Negeri Sembilan Cement Industries Sdn Bhd Appendix 2 Up to RM130.0 Million MUNIF RM200.0 Million BaIDS

Transcription

1 Negeri Sembilan Cement Industries Sdn Bhd Proposed Issue of, Offer for Subscription or Purchase of, or Invitation to Subscribe for or Purchase of - Up to RM130.0 Million Murabahah Notes Issuance Facility ( MUNIF or Murabahah Commercial Papers ( CP )/ Medium Term Notes ( MTN ) Programme ); and - RM200.0 Million Bank Guaranteed Bai Bithaman Ajil Islamic Debt Securities ( ). Principal Terms and Conditions of the Proposal (Information required under paragraph 4 of the Guidelines on the Offering of Private Debt Securities (Revised Edition dated May 2003) BACKGROUND INFORMATION 1. Issuer i. Name Negeri Sembilan Cement Industries Sdn Bhd ( NSCI, Company or Issuer ) ii. Address Business address: 3323, Mukim Kepis Kuala Jelai Bahau Negeri Sembilan Registered office: Level 7, Setia 1 15 Lorong Dungun Damansara Heights Kuala Lumpur iii. iv. Business Registration No. Date/Place of Incorporation H 15 August 1994, Kuala Lumpur v. Date of Listing Not listed vi. Status : resident/ non-resident controlled company : Bumiputera/ non- Bumiputera controlled company Resident Bumiputera controlled company Page 1 of 37

2 vii. Principal Activities viii. Board of Directors The Issuer is principally engaged in the manufacturing and sale of cement and cement products. As at 31 December 2003: Dato Rosli bin Sharif Dato Redzuan bin Tan Sri Sheikh Ahmad Ir. Lim Kim Beng Mohd Yusof bin Abdul Rahman Noor Harlina binti Ismail Lee Mow Ting ix. Structure of shareholdings and names of shareholders As at 31 December 2003 Cement Industries of Malaysia Berhad ( CIMA ): < Direct Interest > - Ordinary shares of RM1.00 each - Non-Cumulative Convertible Redeemable Preference Shares ( NCCRPS ) of RM1.00 each No. of shares % 250,000, ,359, x. Authorised and paid-up capital As at 31 December 2003: Authorised capital: RM - Ordinary shares of RM1.00 each 671,640,014 - NCCRPS of RM1.00 each 328,359,986 1,000,000,000 Issued and fully paid-up capital: - Ordinary shares of RM1.00 each 250,000,000 - NCCRPS of RM1.00 each 328,359, ,359,986 Page 2 of 37

3 PRINCIPAL TERMS AND CONDITIONS 2. Names of parties involved in the proposed transaction (where applicable) i. Principal Adviser/ Lead Arranger Murabahah CP/MTN Programme and AmMerchant Bank Berhad ( AmMerchant Bank ) ii. Arranger Not Applicable iii. Valuers Not Applicable iv. Solicitors Murabahah CP/MTN Programme and Messrs Albar & Partners v. Financial Adviser Not Applicable vi. Technical Adviser Not Applicable vii. Guarantor Murabahah CP/MTN Programme Not Applicable The Guarantors for the arranged under the Kafalah (Bank guarantee) Facility ( Kafalah Facility ) are as follows: Financial Institutions Guarantee Amount (RM) Affin Bank Berhad 60,000, AmMerchant Bank Bhd 94,965, Bumiputra-Commerce 50,000, Bank Bhd Total 204,965, =============== Note: Under the Kafalah Facility agreement, Affin Bank Berhad has appointed AmMerchant Bank as its agent in issuing the guarantee on its behalf. As such,the guarantee to be issued for the benefit of the Trustee/holders to guarantee the shall be only issued by AmMerchant Bank and Bumiputra- Commerce Bank Berhad. viii. Trustee Murabahah CP/MTN Programme and AmTrustee Berhad Page 3 of 37

4 ix. Facility Agent Murabahah CP/MTN Programme and AmMerchant Bank x. Primary Subscriber(s) and Amount subscribed Murabahah CP/MTN Programme Not Applicable Not Applicable xi. Underwriter(s) and amount underwritten CPs under the Murabahah CP/MTN Programme The CPs are fully underwritten as follows: Financial Institutions Underwriting Commitment (RM mil) Abrar Discounts Berhad 50 Bank Muamalat Malaysia Berhad 30 Bumiputra-Commerce Bank 50 Berhad Total ======= MTNs under the Murabahah CP/MTN Programme The MTNs will not be underwritten. Not Applicable xii. Syariah Adviser Murabahah CP/MTN Programme and Associate Professor Dr. Mohd Daud Bakar xiii. Central Depository Murabahah CP/MTN Programme AmMerchant Bank. Bank Negara Malaysia ( BNM ). xiv. Paying Agent Murabahah CP/MTN Programme AmMerchant Bank Page 4 of 37

5 BNM xv. Reporting Accountant Messrs KPMG xvi. Others a) Security Agent b) Tender Panel Members or Investor(s) Murabahah CP/MTN Programme and AmMerchant Bank Murabahah CP/MTN Programme AmMerchant Bank and/ or a selection of financial institutions licensed under BAFIA and/ or Islamic Banking Act 1983, insurance companies registered under the Insurance Act 1996, approved corporations and such other persons falling within Section 4(6) of the Companies Act, 1965 (as amended). The composition of the Tender Panel Members may be varied by the Issuer from time to time in consultation with the Facility Agent. c) Placee : AmMerchant Bank for RM200.0 million d) Kafalah Facility Agent 3. Principle (Conventional/ Islamic) Kafalah Facility: AmMerchant Bank Murabahah CP/MTN Programme and : Islamic 4. Facility Description Murabahah CP/MTN Programme Islamic Notes Issuance Facility comprising the issuance of CPs and/or MTNs based on the Syariah principle of Murabahah. To facilitate the financing based on the principle of Murabahah, the Investor(s) shall purchase from the Issuer certain Identified Asset(s) at an agreed Purchase Price. The said asset(s) shall subsequently be resold to the Issuer at a Sale Price which comprises the original Purchase Price and a portion or margin agreed between the Issuer and the Investor(s). Page 5 of 37

