PTC INTEREST/COUPON (%)

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1 PTC INTEREST/COUPON (%)

2 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL BACKGROUND INFORMATION (a) Issuer (iii) (iv) (v) (vi) (vii) Name PECD Berhad ( PECD ). Address Tingkat 5, Block E, Peremba Square Saujana Resort Seksyen U Kuala Lumpur Business Registration No./Company No K Date/Place of Incorporation 30 October 2003/Malaysia. Date of Listing (in case of a public listed company) 25 October 2004 Status (resident/non-resident controlled and Bumiputera/non-Bumiputeracontrolled company) Resident Bumiputera controlled company. Principal Activities PECD is an investment holding company. PECD s main subsidiaries include Peremba Construction Sdn Bhd ( PCSB ), Peremba Jaya Holdings Sdn Bhd ( PJHSB ) and Wong Heng Engineering Sdn Bhd ( WHESB ). PECD s subsidiaries are involved in general construction contracting, property development and engineering, procurement construction and commissioning ( EPCC ) emphasising the oil and gas as well as power sectors. 1

3 (viii) Board of Directors The Board of Directors of PECD as at 31 March 2005 are as follows: Name (Age) Address Occupation Dato Dr Mohd Munir bin Abdul Majid (57) Ramli bin Ahmad (52) Dato Othman bin Hashim (53) Dato Yam Kong Choy, Michael (52) Tai Keat Chai (51) Oh Teik Tatt (57) No 48, Jalan Bruas, Damansara Heights, Kuala Lumpur No 3, Pinggiran Golf, Saujana Resort, Seksyen U2, Kuala Lumpur No 28, Jalan Bunga Raya 2/8, Shah Alam, Selangor Penthouse A-26-P2, Crown Tower Mont Kiara Astana, 2, Jalan Kiara, Mont Kiara Kuala Lumpur 17, Jalan SS20/22, Petaling Jaya, Selangor 11, Jalan Pinggiran Tunku Bukit Tunku Kuala Lumpur Independent Nonexecutive Chairman Group Managing Director Non-Independent Non-Executive Director Independent Non- Executive Director Independent Non- Executive Director Independent Non- Executive Director 2

4 (ix) Structure of shareholdings and names of shareholders or, in the case of a public company, names of all major shareholders The direct and indirect interest of the substantial shareholders of PECD in the Company as at 31 March 2005 are as follows:- Shareholders Nationality / Shareholding in PECD Place of Direct Indirect Incorporatio n No. of shares % No. of shares % DTSB (1) Malaysia 93,698, Nik Sufian Mohd Zain (2) Malaysian 150, ,698, Dato Othman Hashim (3) Malaysian 150, ,698, PPJHSB (4) Malaysia 88,843, PHSB (5) Malaysia ,843, The Investment Office (LLC) United Arab Emirates 18,392, PMSB (6) Malaysia ,843, Tan Sri Mohd Razali bin Abdul Rahman (7) Malaysian 100, ,427, Datuk Hassan Abas (8) Malaysian ,427, Abu Bakar bin Mohd Nor (9) Malaysian ,843, Notes:- (1) Substantial shareholder of PECD (2) Deemed interested by virtue of his substantial shareholdings in DTSB (3) Deemed interested by virtue of his substantial shareholdings in DTSB (4) Substantial shareholder of PECD (5) Deemed interested by virtue of its substantial shareholdings in PPJHSB (6) Deemed interested by virtue of its substantial shareholdings in PHSB (7) Deemed interested by virtue of his substantial shareholdings in PMSB and NISB (8) Deemed interested by virtue of his substantial shareholdings in PMSB and NISB (9) Deemed interested by virtue of his substantial shareholdings in PMSB (x) Authorised and issued and paid-up capital as at 31 March 2005: Authorised Capital : RM200,000, comprising: 400,000,000 ordinary shares of RM0.50 each. Issued and Paid-up Capital : RM150,000, comprising: 300,000,000 ordinary shares of RM0.50 each. 3

5 PRINCIPAL TERMS AND CONDITIONS (a) Names of parties involved in the proposed transaction (where applicable).. (iii). (iv). (v). (vi). (vii). (viii). (ix). (x). (xi). (xii). (xiii). (xiv). (xv). Principal Adviser/Lead Arranger ABN AMRO Bank Berhad ( ABN AMRO ). Arranger(s) Not applicable. Valuers Not applicable. Solicitors Firdaus Azlina & Co. Financial Adviser Kuala Lumpur City Securities Sdn Bhd. Technical Adviser Not applicable. Guarantor Not applicable. Trustee and Security Account Agent AmTrustee Berhad. Facility Agent ABN AMRO. Primary Subscriber and amount subscribed ABN AMRO RM200 million. Underwriter(s) and amount underwritten Not applicable. Central Depository Bank Negara Malaysia. Paying Agent Bank Negara Malaysia. Reporting Accountant Ernst & Young. Others Not Applicable 4

