: P. : 11 July 2001/Kuching, Sarawak. : Not applicable. : Resident controlled company. : Bumiputera controlled company

Transcription

1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL 1.01 Background Information (a) Issuer (i) Name : Sacofa Sdn Bhd ( Sacofa/ the Issuer ) (ii) Address : Registered Address/Principal Place of Business 3 rd Floor, Lot 367, Section 5 Kuching Town Land District Jalan Kulas/Satok Kuching Sarawak (iii) (iv) (v) (vi) Business Registration No. Date/Place of Incorporation Date of Listing (in case of a public listed company) Status Resident/nonresident controlled company Bumiputera/non- Bumiputera controlled company : P : 11 July 2001/Kuching, Sarawak : Not applicable : Resident controlled company : Bumiputera controlled company (vii) Principal Activities : Trade or business of a telecommunications infrastructure and services company including all its related business (viii) Board of Directors : The Directors of Sacofa as at 1 August 2005 are as follows: Name Resident Status NRIC No. Datu Ahmad Tarmizi Bin Sulaiman Resident

2 Teo Tien Teo Thin Pee Ir. Abang Jemat Bin Abang Bujang Fabian Chang Tsan Shiung Resident Resident Resident Samat Bin Junai Resident Dato Mohamed Yunus Ramli Bin Abbas Resident Name Resident Status NRIC No. Azwan Khan Bin Osman Khan Thien Joon Hiong (Alternate to Teo Tien Teo Thin Pee) Ghazali Bin Ismail (Alternate to Datu Ahmad Tarmizi Bin Sulaiman) Mohamed Adlan bin Ahmad Tajudin (Alternate to Dato Mohamed Yunus Ramli bin Abbas) Resident Resident Resident Resident (ix) Structure of shareholdings and names of shareholders or, in the case of a public company, names of all substantial shareholders : The shareholdings of Sacofa as at 1 August 2005 are as follows: Name No. of shares held % share holding State Financial Secretary (Incorporated) 33,837, Celcom (Malaysia) Berhad 9,815, Sarawak Information Systems Sdn Bhd 7,500,

3 PASB Technology Sdn Bhd 7,500, (x) Authorised Capital (as at 1 August 2005) Issued and Paid-Up Capital (as at 1 August 2005) Yayasan Sarawak 2,500, Total 61,153, : RM500,000,000 comprising 500,000,000 ordinary shares of RM1.00 each : RM61,153,247 comprising of 61,153,247 ordinary shares of RM1.00 each 3

4 1.02 Principal Terms and Conditions (a) Names of parties involved in the proposed transaction (where applicable) (i) Principal Adviser(s) / Lead Arranger(s) : 1. Commerce International Merchant Bankers Berhad 2. RHB Sakura Merchant Bankers Berhad (ii) Arranger(s) : Not Applicable (iii) Valuers : Not Applicable (iv) Solicitors : Messrs Kadir, Andri & Partners (v) Financial Adviser : Newfields Advisors Sdn Bhd (vi) Technical Adviser : Not Applicable (vii) Guarantor : Not Applicable (viii) Trustee : Amanah Raya Berhad (ix) Facility Agent : Commerce International Merchant Bankers Berhad (x) (xi) (xii) Primary Subscriber(s) and amount subscribed (where applicable) Underwriter(s) and amount underwritten Syariah Adviser (where applicable) : The Primary Subscribers (if any) will be determined prior to the issuance of the relevant Sukuk Istisna : Not Applicable : CIMB Shariah Committee (xiii) Central Depository : Bank Negara Malaysia ( BNM ) (xiv) Paying Agent : BNM (xv) Reporting Accountant : Messrs. Ernst & Young (xvi) Other (please specify) : Joint Lead Managers ( JLMs ) 1. Commerce International Merchant Bankers Berhad 2. RHB Sakura Merchant Bankers Berhad 4

5 (b) Islamic Principle Used : Istisna Security Trustee Amanah Raya Berhad Project Monitoring Agent ( PMA ) Commerce International Merchant Bankers Berhad Lead Arranger for BNM purposes Commerce International Merchant Bankers Berhad (c) Facility Description : Sukuk Istisna of up to RM160 million in nominal value. Istisna refers to a construction or manufacturing contract for specific assets or goods. A party will place a construction or manufacturing order with another party for assets or goods which will be delivered in the future, in accordance with the specifications provided under the Istisna contract. Under this transaction, the Istisna Assets to be constructed will be telecommunication towers to be constructed in accordance with the construction contracts to be entered into between Sacofa and various contractors. Sacofa will enter into an Istisna contract with Hepfos Equity ( First Istisna Contract ), whereby Hepfos Equity agrees to construct and deliver the Istisna Asset to Sacofa in consideration for the Istisna Sale Price, which equals to the aggregate of the nominal value of primary Sukuk Istisna and the profit thereon, to be calculated according to a prescribed formula. The Istisna Sale Price will be paid according to an agreed payment schedule and Sacofa will issue primary and secondary Sukuk Istisna to evidence its obligations to pay the Istisna Sale Price to Hepfos Equity. Pursuant to a placement agreement to 5