6 The settlement of the Sale Price by the Issuer shall be evidenced by the issuance of negotiable secured promissory notes, which is payable by the Issuer in one lump sum at the end of the relevant maturity period and may be traded in the secondary market under the Syariah principle of Bai Al-Dayn (i.e. debt trading). The is an Islamic Debt Securities programme which applies the underlying Islamic principle of Bai Bithaman Ajil or Deferred Payment Sale. To facilitate the financing under the principle of Bai Bithaman Ajil, the Primary Subscriber(s) shall first purchase from the Issuer the Identified Asset(s) at the Purchase Price. The said asset(s) shall subsequently thereafter be resold to the Issuer at the Sale Price which comprises the Purchase Price and profit margin agreed between the Issuer and the Primary Subscriber(s). The settlement of the Sale Price by the Issuer shall be evidenced by way of issuance of negotiable and non-interest bearing bank guaranteed promissory notes ( the BBA Notes ), which is payable over an agreed period by the Issuer in deferred instalments. The BBA Notes are called Syahadah Al-Dayn which means Certificates of Debt and may be traded in the secondary market under the Syariah principle of Bai Al-Dayn (i.e. debt-trading). 5. Issue Size (RM) Murabahah CP/MTN Programme Up to RM130.0 million RM200.0 Million 6. Issue Price (RM) CPs Issued at a discount to face value MTNs Issued at par or discount to face value As agreed between the Issuer and the Placee 7. Tenor of the facility/ issue Murabahah CP/MTN Programme The Programme: Up to 7 years from the date of first issuance. The Murabahah CP/MTN Programme is subject to the Limit Reduction Schedule as follows: Page 6 of 37

7 From Date of First Issuance Reduction Amount (RM Million) Cumulative Limit (RM Million) 1 st year nd year rd year th year th year th year th year The Issue: CPs : Minimum of one (1) month and maximum of twelve (12) months MTNs : More than twelve (12) months and maximum of eighty-four (84) months Provided always that the maturity date of the CPs or MTNs shall not exceed the remaining tenor of the Murabahah CP/MTN Programme. Tranche Tenor (Year) Primary BBA Notes (RM million) Tranche Tranche Tranche Tranche Tranche Profit rate (%) Murabahah CP/MTN Programme Profit rates are determined through bidding amongst Tender Panel Members, or agreed between Issuer and approved Investors in the case of private placement. Page 7 of 37

8 Tranche Tenor (Year) Profit Rates Tranche % Tranche % Tranche % Tranche % Tranche % 9. Profit payment frequency Murabahah CP/MTN Programme CPs Not Applicable (CPs are issued at a discount) MTNs For MTNs issued at par Semi-annually For MTNs issued at discount Not Applicable Semi-annually 10. Profit payment basis Murabahah CP/MTN Programme CPs : Actual days/ 365days MTNs : Actual days/ Actual days Actual days/ Actual days 11. Yield to Maturity (%) Murabahah CP/MTN Programme The yields will only be determined upon issuance. As agreed between the Issuer and the Placee. 12. Security/ Collateral Murabahah CP/MTN Programme a. A 1st party legal charge over the Issuer s land in Bahau, Negeri Sembilan where the Issuer s cement plant is sited held under particulars of title: H.S. (D) PT 3754, H.S. (D) PT 3755, H.S. (D) PT 3756 all in the Mukim of Jelai, Daerah Jempol, Negeri Sembilan and H.S. (D) 2026 PT 3323 Mukim Kepis, Daerah Kuala Pilah, Negeri Sembilan. ( Bahau Land Charge ); b. A 3rd party legal charge over CIMA s land in Bukit Page 8 of 37

9 Ketri, Perlis where the Issuer s cement plant is sited, held under particulars of G.M.1537 Lot 1802, G.M Lot 1803, H.S (D) 4335 PT124, H.S (M) 756 PT 251, H.S (M) 792 PT 1642, H.S (M) 762 PT 1031, H.S (M) 765 PT Lot 819, H.S (M) 749 PT 1046, H.S (M) 791 PT Lot 823, H.S (M) 732 PT Lot 836, H.S (M) 768 PT Lot 824, H.S (M) 767 PT Lot 825, H.S (M) 766 PT Lot 826, H.S (M) 764 PT Lot 827, H.S (M) 763 PT Lot 828, H.S (M) 770 PT Lot 835, H.S (M) 769 PT Lot 829, H.S (M) 723 PT 830, H.S (M) 660 PT 681, H.S (M) 708 PT 1001, H.S (M) 1212 PT 2366 and G.M. 935 Lot 838, all in Mukim Chuping, Daerah Perlis, Perlis. ( Perlis Land Charge ); c. Debenture creating a fixed and floating charge over all the present and future assets of the Issuer; d. Assignment of all rights, interest and benefits of the Proceeds and Operating Account (referred to in Paragraph 27(x)); e. Assignment of al rights, interest and benefits of the Finance Service Reserve Account (referred to in Paragraph 27(x)); f. Assignment of insurances; and g. Corporate guarantee of Cement Industries of Malaysia Berhad ( CIMA ). Security Sharing In respect of the above securities (save and except for the Finance Service Reserve Account), they will be shared on a pari-passu basis, where applicable, with AmBank Berhad ( U), Bumiputra- Commerce Bank Berhad (13491-P), Bank Muamalat Malaysia Berhad (6175-W) and the Permitted Indebtedness (as defined in Paragraph 27(xi)) but excluding the. A bank guarantee issued under the Kafalah Facility of RM million to guarantee the payment of all the Primary BBA Notes and one (1) payment of the Secondary BBA Notes. 13. Details on utilisation of proceeds Murabahah CP/MTN Programme and Proceeds from the and initial issuance of the Murabahah CP/MTN Programme will be utilised to part-repay up to RM330.0 million of the amount Page 9 of 37