6 (b) Facility Description RM200 million Serial Fixed Rate Bonds (hereinafter to be referred to as the Bonds ). (c) (d) (e) Issue Size (RM) RM200 million. Issue Price (RM) At a discount. Tenor of the facility/issue Serial Bonds ranging between 3 to 8 years as follows:- 3 Years: RM25 million 4 Years: RM25 million 5 Years: RM25 million 6 Years: RM25 million 7 Years: RM50 million 8 Years: RM50 million (f) Interest/Coupon (%) Based on the following coupon rates: Tenure (years) Coupon Rate(%) % per annum % per annum % per annum % per annum % per annum % per annum The Issue Price for the Bonds shall be subject to a price fixing agreement between PECD and the Primary Subscriber within 7 days prior to the expected issuance date. Hence, the Yield-To-Maturity/Issue Price shall be fixed upon the determination of the issuance date and shall be informed to the Securities Commission. (g) (h) Coupon payment frequency Semi-annually. Coupon payment basis Actual / 365 days. Yield to Maturity (%) The yield-to-maturity shall be confirmed once the issue price has been set with the Issuer. We shall inform the SC of the yield-to-maturity upon confirmation with the Issuer which will be seven (7) days prior to issue date. (j) Security/Collateral 5

7 First charge over the Designated Accounts (as defined in Section (l) sub-section and ). (k) Details on utilisation of proceeds The main purpose of the PDS Issue is to re-finance bank borrowings and for working capital requirements, the details of which are provided herewith:- Description RM 000 To refinance bank borrowings of PECD s subsidiaries 120,000 ** For general working capital and investment requirements 76,698 # (iii) To finance issuance expenses 1,450 Total 198,148 * # - this amount shall be adjusted based on the total net proceeds received * - this is an approximate amount based on an issue at discount and the final total net proceeds shall be confirmed upon determination of the bought deal rate ** - if there is any balance unutilised under, it shall be utilised under Details of the bank borrowings as at 31 March 2005 to be re-financed under above are as follows: Lender Type of Facility Facility Amount RM mil Amount To be refinanced RM mil Purpose Malayan Overdraft Banking Bhd RM60 million Murabahah Working Capital Facilities RM30 million Murabahah Overdraft against Progress Certificate facility General working capital Working capital to finance Sg Muar Waterworks Project Bumiputra Commerce Bank Bhd Revolving credit / Letter of Credit Working capital to finance Petronas Hospital Project (iii) Mayban Finance Bhd Blanket Hire Purchase Loan Hire Purchase Totals (l) Security Accounts The Issuer will establish and maintain the Security Accounts as described in Section (j) above with a bank acceptable to the Facility Agent / Security Account Agent and to the extent permitted by law pledge these accounts to the Security Account Agent for the benefit of the Investors. 6

8 The Issuer and the Trustee shall be the signatories of all the Security Accounts. Notwithstanding anything to the contrary, upon the occurrence of an Event of Default, any withdrawal from the Security Accounts shall be subject to the sole signatory of the Trustee. Disbursement Account ( DA ) All proceeds from the Bonds shall be remitted in one lump sum into the DA upon satisfaction of the Conditions Precedent to First Issuance. The proceeds will be withdrawn and applied in accordance to the Purpose Clause upon the satisfaction of the Conditions Precedent to Disbursement/Withdrawal from the DA as confirmed by the Facility Agent. Debt Service Reserve Account ( DSRA ) The contribution to the DSRA shall be as follows:- (a) (b) In respect of the interest payments due for the Bonds, the amount initially required in the DSRA shall be built up in six equal monthly instalments, with each instalment equivalent to one-sixth (1/6) of the total amount payable by PECD to repay the next forthcoming coupon payment on the first maturity date (being six (6) months from date of issue), and thereafter a credit balance at least equivalent to the coupon payment on the next maturity date must be maintained at all times in the DSRA. In respect of the principal repayment of the Bonds, the amount required in the DSRA shall be built up in six equal monthly instalments, with each instalment equivalent to one-sixth (1/6) of the total amount payable by PECD to repay the next forthcoming principal repayment beginning from the first maturity date. If the balance in the DSRA falls below the minimum required to be maintained in the DSRA following the withdrawal for the payment of any coupon / principal, PECD shall deposit such sums in the DSRA so as to comply with the minimum balance requirement within thirty (30) days of such withdrawal. Amounts in the DSRA in excess of the minimum amount required to be maintained can be withdrawn at the discretion of the PECD. (m) (n) Rating Credit Rating Assigned - A (indicative) Name of Rating Agency - Malaysian Rating Corporation Berhad ( MARC ). Form and Denomination The Bonds shall be issued in accordance with the Code of Conduct and Market Practices for the Malaysian Corporate Bond Market issued by the Institut 7

