into the OA for working capital requirements. Revenue Account ( RA ) APM shall open a Revenue Account to capture all revenue from the following: a) Proceeds from Project Contracts; b) Proceeds from takaful/insurance claims in respect of insurances taken, if any; c) Amount received pursuant to the issue of any ordinary shares, preference shares and all other forms of equity, loan stocks and shareholders advances; and d) All other income received by the Issuer. The monies in the RA shall be applied in the following manner: a) Tax payable; b) Towards meeting all outstanding payments due under the BaIDS; c) To satisfy the Issuer s obligation under the FSRA; d) To periodically transfer to the OA a specified amount based on quarterly budget prepared by APM; and e) Making Permitted Investments. The RA shall be operated/managed solely by the Facility Agent. Finance Service Reserve Account ( FSRA ) APM shall open and maintain an income earning Finance Service Reserve Account which shall be jointly operated by the Issuer and the Facility Agent. On the issue date, the Lead Arranger shall deduct from the Purchase Price such amount required for the redemption of the Secondary BaIDS which will become due and payable six (6) months after the issue date of the Al-Bai Bithaman Ajil bonds and pay such amount immediately into the FSRA. APM may only withdraw sums from the FSRA for the following payments:- a) towards the payment of the Secondary BaIDS and redemption of the Primary BaIDS and other outstanding payment due under the BaIDS; b) for the purchase of the BaIDS (if APM so elects); c) to transfer funds back to the RA should the credit balance in the FSRA exceeds the amount required for the relevant six (6) months period; and d) making Permitted Investments The Issuer may only make payments in connection with items (a) if at the time the relevant payment is due, the Issuer has insufficient funds to make full Page 17 of 23

19 payment from the RA. The resulting shortfall, if any, shall be topped-up by APM via the RA. On an ongoing basis, contributions to the FSRA from the RA, after payments referred to under the Priority of Payments clause, will be credited to the FSRA until the balance is equivalent to the next redemption of the Primary and Secondary BaIDS which are due and payable within the next six (6) months. For avoidance of doubt, the required amount to be maintained in the FSRA shall be fully deposited into the account six (6) months before the respective due dates of the financial obligations. Operating Account The Facility Agent shall remit on a quarterly basis, amount from the RA into the OA and shall be utilised by the Issuer for the following purposes and priority: a) APM s operating expenditure / overhead expenses; b) Payment of routine and recurring capital expenditure arising out of the carrying on of the authorised business; and c) Dividends and any other payments to shareholders (subject to meeting all related covenants hereof). The quantum of the funds transferred will be based on a quarterly operating budget which shall be approved by the Board of Directors of APM and shall be submitted to the Facility Agent fourteen (14) days prior to the commencement of the next budget period. The budget shall contain a reasonably detailed and itemised estimate of the amount of income to be received by APM and the amounts of the expenditure to be incurred by APM for each month during that budget period. Financial Covenants (a) APM shall maintain a Debt to Equity ( D/E ) ratio to or less than 2.75 during a period of two (2) years from the Issue Date of the BaIDS, 2.00:1 during the third (3 rd ) year of the BaIDS and thereafter 1.50:1 throughout the tenure of the BaIDS; (b) The D/E ratio is defined as the ratio of APM s total borrowings outstanding (excluding contingent liabilities, including but not limited to performance bonds and bank guarantee) to APM s shareholders funds); (c) APM shall maintain a minimum Annual Finance Service Cover ratio ( FSCR ) of 1.50 times at all times; (d) Annual FSCR is defined as the ratio of cumulative Available Cash Flow to the aggregate of all financing costs incurred by APM and any principal amounts repaid or cost portion paid under any of the indebtedness arising from borrowed moneys or financing facilities of the Company, Page 18 of 23