10 14. Sinking fund Not Applicable outstanding under the Bridging Loan Facility* of RM360.0 million. Proceeds from any subsequent issue of notes under the Murabahah CP/MTN Programme following the redemption of maturing notes will be utilised to partfinance working capital requirements and/or repayment of bank borrowings of the Issuer. * Note: The Bridging Loan Facility has been utilised for the following purposes:- 1) To repay RM194 million of the Issuer s then existing borrowings. 2) To repay Shareholder s advances of RM166 million. The Shareholder s advances represents the CSLS issued by CIMA to the Syndicated Lenders of NSCI as part settlement of the principal term loan on 30 August Rating: Credit rating assigned: Name of Rating agency: Murabahah CP/MTN Programme BBB+/MARC-2 (Final) A(bg) (Final) Malaysian Rating Corporation Berhad 16. Form and Denomination Murabahah CP/MTN Programme Form : The Murabahah CPs/MTNs shall be represented at all times by global certificates issued in bearer form (exchangeable for definitive certificates only in limited circumstances). No physical delivery of Murabahah CPs/MTNs is permitted. Denomination: RM1,000,000 Form : The BBA Notes shall be represented at all times by global certificates issued in bearer form (exchangeable for definitive certificates only in limited circumstances). No physical delivery of the BBA Notes is permitted. Denomination: RM1,000,000 Page 10 of 37

11 17. Mode of Issue Murabahah CP/MTN Programme Private placement and/or tender via FAST. Private placement made under RENTAS and reported in FAST. 18. Selling Restriction Murabahah CP/MTN Programme and The Murabahah CPs/MTNs and BBA Notes may not be offered, sold or delivered, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling within Section 4(6) of the Companies Act, 1965 (as amended). 19. Listing Status Murabahah CP/MTN Programme and The BBA Notes and Murabahah CPs/MTNs issued will not be listed on the Kuala Lumpur Stock Exchange or on any other stock exchanges. 20. Minimum Level of Subscription (RM or %) CPs MTNs :100% : Not Applicable (fully underwritten) : 100% (private placement) 21. Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained Not Applicable 22. Additional information for PDS: i) Islamic principle Murabahah CP/MTN Programme Based on Syariah principle of Murabahah. Based on Syariah principle of Bai Bithaman Ajil or Deferred Payment Sale. Page 11 of 37

12 ii) Identified assets Murabahah CP/MTN Programme The assets identified by the Issuer from time to time with value equal to or exceeding the Purchase Price. The assets may be substituted from time to time so long as the nature/ type and value being ascribed to the assets or part or portion thereof to be sold by the Issuer is acceptable and approved by the Facility Agent and the Syariah Adviser. Currently, the assets identified by the Issuer are selected plants and machineries of the Issuer located at Bukit Ketri, Perlis, with a net book value of RM million as at 31 December The assets identified by the Issuer are selected plants and machineries belonging to the Issuer located in Bahau, Negeri Sembilan, with a net book value of RM million as at 31 December In any event, each issuance transacted based on the Identified Assets shall comply with the new guidelines on assets valuation issued by the Syariah Advisory Council on 31 December 2003, i.e. Syariah Advisory Council Pricing Guideline. iii) Purchase Price Murabahah CP/MTN Programme To be determined at point of issuance by way of tender via FAST and/or private placement. As agreed between the Issuer and the Placee. iv) Selling Price ( Sale Price ) Murabahah CP/MTN Programme To be determined and agreed between the Issuer and the relevant Investor(s) from time to time prior to the sale of the Identified Asset(s) back to the Issuer, which is to be wholly satisfied by the issue of the Murabahah CP and/ or MTN. Page 12 of 37

13 Tranche Tenor (Year) Selling Price (RM million) Tranche Tranche Tranche Tranche Tranche ======== 23. Conditions precedent Common Conditions Precedent These shall include conditions which are standard and customary for an issue of this nature, complied to the satisfaction of the Lead Arranger/Facility Agent/Kafalah Facility Agent and shall include but not be limited to: a) The MUNIF and shall be subject to the prior approval of the SC and/ or any other authorities having jurisdiction over matters pertaining to the MUNIF and. b) Receipt of solicitor s confirmation that the financing agreements, trust deeds and other relevant documents pertaining to the MUNIF, and Kafalah Facility ( Financing Facilities ) shall have been executed, endorsed as exempted from stamp duties and presented for registration (where applicable). c) CIMA s undertaking that so long as there are outstanding amounts remaining under the Financing Facilities, it shall at all times maintain the Issuer as its subsidiary. d) Receipt of the Issuer s: 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 and 49 of the Issuer; A certified true copy of a board resolution or extract of the board minutes of the Issuer authorising, among others, the execution of the financing agreements; Page 13 of 37