9 Peniaga Bon Malaysia and approved by Bank Negara Malaysia ( BNM ) and the Rules on the Scripless Securities under the Real Time Electronic Transfer of Funds and Securities System ( RENTAS ) issued by BNM, or the replacement thereof (collectively the Code of Conduct ) applicable from time to time. The Bonds shall be in the denomination of RM1,000, each and shall be issued in bearer form (where applicable). The Bonds will be represented by Global Certificates to be deposited with BNM and will be traded under the Scripless Securities Trading System operated by BNM. (o) (p) (q) Mode of Issue Bought deal arrangement without prospectus to the Primary Subscriber made under RENTAS and reported in the Fully Automated System for Issuing / Tendering ( FAST ). Selling Restriction The Bonds may not be offered or sold directly or indirectly, nor may any document or other material in connection there with be distributed in Malaysia other than persons whose ordinary business is to buy or sell shares and securities, whether as principal or agent falling within any of the category of persons specified under Schedules 2 or 3 and 5 of the Securities Commission Act 1993 (as amended by the Securities Commission (Amendment) Act 2000). Listing Status The Bonds shall not be listed on Bursa Securities or any other stock exchange but will be reported on the FAST, and traded and prescribed under the SSTS maintained by BNM. (r) Minimum Level of Subscription (RM or %) 100% as the Bonds will be issued on a bought deal basis. (s) (t) Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained Not applicable. Conditions Precedent Usual and customary for an offering of PDS of this nature, which shall include but is not limited to the following:- Execution and delivery of all financing documents reflecting the terms and conditions set forth herewith and otherwise in form acceptable to the Lead Arranger and PECD; Delivery of evidence satisfactory to the Lead Arranger that all security interests and liens with respect to the Security Accounts have been created, filed, presented for registration, powers of attorney (if any) 8

10 lodged at the High Court, recorded and/or perfected as applicable, and all necessary consents have been obtained and are in full force and effect; (iii) (iv) (v) (vi) (vii) Delivery of all relevant corporate documents, resolution and other organisational documents relating to PECD, in form and substance satisfactory to the Lead Arranger; Delivery of satisfactory legal opinion from the Solicitor as to the validity and enforceability of all agreements; Evidence that the Security Accounts have been established with a bank acceptable to the Facility Agent/Trustee; Evidence of the approval of the Securities Commission ( SC ) in respect of the Bonds shall have been obtained; Evidence that the Bonds have been accorded a minimum rating of A by MARC; and (viii) Other conditions typical and customary for similar financing at the recommendation of the Lead Arranger and/or Solicitor and agreed by PECD. The conditions precedents for disbursement / withdrawal from the DA are as follows: (iii) (iv) (v) All prescribed security shall be in full force and effect; Representations and Warranties remain true and correct; Drawings for the refinancing of bank borrowings shall be against redemption statements and shall be paid directly to the beneficiary(ies) whilst the remaining balance shall be remitted directly to PECD against its Issue Request; No Event of Default has occurred; and Two (2) business days prior written notice to the Trustee in respect of any drawing from the DA. (u) Representations & Warranties: The Bonds shall have the benefit of customary representation and warranties including but not limited to the following:- (a) PECD is duly incorporated with limited liability under the Laws of Malaysia and is validly existing; 9

