(ii) Address : Level 17, 1 First Avenue, Bandar Utama, Petaling Jaya, Selangor Darul Ehsan, Malaysia. : A. : 9 February 2002/ Malaysia.

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1 (1) BACKGROUND INFORMATION (a) ISSUER (i) Name : Scomi Group Bhd ( SGB or Company or Issuer ) (ii) Address : Level 17, 1 First Avenue, Bandar Utama, Petaling Jaya, Selangor Darul Ehsan, Malaysia. (iii) Business Registration No. : A (iv) Date/Place of incorporation : 9 February 2002/ Malaysia. (v) Date of Listing : SGB was listed on the then Second Board (now known as the Main Market) of Bursa Malaysia Securities Berhad ( Bursa Securities ) on 13 May On 13 May 2004, SGB transferred its listing status to the Main Board (now known as the Main Market) of Bursa Securities. (vi) (vii) Status (as at 31 October 2012) Principal activities : Resident controlled company Non-Bumiputera controlled company : The principal activities of the Issuer are investment holding and the provision of management services. (viii) Board of Directors (as at 31 October 2012) : 1. Tan Sri Asmat bin Kamaludin 2. Tan Sri Nik Mohamed bin Nik Yaacob 3. Tan Sri Mohamed Azman bin Yahya 4. Datuk Haron bin Siraj 5. Dato Mohammed Azlan bin Hashim 6. Dato Abdul Rahim bin Abu Bakar 7. Dato Sreesanthan a/l Eliathamby 8. Dato Teh Kean Ming 9. Foong Choong Hong 10. Shah Shahzanim bin Zain (ix) Structure of shareholdings and names of shareholders or, in the case : Name of Shareholders Kaspadu Sdn Bhd Direct Shareholding Indirect Shareholding No. of Shares Held %* No. of Shares Held %* 85,753,055 (1) ,521,970 (2)(3)

2 of public company, names of all substantial shareholders (as at 31 October 2012 ) Onstream Marine Sdn Bhd Shah Shahzanim Bin Zain Dato Kamaluddin Bin Abdullah Dato Siew Mun Chuang Tan Sri Abu Sahid Bin Mohamed IJM Corporation Berhad 86,521,970 (3) ,779,100 (4) ,275,025 (5) ,275,025 (5) ,797, ,177, ,109, (x) Authorised and issued and paid-up share capital (as at 31 October 2012) Notes: * The percentage shareholdings have been computed net of SGB Treasury Shares. 1 Held through RHB Capital Nominees (Tempatan) Sdn Bhd, EB Nominees (Tempatan) Sdn Bhd and A.A. Anthony Nominees (Tempatan) Sdn Bhd. 2 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through its shareholding in Onstream Marine Sdn Bhd. 3 85,396,630 shares held through UOBM Nominees (Tempatan) Sdn Bhd. 4 2,250,000 shares held through BHLB Trustee Berhad (PCM for Shah Shahzanim Bin Zain). 5 Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd. : No. of ordinary shares Authorised share capital Issued and paid-up share capital Par value (RM) Total value (RM) 3,000,000, ,000,000 1,340,590,647* ,059, Note: * This includes14,427,200 ordinary shares purchased by the Company under share buy-back scheme and retained as treasury shares. 2

3 (2) (a) Names of parties involved in the proposed transaction (where applicable) (i) Principal Adviser : Hong Leong Investment Bank Berhad (Company No W) (formerly known as MIMB Investment Bank Berhad) ( HLIB ). (ii) Lead Arranger : HLIB. (iii) Co-Arranger : Not Applicable. (iv) Solicitor : Lee Hishammuddin Allen & Gledhill. (v) Financial Adviser : Newfields Advisors Sdn Bhd. (vi) Technical Adviser : Not applicable. (vii) Trustee : Not applicable. (viii) Guarantor : Not applicable. (ix) Valuer : Not applicable. (x) Facility Agent : HLIB. (xi) (xii) (xiii) Primary Subscriber (under a bought-deal arrangement) and amount subscribed Underwriter(s) and amount underwritten Central Depository : Not applicable. : Not applicable. : Bank Negara Malaysia ( BNM ). (xiv) Paying Agent : BNM. (xv) Reporting Accountant : PricewaterhouseCoopers. 3