14 Conditions precedent (Continued) iv) A list of the Issuer's authorised signatories and their respective specimen signatures; and v) A report of the relevant company search. e) A certificate of the Issuer, certifying as to each of the following:- i) The accuracy of the representations and warranties contained in the financing agreements in all material respects; ii) iii) The absence of any potential Events of Default or Events of Default under the financing agreements; and Absence of any material adverse change in the business, condition (financial or otherwise), performance or results of the operations of the Issuer, the Shareholder and the subsidiaries (if any) to the extent that such change would have a material adverse effect on the Issuer s ability to perform its obligations under the financing agreements. f) Payment of all financing fees, independent consultants fees and expenses, legal fees, stamp taxes, and other transaction costs which shall have been due at such time. g) Confirmation from an independent insurance consultant acceptable to the Lead Arranger/Facility Agent/ Kafalah Facility Agent that the insurance programme (which shall be takaful based, to the extent commercially possible and viable) for the Issuer is adequate, the insurance policies are in place and the Security Agent shall be named as loss-payee. h) The Lead Arranger/Facility Agent/ Kafalah Facility Agent has received a legal opinion from its solicitors advising with respect to, among others, the legality, validity and enforceability of the financing agreements and that all the conditions precedent have been fulfilled. i) The Lead Arranger/Facility Agent/ Kafalah Facility Agent shall have received copies of all material permits required to be obtained for the Issuer s business operations. Page 14 of 37

15 Conditions precedent (Continued) j) Other conditions typical and customary for similar financing at the recommendation of the Lead Arranger s solicitor. Specific Conditions Precedent Murabahah CP/MTN Programme a) For the purpose of perfecting securities in favour of the Murabahah CP/MTN Programme:- i) The Lead Arranger/ Facility Agent shall have received the necessary consents from the existing lenders of the Issuer and CIMA (where applicable) for the (a) incurrence of indebtedness under the Financing Facilities (b) creation and sharing of the relevant securities on a pari passu basis in point of priority and security, and (c) creation of corporate guarantee by CIMA in relation to the proposed Financing Facilities (excluding the ). ii) The Lead Arranger/Facility Agent shall have received the necessary consents from the relevant State Authorities to create the Perlis Land Charge and the Bahau Land Charge. b) The Issuer shall have obtained a minimum rating of BBB+/ MARC-2 from MARC at the point of first issuance. The Issuer shall have obtained a minimum rating of A(bg) from MARC at point of issuance. Kafalah Facility a) For the purpose of perfecting securities in favour of the Kafalah Facility:- i) The Lead Arranger/ Kafalah Facility Agent shall have received the necessary consents from the existing lenders of the Issuer and CIMA (where applicable) for the (a) incurrence of indebtedness under the Financing Facilities (b) creation and sharing of relevant securities on a pari passu basis in point of priority and security, and (c) creation of corporate Page 15 of 37

16 Conditions precedent (Continued) ii) guarantee by CIMA in relation to the proposed Financing Facilities (excluding the ). The Lead Arranger/ Kafalah Facility Agent shall have received the necessary consents from the relevant State Authorities to create the Perlis Land Charge and the Bahau Land Charge. 24. Representations and Warranties Murabahah CP/MTN Programme The proposed Murabahah CP/MTN Programme shall be subject to such representations and warranties as may be deemed standard for a facility of this nature and shall include but not limited to:- a) Status: each of the Issuer and the security party is a company duly incorporated with limited liability under the laws of Malaysia and is validly existing; b) Authorisations: the memorandum and articles of association of the Issuer and the security party (which is a body corporate) include 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 which are required to authorise, the Issuer and the security party to own its assets, carry on its business as it is being conducted, and sign and deliver, and perform the transactions contemplated under the MUNIF issue documents, to issue the CPs/MTNs and to perform its obligations specified therein and under the CPs/MTNs in accordance with their terms and that there is no law or regulation or any order or decree of any governmental authority, agency or court to which the Issuer is subject to which would be in conflict with or prevent the Issuer executing and delivering, and performing the transactions contemplated in the MUNIF trust deed; c) Non-violation: neither the signing and delivery of the MUNIF issue documents nor the issue of the CPs/MTNs nor the performance of any of the transactions contemplated in the MUNIF issue documents does or will: Page 16 of 37

17 Representations and Warranties (Continued) (i) (ii) (iii) contravene or constitute a default under any provision contained in any agreement, instrument, judgment, order, licence, permit or consent by which the Issuer or the security party or any of its assets is bound or affected or by which any of their respective assets are bound and will result in the creation or imposition of, or any obligation to create or impose any mortgage, lien, pledge or charge on any of its assets pursuant to the provisions of any such mortgage, contract or other undertakings or instrument; or cause any limitation on the Issuer or the security party 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 contravene or constitute a default under any provision contained in any law, legislation or regulation by which the Issuer, the security party or any of their respective assets are bound or affected; d) Financial statements: the audited financial statements of the Issuer for the year ended 31 December 2002 have been prepared in accordance with generally accepted accounting principles in Malaysia and consistently applied and give a true and fair view of the results of its operations for that year and the state of its affairs at that date, and in particular disclose or reserve against all the liabilities (actual or contingent) of the Issuer. Since the last audited accounts of the Issuer, there has not been a material adverse change in the Issuer's financial position which would materially and adversely affect the Issuer's ability to perform its obligations thereunder; e) Litigation: save as disclosed in the information memorandum, 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 (financial or otherwise) of the Issuer or Page 17 of 37