6 be entered into between Hepfos Equity, Sacofa and the Joint Lead Managers, Hepfos Equity agrees for the Sukuk Istisna to be placed directly to the Joint Lead Managers (in the case of bought deal with the Joint Lead Managers) or through the Joint Lead Managers (in the case of book-run). Hepfos Equity will thereafter enter into an Istisna contract with Sacofa ( Second Istisna Contract ), whereby Sacofa agrees to construct and deliver the Istisna Asset to Hepfos Equity in consideration for the Istisna Purchase Price, which will be equal to the net proceeds to be raised from the issuance of Sukuk Istisna. Delivery of the Istisna Asset to Sacofa will take place upon Hepfos Equity taking delivery of the same under the Second Istisna Contract. The First Istisna Contract and Second Istisna Contract will be entered into on a parallel basis. (d) Issue Size (RM) : The outstanding nominal value of the primary Sukuk Istisna issued at any point in time shall not exceed RM160 million. (e) Issue Price : The Sukuk Istisna shall be issued at par or discount. (f) Tenor of the facility/issue : Nine (9) years from the date of first issuance of the Sukuk Istisna. The Sukuk Istisna will be issued on the same day and will have the following maturities: Tranche Tenure Nominal Value 1 4 Up to RM25.0 million 2 5 Up to RM25.0 million 3 6 Up to RM25.0 million 6

7 (g) (h) Coupon/profit or equivalent rate (%) (please specify) Coupon/profit payment frequency and basis 4 7 Up to RM25.0 million 5 8 Up to RM30.0 million 6 9 Up to RM30.0 million : Fixed profit rates per annum calculated on the nominal value of each tranche of Sukuk Istisna which shall be agreed between the Issuer and the Joint Lead Managers (in the case of a bought deal) or to be determined at the point of book closure (in the case of a book-run). : Payable semi-annually in arrears with the first profit payments for each tranche of Sukuk Istisna commencing six months from the date of issue of the respective Sukuk Istisna with the last profit payment for each tranche of Sukuk Istisna to be made on the maturity dates of each respective tranche of Sukuk Istisna. Profit payment are to be calculated based on the actual number of days elapsed and the actual number of days basis (actual/actual). (i) Yield to Maturity (%) : To be agreed between the Issuer and the Joint Lead Manager (in case of a bought deal) or determined at the point of book closure (in case of a book-run). (j) Security/collateral (if any) : Including but not limited to the following: 1. an assignment over Designated Accounts (as defined below) of the Issuer and the credit balances therein; 2. an assignment of completion guarantees and performance bonds (if any) issued or to be issued in favour of Sacofa for construction contract(s) awarded to contractor(s) by Sacofa in respect of any part of the works under the Project (as defined below); 7

8 3. an assignment of the Issuer s rights, interest, titles and benefits under the present and future license agreement(s) with telecommunication companies and/or other agreements on the leasing of telecommunication towers and lease agreement(s) on the leasing of submarine cable and fibre optic network bandwidth; and 4. an assignment of all insurance policies taken by Sacofa in relation to the Project The security over the TRA and OA as described under Designated Accounts below and in relation to item 3 above will be shared between the Sukuk Istisna holders and Sarawak Gateway s Sukuk Ijarah holders. Designated Accounts The Issuer shall open and maintain the following Syariah-compliant Designated Accounts with a bank to be appointed by the Issuer which is acceptable to the Joint Lead Managers: (i) (ii) Sukuk Istisna Escrow Account ( SIEA ); Telco Revenue Account ( TRA ); and (k) Details on utilisation of proceeds (iii) Operating Account ( OA ). The SIEA and TRA shall be jointly operated by CIMB as the Project Monitoring Agent ( PMA ) (acting as agent for the Security Trustee) and the Issuer. The OA shall be operated solely by the Issuer. The proceeds from the issuance of the Sukuk Istisna shall be utilised as follows: 8

9 (a) up to RM130.0 million, to part finance the construction of new telecommunication towers in Sarawak as well as the purchase of existing telecommunication towers from telecommunication companies operation in Sarawak ( Project ); (b) up to RM5.55 million for the repayment of existing shareholders loan; and (c) the balance to finance Sacofa s working capital requirements and/or for payments of fees, costs and expenses relating to the issue of the Sukuk Istisna and/or the fees, costs and expenses related to Sarawak Gateway s Sukuk Ijarah. (l) Sinking Fund (if any) : Not Applicable (m) Rating Credit Rating assigned (Please specify if this is an indicative rating) Name of rating agency : Indicative rating of AAA IS Malaysian Rating Corporation Berhad ( MARC ). Please refer to Appendix VII for a copy of MARC s indicative rating letter dated 22 August (n) Form and denomination : Sukuk Istisna shall be issued in accordance with (1) the Code of Conduct and Market Practices for the Malaysian Corporate Bond Market issued by the Institut Peniaga Bon Malaysia and approved by BNM ( IPBM Code ) and (2) the Rules on the Scripless Securities under the Real Time Electronic Transfer of Funds and Securities ( Rentas ) system issued by BNM ( Rentas Rules ) and (3) the Rules on Fully Automated System for Issuing/Tendering ("FAST") issued by BNM ( FAST Rules ), or their replacement thereof (collectively the Codes of Conduct ) applicable from time 9