4 (xvi) Calculation Agent : HLIB. (xvii) Others (1) Security Trustee : Malaysian Trustees Berhad (2) Lead Manager : HLIB or such other joint lead manager(s) as may be appointed. (3) Subscriber : IJM Corporation Berhad is the sole subscriber. (b) Facility Description : Convertible redeemable secured bonds of an aggregate nominal value of RM110,000,000 ( Bonds ). (c) Issue/programme size : Nominal value of RM110.0 million. (d) Tenure of issue/debt programme (or facility) : Three (3) years from the Issue Date (as defined in clause (v)(i) below) ( Maturity Date ). (e) Available period of debt programme : Not applicable. (f) Interest/coupon rate : The Bonds will be issued on a zero coupon basis. (g) (h) Interest/coupon payment frequency Interest/coupon payment basis : Not applicable. : Not applicable. (i) Security/Collateral (if any) : The Bonds will be secured (in favour of the Security Trustee for the benefit of the Subscriber) vide a first party legal charge over 313,043,478 ordinary shares of RM0.45 each in Scomi Marine Bhd held by SGB ( Charged SMB Shares ); The Charged SMB Shares will be proportionately discharged upon redemption/conversion of the said Bonds (as the case may be). Note:- The Charged SMB Shares are currently charged to the lenders under a bridging loan facility of RM

5 million ( Bridging Loan ) which was granted to SGB. The Charged SMB Shares will be discharged and credited into the central depository system of the Security Trustee in favour of the Subscriber within three (3) business days upon receipt of the redemption amount by the security agent of the Bridging Loan. (j) Details on Utilisation of Proceeds by Issuer : The proceeds raised from the Bonds shall be utilised by the Issuer in the following manner: Purpose of Utilisation Amount (Up to RM 000) a) To repay the 61,000 outstanding amount under the Bridging Loan. b) Defray expenses in connection with the 3,000 issuance of the Bonds; and c) Working capital requirements of the 46,000 Company Total 110,000 (k) Sinking Fund and Designated Accounts (if any) : Not Applicable. (l) Rating : The Bonds are exempted from the rating requirement pursuant to paragraph 7.09(c) of the Private Debt Securities Guidelines as this is a convertible bonds issue whereby:- (i) (ii) The Subscriber of the Bonds are given the right to convert the Bonds into the underlying shares at any time during the tenure of the Bonds; and The underlying shares shall be listed on Bursa Securities. (m) Mode of Issue : The Bonds will be issued on a private placement basis without prospectus. Issuance of the Bonds shall be in accordance with the rules of Malaysian Electronic Clearing 5

6 Corporation Sdn Bhd ( MyClear ), subject to such exemptions (if any) granted from time to time. (n) Selling Restriction, including tradability (i.e. tradable or non-tradable) : At the point of issuance, the Bonds fall within: (i) Schedule 6 (or Section 229 (1)(b) of the Capital Markets & Services Act 2007 ( CMSA )) and Schedule 7 (or Section 230 (1)(b) of the CMSA); read together with (ii) Schedule 9 (or Section 257 (3)) of the CMSA. (o) Listing Status and types of listing The Bonds are not tradable and not transferable. : Not applicable. The Bonds will not be listed on any stock exchange. (p) Other Regulatory Approvals Required in relation to the Issue, Offer or Invitation and whether or not obtained : Not applicable. (q) Conditions Precedent : 1. Condition Precedent for the issuance of the Bonds The issuance of the Bonds shall be subject to the following conditions including but not limited to: - (i) (ii) (iii) Approval of the SC for the issuance of the Bonds and the Issuer s due compliance with all conditions of such approval which must be met prior to the issue of the Bonds; The approval of the shareholders of the Issuer at an extraordinary general meeting for the issuance of the Bonds and the issuance of the new ordinary shares of RM0.10 each in the Issuer ( SGB Shares ) arising from the conversion of the Bonds; The approval of the Bursa Securities. 6