18 Representations and Warranties (Continued) the security party or materially and adversely affect the Issuer's or the security party's ability to perform its obligations under the MUNIF issue documents in accordance with their terms, is presently in progress or pending or, to the best of the knowledge, information and belief of the Issuer, threatened against the Issuer or the security party or any of its assets; and f) such other conditions applicable as may be advised by the Lead Arranger s solicitor and/or the nominated rating agency, MARC. The proposed shall be subject to such representations and warranties as may be deemed standard for a facility of this nature and shall include but not limited to:- g) Status: the Issuer is a company duly incorporated with limited liability under the laws of Malaysia and is validly existing; h) Authorisations: the memorandum and articles of association of the Issuer include 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 which are required to authorise, the Issuer to own its assets, carry on its business as it is being conducted, and sign and deliver, and perform the transactions contemplated under the issue documents, to issue the BBA Notes and to perform its obligations specified therein and under the BBA Notes in accordance with their terms and that there is no law or regulation or any order or decree of any governmental authority, agency or court to which the Issuer is subject to which would be in conflict with or prevent the Issuer executing and delivering, and performing the transactions contemplated in the trust deed; i) Non-violation: neither the signing and delivery of the issue documents nor the issue of the BBA Notes nor the performance of any of the transactions contemplated in the issue documents does or will: Page 18 of 37

19 Representations and Warranties (Continued) (i) (ii) (iii) contravene or constitute a default under any provision contained in any agreement, instrument, judgment, order, licence, permit or consent by which the Issuer or any of its assets is bound or affected or by which any of its assets is bound and will result in the creation or imposition of, or any obligation to create or impose any mortgage, lien, pledge or charge on any of its assets pursuant to the provisions of any such mortgage, contract or other undertakings or instrument; or 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 other law, order, judgment, agreement, instrument or otherwise, to be exceeded; or contravene or constitute a default under any provision contained in any law, legislation or regulation by which the Issuer or any of its assets is bound or affected; j) Financial statements: the audited financial statements of the Issuer for the year ended 31 December 2002 have been prepared in accordance with generally accepted accounting principles in Malaysia and consistently applied and give a true and fair view of the results of its operations for that year and the state of its affairs at that date, and in particular disclose or reserve against all the liabilities (actual or contingent) of the Issuer. Since the last audited accounts of the Issuer, there has not been a material adverse change in the Issuer's financial position which would materially and adversely affect the Issuer's ability to perform its obligations thereunder; k) Litigation: save as disclosed in the information memorandum, 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 (financial or otherwise) of the Issuer or materially and adversely affect the Issuer's Page 19 of 37

20 ability to perform its obligations under the issue documents in accordance with their terms, is presently in progress or pending or, to the best of the knowledge, information and belief of the Issuer, threatened against the Issuer or any of its assets; and l) such other conditions applicable as may be advised by the Lead Arranger s solicitor and/or the nominated rating agency, MARC. 25. Events of Default Standard events of default shall apply and shall include but not limited to the following:- Murabahah CP/MTN Programme a) Non-payment: the Issuer or any security party fails to pay any amount due from it under the MUNIF issue documents on the due date or on demand, if so payable; b) Breach of obligations: the Issuer or any security party fails to observe or perform any of its obligations under the MUNIF issue documents or under any undertaking or arrangement entered into in connection therewith, other than an obligation of the type referred to in Paragraph 25(a) (Non-payment) and, in the case of a failure capable of being remedied, the Trustee does not determine, within fourteen (14) days after the Issuer became aware or having been notified of the failure, that it has been remedied to the satisfaction of the Trustee; c) Cross-default: the Issuer or any security party stops or threatens to stop payment in respect of obligations generally or if any other debenture of or monies borrowed by the Issuer or any security party 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 the Issuer or any security party is not honoured when due and called upon or if any security for any such debenture, monies borrowed, guarantee or indemnity becomes enforceable; d) Licences: there should occur any revocation, withholding, non-renewal, expiration or modification of a licence, consents, permits, Page 20 of 37

21 Events of Default (Continued) authorisation or approval or otherwise ceases to be in full force and effect that impairs or prejudices the Issuer s or any security party s ability to perform its obligations under the MUNIF issue documents; e) Insolvency: the Issuer or any security party is for the purposes of section 218(2) of the Companies Act 1965 deemed unable to pay its debts or becomes unable to pay its debts as they fall due or suspends or threatens to suspend making payments (whether principal or interest) with respect to all or any class of its debts; f) Judgment Passed: i) the Issuer shall fail to satisfy any judgment passed against the Issuer by any Court of competent jurisdiction and the Issuer fails to appeal against such judgment within twenty one (21) days from the date of judgment or within the time prescribed by law, whichever is earlier; ii) any security party shall fail to satisfy any judgment passed against itself by any Court of competent jurisdiction and such security party fails to appeal against such judgment within twenty one (21) days from the date of judgment or within the time prescribed by law, whichever is earlier and the occurrence of any of such events, in the reasonable opinion of the Trustee would materially and adversely affect the business, assets, or condition (financial or otherwise), of such security party or the ability of such security party to perform any of its obligations under the MUNIF security documents in accordance with the terms thereof; g) Appointment of receiver, legal process: an encumbrancer takes possession of, or a trustee or administrator or other receiver or similar officer is appointed in respect of, all or any part of the business or assets of the Issuer or any security party or distress or any form of execution is levied or enforced upon or sued out against any such assets and is not discharged or stayed within seven (7) days after being levied, enforced or sued out, or any security interest which may for the time being affect any Page 21 of 37