10 to time. The Rentas Rules shall prevail to the extent of any inconsistency between the Rentas Rules and the IPBM Code. Each tranche of Sukuk Istisna shall be represented by a global certificate to be deposited with BNM, and is exchanged for definitive bearer form only in certain limited circumstances. The denomination of the Sukuk Istisna shall be RM1,000 or in multiples of RM1,000 at the time of issuance. (o) Mode of Issue : Bought deal or private placement on a book running basis (to be mutually agreed by both the Issuer and the Joint Lead Managers). (p) Selling Restriction : Upon issuance Sukuk Istisna may only be offered, sold, transferred or otherwise disposed directly or indirectly to persons falling within the relevant category of the persons specified in section 4(6) of the Companies Act, as amended from time to time. Selling restriction thereafter Sukuk Istisna may only be offered, sold, transferred or otherwise disposed directly or indirectly to persons falling within the relevant category of the persons specified in section 4(6) of the Companies Act, as amended from time to time. In the event the Issuer becomes a public limited company, the Sukuk Istisna may only be offered, sold, transferred or otherwise disposed directly or indirectly to a person to whom an offer or invitation to purchase the Sukuk Istisna would fall within Schedule 2 or Section 38(1)(b) of SCA and would fall within Schedule 5 or Section 66(3) of the SCA (q) Listing Status : Sukuk Istisna will not be listed on Bursa Malaysia Securities Berhad or any other stock exchange. 10

11 (r) (s) Minimum level of subscription (RM or %) Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained (please specify) : The minimum level of subscription for each issue of Sukuk Istisna, if not issued on a bought deal basis, shall be 100% of the size of a particular issue. : Not Applicable (t) Identified Assets : Telecommunication towers to be constructed in accordance with the specifications/descriptions of the construction contracts to be entered into between Sacofa and various contractors. The Identified Assets has a fair value of approximately RM160.0 million. The value of the Identified Assets is based on the value of the actual construction contracts to be entered into between the Issuer and various contractors for the construction of the telecommunication towers. The Purchase Price represents 1.00 times of the value of the Identified Assets; SAC Pricing Guidelines is therefore complied with. (u) Purchase and selling price/rental (where applicable) : Istisna Purchase Price The Istisna Purchase Price refers to the price payable by the Hepfos Equity under the Second Istisna Contract to the Issuer in one lump sum for the construction and delivery of the Istisna assets. The Istisna Purchase Price will be equal to the net proceeds to be raised from the issuance of the Sukuk Istisna. The Istisna Purchase Price will be disbursed in one lump sum into the SIEA, after the initial payment of fees, costs and expenses relating to the issue of the Sukuk Istisna and/or the fees, costs and expenses related to Sarawak Gateway s Sukuk Ijarah have been effected. 11

12 The Istisna Purchase Price, of the Identified Assets, shall at all times comply with the Securities Commission s Syariah Advisory Council Pricing Guidelines, dated 30 April Istisna Sale Price The Istisna Sale Price refers to the price payable by the Issuer under the First Istisna Contract. The Istisna Sale Price will equal to the aggregate of the nominal value of primary Sukuk Istisna and the profit thereon, to be calculated according to a prescribed formula. The Istisna Sale Price will be paid according to an agreed payment schedule and the Issuer will issue primary and secondary Sukuk Istisna to evidence its obligations to pay the Istisna Sale Price to Hepfos Equity. (v) Conditions Precedent : To include but not limited to the following (all have to be in form and substance acceptable to the Joint Lead Managers): A (i) Main Documentation The transaction documents have been signed and, where applicable, stamped and presented for registration. (ii) All relevant notices and acknowledgements (where applicable) shall have been made or received as the case may be. B (i) (ii) (iii) The Issuer Certified true copies of the Certificate of Incorporation, and the Memorandum and Articles of Association, of the Issuer. Certified true copies of the latest Forms 24 and 49 of the Issuer. A certified true copy of a board resolution of the Issuer authorising, 12

13 among others, the execution of the transaction documents. (iv) A list of the Issuer s authorised signatories and their respective specimen signatures. (v) A report of the relevant company search of the Issuer. (vi) A report of the relevant winding up search or the relevant statutory declaration of the Issuer. (vii) Satisfactory evidence to the Joint Lead Managers that an irrevocable and unconditional instruction has been provided to the OA bank to remit payments to the relevant banks for the repayment of Sacofa s existing bank borrowings of up to RM163.0 million and for repayment of bridging loans provided by RHB Sakura and Bumiputera Commerce Bank Berhad amounting up to RM65.0 million from the Ijarah sale proceeds of the Ijarah Assets upon receipt of the same from Sarawak Gateway. C Hepfos Equity (re. First Istisna Contract) The documents corresponding to those under items B(i) to B(vi) (both inclusive) in respect of Hepfos Equity. D (i) General The approval from the Securities Commission ( SC ). (ii) The Sukuk Istisna have received the requisite rating as stated in this term sheet. 13

