PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF MPB ( PROPOSED M&A AMENDMENTS )

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1 MAGNA PRIMA BERHAD ( MPB OR THE COMPANY ) (I) PROPOSED ISSUANCE OF 40,000,000 NEW REDEEMABLE CONVERTIBLE PREFERENCE SHARES OF RM0.01 EACH IN MPB ( RCPS ) TO LEMBAGA TABUNG ANGKATAN TENTERA ( LTAT ) AT AN ISSUE PRICE OF RM1.00 PER RCPS ( PROPOSED ISSUANCE ); (II) (III) PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL OF MPB FROM RM100,000,000 COMPRISING 400,000,000 ORDINARY SHARES OF RM0.25 EACH IN MPB ( MPB SHARE(S) OR SHARE(S) ) TO RM125,400,000 COMPRISING 500,000,000 MPB SHARES AND 40,000,000 RCPS ( PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL ); AND PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF MPB ( PROPOSED M&A AMENDMENTS ) 1. INTRODUCTION The Board of Directors of MPB ( Board ) wishes to announce that the Company had on 11 August 2014 entered into a conditional subscription agreement with LTAT in relation to the proposed subscription of 40,000,000 new RCPS at an issue price of RM1.00 each ( Subscription Agreement ) and pursuant thereto, the Company proposes to undertake the following corporate proposals: (i) (ii) (iii) Proposed Issuance; Proposed Increase in Authorised Share Capital; and Proposed M&A Amendments. (The Proposed Issuance, the Proposed Increase in Authorised Share Capital and the Proposed M&A Amendments shall collectively be referred to as the Proposals.) Further details of the Proposals are set out in the ensuing sections of this announcement. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Issuance Details of the Proposed Issuance The Proposed Issuance will entail the issuance of 40,000,000 new RCPS to LTAT at an issue price of RM1.00 per RCPS ( Issue Price ). Further details on the salient terms of the Subscription Agreement and the salient terms of the RCPS are set out in Sections and respectively, as well as Appendix I of this announcement. The Proposed Issuance will not be made in tranches and there is no minimum level of subscription for the Proposed Issuance. 1

2 2.1.2 Background information on LTAT LTAT is a corporation that was established on 1 August 1972 in Malaysia by an Act of Parliament 101 (1973). The principal activities of LTAT are the provision of superannuation and other benefits to members of the other ranks in the Armed Forces and to enable officers in the service to participate in a savings scheme and also to promote socio-economic development and to provide welfare and other benefits for the retiring and retired personnel of the Armed Forces of Malaysia. As LTAT is a corporation incorporated by an Act of Parliament, it has no share capital. LTAT does not have any shareholder as it is a government corporation. As at 24 July 2014, the members of the Board of Directors of LTAT are as follows: Name Nationality Position Laksamana Tan Sri Dato Sri Mohd Anwar bin Haji Mohd Nor (Retired) Dato Sri Dr. Haji Ismail bin Haji Ahmad Malaysian Malaysian Chairman Deputy Chairman Dato Fauziah binti Yaacob Malaysian Deputy Secretary General to the Treasury Malaysia Jen Tan Sri Dato Sri Zulkifeli bin Mohd Zin Lt Gen Dato Seri Panglima Ahmad Hasbullah bin Haji Mohd Nawawi Laksamana Madya Dato Seri Panglima Ahmad Kamarulzaman bin Haji Ahmad Lt Gen Dato Sri Haji Roslan bin Saad RMAF Malaysian Malaysian Malaysian Malaysian Member representing contributors (Chief of Defence Forces) Member representing contributors (Deputy Chief of the Army) Member representing contributors (Deputy Chief of the Navy) Member representing contributors (Deputy Chief of the Air Force) Dato Ghazali Mohd Ali Malaysian Member appointed by Minister (Executive Director of Boustead Properties Berhad) Tan Sri Dato Seri Lodin Wok Kamaruddin Malaysian Member appointed by Minister (Chief Executive Officer) As at 24 July 2014, none of the Directors of LTAT have any interest (direct or indirect) in LTAT. 2

3 2.1.3 Salient terms of the RCPS The salient terms of the RCPS are as follows: Issuer : MPB Holder : LTAT Issuance : RCPS Issue Size : 40,000,000 units of RCPS Issue Price : RM1.00 per RCPS comprising par value of RM0.01 and a premium of RM0.99. Dividend : The RCPS shall carry the right to receive a fixed preferential dividend at the rate of 16% per annum, calculated based on the total subscription price paid on each RCPS by LTAT (par value and the premium), to be paid in cash upon redemption of the RCPS. The RCPS that have already been converted into new MPB Shares in accordance with the Subscription Agreement shall not be entitled to any dividend payable for the RCPS. Tenure : 1 year commencing from and including the date of issuance of the RCPS or such other period mutually agreed by MPB and LTAT to the extent permitted by law. Maturity Date : The date occurring on the day immediately preceding the expiry of the Tenure or if such date is not a market day, the next market day following such date. Ranking : The RCPS shall rank in priority to the ordinary shares but pari passu among themselves in respect of the right to receive Dividends out of distributable profits. The new MPB Shares to which LTAT is entitled to receive by virtue of the exercise of the Conversion Rights (as defined herein) ( Conversion Shares ) shall rank pari passu in all respects with all the then existing issued and paid-up share capital of MPB, except that the Conversion Shares shall not be entitled to any dividends, rights, allotments and/or any other distributions, where the entitlement date precedes the date of allotment and issuance of the Conversion Shares. 3