20 each during the previous twelve (12) months, period duly audited by APM s auditors at the end of each financial year. Positive Covenants So long as any commitments under the BaIDS remain outstanding, APM will unless otherwise approved by the Trustee and/or the Facility Agent of which such approval shall not be unreasonably withheld:- i) Pursuant to Project Contracts, construct and complete, non-compliance with which would have a Material Adverse Effect and subject (thereto) in accordance with good industry practice; ii) Comply with all material provisions of the Project Contracts and Transaction Documents; iii) Take out and maintain the necessary takaful/insurance policies (during the periods in which such policies are relevant) and notify of any material events which may give rise to any claim or right of action under the takaful/insurance policies; iv) Maintain an accounting system and keep adequate records in compliance with applicable statutory requirements; v) Deliver to the Facility Agent within 180 days of the end of each financial year its audited financial statements; and within 90 days of each half year period its unaudited financial statements for that period together with a certificate signed by two of its directors, to the effect that such financial statements present a true and fair view; vi) As soon as practicable, deliver to the Trustee and the Facility Agent a certified copy of each new contract above RM5.0 million entered into subsequent to the Transaction Documents; vii) Use all reasonable endeavours to collect all monies becoming due to APM; viii) Open and/or maintain each of the required Designated Accounts and pay all amounts into such accounts and make all payments from such accounts, only as permitted under the Transaction Documents; ix) Take such steps as may have been notified to the Facility Agent following the occurrence of an Event of Default to remedy or litigate the effect of the Event of Default or any other step as the Facility Agent may reasonably request x) Comply with such other positive covenants as required under the SC Guidelines on Minimum Contents Requirements for Trust Deeds; and xi) Any other customary covenants as advised by solicitors. Negative Covenants As long as any payment obligations under the BaIDS remain outstanding, APM shall not, unless otherwise approved by the Trustee and/or the Facility Agent of which such approval not to be unreasonably withheld:- Page 19 of 23

21 i) Indebtedness: incur, assume or permit to exist any indebtedness other than:- a) The indebtedness under the BaIDS, unless APM meets the stipulated D/E ratio; and b) Indebtedness arising out of subordinated shareholder s loans; ii) iii) iv) Negative Pledge: create or permit to subsist any other security interests other than security interests arising out of any agreements entered by APM for the provision of performance and maintenance of the BaIDS or other financing facilities (as stated in indebtedness above) Share Capital: reduce its authorised and issued paid-up capital; Loan stock/advances: Make any principal repayment in respect of any subordinated advances/loan stocks prior to the full repayment of the BaIDS; v) Dissolution: dissolve its affairs or consolidate with or merge with any person; vi) vii) Surrender rights etc: surrender, assign, relinquish or otherwise dispose any of its rights and interest under the Transaction Documents and Project Contracts (except as permitted or required under the Transaction Documents) Render void: do or suffer to be done any act, matter or thing whereby any takaful/insurance may be rendered void, voidable or incapable of being effected, maintained or renewed; viii) Other business: carry on any other business other than its authorised business in accordance with its Memorandum and Articles of Association; and ix) Restricted payment: declare or make any payment of any dividend on share capital and/or income on subordinated advances/loan stocks:- a) If the FSCR is less than 2.0 times to 1 or would be if recalculated immediately after the payment of any dividend; b) If the D/E ratio is more than 2.75:1 during the period of two (2) years from the Issue Date of the BaIDS, 2.00:1 during the third (3 rd ) year of the BaIDS and thereafter 1.50:1 throughout the tenure of the BaIDS; c) If APM fails to adhere to the contribution schedules under the FSRA; and d) If any Event of Default has occurred or is continuing. Compensation on Late Payment Based on the Majlis Penasihat Syariah ( MPS ) Suruhanjaya Sekuriti s Guidelines, in the event that the Issuer fails to make timely payment on the profit portion in respect of the BaIDS, the Issuer must pay compensation to Page 20 of 23