14 (w) Representations and Warranties (iii) Evidence that all transaction fees, costs and expenses have been or will be paid in full. (iv) The Joint Lead Managers have received from its legal counsel a favourable legal opinion addressed to it and the Trustee advising with respect to, among others, the legality, validity and enforceability of the transaction documents and a confirmation addressed to the Joint Lead Managers that all the conditions precedent have been fulfilled, and. (v) Receipt of approval from the Syariah Adviser for the Sukuk Istisna. : To include but not limited to the following: (i) the Issuer is a company with limited liability duly incorporated and validly existing under the laws of Malaysia, has full power to carry on its business and to own its property and assets, and has full beneficial ownership of all its assets; (ii) the memorandum and articles of association of the Issuer incorporate provisions which authorise, and all necessary corporate and other relevant actions have been taken to authorise, and all relevant consents and approvals of any administrative, governmental or other authority or body in Malaysia have been duly obtained and are in full force and effect which are required to authorise, the Issuer to execute and deliver and perform the transactions contemplated in the transaction documents in accordance with their terms; (iii) neither the execution and delivery of any of the transaction documents 14

15 nor the performance of any of the transactions contemplated by the transaction documents did or does as at the date this representation and warranty is made or repeated (a) contravene or constitute a default under any provision contained in any agreement, instrument, law, ordinance, decree, judgement, order, rule, regulation, licence, permit or consent by which the Issuer or any of its assets is bound or which is applicable to the Issuer or any of its assets, (b) cause any limitation on the Issuer or the powers of its directors, whether imposed by or contained in its memorandum and articles of association or in any agreement, instrument, law, ordinance, decree, order, rule, regulation, judgement or otherwise, to be exceeded, or (c) cause the creation or imposition of any security interest or restriction of any nature on any of the Issuer s assets; (iv) each of the transaction documents is or will when executed and/or issued, as the case may be, be in full force and effect and constitutes, or will when executed or issued, as the case may be, constitute, valid and legally binding obligations of the Issuer enforceable in accordance with its terms. (x) Events of Default : To include but not limited to the following: (i) the Issuer fails to pay any amount due from it under any of the transaction documents on the due date or, if so payable, on demand; (ii) any representation or warranty made or given by the Issuer and/or Hepfos Equity under the transaction 15

16 documents or which is contained in any certificate, document or statement furnished at any time pursuant to the terms of the Sukuk Istisna and/or any of the transaction documents proves to have been incorrect or misleading in any material respect on or as of the date made or given or deemed made or given, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy the failure within a period of seven (7) business days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the failure; (iii) the Issuer or Hepfos Equity fails to observe or perform its obligations under any of the transaction documents or the Sukuk Istisna or under any undertaking or arrangement entered into in connection therewith other than an obligation of the type referred to in paragraph (i.) above, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy the failure within a period of seven (7) business days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the failure; (iv) there has been a breach by the Issuer of any obligation under any of the Issuer s existing contractual obligations which may materially and adversely affect the Issuer s ability to perform its obligations under the transaction documents and, if in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy the breach within a period of seven (7) 16

17 business days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the breach; (v) any indebtedness for borrowed moneys or debts of the Issuer or Hepfos Equity becomes due or payable or capable of being declared due or payable prior to its stated maturity or when the Issuer or Hepfos Equity is deemed unable to pay any of its debts or becomes unable to pay any of its debts as they fall due or any guarantee or similar obligations of the Issuer is not discharged at maturity or when called and such declaration of indebtedness being due or payable or such call on the guarantee or similar obligations is not discharged or disputed in good faith by the Issuer in a court of competent jurisdiction within thirty (30) days from the date of such declaration or call, or the Issuer goes into default under, or commits a breach of, any agreement or instrument relating to any such indebtedness, guarantee or other obligations, or any security created to secure such indebtedness becomes enforceable or when the Issuer or Hepfos Equity suspend or threaten to suspend making payments with respect to all or any class of its debts; (vi) an encumbrancer takes possession of, or a trustee, receiver, receiver and manager or similar officer is appointed in respect of the whole or substantial part of the business or assets of the Issuer or Hepfos Equity, or distress, legal process, sequestration or any form of execution is levied or enforced or sued out against the Issuer or Hepfos Equity which may have a 17

18 Material Adverse Effect (as defined below) on the Issuer or Hepfos Equity, or any security interest which may for the time being affect any of its assets becomes enforceable; For the purpose of this paragraph (vi), references to substantial shall mean such value equivalent to or more than 10% of the Issuer s net tangible assets as reflected in its latest annual audited financial statements. (vii) the Issuer fails to satisfy any judgement passed against it by any court of competent jurisdiction and no appeal against such judgement or no application for a stay of execution has been made to any appropriate appellate court within the time prescribed by law or such appeal or application for a stay of execution has been dismissed; (viii) any step is taken for the winding up, dissolution or liquidation of the Issuer or Hepfos Equity or a resolution is passed for the winding up of the Issuer or Hepfos Equity or a petition for winding up is presented against the Issuer or Hepfos Equity and the Issuer or Hepfos Equity has not taken any action in good faith to set aside such petition within thirty (30) days from the date of service of such winding up petition or a winding up order has been made against the Issuer; (ix) the Issuer or Hepfos Equity convenes a meeting of its creditors or proposes or makes any arrangement including any scheme of arrangement or composition or 18