4 Redemption Price : RM1.00 for each RCPS together with the Dividend for the RCPS, accruing up to and including the date of the redemption. If MPB fails to pay the Redemption Price and the Dividend on its due date, MPB shall pay LTAT interest at the rate of 8% per annum on such portion of the Redemption Price and the Dividend remaining unpaid calculated on a daily basis based on a 365-day year from the date it is due to the date of full payment thereof. Redemption Right : (1) On the Maturity Date, each RCPS shall confer on LTAT the right to require MPB to redeem any or all outstanding RCPS. (2) The redemption of the RCPS is by MPB, and shall, at the option of LTAT, be paid: in cash; and/or subject to Clauses 3 and 4 below, in kind by way of unsold residential apartment units of the Istana Project (1) ( Istana Units ); and/or in kind by way of issuance of new MPB Shares (which is rounded down to the nearest whole number) at the Conversion Price (as defined herein) through the surrender of RCPS, on the basis of each RCPS being equivalent to the value of RM1.00 towards satisfying the Conversion Price. Note: (1) The Istana Project is a single tower residential apartment consisting 320 units of 1, 2 and 3- bedroom apartments and 2-storey penthouses, complimented with retail elements located in Melbourne, Australia. Further details of the Istana Project are set out in Appendix II of this announcement. (3) If LTAT elects to take the Istana Units towards account of the Redemption Price, the sale price of the Istana Units as set out in the Subscription Agreement will account towards the Redemption Price and the excess (if any) shall be settled in cash by LTAT or shortfall (if any) shall, at the option of LTAT, be paid in cash or in kind by way of issuance of new MPB Shares. 4

5 (4) The selection of the Istana Units shall be limited to the units set out in the Subscription Agreement and subject to availability. If no Istana Units are available or the value of the available Istana Units is less than the Redemption Price, the Redemption Price or the balance of the Redemption Price (as the case may be) shall, at the option of LTAT, be paid in cash or in kind by way of issuance of new MPB Shares. (5) All outstanding RCPS shall be redeemed by MPB by giving not less than 15 market days notice prior to the Maturity Date (both dates inclusive) ("Redemption Notice") to LTAT on its intention to redeem all the RCPS on the Maturity Date. (6) LTAT shall within 5 market days from the date of receipt of the Redemption Notice ("Election Period") reply to MPB in writing ("Election Notice") specifying the elected mode of redemption for the RCPS as set out above. (7) If no Election Notice is received by MPB before the expiry of the Election Period, any RCPS not redeemed or converted on the Maturity Date shall be paid in cash. Early Redemption Right : MPB shall have the option to redeem all the outstanding, unredeemed and unconverted RCPS at any time after the expiry of 6 months from the issue date of the RCPS at the Redemption Price by giving LTAT 30 days prior written notice of its intention to redeem all of such RCPS as MPB may choose, specifying the date on which MPB proposes to redeem such RCPS. Should MPB exercise its option to redeem all outstanding, unredeemed and unconverted RCPS, MPB shall pay, in addition to the Redemption Price: an amount equal to 1% of the Redemption Price for such RCPS; and the Dividend for such RCPS, accruing up to and including the date of the early redemption. Conversion Period : The period commencing from the 3 rd month of the date of issuance of the RCPS and expiring at 4:00 p.m. Malaysian time on the Maturity Date. Conversion Right : (1) The RCPS shall be convertible, at the option of LTAT, at any time during the Conversion Period into new MPB Shares (rounded down to the nearest whole number of new MPB Shares) on the basis of each RCPS being equivalent to the value of RM1.00 towards satisfying the Conversion Price. 5

6 (2) In the event LTAT intends to convert any of the RCPS, it shall issue a notice to convert to MPB together with the relevant RCPS certificates. After issuance of the notice to convert by LTAT, LTAT shall further furnish to MPB such supporting documents or information as may be prescribed by MPB or as may be required under any applicable laws or regulations from time to time. (3) Once the notice to convert has been submitted to MPB, LTAT shall not sell, transfer, dispose or otherwise encumber the RCPS in respect of which the Conversion Right has been exercised. (4) Subject to all applicable laws, rules and regulations, within 8 market days from the date of receipt by MPB of the notice to convert (or if such date falls on a date on which the Record of Depositors/Register of Member is closed, the next following market day on which the Record of Depositors/Register of Member is opened) or such other period as may be prescribed or allowed by Bursa Malaysia Securities Berhad ( Bursa Securities ) or under any applicable laws and regulations, MPB shall: (a) (b) allot and issue to LTAT, the Conversion Shares, credited as fully paid up, and shall cause the securities account of LTAT to be credited with such number of Conversion Shares; and despatch a notice of allotment to LTAT in respect of the Conversion Shares. (5) Any fraction of a new MPB Share resulting from the exercise of the Conversion Right shall be disregarded and MPB shall not be required to make cash payment of the value of such fractions to LTAT or cause the securities account of LTAT to be credited for such fractions. (6) Once converted, the RCPS shall not be capable of reissuance. 6