22 Events of Default (Continued) of its assets becomes enforceable; h) Composition, winding up: the Issuer or any security party convenes a meeting of its creditors or proposes or makes any arrangement (including any scheme of arrangement pursuant to Section 176 of the Companies Act 1965) or composition with, or any assignment for the benefit of, its creditors or a petition is presented and is not withdrawn or struck off or stayed within twenty one (21) days from the date of its presentation or a meeting is convened or other steps are taken for the purpose of considering a resolution for the winding up of the Issuer or any security party (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 or any security party becomes or is declared to be insolvent) or a winding up order has been made against the Issuer or any security party; and i) such other conditions applicable as may be advised by the Lead Arranger s solicitor and/or the nominated rating agency, MARC, which shall comply with the Securities Commission ( SC ) s Guidelines on the Minimum Contents Requirements for Trust Deeds. j) Non-payment: the Issuer or any of the Kafalah Facility guarantor fails to pay any amount due from it under the issue documents or the Kafalah Facility financing documents on the due date or on demand, if so payable or any of the Kafalah Facility guarantors fails to pay any amount due under the guarantee (if expressed to be so payable) upon demand by the Trustee; k) Breach of obligations: the Issuer or any Kafalah Facility guarantor fails to observe or perform any of its obligations under the to which it is a party or under any undertaking or arrangement entered into in connection therewith, other than an obligation of the type referred to in Paragraph 25(j) (Non-payment) and, in the case of a failure capable of being remedied, the Trustee does not determine, within fourteen (14) days after the Issuer or Page 22 of 37

23 Events of Default (Continued) such Kafalah Facility guarantor became aware or having been notified of the failure, that it has been remedied to the satisfaction of the Trustee; l) Cross-default: the Issuer or any Kafalah Facility guarantor stops or threatens to stop payment in respect of obligations generally or if any other debenture of or monies borrowed by the Issuer or any Kafalah Facility guarantor 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 the Issuer or any Kafalah Facility guarantor is not honoured when due and called upon or if any security for any such debenture, monies borrowed, guarantee or indemnity becomes enforceable; m) Licences: there should occur any revocation, withholding, non-renewal, expiration or modification of a licence, consents, permits, authorisation or approval or otherwise ceases to be in full force and effect that impairs or prejudices the Issuer s ability to perform its obligations under the ; n) Insolvency: the Issuer or any Kafalah Facility guarantor is for the purposes of section 218(2) of the Companies Act 1965 deemed unable to pay its debts or becomes unable to pay its debts as they fall due or suspends or threatens to suspend making payments (whether principal or interest) with respect to all or any class of its debts; o) Judgment Passed: the Issuer shall fail to satisfy any judgment passed against the Issuer by any Court of competent jurisdiction and the Issuer fails to appeal against such judgment within twenty one (21) days from the date of judgment or within the time prescribed by law, whichever is earlier; p) Appointment of receiver, legal process: an encumbrancer takes possession of, or a trustee or administrator or other receiver or similar officer is appointed in respect of, all or any part of the business or assets of the Issuer or any Kafalah Facility guarantor or distress or any form of execution is levied or enforced upon or Page 23 of 37

24 Events of Default (Continued) sued out against any such assets and is not discharged or stayed within seven (7) days after being levied, enforced or sued out, or any security interest which may for the time being affect any of its assets becomes enforceable; q) Composition, winding up: the Issuer or any Kafalah Facility guarantor convenes a meeting of its creditors or proposes or makes any arrangement (including any scheme of arrangement pursuant to Section 176 of the Companies Act 1965) or composition with, or any assignment for the benefit of, its creditors or a petition is presented and is not withdrawn or struck off or stayed within twenty one (21) days from the date of its presentation or a meeting is convened or other steps are taken for the purpose of considering a resolution for the winding up of the Issuer or any Kafalah Facility guarantor (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 or any Kafalah Facility guarantor becomes or is declared to be insolvent) or a winding up order has been made against the Issuer or any Kafalah Facility guarantor; and r) such other conditions applicable as may be advised by the Lead Arranger s solicitor and/or the nominated rating agency, MARC, which shall comply with the Securities Commission ( SC ) s Guidelines on the Minimum Contents Requirements for Trust Deeds. 26. Principal terms and conditions for warrants (where applicable) Not applicable. 27. Other Principal Terms and Conditions for the issue i) Facility Limit Murabahah CP/MTN Programme Up to RM130.0 Million RM200.0 Million Page 24 of 37

25 ii) Issuance date Murabahah CP/MTN Programme First issuance of the Murabahah CP/MTN to be made within 6 months from the date of approval by the SC. One lump sum on a date as may be mutually agreed upon with the Primary Subscriber(s), and in any case, a date not later than 6 months from the date of approval by the SC. iii) Instruments CPs under the Murabahah CP/MTN Programme Negotiable non-interest bearing secured promissory notes in bearer form issued at a discount to face value evidencing a promise by the Issuer to pay on specified dates the stated sums in Ringgit Malaysia based on the relevant Sale Price. MTNs under the Murabahah CP/MTN Programme Negotiable secured promissory notes in bearer form issued at a discount or par evidencing a promise by the Issuer to pay on specified dates the stated sums in Ringgit Malaysia based on the relevant Sale Price. Profit payments, where applicable, will be computed in the manner as specified under FAST. To facilitate the financing under the principle of Bai Bithaman Ajil, the Primary Subscriber(s) shall first purchase from the Issuer the Identified Asset(s) at the Purchase Price. The said asset(s) shall subsequently thereafter be resold to the Issuer at the Sale Price which comprises the Purchase Price and profit margin agreed between the Issuer and the Primary Subscriber(s). The settlement of the Sale Price by the Issuer shall be evidenced by way of issuance of negotiable and non-interest bearing bank guaranteed promissory notes (the BBA Notes ), which is payable over an agreed period by the Issuer in deferred instalments. The BBA Notes are called Syahadah Al-Dayn which means Certificates of Debt and may be traded in the secondary market under the Syariah principle of Bai Al-Dayn ( debt-trading ). Page 25 of 37