19 begins negotiations with its creditors, or takes any proceedings or other steps, with a view to a rescheduling or deferral of all or any part of its indebtedness or a moratorium is agreed or declared by a court of competent jurisdiction in respect of or affecting all or any part of its indebtedness or any assignment for the benefit of its creditors (other than for the purposes of and followed by a reconstruction previously approved in writing by the Trustee, unless during or following such reconstruction the Issuer becomes or is declared to be insolvent) or where a scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against the Issuer; (x) where there is a revocation, withholding or modification of any license, authorisation, approval or consent which in the opinion of the Trustee may materially and adversely impairs or prejudices the ability of the Issuer to comply with the terms and conditions of the Sukuk Istisna or the transaction documents; (xi) any creditor of the Issuer exercises a contractual right to take over the financial management of the Issuer and such event in the opinion of the Trustee may have a Material Adverse Effect on the Issuer; (xii) the Issuer changes or threatens to change the nature or scope of a substantial part its business, or suspends or threatens to suspend or cease or threatens to cease the operation of a substantial part of its business which it now conducts directly or indirectly and such 19

20 change or suspension or cessation in the opinion of the Trustee may have a Material Adverse Effect on the Issuer; (xiii)at any time any of the provisions of the transaction documents is or becomes illegal, void, voidable or unenforceable; (xiv) the Issuer repudiates any of the transaction documents or the Issuer does or causes to be done any act or thing evidencing an intention to repudiate any of the transaction documents; (xv) any of the assets, undertakings, rights or revenue of the Issuer are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any governmental body which in the opinion of the Trustee may have a Material Adverse Effect on the Issuer; (xvi)any event or events has or have occurred or a situation exists which in the opinion of the Trustee may have a Material Adverse Effect on the Issuer, and in the case of the occurrence of such event or situation which in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy it within a period of seven (7) business days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the event or situation. The Trustee may and if so directed by the Sukuk Istisna holders in a special resolution shall (subject to its rights to be indemnified), declare that the Sukuk Istisna are immediately due and payable 20

21 (y) (z) Principal terms and conditions for warrants (where applicable) Other principal terms and conditions for the issue and the Sukuk Istisna will thereupon become immediately due and payable if any of the above events of default occur. At any time after the Sukuk Istisna shall have become immediately due and payable under the event of default provisions above, the Trustee may at its discretion institute such proceedings as it may think fit against the Issuer to enforce such payment including to issue such notices as required under the trust deed. Material Adverse Effect Means any material adverse effect on the business or condition (financial or otherwise) or results of the operations of the Issuer or the occurrence of any event which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents. : Not Applicable : Status : Sukuk Istisna will constitute direct, unconditional and secured obligations of the Issuer and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, subject to those preferred by law or the transaction documents. Redemption : Unless previously redeemed or purchased and cancelled, Sukuk Istisna will be redeemed by the Issuer at 100% of their nominal value on their respective maturity dates. 21

22 Repurchase and cancellation : The Issuer or any of its Related Corporations (as defined in the Companies Act, 1965, amended from time to time) may at any time purchase Sukuk Istisna at any price in the open market or by private treaty. The Issuer or any of its Related Corporations may at its option retain such purchased Sukuk Istisna for their own account or sell or cancel or otherwise deal with them at its discretion but such Sukuk Istisna held by it shall not be counted for purposes of voting. Availability : Upon completion of documentation and, unless waived by the Joint Lead Managers, compliance of all conditions precedent and other applicable conditions to the satisfaction of the Joint Lead Managers. Sukuk Istisna Escrow Account ( SIEA ) The SIEA is for the purpose of crediting and/or depositing the following: (i) proceeds from the Sukuk Istisna, save and except for the proceeds which are intended for the initial payment of fees, costs and expenses relating to the issue of the Sukuk Istisna and/or the fees, costs and expenses related to Sarawak Gateway s Sukuk Ijarah; (ii) proceeds from any insurance claims or from the enforcement of performance bonds and completion guarantees in relation to or arising from the Project; and (iii) profit earned on Permitted Investments (as defined below) in relation to SIEA funds. The balances in the SIEA shall be transferred to the OA to pay for costs related to the Project or as working capital against satisfactory documentary evidence acceptable to the PMA. 22

23 Telco Revenue Account ( TRA ) : The TRA is for the purpose of crediting and/or depositing the following: - 1. all lease payments due to Sacofa and/or its subsidiaries in relation to the lease of existing and future telecommunication towers, the submarine cable and fibre optic network; 2. amounts received by Sacofa pursuant to the repayment of loans extended to its subsidiaries or advances and/or dividend payments received by Sacofa; 3. profits earned on Permitted Investments (as defined below) in relation to TRA funds; 4. proceeds from any insurance claims or from the enforcement of performance bonds and completion guarantees in relation to or arising from the identified Ijarah Assets sold to Sarawak Gateway under the Sukuk Ijarah transaction; and 5. all other payments (other than those to be credited into the SIEA and the OA) received by Sacofa. Utilisation of Funds in the Telco Revenue Account : Funds credited in the TRA shall be applied in the following order of priority: 1. for profit payments represented by secondary notes relating to each respective tranche of Sukuk Istisna and for Ijarah rentals payable to Sarawak Gateway as and when due; 2. redemption of primary notes due under the Sukuk Istisna and for payments relating to the exercise of the Sacofa s Purchase Undertaking (as defined below) or the Sarawak Gateway s Sale Undertaking (as defined below) in relation to Sarawak 23