7 Conversion Price : Subject to the adjustments provided in the Subscription Agreement, the conversion price of each unit of the RCPS is as follows: Holding Period Within 6 months from the date of issuance of the RCPS After the 6 th month but before the 9 th month from the date of issuance of the RCPS After the 9 th month but before the 12 th month from the date of issuance of the RCPS Conversion Price 5% discount to the 5-day volume weighted average market price ( VWAMP ) of MPB Shares up to and including the date of the notice to convert 8% discount to the 5-day VWAMP of MPB Shares up to and including the date of the notice to convert 10% discount to the 5-day VWAMP of MPB Shares up to and including the date of the notice to convert The Conversion Price of the RCPS shall not in any event be lower than the par value of the MPB Shares of RM0.25 each. The other salient terms of the RCPS are set out in Appendix I of this announcement Basis of determining the Issue Price and the Conversion Price (a) Issue Price The RCPS will be issued at the Issue Price, which is fixed at a premium of RM0.99 above the par value of RM0.01 per RCPS. The above was arrived at after negotiations with LTAT. The Issue Price of RM1.00 is justified after taking into consideration, the following: the illiquidity of the RCPS. As set out in the Subscription Agreement, the RCPS will neither be tradable nor transferable (when compared to MPB Shares which are traded on the Main Market of Bursa Securities); and the limited voting rights attached to the RCPS where LTAT shall not be entitled to vote (in person or by proxy or by attorney) in any general meeting of MPB except in, amongst others, when the Dividend or part thereof on the RCPS is in arrears for more than 6 months, on a proposal to reduce MPB's share capital, on a proposal for the disposal of the whole of MPB's property, business and undertaking, on a proposal that affects the rights attached to the RCPS, on a proposal to wind up MPB and during the winding up of MPB. Further details of the salient terms of the RCPS are set out in Section and Appendix I of this announcement. 7

8 (b) Conversion Price The Conversion Price of the RCPS was also arrived at after negotiations with LTAT. The Conversion Price is justified after taking into consideration, amongst others, that the Conversion Price is pegged against the prevailing future market prices of MPB Shares and that the discount accorded is fixed to a maximum of 10% only, being a similar maximum discount given in private placement exercises undertaken pursuant to Section 132D of the Companies Act, 1965 ( Act ). In addition to the above, the Conversion Price of the RCPS shall not in any event be lower than the par value of the MPB Shares of RM0.25 each Listing of the RCPS and the new MPB Shares to be issued from the conversion of the RCPS The RCPS will not be listed on the Main Market of Bursa Securities. However an application will be made for the listing of and quotation for the new MPB Shares to be issued from the conversion of the RCPS on the Main Market of Bursa Securities Salient terms of the Subscription Agreement In addition to the salient terms of the RCPS which are contained in the Subscription Agreement, the salient terms of the Subscription Agreement are as follows: (i) Subscription of the RCPS Subject to the fulfilment of the Conditions Precedent (as defined below) and the terms and conditions of the Subscription Agreement, LTAT irrevocably agrees and undertakes to subscribe in cash for the RCPS. (ii) Conditions Precedent The Proposed Issuance is conditional upon: (a) (b) (c) (d) MPB obtaining the approval of its shareholders and its Board for the Proposed Issuance and the Proposed M&A Amendments; MPB obtaining the approval of Bursa Securities for the listing of and quotation for the new MPB Shares arising from the conversion of the RCPS; LTAT receiving the Irrevocable Undertaking (further details of which are set out in item (v) below); MPB and LTAT opening the Joint Account (further details of which are set out in item (iv) below); and 8

9 (e) MPB and LTAT obtaining all other requisite approvals as may be necessary or required by law or any authority for the Proposed Issuance. (collectively referred to as the Conditions Precedent ) (iii) Non-fulfilment of the Conditions Precedent If any of the Conditions Precedent is not fulfilled within 3 months from the date of the Subscription Agreement (or such other period mutually agreed by MPB and LTAT), the Subscription Agreement shall cease to have effect and neither MPB nor LTAT shall have any claim against the other, save in respect of any prior breach. (iv) Joint Account MPB and LTAT shall within 3 months from the date of the Subscription Agreement (or such other period as may be mutually agreed by MPB and LTAT) open a joint account in the name of MPB and LTAT with a licensed bank in Australia ( Joint Account ) whereby RM46,400,000 of the net sales proceeds of the Istana Project shall be channelled into the Joint Account. The net sales proceeds of the Istana Project shall be paid into the Istana Project s existing escrow account which is opened and maintained by MPB s stakeholder dealing with the proceeds of the Istana Project ( Existing Escrow Account ) and the Joint Account in the following order: (a) (b) (c) the net sales proceeds of the Istana Project shall be paid into the Existing Escrow Account until the Existing Escrow Account has an amount equivalent to AUD83,000,000 for the purpose of repayment to a financial institution; all further net sales proceeds of the Istana Project shall be paid into the Joint Account until the Joint Account has an amount equivalent to RM46,400,000 as at the Maturity Date; and the balance of the net sales proceeds of the Istana Project shall then be paid to MPB. (v) Irrevocable Undertaking The Company shall procure an irrevocable undertaking from its stakeholder dealing with the sales proceeds from the Istana Project whereby the said stakeholder shall irrevocably undertake to LTAT that, among others, RM46,400,000 of the net sales proceeds from the Istana Project shall be channelled into the Joint Account ( Irrevocable Undertaking ). (vi) Completion Completion shall take place within 7 days after the date the last Condition Precedent is fulfilled. Thereafter: (a) MPB shall procure its Board to authorise the issue and allotment of the RCPS; and 9