26 iv) Redemption Murabahah CP/MTN Programme The Murabahah CPs/MTNs shall be redeemed at par or face value on the respective maturity dates. Unless previously purchased and cancelled, the BBA notes shall be redeemed at par on the respective maturity dates. v) Underwriting Fee CPs under the Murabahah CP/MTN Programme The underwriting fee is calculated on the Facility Limit then prevailing on each date the underwriting fee is to be paid and shall be payable annually in advance to the Underwriters based on their then prevailing underwriting commitments. The underwriting fee is subject to the Issuer s credit rating, as follows: Rating MARC-1 MARC-2 MARC-3 Underwriting Fee 0.50% p.a. 0.60% p.a. 0.85% p.a. MTNs under the Murabahah CP/MTN Programme Not Applicable Not Applicable vi) Underwritten Rate CPs under the Murabahah CP/MTN Programme The underwritten rate is subject to the Issuer s credit rating, as follows: Rating MARC-1 MARC-2 MARC-3 Underwritten Rate 0.75% p.a. above respective Underwriter s Islamic Cost of Funds ( ICOF ) 0.85% p.a. above respective Underwriter s ICOF 1.00% p.a. above respective Underwriter s ICOF Page 26 of 37

27 MTNs under the Murabahah CP/MTN Programme Not Applicable Not Applicable vii) Status Murabahah CP/MTN Programme The Murabahah CPs/MTNs will constitute direct, unconditional, secured and unsubordinated obligations of the Issuer and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves, subject to those preferred by law or otherwise provided in the trust deed. The BBA Notes will constitute direct, unconditional, unsecured and unsubordinated obligations of the Issuer and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves, subject to those preferred by law or otherwise provided in the trust deed. viii) Trust Deed Murabahah CP/MTN Programme and The Murabahah CPs/MTNs and BBA Notes shall be constituted by a Trust Deed, which shall be administered by the Trustee acting on behalf of the holders of the Murabahah CPs/MTNs and the BBA Notes. ix) Compensation for Late Payment(s) ( Ta Widh ) Murabahah CP/MTN Programme and In the event of overdue payment of any sums covenanted to be paid, the Issuer shall pay compensation on such overdue amounts at the rate and in the manner prescribed by the SC and endorsed by its Syariah Advisory Council from time to time x) Designated Accounts Murabahah CP/MTN Programme The Issuer shall open and maintain the following designated accounts which are Syariah compliant: i. Proceeds and Operating Account (Operated solely by the Issuer): All proceeds from shareholder s advances/ loans or equity, the issuance of the Murabahah CP/MTN and BBA Notes, revenues, insurance and warranty proceeds, and other cash receipts Page 27 of 37

28 of the Issuer will be deposited into this account pending utilisation. ii. Finance Service Reserve Account ( FSRA ) (Operated solely by the Security Trustee): The balance in FSRA shall at all times be equivalent to 50% of the next twelve (12) months finance service (excluding (if any) subordinated debt service) ( Minimum FSRA Balance ). Finance service here shall be an amount equivalent to the next twelve (12) months: a) principal payments for the CPs; b) principal and profit payments for the MTNs (the inclusion of profit payments is only applicable when the MTNs are issued at par); so long as the next principal payment is not capable of being refinanced by a new issuance of Murabahah CPs/MTNs, and c) the principal and profit payments for the. The Minimum FSRA Balance shall be progressively built up over a period of five months, by crediting 1/5 of such amount every month, commencing one month from the date of first issuance. Furthermore, the Issuer shall credit monthly over a period of 5 months an amount equivalent to 1/5 of the difference between the next principal and interest payments and Minimum FSRA Balance, commencing 6 months prior to each of the Facility Limit Reduction date under the Murabahah CP/MTN and/or 6 months prior to the redemption of the respective tranches under the, as the case may be. The Issuer may utilise such amount equivalent to the shortfall in the Operating Account to meet its obligations to the Murabahah CP/MTN and BBA noteholders should there be insufficient funds. However, the FSRA balance is required to be replenished to the Minimum FSRA Balance within three (3) months from the date of utilisation. Page 28 of 37

29 xi) Permitted Indebtedness These shall Include: (i) the Financing Facilities; (ii) the RM15 million facilities granted by AmBank Berhad, the RM30 million faciilties granted by Bank Muamalat Malaysia Berhad and the RM48 million facilities granted by Bumiputra- Commerce Bank Berhad; (iii) indebtedness arising out of any arrangements entered into by the Issuer for provision of bank guarantees, including performance bonds and maintenance bonds; (iv) hedging against exposure to interest rates and foreign currencies; (v) indebtedness arising in respect of any hire purchase or leasing of any equipment or vehicles; (vi) other short term trade facilities ( Working Capital Facilities ) debts not exceeding a tenure of twelve (12) months; and/or (vii) existing indebtedness and/or guarantees (if any) which have been disclosed in writing to the Trustee prior to the date of the relevant trust deed. Provided that: (i) (ii) (iii) the facilities are incurred in the ordinary course of the Issuer s business; the rating will not be adversely affected with the incurrence of such additional indebtedness; and the Debt to Equity Ratio of 0.8:1.0 would not be breached. xii) Permitted Investment Any unutilised amount in the Designated Accounts may be invested in Islamic deposits with financial institutions, government papers, Khazanah bonds or other acceptable rated Islamic bonds with a minimum rating of AA3/ AA- from Rating Agency Malaysia Berhad ( RAM ) or MARC ( Syariah compliant investments ). Page 29 of 37