7 (iv) Receipt of the following by the Solicitor, Lead Arranger and Subscriber: - (i) Certified true copies of the Certificate of Incorporation and the Memorandum and Articles of Association of the Issuer; (ii) (iii) Certified true copies of the latest Forms 24, 44 and 49 of the Issuer; Certified true copies of the board of directors resolution of the Issuer authorizing, among others, the issuance of the Bonds, creation of the Securities, the execution of all the legal documentation necessary for the issuance of the Bonds and the issuance of the SGB Shares ( Issue Documents ), lists of the Issuer s authorized signatories and their respective specimen signatures nominated to approve any variation to the terms and conditions of the Bonds issue and to sign all notices and documents in connection with the Bonds; (iv) Redemption cum letter of undertaking from the security agent of the Bridging Loan to (a) release the Charged SMB Shares upon full repayment of amount outstanding under the Bridging Loan and (b) transfer the Charged SMB Shares into a central depository system account of the Security Trustee within three (3) business days upon receipt of the redemption amount by the security agent of the Bridging Loan; (v) A company search report on the Issuer; 7

8 (vi) (vii) A winding up search report on the Issuer; Certified true copy of the duly executed subscription agreement dated 24 September 2012 executed between the Issuer and the Subscriber ( Subscription Agreement ); and (viii) Certified true copy of the Form 11 of the Issuer authorizing the issue of the Bonds and the allotment and issue of the SGB Shares upon the conversion of the Bonds. (v) (vi) (vii) (viii) (ix) All necessary approvals and consents required (including but not limited to the shareholders of the Issuer and the existing lenders/financiers (if required) of the Issuer) for the Bonds have been obtained and compliance with all conditions to such approvals; Receipt of written confirmation from the Solicitor that all conditions precedent as set out in the Subscription Agreement have been duly complied with; Satisfactory legal due diligence for the issuance of the Bonds shall have been completed by Solicitor and acceptable to the Lead Arranger; Execution of all relevant Issue Documents in relation to the Bonds and the Security(ies), including but not limited to the Subscription Agreement, deed poll, and the Share Charge in relation to the Charged SMB Shares as advised by the Solicitor and where relevant have been stamped and registered with the relevant registries; Receipt of satisfactory legal opinion from the Solicitor as to the legality, validity and 8

9 enforceability of the Issue Documents; (x) Receipt of written confirmation from Solicitor that all Conditions Precedent in relation to issuance of the Bonds have been duly complied with; and (xi) Such other Conditions Precedent as may be advised by Solicitor. 2. Condition Subsequent to the issuance of the Bonds (i) (ii) Receipt of documentary evidence from the Security Trustee confirming that the Charged SMB Shares have been deposited into a central depository system account of the Security Trustee within three (3) business days upon receipt of the redemption amount by the security agent of the Bridging Loan; and Such other Conditions Subsequent as may be advised by Solicitor. (r) Representations and Warranties Representations and warranties typical and customary for a facility of this nature as advised by the Solicitor including but not limited to the following: - (i) (ii) (iii) The Issuer is a company duly established and existing under Malaysian law and have the power and authority to enter into the businesses in which they are engaged respectively; The Issue Documents create valid and binding obligations which are enforceable on or against the Issuer where relevant; The Issuer has the power to enter into, exercise their respective rights under and perform their respective obligations under the Issue Documents to which they are a party; 9