10 (b) LTAT shall deliver a cheque or banker s draft or such other mode that may be agreed between MPB and LTAT (in favour of MPB) in payment for the RCPS. Upon the receipt of the said payment, the RCPS shall be issued and credited as fully paid-up. 2.2 Proposed Increase in Authorised Share Capital The present authorised share capital of MPB is RM100,000,000 comprising 400,000,000 MPB Shares of which RM83,222,485 comprising 332,889,940 MPB Shares have been issued and fully paid-up. Therefore, to accommodate the issuance of the RCPS and the conversion thereof, MPB proposes to increase its authorised share capital to RM125,400,000 comprising 500,000,000 MPB Shares and 40,000,000 RCPS by the creation of an additional 100,000,000 MPB Shares and 40,000,000 RCPS. 2.3 Proposed M&A Amendments The Proposed M&A Amendments is undertaken to accommodate the issuance of the RCPS and the Proposed Increase in Authorised Share Capital. 3. PROPOSED UTILISATION OF THE PROCEEDS TO BE RAISED FROM THE PROPOSED ISSUANCE The Proposed Issuance is expected to raise RM40,000,000 and shall be utilised in the following manner: Description Amount (RM) Estimated timeframe for utilisation from the completion of the Proposed Issuance Working capital: - MPB Group s property development projects (1) 38,000, months - general working capital (2) 1,600,000 3 months Defrayment of expenses in relation to the Proposals (3) 400,000 3 months 40,000,000 Notes: (1) Part of the proceeds from the Proposed Issuance will be utilised to meet the working capital requirements of MPB Group s property development projects, the details of which are as follows: (a) (b) to part finance the development and other ancillary costs of the Istana Project. The ancillary costs of the Istana Project includes, amongst others, the costs required to obtain vacant possession of the Istana Project, marketing expenses and payment of goods and services tax. Further details of the Istana Project are set out in Appendix II of this announcement; to part finance the development costs for MPB Group s project comprising 8 blocks of 4-storey shop offices, 1 block of 30-storey apartment with a 4-storey shop lot and 1 block of 4-storey shopping mall and a supermarket on Jalan Kuching to be known as Boulevard Business Park ( Boulevard Business Park Development Project ). Further details of the Boulevard Business Park Development Project are set out in Appendix III of this announcement; and 10

11 (c) to part finance the development costs for MPB Group s project comprising 36 units of 3-storey shop offices located on 36 plots of sub-divided terraced commercial lots, identified as Title Nos. HS(D) , PT Nos & HS(D) , PT Nos , all within Mukim of Damansara, District of Petaling, State of Selangor ( Desa Mentari Development Project ). Further details of the Desa Mentari Development Project are set out in Appendix IV of this announcement. (2) Part of the proceeds from the Proposed Issuance will be utilised to meet MPB Group s general working capital requirements which includes, amongst others, sales and marketing expenses, finance costs and administrative costs. The actual breakdown of the proceeds to be utilised for each component of MPB Group s general working capital has not been determined at this juncture. The actual utilisation of each component of MPB Group s general working capital may differ subject to the operating requirements of MPB Group at the time of utilisation. (3) The expenses related to the Proposed Issuance comprise, amongst others, professional fees, fees payable to the relevant authorities in connection with the Proposals and costs related to convening the extraordinary general meeting ( EGM ) in relation to the Proposals. The aforesaid expenses are subject to change, depending upon and after setting off the amount to be charged by the relevant parties. The proceeds to be received from the Proposed Issuance will be placed into interest bearing bank account(s) pending its utilisation. Any variation in the actual amount of proceeds to be utilised for working capital and the defrayment of expenses stated above will be adjusted against each other accordingly. No new proceeds will be raised from the conversion of the RCPS into Conversion Shares as the conversion will be wholly satisfied through the surrender of the RCPS. 4. RATIONALE FOR THE PROPOSALS 4.1 Proposed Issuance The Proposed Issuance will provide an avenue for MPB Group to raise funds (which are proposed to be utilised in the manner set out in Section 3 of this announcement) in the most expeditious manner. After due consideration of the various methods of fund raising available, the Board is of the opinion that the Proposed Issuance is the most appropriate avenue due to the following reasons: (i) (ii) (iii) the Proposed Issuance will enable MPB Group to raise additional working capital (which will mainly be utilised for MPB Group s property development projects) in a more timely manner; the Proposed Issuance provides the most expeditious way of raising funds from the capital markets as opposed to a pro-rata issuance of securities (such as a rights issue) which is comparatively more time consuming and costly; on 22 November 2013, MPB Group announced that the Company s subsidiary, Magna Prima Australia Pty Ltd, has been granted a Mezzanine Loan of AUD15.00 million from Hickory Group Pty Ltd to finance part of the development cost of the Istana Project ( Mezzanine Loan ). The finance cost for the Mezzanine Loan was 25% per annum. 11