30 xiii) Clear Market From the date of acceptance of this offer until thirty (30) days after the issuance date(s) of the Financing Facilities, the Issuer shall ensure that no other financing facilities or debt instruments or securities issued by the Issuer or any affiliates are mandated, placed or syndicated directly or on its behalf without the prior written consent of the Lead Arranger. xiv) Changes of Circumstances If, as a result of any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof that it will be unlawful or impractical for the Lead Arranger/ Placee/ Underwriter(s)/ bank guarantor(s) (collectively Financing Parties ) without breaching any such law, regulation or regulatory requirement to fund its obligations, then the obligations of the Financing Parties (if any) shall be suspended upon written notice to the Issuer. xv) Adverse Market The Financing Parties reserve the right to withdraw or terminate the arrangement of the Financing Facilities if there occurs any change in the national or international financial, political or economic conditions, including but not limited to adversities in the international/ domestic money, capital or syndicated loan markets, the Issuer s business activities or financial position which in the opinion of the Financing Parties will materially affect the offering and distribution of the Murabahah CP/MTN and BBA Notes or dealings in the Murabahah CP/MTN and BBA Notes in the secondary market and/ or the successful completion/ syndication of the Financing Facilities. xvi) Currency Ringgit Malaysia xvii) Taxation xviii) Incidental Expenses & Legal Fees 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 Malaysian law unless such withholding or deduction is required by law, in which event, the Issuer shall gross up for any such withholding or deduction. All legal and professional fees, the cost of duediligence exercises, Syariah Advisory fees, stamp duties (where applicable), taxes and any other out-ofpocket expenses incurred pursuant to the Issuer s acceptance of the Financing Facilities and for purposes of preparation/ submission for relevant approvals and prospectus/ information memorandum Page 30 of 37

31 (if any) and the preparation of security documentation, if applicable, (notwithstanding nonutilisation of the Kafalah Facility, MUNIF or by the Issuer) shall be borne by the Issuer. All costs and expenses incurred by the Financing Parties for and on behalf of the Issuer including legal costs on solicitor/ client basis in enforcing any term or condition or in obtaining payment of any sum due and payable or any cost and expenses in relation to insurances and etc. shall be for the account of the Issuer. xix) Documentation Standard documentation satisfactory to all parties concerned incorporating clauses normal and customary for a financing of this nature and/ or as advised by the Lead Arranger s legal counsel and/or Syariah Adviser. xx) Positive Covenants Murabahah CP/MTN Programme So long as there is an amount remaining outstanding in relation to the MUNIF, the Issuer hereby covenants and undertakes that it shall, inter-alia: i) maintain the following Financial Covenants: a) a Finance Service Cover Ratio of not less than 1.10 times at all times; and ii) b) a Debt to Equity Ratio of not more than 0.80:1 at all times; cause and ensure that all and any advances by its shareholders/ directors/ related companies or any inter-company advances permitted are to be subordinated (to the extent permitted under clause (viii) of Negative Covenants) to its liabilities under the MUNIF; iii) provide half-yearly management accounts within 120 days from the end of each half-year end and year-end audited financial statements within 180 days from its fiscal year end, and such other information (financial or otherwise) as the Facility Agent/ Trustee may reasonably require from time to time; iv) maintain its audited accounts such that the accounts represent fairly the Issuer's financial position and give a true and fair view of its financial conditions; v) keep proper books and accounts at all times and provide Trustee or its agent access to Page 31 of 37

32 Positive Covenants (Continued) vi) vii) viii) ix) and provide Trustee or its agent access to such books and accounts; deliver to the Trustee/ Facility Agent a certificate issued by the Issuer annually, certifying that: a) the Issuer has complied with its obligations under the trust deed and the terms and conditions of the MUNIF; and b) that there did not exist or had not existed, from the date the CPs/MTNs were issued or date of the previous certificate as the case may be, any event of default and if such is not the case, to specify the same; perform and carry out all and any of its obligations under the MUNIF issue documents; carry on and operate its business and affairs with due diligence in a proper and efficient manner and maintain in force and effect all material contracts, consents, licences and rights necessary for the conduct of its business; maintain a Paying Agent in Malaysia at all times; x) notify the Facility Agent/ Trustee of any litigations/ claims/ other proceedings which may have a material adverse effect on the business, assets or condition (financial or otherwise) threatened against it or the security party or on the Issuer s or such security party s ability to perform and fulfill any of its obligations under the MUNIF issue documents; xi) notify the Facility Agent/ Trustee in writing as it becomes aware of any Events of Default; xii) notify the Facility Agent/ Trustee upon becoming aware of the following: a) any substantial change in the nature of its or the security party s business; b) any change in its withholding tax position or taxation jurisdiction; c) any change in the usage of the utilisation proceeds arising from the issuance of the Murabahah CP/MTN; d) any other matter that may materially prejudice the interest of the providers of Page 32 of 37