10 (iv) (v) (vi) All necessary actions, authorisations and consents required under the Issue Documents have been taken, fulfilled and obtained and remain in full force and effect; The Issuer s entry into, exercise of their respective rights under and performance of the Issue Documents to which they are a party do not and will not violate any existing law or any agreements to which they are a party; and The Issuer is in compliance with and will comply with all applicable laws and the listing requirements of the Bursa Securities. (s) Events of Default : Events of Default typical and customary for a facility of this nature as advised by the Solicitor, including but not limited to the following: - (i) (ii) Any representation or warranty made or implied under any provision of the Issue Documents or any information, notice, opinion or certificate or other document delivered pursuant to the terms of the Issue Documents proves to have been incorrect or misleading in any particular manner deemed to be material by the Subscriber as of the date on which the representation or warranty was made or was deemed made; The Issuer fails to observe or perform or commits a breach of any of its obligations under any of the Issue Documents to which it is a party or under any undertaking or arrangement entered into (if applicable) in connection therewith which is not capable of remedy or if capable of remedy, the failure is not remedied within ten (10) business days thereof or such other period as may be agreed by the Subscriber; 10

11 (iii) Any authorisation, licence, approval, permit or consent which is required for the Issuer to carry on its business is withdrawn, revoked or terminated or has expired and not renewed and the result of the foregoing could reasonably be expected to have a Material Adverse Effect (as set out in clause (v)(x) below) on the ability of the Issuer to perform its obligation; (iv) The Issuer or any of its Material Subsidiaries enters into or propose to enter into, or there is declared by any competent court or authority, a moratorium on the payment of indebtedness or other suspensions of payments generally; (v) A dissolution, winding up order or liquidation proceeding has been made against the Issuer or its Material Subsidiaries and it is not withdrawn or discharged within forty five (45) days thereof; (vi) (vii) (viii) A resolution to wind up the Issuer or its Material Subsidiaries has been passed and it is not withdrawn or discharged within forty five (45) days thereof; A scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against the Issuer or its Material Subsidiaries and it is not withdrawn or discharged within forty five (45) days thereof; The Issuer or its Material Subsidiaries becomes or is declared insolvent or consents to the appointment of a trustee, custodian or receiver or administrator for it or for a substantial part of its property, or any such trustee, custodian or receiver is appointed, or dissolution, reorganization, intervention, arrangement or liquidation proceedings are instituted by the Issuer or its Material Subsidiaries. 11

12 (ix) The Issuer or any of its Material Subsidiaries ceases or threaten to cease to carry on all or a substantial part of its respective business; (x) The Issuer or any of its Material Subsidiaries becomes insolvent or commits an act of insolvency or is unable to pay its debts as they fall due or any final judgment or judgments is or are obtained against the Issuer or any of its Material Subsidiaries; (xi) (xii) (xiii) (xiv) (xv) If any other indebtedness of the Issuer becomes due and payable prior to its stated maturity or if the Issuer fails to pay any other indebtedness within fourteen (14) days after the due date for payment thereof or where the security created for any such other indebtedness becomes enforceable or the Issuer is in default under or commits a breach of any instrument or agreement relating to any such indebtedness, all which may have Material Adverse Effect (as set out in clause (v)(x) below); The Issuer defaults on any other provision of the Issue Documents which is not capable of remedy or which, being capable of remedy, is not remedied within ten (10) business days thereof or such other period as may be agreed by the Subscriber; Any provision of the Issue Documents is or becomes illegal, void, voidable or unenforceable; The Issuer commits a breach or defaults on the terms and conditions of any other contract or agreement it enters into to the extent that which may have Material Adverse Effects (as set out in clause (v)(x) below); The Issuer sells or threatened to sell, 12