12 Further to the above, MPB Group announced on 8 July 2014 that Magna Prima Australia Pty Ltd has fully settled the Mezzanine Loan. The Proposed Issuance will allow MPB Group to raise funds to complete the Istana Project at a relatively lower finance cost of 16% per annum, which is the Dividend payable on the RCPS; and (iv) the Proposed Issuance will potentially introduce LTAT, a reputable institutional investor as a substantial shareholder of MPB in the event LTAT decides to convert all or part of its RCPS into new MPB Shares, resulting in its direct shareholding in MPB increasing to 5% or more of the issued and paid-up share capital of MPB. 4.2 Proposed Increase in Authorised Share Capital The Proposed Increase in Authorised Share Capital is required to cater for the Proposed Issuance. 4.3 Proposed M&A Amendments The rationale for the Proposed M&A Amendments is to facilitate the creation and issuance of the RCPS pursuant to the Proposed Issuance and to facilitate the Proposed Increase in Authorised Share Capital. 5. EFFECTS OF THE PROPOSALS The actual number of new MPB Shares to be issued pursuant to the conversion of the RCPS cannot be determined at this juncture as it will depend on the prevailing market prices at the date the Company receives a notice from LTAT that it intends to convert the RCPS into MPB Shares. For illustration purposes, assuming the Conversion Shares are issued at RM0.95 per Conversion Share, being approximately a 10% discount to the 5-day VWAMP up to and including 8 August 2014 (being the latest trading date prior to the date of this announcement) of RM1.05 per Share ( Assumed Conversion Price ), the Company is expected to issue up to 42,105,263 Conversion Shares. Furthermore, the RCPS also confers on LTAT upon maturity, the right to require MPB to redeem any or all outstanding RCPS by way of cash to be paid by MPB on the Maturity Date and/or transfer of equivalent number of the Istana Units (details of which are set out in Section of this announcement) and/or the issuance of new MPB Shares at the Conversion Price. Premised on the above, the proforma effects of the Proposals on the issued and paid-up share capital, shareholdings of the substantial shareholders, net assets ( NA ), NA per Share, gearing, earnings and earnings per Share ( EPS ) of MPB Group have been prepared on the following basis: 12

13 Scenario Scenario 1 Scenario 2 Description Assuming that upon maturity all the RCPS will be redeemed by way of cash to be paid by MPB on the Maturity Date and/or through the transfer of an equivalent number of the Istana Units. Assuming that upon maturity all the RCPS will be converted through the issuance of 42,105,263 new MPB Shares on the basis of each RCPS being equivalent to the value of RM1.00 towards satisfying the Assumed Conversion Price. 5.1 Effects of the Proposed Issuance The effects of the Proposed Issuance are as follows: Share capital The proforma effects of the Proposed Issuance on the issued and paid-up share capital of MPB are as follows: Scenario 1 No. of Shares Par value Amount (RM) (RM) Issued and paid-up share capital of MPB as at 31 July 2014, being the latest practicable date for the purposes of this announcement ( LPD ) MPB Shares to be issued pursuant to the completion of the Proposed Issuance Total issued and paid-up share capital after the completion of the Proposed Issuance 332,889, ,222, ,889, ,222,485 Scenario 2 No. of Shares Par value Amount (RM) (RM) Issued and paid-up share capital of MPB as at the LPD MPB Shares to be issued pursuant to the completion of the Proposed Issuance Total issued and paid-up share capital after the completion of the Proposed Issuance Maximum number of Conversion Shares issued at the Assumed Conversion Price Enlarged and issued paid-up share capital after the full conversion of all the RCPS into new MPB Shares 332,889, ,222, ,889, ,222,485 42,105, ,526, ,995, ,748,801 13

14 5.1.2 Shareholdings of substantial shareholders The proforma effects of the Proposed Issuance on the shareholdings of the substantial shareholders are as follows: Scenario 1 (I) As at the LPD After (I) and the completion of the Proposed Issuance Direct Indirect Direct Indirect Substantial shareholders No. of Shares % (1) No. of Shares % (1) No. of Shares % (1) No. of Shares % (1) Muafakat Kekal Sdn Bhd Fantastic Realty Sdn Bhd 33,000, ,000, ,561, ,561, Chun Mei Ngor 22,953, ,953, Chun Yee Ying 18,626, ,626, Dato Haji Abdul Hanif bin Abdullah ,000,000 (2) ,000,000 (2) 9.91 Lee Hing Lee ,631,824 (3) ,631,824 (3) Lee Siong Hai 210, ,561,824 (4) , ,561,824 (4) Notes: (1) Based on the issued and paid-up share capital of 332,889,940 MPB Shares as at the LPD. (2) Deemed interested by virtue of his substantial shareholding in Muafakat Kekal Sdn Bhd pursuant to Section 6A(4) of the Act. (3) Deemed interested by virtue of his substantial shareholding in Fantastic Realty Sdn Bhd and Top Fresh Foods (M) Sdn Bhd pursuant to Section 6A(4) of the Act. (4) Deemed interested by virtue of his substantial shareholding in Fantastic Realty Sdn Bhd pursuant to Section 6A(4) of the Act. 14