22 the BaIDS Holders. The rate of compensation that shall be charged by the BaIDS Holders is at 1.0% per annum on the amount overdue. However, the amount of compensation cannot be compounded. In the event that the Issuer fails to make timely payment on the outstanding cost that has reached beyond the maturity date of the BaIDS, the rate of compensation shall be the current prevailing rate of the Islamic inter-bank money market. Permitted Investments The Issuer shall be permitted from time to time to utilise funds held in the Designated Accounts to make Permitted Investments or to make other investments subject to the consent of the Trustee, provided that such funds utilised for Permitted Investments shall be remitted to the Designated Accounts in a timely manner to meet any payment obligations of the Issuer when due and payable. The Permitted Investments shall have an earlier maturity date by at least five (5) days prior to the date when monies will be needed for payments. Such Permitted Investments are to be held and not traded. Permitted Investments mean: a) Mudharabah Deposits with any licensed financial institution; b) Islamic acceptance bills, bankers acceptance or promissory notes issued by licensed financial institutions with a rating of not less than AA (or its equivalent); c) Marketable Islamic securities which are Government guaranteed, or guaranteed by licensed financial institutions whose long term rating are not lower than AA (or its equivalent); d) Marketable Islamic securities with a minimum long term rating of AA (or its equivalent); e) Marketable Islamic securities which are guaranteed by licensed financial institutions with long-term rating of AA and above, and those issued by corporations with long-term rating of AAA (or its equivalent); or AA (or its equivalent); if such corporations are controlled by the Government; f) Islamic Bonds, treasury bills, debt instruments or securities issued by the Government or Khazanah Nasional Berhad. Other Conditions a) The operation of the BaIDS Facility shall at all times be governed by guidelines issued and to be issued from time to time by the relevant authorities having jurisdiction over matters pertaining to such instrument; b) The Lead Arranger and Investor(s) reserve/s the right to amend, add, vary, delete or selectively enforce any terms or conditions governing the availability of the BaIDS prior to the issuance of the BaIDS, subject to due diligence and material adverse change. Any change to terms and Page 21 of 23

23 conditions of the PTC of the BaIDS which has been approved by the SC would require prior approval of the SC; c) From the date of provision of a formal offer by the Lead Arranger until the date of execution of the documentation, the Lead Arranger retains the right to withdraw and/or terminate the offer if there occurs any event or circumstance which, in the opinion of the Lead Arranger will materially affect both the international and domestic money, capital or syndicated loan markets, the Issuer and its affiliated companies business activities; and/or the social, political, financial and economic situation in Malaysia. Transaction Documents Collectively refers to the Issue Documents and the Security Documents. Security Documents Collectively, (i) Debenture; (ii) Deed of Assignment of Project Contracts (Proceeds, Benefits and Contractual Rights); (iii) Deed of Assignment of Project Contracts (Proceeds, Benefits and Contractual Rights) (Third Party); (iv) Deed of Assignment (Insurance); (v) Memorandum of Charge (Designated Accounts); (vi) First Fixed Legal Charge; and the same includes any other agreement(s) or instrument(s) hereafter executed, amendment, variation or supplement thereto and Security Document shall refer to each or any one of them. Issue Documents collectively, (i) (ii) (iii) (iv) (v) (vi) (vii) Facility Agreement; Issue Agency Agreement; Asset Purchase Agreement; Asset Sale Agreement; Trust Deed; Depository and Paying Agency Agreement; and BaIDS Notes. Material Adverse Effect Material Adverse Effect means a material adverse effect upon the financial condition, business operations or management activities of the Issuer which may have a material adverse impact upon the ability of the Issuer to perform its obligations under the Transaction Documents. Page 22 of 23

24 Available Cash Flow In any relevant period, the sum of :- (a) (b) (c) (d) All income received and receivable by APM in cash and any other receipts of a capital or revenue nature under any Agreements; Income received on cash balances of the Designated Accounts and Permitted Investments; Takaful/Insurance proceeds received by APM during such period; and All credit balances and amounts standing to the credit of the Designated Accounts at the beginning of the financial year prior to the relevant date on which the FSCR is to be calculated. Less: (a) Tax paid in cash; (b) The total amount spent on management, administration and other operating activities; and (c) Capital expenditure incurred during that period to be duly audited by APM s auditors. Page 23 of 23