11 (b) (c) the Memorandum and Articles of Association of PECD incorporate provisions which authorise, and all necessary corporate action has been taken to authorise, and all authorisations of any governmental or other authority have been duly and unconditionally obtained and are in full force and effect to authorise, PECD to own its assets, carry on its business as it is being conducted, and sign and deliver, and exercise its rights and perform the transactions contemplated in the financing documents, to issue the Bonds and to perform its obligations specified therein and under the Bonds in accordance with its terms; neither the execution and delivery of the financing documents nor the performance of any of the transactions contemplated in the financing documents does or will; (iii) contravene or constitute a default under any provision contained in any contract, undertaking, agreement, instrument, law, judgment, order, licence, permit or consent by which PECD or any of its assets is bound or affected; or cause any limitation on PECD or the powers of its directors, whether imposed by or contained in its memorandum and articles of association or in any other law, order, judgment, agreement, instrument or otherwise, to be exceeded; or result in the creation or imposition of, or any obligation to create or impose, any mortgage, lien, pledge, charge or other security interest or any of its assets pursuant to the provisions of any other contract, undertaking or instrument; (d) all authorisation, approval, consent, licence, exemption, registration, recording, filing or notarisation of the financing documents and payment of all duty and all other action whatsoever which is necessary to ensure the legality, validity or enforceability or priority of the liabilities and obligations of PECD or the rights of the Trustee, the holders of the Bonds and the relevant agents under the financing documents to the extent that it is necessary for PECD to obtain and/or renew and/or deliver such authorisations, approval, consent, licence, exemption, registration, recording, filing or notarisation has been duly and unconditionally obtained, made or taken save and except for the following:- the registration of the power of attorney clause contained in the relevant financing documents with the High Court of Malaya in Kuala Lumpur; the registration of Forms 34 in relation to the charges created under the relevant financing documents with the Companies Commission of Malaysia; 10

12 (e) (f) (g) (h) (j) (k) no event has occurred which constitutes, or which with the giving of notice and/or the lapse of time and/or a relevant determination would constitute, a contravention of, or default under, any agreement or instrument by which PECD or any of its assets is bound or affected, being a contravention or default which might either have a material adverse effect on the business, assets or financial condition of PECD or materially and adversely affect PECD' ability to observe or perform its obligations under the financing documents in accordance with their respective terms; no litigation, arbitration or administrative proceeding or claim which might by itself or together with any other such proceedings or claims either have a material adverse effect on the business, assets or condition of PECD or materially and adversely affect PECD' ability to observe or perform its obligations under the financing documents in accordance with their terms, is presently in progress or pending or threatened against PECD; all necessary returns have been delivered by or on behalf of PECD to the relevant taxation authorities and PECD is not in default in the payment of any taxes of a material amount and no material claim is being asserted with respect to taxes which is not disclosed in the financial statements referred to in sub-paragraph (h) which would materially and adversely affect PECD ability to perform its obligations under the financing documents with respect to any taxes; the audited financial statements (including the income statement and balance sheet) of PECD for the relevant financial period have been prepared on a basis consistently applied in accordance with approved accounting principles in Malaysia and give a true and fair view of the results of its operations for that financial period and the state of its financial affairs at that date and in particular disclose or make provision against all the liabilities (actual or contingent) of PECD to the extent such disclosure or provision is required by the generally accepted accounting principles in Malaysia applicable at the relevant time and there has been no material adverse change in PECD financial position since the date of the latest audited financial statement which would materially and adversely affect PECD ability to perform its obligations under the financing documents; no lawsuits by a governmental agency, body or other regulatory authority are pending against PECD or, to the best of its knowledge, threatened to be instituted against PECD which will materially and adversely affect the ability of PECD to discharge its obligations under the financing documents; PECD is the beneficial owner or has title to all its assets; PECD is in compliance and will comply with any applicable laws and regulations; 11

13 (l) (m) no steps have been taken by PECD nor, to the best of its knowledge, have any legal proceedings been started or threatened for the dissolution or winding up of PECD or for the appointment of a receiver or similar officer in respect of all or any part of the business or assets of PECD and no demand under Section 218(2) of the Companies Act 1965 have been received by PECD; All other representations and warranties as may be stipulated by the Lead Arranger and/or the Solicitor (v) Events of Default The Bonds shall have the benefit of customary events of default including but not limited to the following:- (a) (b) PECD fails to pay any amount due under Bonds and/or the financing documents on the due date (whether formally demanded or not) or on demand, if so payable; PECD fails to observe or perform or commits a breach of any of its obligations under the financing documents or under any undertaking or arrangement entered into in connection therewith, other than an obligation of the type referred to in (a) above and, in the case of a failure capable of being remedied, PECD has not remedied such failure within fourteen (14) days after PECD became aware or having been notified of the failure; (c) any representation, warranty or statement which is made (or acknowledged to have been made) by PECD in the financing documents upon the execution of the same or which is contained in any certificate, statement, legal opinion or notice provided or caused to be provided by PECD under or in connection with the financing documents proves to be inaccurate in any material respect or, if repeated at any time with reference to the facts and circumstances then existing, would not be accurate in all material respects; (d) (e) at any time it is unlawful for PECD to perform any of its obligations under the financing documents or any provision of the financing documents is or becomes, for any reason, invalid or unenforceable; PECD stops or threatens to stop payment in respect of its obligations generally or if any other debenture of or monies borrowed by PECD becomes repayable by reason of default or any amount owing thereunder or in respect thereof is not repaid on its due date (or within any applicable grace period) or if any guarantee or indemnity given by PECD is not honoured when due and called upon or if any security for any such debenture, monies borrowed, guarantee or indemnity becomes enforceable; 12