15 Scenario 2 Substantial shareholders (I) As at the LPD (II) After (I) and the completion of the Proposed Issuance After (II) and assuming full conversion of all the RCPS into new MPB Shares Direct Indirect Direct Indirect Direct Indirect No. of No. of No. of No. of No. of No. of Shares % (1) Shares % (1) Shares % (1) Shares % (1) Shares % (2) Shares % (2) Muafakat Kekal Sdn Bhd Fantastic Realty Sdn Bhd 33,000, ,000, ,000, ,561, ,561, ,561, Chun Mei Ngor 22,953, ,953, ,953, Chun Yee Ying 18,626, ,626, ,626, Dato Haji Abdul Hanif bin Abdullah ,000,000 (3) ,000,000 (3) ,000,000 (3) 8.80 Lee Hing Lee ,631,824 (4) ,631,824 (4) ,631,824 (4) Lee Siong Hai 210, ,561,824 (5) , ,561,824 (5) , ,561,824 (5) LTAT ,105, Notes: (1) Based on the issued and paid-up share capital of 332,889,940 MPB Shares as at the LPD. (2) Based on the enlarged issued and paid-up share capital after the Proposed Issuance and assuming the maximum number of Conversion Shares are issued at the Assumed Conversion Price of 374,995,203 Shares. (3) Deemed interested by virtue of his substantial shareholding in Muafakat Kekal Sdn Bhd pursuant to Section 6A(4) of the Act. (4) Deemed interested by virtue of his substantial shareholding in Fantastic Realty Sdn Bhd and Top Fresh Foods (M) Sdn Bhd pursuant to Section 6A(4) of the Act. (5) Deemed interested by virtue of his substantial shareholding in Fantastic Realty Sdn Bhd pursuant to Section 6A(4) of the Act. 15

16 5.1.3 NA, NA per Share and gearing The proforma effects of the Proposed Issuance on the audited consolidated NA, NA per Share and gearing of MPB Group based on its latest audited consolidated financial statements of MPB as at 31 December 2013 are as follows: Scenario 1 (I) Audited consolidated as at 31 December 2013 (II) After (I) and the Proposed Issuance After (II) and assuming all the RCPS are redeemed by way of cash and/or through the transfer of an equivalent number of the Istana Units (RM) (RM) (RM) Share capital 83,222,485 83,222,485 83,222,485 Share premium 35,565,970 35,565,970 35,565,970 Capital reserve 19,706,095 19,706,095 19,706,095 Foreign currency translation reserve (8,418,001) (8,418,001) (8,418,001) Retained profits 30,799,373 30,799,373 23,999,373 (1)(2) NA 160,875, ,875, ,075,922 No. of Shares 332,889, ,889, ,889,940 NA per Share (RM) Borrowings 286,277, ,277, ,277,168 RCPS Liability (3) - 39,600,000 (1)(3) - Total borrowings 286,277, ,277, ,277,168 Gearing (times) Notes: (1) After deducting estimated expenses in relation to the Proposals of RM400,000. Further details of the estimated expenses in relation to the Proposals are set out in Section 3 of this announcement. (2) After deducting accrual of Dividend of RM6,400,000 which is in relation to the entire tenure of the RCPS. (3) The RCPS was computed as a liability component in accordance with the requirements of the Malaysian Financial Reporting Standards. 16

17 Scenario 2 (I) Audited consolidated as at 31 December 2013 (II) After (I) and the Proposed Issuance After (II) and assuming full conversion of all the RCPS into new MPB Shares (RM) (RM) (RM) Share capital 83,222,485 83,222,485 93,748,801 (2) Share premium 35,565,970 35,565,970 65,039,654 Capital reserve 19,706,095 19,706,095 19,706,095 Foreign currency translation reserve (8,418,001) (8,418,001) (8,418,001) Retained profits 30,799,373 30,799,373 23,999,373 (1)(3) NA 160,875, ,875, ,075,922 No. of Shares 332,889, ,889, ,995,203 NA per Share (RM) Borrowings 286,277, ,277, ,277,168 RCPS Liability (4) - 39,600,000 (1)(4) - Total borrowings 286,277, ,877, ,277,168 Gearing (times) Notes: (1) After deducting estimated expenses in relation to the Proposals of RM400,000. Further details of the estimated expenses in relation to the Proposals are set out in Section 3 of this announcement. (2) After the full conversion of 40,000,000 RCPS into 42,105,263 new MPB Shares, on the basis of each RCPS being equivalent to the value of RM1.00 towards satisfying the Assumed Conversion Price. (3) After deducting accrual of Dividend of RM6,400,000 which is in relation to the entire tenure of the RCPS. (4) The RCPS was computed as a liability component in accordance with the requirements of the Malaysian Financial Reporting Standards. 17

18 5.1.4 Earnings and EPS Save for the Dividend to be accrued in respect of the RCPS, the Proposed Issuance is not expected to have a material impact on the earnings and EPS of MPB Group for the financial year ending 31 December The EPS of MPB Group may be diluted as a result of an increase in the number of MPB Shares in issue after the issuance of the Conversion Shares. However, after taking into consideration the proposed utilisation of the proceeds from the Proposed Issuance as set out in Section 3 of this announcement, the Proposed Issuance is expected to enhance the future earnings of MPB Group in the long term as the proceeds from the Proposed Issuance will be utilised, amongst others, for the Group s property development projects specifically the Istana Project, the Boulevard Business Park Development Project and the Desa Mentari Development Project. 5.2 Effects of the Proposed Increase in Authorised Share Capital and Proposed M&A Amendments The Proposed Increase in Authorised Share Capital and the Proposed M&A Amendments will not have any effect on the issued and paid-up share capital, shareholdings of the substantial shareholders, NA, NA per Share, gearing, earnings and EPS of MPB Group. 5.3 Existing convertible securities MPB does not have any existing convertible securities as at the LPD. 6. APPROVALS REQUIRED The Proposals are subject to the following approvals being obtained: (i) (ii) (iii) the approval of Bursa Securities for the listing of and quotation for the Conversion Shares on the Main Market of Bursa Securities; the approval of the shareholders of MPB at an EGM to be convened; and the approval of any other relevant authorities, if required. The Proposed Issuance, the Proposed Increase in Authorised Share Capital and the Proposed M&A Amendments are inter-conditional to each other. The Proposals are not conditional upon any other corporate exercises undertaken or to be undertaken by MPB. 7. ESTIMATED TIME FRAME FOR SUBMISSION OF THE APPLICATION TO THE RELEVANT AUTHORITIES Barring any unforeseen circumstances, the applications to the relevant authorities in relation to the Proposed Issuance are expected to be made within 2 months from the date of this announcement. 8. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposals are expected to be completed by the end of the 3 rd quarter of