24 Gateway Ijarah assets; 3. payment of recurring fees, expenses, costs and all other amounts in relation to the Sukuk Istisna and the Sarawak Gateway s Sukuk Ijarah; 4. an amount to be periodically deposited (the amount and period to be agreed with the Issuer prior to the issuance of the Sukuk Istisna ) into the OA for payment of operating and administration expenditures, costs in relation to construction of new telecommunication towers, purchase of existing towers from telecommunication companies operating in Sarawak, taxes and other overheads of the Issuer and Sarawak Gateway; 5. for payment of dividends or capital or income distributions to the Issuer s shareholders or for payment of shareholder s loans or advances subject to compliance with the terms and conditions under this term sheet; 6. investments in Permitted Investments (as defined below), subject to all requisite terms and conditions herein being observed; 7. for repurchase of Sukuk Istisna or the Sarawak Gateway s Sukuk Ijarah. Sacofa s Purchase Undertaking The unconditional and irrevocable undertaking by Sacofa to purchase Sarawak Gateway s Ijarah assets under certain circumstances for an agreed purchase price. Sarawak Gateway s Sale Undertaking The unconditional and irrevocable undertaking by Sarawak Gateway to sell its Ijarah assets to Sacofa under certain 24

25 circumstances for an agreed sale price. Operating Account ( OA ) : The Issuer shall open and operate an OA for the purpose of depositing the following: - 1. amounts transferred from the SIEA for the payment of costs related to the Project and for working capital; 2. amounts transferred from the TRA for the payment of operating and administration expenditures, costs in relation to construction of new telecommunication towers, purchase of existing towers from telecommunication companies operating in Sarawak, taxes and other overheads of the Issuer and Sarawak Gateway; and 3. proceeds received from the sale of the identified Ijarah assets to Sarawak Gateway which is to be utilised for the repayment of bank borrowings amounting up to RM163.0 million, repayment of all amounts outstanding under the bridging loans of up to RM65.0 million extended to Sacofa by RHB Sakura and Bumiputra-Commerce Bank Berhad ( BCB ) with the balance for working capital. Right to make Permitted Investments : Funds held in the SIEA and TRA shall be permitted to be invested in Permitted Investments (as defined below) by the PMA upon instruction from the Issuer, provided that: (i) such funds utilised for Permitted Investments shall, where necessary, be remitted to the SIEA and the TRA as the case may be in a timely manner to meet any payment obligations of the Issuer when due and payable; 25

26 (ii) such Permitted Investments are to be held and not traded; and (iii) shall be denominated in Ringgit. Permitted Investments : Permitted Investments shall comprise investment products approved by the Syariah Advisory Council of the Securities Commission ( SC ), Bank Negara Malaysia s Syariah Council and/or other recognised Syariah authorities. For the purpose of the Sukuk Istisna, Permitted Investments are as follows: - (i) Mudharabah, wadiah and other deposits under Syariah principles with licensed financial institutions with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent; or (ii) Islamic bankers acceptances, bills and other money market instruments issued under Syariah principles by licensed financial institutions with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent; or (iii) Treasury bills, money market instruments, and other debt instruments issued under Syariah principles by Bank Negara Malaysia ( BNM ) or the Government of Malaysia ( GOM ); or (iv) Syariah-compliant money market funds which are principal guaranteed and are approved by the SC; or (v) Syariah-compliant principal guaranteed structured investments approved by BNM and issued by licensed financial institutions with a short term rating of P1 and a minimum long term rating of AA3 or 26

27 their equivalent; (vi) Private debt securities issued under Syariah principles by quasi Government or Government related corporations, corporations, financial institutions or guaranteed by licenced financial institutions with a short term rating of P1 or a minimum long term rating of AA3 or their equivalent. Funds from the SIEA can only be invested in items (i) to (v) (both inclusive) above. Financial Covenants : (i) Debt to Equity Ratio ( D:E Ratio ) The Issuer shall maintain an annual D:E Ratio of 80:20 throughout the tenure of the Sukuk Istisna commencing from the date falling 36 months from the date of issue of the Sukuk Istisna or upon the listing of Sacofa on Bursa Malaysia Securities Berhad, whichever is earlier. The D:E Ratio is the ratio of indebtedness of the Issuer and its subsidiaries (collectively herein referred to as the Group ) represented by: (i) (ii) all amounts outstanding under the Sukuk Istisna ; all other indebtedness for borrowed monies (be it actual or contingent), hire purchase obligations, finance lease obligations, and obligations/ contingent liabilities under guarantees of the Group but excluding any inter company loans which are subordinated to the Sukuk Istisna ; 27