13 transfer or otherwise dispose off all or part of its business or assets which may have Material Adverse Effect (as set out in clause (v)(x) below); (xvi) (xvii) It is or becomes unlawful for the Issuer to perform or comply with any one or more of the Issuer's obligations under the Issue Documents; If any legal proceeding, suit or action is instituted against the Issuer, or any distress or any form of execution or other legal process is levied, enforced upon or sued out against all or any part of the business assets of the Issuer and is not stayed or discharged within twenty one (21) days after being levied, enforced or sued out, which may have a Material Adverse Effect (as set out in clause (v)(x) below). (xviii) Nationalization event shall have occurred. In this term sheet, nationalization event is defined as private industry or private asset is transformed into public ownership by a national government or state; and (xix) An event of total loss occurs in the opinion of the Subscriber. In this term sheet, event of total loss is defined as earthquake, fire or war etc. Material Subsidiaries shall mean Scomi Marine Bhd and Scomi Engineering Bhd. Upon the occurrence of any Event of Default, whether or not such event is continuing, the Subscriber may declare by giving notice thereof to the Issuer that (i) (ii) an Event of Default has occurred; and the Bonds are immediately due and repayable; and 13

14 (t) Covenants : Positive covenants without further notice to the Issuer, institute such proceedings and take such steps as it may think fit, including enforcing all or any of the remedies under the Bonds. Positive Covenants typical and customary for facility of this nature as advised by the Solicitor including but not limited to: - (i) The Issuer will comply with all provisions and perform all their respective obligations under the Issue Documents to which they are a party; and (ii) The Issuer shall promptly comply with all applicable laws including the provisions of the Capital Markets & Services Act 2007 and/or notes, circular, conditions or guidelines issued by the SC from time to time. Negative Covenants Negative Covenants typical and customary for facility of this nature as advised by the Solicitor including but not limited to the following, without the prior written consent of the Subscriber: - (i) The Issuer will not surrender, transfer, assign, relinquish or otherwise dispose of any of its rights and interest under any of the Issue Documents to which it is a party; and (ii) The Issuer will not enter into any amalgamation, demerger, reconstruction or winding up of itself which may materially affect its ability to perform its obligations unless it is and will be the surviving legal entity and such amalgamation, demerger, reconstruction is not reasonably expected to result in the occurrence of a material adverse change to the interests of the holders under the Bonds save and except for the proposed internal reorganisation of SGB group in accordance 14

15 with the detailed steps set out in the announcements made by the Issuer and Scomi Marine Bhd on 24 July (u) Provisions on buy-back and early redemption of bonds : Provision on Buy-Back Not applicable. Early Redemption The Issuer has an option to redeem all or any part of the outstanding Bonds in cash at each anniversary of the Issue Date. The redemption price will be the nominal value of the Bonds plus 10% yield for each full year that the Bonds remain outstanding. As an illustration, the redemption price for: redemption on 1st anniversary from the Issue Date is RM1.10 redemption on 2nd anniversary from the Issue Date is RM1.21 redemption on 3rd anniversary from the Issue Date is RM1.33, for every RM1.00 nominal value. Consent from the Subscriber is required for redemption on the first (1 st ) and second (2 nd ) anniversary from the Issue Date unless: i. the SGB Shares have been traded at a price of not less than RM0.50 (based on daily volume weighted average market price) for ninety (90) days consecutively prior to the respective first (1 st ) and second (2 nd ) anniversary of the Issue Date; and ii. the Issuer has recorded profit after taxation and minority interest (consolidated basis) for the latest two (2) quarters prior to the redemption. All Bonds redeemed by the Issuer shall be cancelled and cannot be resold. 15

16 (v) Other principal terms and conditions for the issue (i) Issue Date : The Bonds shall be issued on a date to be mutually agreed between the Issuer and the Subscriber, but in any case the Issue Date shall be within two months from which the Subscription Agreement becomes unconditional. For avoidance of doubt, such issuance shall be implemented within one (1) year from the date of SC approval. (ii) Conversion Period : Any time after the Issue Date and up to the Maturity Date of the Bonds. (iii) Conversion Rights : The Subscriber shall have the option to convert at the Conversion Price (as defined in clause (v)(iv) below) all or any part of the Bonds into fully paid SGB Shares at any time during the Conversion Period, subject to Subscriber giving a prior thirty (30) days irrevocable written notice to the Issuer. For the purposes of conversion, the Bonds will carry a yield of 5% per annum calculated daily. The number of SGB Shares to be issued upon conversion will be determined based on the following: Whereby: a = Nominal value of Bonds to be converted b = Conversion Price c = no. of days from the Issue Date until conversion/365 All outstanding Bonds will automatically be converted into SGB Shares upon maturity of the Bonds and the number of SGB Shares to be issued will be based on the abovementioned formula. Any fractional entitlements on the conversion of 16