19 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the Directors, major shareholders and/or persons connected with them have any interest, direct or indirect in the Proposals. 10. DIRECTORS STATEMENT The Board, having considered all aspects of the Proposals, including but not limited to the rationale for the Proposals, the terms of the Subscription Agreement as well as the effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company. 11. DOCUMENTS AVAILABLE FOR INSPECTION A copy of the Subscription Agreement will be made available for inspection at the registered office of MPB at Lot No. C-10, Block C, Jalan Persiaran Surian, Palm Damansara, Kota Damansara, Petaling Jaya, Selangor from 8:30 a.m. to 6:00 p.m. from Mondays to Fridays (excluding public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 11 August

20 APPENDIX I OTHER SALIENT TERMS OF THE RCPS The other salient terms of the RCPS are as follows: Rating : Not applicable. Listing of the RCPS : Not listed. Adjustments Conversion Price to : The Conversion Price may be adjusted from time to time at the determination of the Board in the event of alteration to the share capital of MPB on or before the Maturity Date, in all or any of the following circumstances: (i) (ii) an alteration of the par value of the ordinary shares by reason of consolidation or subdivision; a bonus issue of fully paid-up ordinary shares or any other capitalisation issue for accounting purposes; (iii) a capital distribution to shareholders made by the Company whether on a reduction on capital or otherwise, but excluding any cancellation of capital which is lost or unrepresented by assets; (iv) a rights issue involving ordinary shares; or (v) any other circumstances that the Board deems necessary. provided that any adjustment to the Conversion Price will be rounded to the nearest 1 sen and under no circumstances shall any adjustment result in the Conversion Price falling below the par value of the ordinary shares for the time being. No adjustment to the Conversion Price shall be made unless it has been certified by a professional adviser or the external auditors of the Company. Transferability : Each unit of RCPS is not transferable. Voting Rights : LTAT shall have the right to receive notices, reports and audited financial statements and attend meetings of MPB, but shall not be entitled to vote in person or by proxy or by attorney in a general meeting of MPB except at such meeting in each of the following circumstances: (i) (ii) when the Dividend or part thereof on the RCPS is in arrears for more than 6 months; on a proposal to reduce MPB s share capital; (iii) on a proposal for the disposal of the whole of MPB's property, business and undertaking; (iv) on a proposal that affects the rights attached to the RCPS; (v) on a proposal to wind up MPB; and (vi) during the winding up of MPB. 20

21 APPENDIX I OTHER SALIENT TERMS OF THE RCPS (Cont d) Whenever LTAT has the right to vote at a general meeting, LTAT has the same right to vote (both on a show of hands and on a poll) as the holder of 1 ordinary share for each RCPS held. Changes in capital : MPB may create and issue further preference shares ranking in all respects pari passu with, but not ranking in priority to the RCPS save with the prior approval of LTAT. Rights of LTAT in the event of winding up or liquidation : The RCPS shall rank pari passu among themselves but in priority to all other classes of preference shares and/or ordinary shares in MPB in the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary ( Liquidation Event ) or upon a reduction of capital or other return of capital (other than a conversion, purchase or redemption of any RCPS or any share of any other class of redeemable shares). In the event of the abovementioned Liquidation Event, reduction of capital or other return of capital, the funds and assets that may be legally distributed to MPB s shareholders ( Distributable Assets ) shall be distributed to the shareholders in the following manner: (a) (b) (c) LTAT shall be entitled to be paid, in priority to the holders of ordinary shares, any declared and unpaid Dividend in respect of the RCPS; after payment of any Dividend payable above, LTAT shall be entitled to be paid, and prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any Distributable Assets on any ordinary shares, an amount per share equal to the original issue price for each RCPS, respectively; and if there are any Distributable Assets remaining after the payment or distribution (or the setting aside for payment or distribution) to LTAT of its full preferential amounts described above, then all such remaining Distributable Assets shall be distributed among the holders of the ordinary shares then in issue pro rata according to the number of ordinary shares held by each holder thereof. Form of Notice : The Election Notice or the notice to convert (as the case may be) shall be accepted by MPB if it is in the form set out in the Subscription Agreement or such other form as may be acceptable to MPB. Save as otherwise stated, any notice served under any provision of the Subscription Agreement may not be withdrawn except with the written consent of the recipient of the notice. Listing Status of Conversion Shares : The new MPB Shares to be issued upon conversion of the RCPS will be listed on the Main Market of Bursa Securities. Governing Law : Laws of Malaysia 21