28 to the shareholders funds of the Issuer including, if any, preference equity, subordinated shareholders advances/loans, minority interests of the Group (if any) and retained earnings/losses less goodwill (if any). The D:E Ratio calculations shall be duly confirmed by the Issuer s external auditors and based on the latest audited consolidated accounts of the Issuer. The Issuer shall arrange for the external auditor s confirmation to be forwarded to the Facility Agent for its distribution to the Trustee and the Rating Agency. For the avoidance of doubt, any double counting shall be disregarded. (ii) Finance Service Cover Ratio ("FSCR") The Issuer shall maintain an annual FSCR of not less than 2.0 throughout the tenure of the Sukuk Istisna. The FSCR is the ratio of cumulative Available Cash Flow (as defined below) to the aggregate of: (i) (ii) (iii) all principal obligations paid by the Issuer under the Sukuk Istisna during the previous 12 months; plus all principal obligations and/or Purchase Undertaking or Sale Undertaking obligations paid by the Group under any other borrowings of the Group during the previous 12 months; plus all profit payments under the Sukuk Istisna and any other 28

29 interest/profit distributions due under the borrowings of the Group during the previous 12 months. The FSCR calculations shall be duly confirmed by the Issuer s external auditors and based on the latest audited consolidated accounts of the Issuer on an annual basis. The Issuer shall arrange for the external auditor s confirmation to be forwarded to the Facility Agent for its distribution to the Trustee and the Rating Agency. For the avoidance of doubt, any double counting shall be disregarded. Available Cash Flow During the relevant 12 months period the sum of: (i) (ii) (iii) (iv) all revenues, royalties, fees received by the Group and any other receipts of a capital or revenue nature under any agreement; all distribution, returns and realised gains received by the Group; all SIEA, OA and the TRA credit balances and the amount utilised from the SIEA and the TRA for Permitted Investments at the beginning of the relevant 12-month period; and all proceeds of insurance claim and amounts received by the Group; 29

30 Less: (i) (ii) the total amount paid on insurance / takaful, operations, maintenance, administration, management and overheads and fees for that period; and taxes paid or such other contributions paid by the Group for that period. For the avoidance of doubt, any double counting shall be disregarded. Information Covenants : To include but not limited to the following: (i) (ii) the Issuer shall provide to the Trustee at least on an annual basis, a certificate confirming that it has complied with all its obligations under the transaction documents and the terms and conditions of the Sukuk Istisna and that there does not exist or had not existed, from the date the Sukuk Istisna were issued, any Event of Default, and if such is not the case, to specify the same; the Issuer shall deliver to the Trustee the following: (a) as soon as they become available (and in any event within one hundred and eighty (180) days after the end of each of its financial years) copies of its consolidated financial statements for that year which shall contain the income statements and balance sheets of the Issuer and which are audited and certified without qualification by a firm of independent 30

31 certified public accountants acceptable to the Trustee; (b) as soon as they become available (and in any event within ninety (90) days after the end of the first half of its financial year) copies of its unaudited half yearly consolidated financial statements for that period which shall contain the income statements and balance sheets of the Issuer which are duly certified by any one of its directors; (c) promptly, such additional financial or other information relating to the Issuer s business and its operations as the Trustee may from time to time reasonably request; and (d) promptly, all notices or other documents received by the Issuer from any of its shareholders or its creditors which contents may materially and adversely affect the interests of the Sukuk Istisna holders, and a copy of all documents dispatched by the Issuer to its shareholders (or any class of them) in their capacity as shareholders or its creditors generally at the same time as these documents are dispatched to these shareholders or creditors, (iii) the Issuer shall promptly notify the Trustee, the Facility Agent and the rating agency (the Parties ) of any proposed change in its shareholding structure (including changes in the 31

32 board of directors). In the event that the Issuer is listed on the Bursa Malaysia Securities Berhad, the Issuer is then required to notify the Parties of any change in its board of directors, substantial shareholders and/or its largest controlling shareholders; (iv) the Issuer shall promptly notify the Trustee of any change in its condition (financial or otherwise) and of any litigation or other proceedings of any nature whatsoever being threatened or initiated against the Issuer before any court or tribunal or administrative agency which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents; (v) the Issuer shall promptly give notice to the Trustee of the occurrence of any Event of Default or any event which, upon the giving of notice and/or lapse of time and/or the issue of a certificate and/or the fulfilment of the relevant requirement as contemplated under the relevant transaction document would constitute an Event of Default ( Potential Event of Default ) forthwith upon becoming aware thereof, and it shall take all reasonable steps and/or such other steps as may reasonably be requested by the Trustee to remedy and/or mitigate the effect of the Event of Default or the Potential Event of Default. Positive Undertakings : To include but not limited to the following: (i) the Issuer shall maintain in full force and effect all relevant 32