17 the Bonds will be disregarded and shall be dealt with in such manner as the board of directors of the Issuer shall in its absolute discretion think expedient in the best interests of the Company. (iv) Conversion Price : The SGB Shares will be issued at a conversion price of RM0.365 per SGB share which was arrived at based on a premium of approximately 10% to the five (5)-day volume weighted average market price of SGB shares up to and including 21 September 2012, of RM0.33, upon conversion. The Conversion Price is subject to adjustments pursuant to certain events as set out in the deed poll to be entered into (including but not limited to subdivision, consolidation of shares, bonus issues, rights issues and other dilutive events). (v) Status of SGB Shares : The SGB Shares arising from the conversion of the Bonds will, upon allotment and issue, rank pari-passu in all respects with the existing SGB shares, except that they shall not be entitled to any dividends, rights, allotments and/or any other distributions, unless the allotment of the SGB Shares were made on or prior to the entitlement date of such dividends, rights, allotments and/or other distributions. Application has been made to Bursa Securities on 9 November 2012 for the listing and quotation for the SGB Shares to be issued arising from the conversion of the Bonds on the Main Market of Bursa Securities. (vi) Status & Ranking : The Bonds shall constitute direct, unconditional and secured obligations of the Issuer and will at all times rank pari-passu without preference or priority among themselves and will rank in priority to all other present and future unsecured obligations of the Issuer from time to time (subject to those preferred by laws). (vii) Form and Denomination : Form The Bonds shall be represented by a Global Certificate to be deposited with BNM and shall be in bearer form. No physical delivery of the Bonds 17

18 is permitted. The Bonds shall be prescribed and be reported under the rules of MyClear and shall comply with all rules and requirements set out by MyClear. Denomination The Bonds will be denominated in multiples of RM1,000,000 each. (viii) Taxes : All payments (where applicable) in respect of the Bonds will be made by the Issuer after deducting or withholding any amount for or on account of any present or future taxes or duties of whatsoever nature imposed or levied by the Government of Malaysia or any authority thereof or therein having power to tax and which are required by law to be deducted or withheld. The Issuer shall not be required to pay any additional amount in respect of any such deduction or withholding or payment of principal or coupon for or on account of any such taxes and duties. (ix) Documentation : The terms and conditions of the Bonds shall be set out in various agreements in form and substance acceptable to the Lead Arranger, and the Issuer and as deemed necessary by the Solicitor. (x) Material Adverse Effect : In relation to an event or circumstance, the occurrence or effect of which (in the opinion of the Subscriber) may have a material adverse effect on: - (a) (b) the business or condition (financial or otherwise) or prospects of the Issuer and/or its Material Subsidiaries taken as a whole, or the ability of the Issuer to perform any of its obligations under any provision of the Issue Documents, or 18

19 (c) the rights of or remedies available to the Subscriber under any provision of the Issue Documents. (xi) Issue Price : The Bonds will be issued at par to the nominal value and the issue price shall be calculated in accordance with the Operational Procedures for Securities Services issued by MyClear, as amended or substituted from time to time. (xii) Other Conditions : The Bonds shall at all times be governed by the guidelines issued and to be issued from time to time by the SC and/or BNM having jurisdiction over matters pertaining to the Bonds. (xiii) Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the exclusive jurisdictions of the courts of Malaysia. (xiv) Governing Laws : Laws of Malaysia. 19