22 APPENDIX II FURTHER DETAILS OF THE ISTANA PROJECT The details of the Istana Project are as follows: Name of project : The Istana Melbourne Location : A Beckett Street, Melbourne, Australia Land area : Approximately 2,763 square metres Development project : Single tower residential apartment consisting 320 units of 1, 2 and 3-bedroom apartments and 2-storey penthouses, complimented with retail elements Approximate age of buildings : Not applicable Tenure : Freehold Net book value based on the latest audited consolidated financial statements of MPB as at 31 December 2013 : AUD77.7 million/rm230.8 million^ (including land cost) Encumbrances : (i) The land on which the Istana Project is built on is charged to Export Import Bank of Malaysia Berhad; and (ii) Hickory Group Pty Ltd has a caveat on the land on which the Istana Project is built on Commencement date : 9 August 2012 Expected completion date : 27 October 2014 Estimated gross development value : AUD210.1 million/rm624.0 million^ Estimated development cost : AUD152.8 million/rm453.8 million^ Estimated gross development profit : AUD57.3 million/rm170.2 million^ Current percentage of completion : 84.0% as at the LPD Current percentage of sales : 76.0% as at the LPD Sources of funds : Internally generated funds and bank borrowings Note: ^ Based on the exchange rate of AUD1.00 = RM2.97 as at the LPD. 22

23 APPENDIX II FURTHER DETAILS OF THE ISTANA PROJECT (Cont d) Approvals/Planning consent obtained and the conditions thereof : The planning permit from the Minister of Planning had been obtained on 5 May 2002 and was amended on 6 October On 22 November 2013, a request for an extension of time to complete the said planning permit was submitted and on 3 December 2013, approval was granted to extend the time to complete the planning permit until 5 May (The rest of this page has been intentionally left blank) 23

24 FURTHER DETAILS OF THE BOULEVARD BUSINESS PARK DEVELOPMENT PROJECT APPENDIX III The details of the Boulevard Business Park Development Project are as follows: Name of proposed development project : Boulevard Business Park Location : Lot Mukim of Batu, District of Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur Land area : 40,670 square meters Proposed development project : Phase Development project Phase 1 Phase 2 Phase 3 8 blocks of 4-storey shop offices 1 block of 30-storey service apartments with 4-storey shop lots 1 block of 4-storey shopping mall and a supermarket Existing use : Nil Approximate age of buildings : Not applicable Tenure : Freehold land Net book value based on the latest audited consolidated financial statements of MPB as at 31 December 2013 : RM149.6 million Encumbrances : Nil Expected commencement date : 5 July 2011 Expected completion date : Phase Expected completion date Phase 1 4 th quarter of 2014 Phase 2 2 nd quarter of 2016 Phase 3 2 nd quarter of 2016 Estimated gross development value : RM660.5 million Estimated development cost : RM438.2 million 24

25 APPENDIX III FURTHER DETAILS OF THE BOULEVARD BUSINESS PARK DEVELOPMENT PROJECT (Cont d) Estimated gross development profit : RM222.3 million Current percentage of completion : 44.0% as at the LPD Current percentage of sales : Phase Current percentage of sales Phase 1 Phase 2 Phase % as at the LPD 54.0% as at the LPD Sold (En-bloc) Sources of funds : Internally generated funds Approvals/Planning consent obtained and conditions thereof : The development order was obtained on 9 February 2011 from Perintah Pembangunan and the building plan was approved by Dewan Bandaraya Kuala Lumpur on 23 May 2012 (The rest of this page has been intentionally left blank) 25

26 APPENDIX IV FURTHER DETAILS OF THE DESA MENTARI DEVELOPMENT PROJECT The details of the Desa Mentari Development Project are as follows: Name of project : Desa Mentari Location : 36 plots of sub-divided terraced commercial lots, identified as Title Nos. HS(D) , PT Nos & HS(D) , PT Nos , all within Mukim of Damansara, District of Petaling, State of Selangor Land area : 76,757 square feet Development project : 36 units of 3-storey shop offices Approximate age of buildings : Nil Tenure : Not applicable Net book value based on the latest audited consolidated financial statements of MPB as at 31 December 2013 : Leasehold (99 years expiring on 11 April 2101) Encumbrances : RM24.4 million Commencement date : 3 June 2014 Expected completion date : 2 December 2015 Estimated gross development value : RM68.0 million Estimated development cost : RM49.9 million Estimated gross development profit : RM18.1 million Current percentage of completion : This project has just commenced Current percentage of sales : 5% as at the LPD Sources of funds : Internally generated funds and bank borrowings 26

27 APPENDIX IV FURTHER DETAILS OF THE DESA MENTARI DEVELOPMENT PROJECT (Cont d) Approvals/Planning consent obtained and the conditions thereof : The building plan was approved by Majlis Bandaraya Petaling Jaya on 24 October 2013, subject to, amongst others, the following conditions: (i) to obtain approval for the temporary constructions on site such as project signboard, site office, workers quarters and others to comply with the relevant construction site rules; (ii) reinforced concrete piling that uses hammer (hydraulic/diesel) is not allowed; (iii) (iv) to ensure that the design of the building complies with the criteria of a green building ; to ensure that the following are fulfilled before the Certificate of Completion and Compliance is issued: to repair the damages caused to neighbouring properties and public properties; to put in place facilities for the physically disabled; to ensure the building is built according to the plan that has been approved; and to present the building plan, structure plan and computation in the event of any amendments, and pictures of the construction in digital form (DVD/CD) with dxf/jpeg/gif format; and (v) to put in place a rainwater collection and utilisation system according to the Guidelines for Rainwater Collection & Utilisation System prepared by the Ministry of Housing and Local Government. (The rest of this page has been intentionally left blank) 27