33 authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) and will promptly obtain any further authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) which is or may become necessary to enable it to own its assets, to carry on its business or for the Issuer to enter into or perform its obligations under the transaction documents or to ensure the validity, enforceability, admissibility in evidence of the obligations of the Issuer or the priority or rights of the financiers under the transaction documents and the Issuer shall comply with the same; (ii) the Issuer shall at all times on demand execute all such further documents and do all such further acts reasonably necessary at any time or times to give further effect to the agreed terms and conditions of the transaction documents; (iii) the Issuer shall exercise reasonable diligence in carrying out its business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices; (iv) the Issuer shall promptly perform and carry out all its obligations under all the transaction documents (including but not limited to redeeming the Sukuk Istisna on the relevant Maturity Date(s) or any other date on which the Sukuk Istisna are due and payable) and ensure that it shall as soon as it may be practicable notify the Trustee in the event that the Issuer is unable to fulfil or comply with any of the provisions of the transaction 33

34 documents; (v) the Issuer shall prepare its financial statements on a basis consistently applied in accordance with approved accounting standards in Malaysia and those financial statements shall give a true and fair view of the results of the operations of the Issuer for the period to which the financial statements are made up and shall disclose or provide against all liabilities (actual or contingent) of the Issuer; (vi) the Issuer shall promptly comply with all applicable laws including the provisions of the SCA and/or the notes, circulars, conditions or guidelines issued by SC from time to time; (vii) Sacofa shall ensure that the State Government of Sarawak and State related entities, either directly or indirectly, collectively be the largest and controlling shareholders of the Issuer at all times; (viii) the Issuer shall settle all outstanding amounts due under the First Istisna Contract when due irrespective of whether the Project is completed. Negative Undertakings : To include but not limited to the following: (i) save for those contemplated under this term sheet and Sarawak Gateway s Sukuk Ijarah term sheet, the Issuer shall not obtain or permit to exist any borrowings and/or guarantee to any party during the period when the D:E Ratio covenant is not applicable and thereafter, the Issuer shall not obtain or permit to exist any borrowings and/or 34

35 guarantee to any party or cause its subsidiaries not to obtain or permit to exist any borrowings and/or guarantee to any party which would result in a breach of the D:E Ratio; (ii) the Issuer shall not create or permit to exist any encumbrance, mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment by way of security, trust arrangement for the purpose of providing security or other security interest of any kind including, without limitation, title transfer and/or retention arrangements having a similar effect or any agreement to create any of the foregoing, but excluding liens arising in the ordinary course of business by operation of law and not by way of contract, and those security as contemplated under this term sheet and Sarawak Gateway s Sukuk Ijarah term sheet; (iii) the Issuer shall not dispose any assets in excess of 5% of the Issue s net tangible assets as reflected in its latest annual audited financial statements in any financial year; (iv) the Issuer shall not add, delete, amend or substitute its Memorandum or Articles of Association in a manner inconsistent with the provisions of the transaction documents; (v) the Issuer shall not reduce its authorised or paid-up share capital whether by varying the amount, structure or value thereof or the rights attached thereto or by converting any of its share capital into stock, or by consolidating, dividing or sub-dividing all or any of 35

36 its shares, or by any other manner; (vi) the Issuer shall not declare or pay any dividends or make any distribution whether income or capital in nature to its shareholders (whether in relation to principal, interest or otherwise) if: (a) an Event of Default has occurred or is continuing or would occur if such payment is made; or (b) the FSCR is breached or a breach of the FSCR would occur if such payment is made; (vii) the Issuer shall not make any payments (whether in relation to principal, interest or otherwise) to its subsidiaries or associated companies in connection with any loans or advances from its subsidiaries or associated companies; (viii) save for the shareholders loan referred to under the details on utilisation of proceeds clause herein and save and except for the holdings of Sacofa s Sukuk Istisna, the Issuer shall not obtain or permit to exist any loans or advances from its shareholders, subsidiaries or associated companies unless these loans and advances are subordinated to the Sukuk Istisna ; (ix) subject to paragraph (viii) above and those contemplated under this and the Sarawak Gateway s Sukuk Ijarah term sheet, the Issuer shall not enter into any agreement with its shareholders, subsidiaries or associated companies unless such agreement is entered into: 36

37 (a) in the ordinary course of its business; (b) on an arms-length basis; and (c) will not have a Material Adverse Effect on the Issuer; (x) the Issuer shall not use the proceeds of the issuance of Sukuk Istisna except for the purposes set out in this term sheet; (xi) the Issuer shall not lend any money to any party other than to the Issuer's directors, officers or employees as part of their terms of employment and its subsidiaries for the purpose of funding operating expenses arising from the ordinary course of business. Taxation : All payments by the Issuer shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia, or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law, in which event the payer shall be required to make such additional amount to that the payee would receive the full amount which the payee would have received if no such withholding or deductions are made. Compensation ( Ta widh ) : In the event of overdue payments of any amount due under the Sukuk Istisna, the Issuer shall pay the compensation on such overdue amount at the rate and manner prescribed by SC s Syariah Advisory Council. Other Conditions : The Sukuk Istisna shall at all times be governed by the guidelines issued and to be issued from time to time by the SC, BNM and/or any other authority in 37

38 Malaysia having jurisdiction over matters pertaining to the Sukuk Istisna, and the Code of Conduct. Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the non-exclusive jurisdictions of the courts of Malaysia. Governing Law : Laws of Malaysia 38