14 (f) (g) an encumbrancer takes possession of, or a trustee, receiver or similar officer is appointed in respect of, the whole or substantial part of the business or assets of PECD or distress, legal process, sequestration or any form of execution is levied or enforced upon or instituted against any of the assets of PECD and is not discharged within sixty (60) days after being levied, enforced or instituted, or any security interest which may for the time being affect any of its assets becomes enforceable; PECD shall fail to satisfy any judgment passed against PECD by any Court of competent jurisdiction; (h) a scheme of arrangement under Section 176 of the Companies Act, 1965 (as amended) has been instituted by or against PECD; (j) (k) any step is taken for the winding up, dissolution or liquidation of PECD or a petition for winding up, is presented against PECD and PECD has not taken any action to set aside such petition within sixty (60) days from the date of service of such winding up petition; any legal proceedings, suit or action shall be instituted against PECD by any third parties and PECD has not, within thirty (30) days from the date such legal proceedings, suit or action were instituted against PECD, taken any reasonable steps acceptable to the Trustee to discharge or stay such legal proceedings, suit or action; All other events of default as may be stipulated by the Lead Arranger and/or the Solicitor. In the event of default, the Bondholders will have a direct recourse on PECD and they will be entitled to sue PECD for monies due and not paid. The rights of the Bondholders in respect of the bonds will rank pari passu with all of PECD s other senior debts irrespective of when the debts were incurred. (w) (x) Principal terms and conditions for warrants (where applicable) Not applicable. Other principal terms and conditions for the issue The Bonds incorporates the following Financial Covenants: The Debt/Equity ratio should be maintained at a ratio not exceeding 1.50:1(based on the earliest available consolidated semi-annual announced and annual audited statements respectively of the Issuer starting one year from the anniversary of the issuance). Terms used for the above financial ratios are as defined below:- 13

15 Debt is defined as the aggregate of the amount outstanding arising from all bank borrowings obtained including the aggregate of all monies whether principal, interest payments and fees payable under this PDS Issue (minus the cash balances of the issuer and its subsidiaries) save and except for trade lines incurred in the ordinary course of business and the project debt incurred in relation to the Kuala Lumpur Flood Mitigation Project. Equity is defined as the aggregate of the amount of the paid-up capital of the Issuer and its retained earnings on a consolidated basis, the balance standing to the credit of its share premium, its revenue and capital reserves and all shareholders advances which are subordinated including existing revaluation surplus but excluding goodwill and minority interest. Cannot declare or pay any dividends save for the minimum dividend as may be required to attain and maintain the trustee status of PECD (where applicable) if:- a) the annual Debt Service Cover Ratio is less than 1.25 times (commencing 31 December 2005 and based on the consolidated semi-annual announced (on an annualised basis) and annual audited statements respectively of the Issuer); b) an event of default has occurred, or is continuing and has not been waived; or c) payments to the DSRA are outstanding. Debt Service Cover ratio is defined as the aggregate amount of net cashflow from operating activities, interest received and cash balances (excluding cashflow paid by the Government of Malaysia, Jabatan Pengairan dan Saliran Malaysia upon the completion of the Kuala Flood Mitigation Project); divided by the aggregate of all monies paid whether principal, interest payments and fees payable under the PDS Issue and any other principal, interest payments and fees payable arising out of shareholders advances or bank loans (save and except for trade lines incurred in the ordinary course of business) or lease creditors or other any indebtedness, excluding indebtedness in relation to the Kuala Lumpur Flood Mitigation Project, and in each case calculated on the date of determination, commencing 31 December 2005 and based on the consolidated semi-annual announced (on an annualised basis) and annual audited statements respectively of the Issuer. 14