Westports Malaysia Sdn Bhd ( Westports or the Issuer ) Up to RM800.0 Million Sukuk Musyarakah Medium Term Notes ( Sukuk Musyarakah MTN ) Programme

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1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL BACKGROUND INFORMATION (a) Issuer i. Name : Westports Malaysia Sdn Bhd (formerly known as Kelang Multi Terminal Sdn Bhd) ( Westports or the Issuer ). ii. Address iii. Business Registration No. iv. Date/ Place of Incorporation v. Date of Listing (in case of Public Listed Company) : Suite, 15-3A, Block C, Jalan Solaris 2, Solaris Mont Kiara, Kuala Lumpur. : V. : January 24, 1990/ Malaysia. : Not listed. vi. Status Resident/Non- Resident Controlled Company Bumiputra/ Non- Bumiputra Controlled Company : : Resident controlled company. Non Bumiputra controlled company. vii. Principal Activities : The Issuer is principally involved in the development and management of port operations. viii. Board of Directors : As at 30 November 2007, the Board of Directors for the Issuer are as follows: (i) Tan Sri Datuk G. Gnanalingam; (ii) Tan Sri Dato Nik Ibrahim Kamil bin Tan Sri Nik Ahmad Kamil; (iii) Dato Haji Badri bin Haji Masri; (iv) John Edward Wenham Meredith; (v) James Steed Tsien; (vi) Chan Chu Wei; (vii) Fauziah binti Yaacob; (viii) Ahmayuddin bin Ahmad; and (ix) Chai Yune Loong. 1

2 ix. Structure of Shareholdings and Names of Shareholders : The shareholder of the Issuer and the structure of shareholdings as at 30 November 2007 are as follows: Names Westports Holdings Sdn Bhd Minister of Finance (Incorporated) No. of shares held % of shareholdings 200,000, Note: * Article 6 A (1) of the Articles of Association of Westports provides; The Special Share may be held only by or transferred only to the Minister of Finance (Incorporated) or its successors or any Minister, representative or any person acting on behalf of the Government of Malaysia Article 6 A (2) of the Articles of Association of Westports provides; The Special Shareholder shall be entitled to nominate one (1) Director to be on the Board of Directors of Westports. Westports Holdings Sdn Bhd ( A) Shareholders No. of shares Direct Percentage (%) Pembinaan Redzai Sdn Bhd 50,200, South Port Investment Holdings Ltd 36,800, Semakin Ajaib Sdn Bhd 10,000, Dinamik Imbangan Sdn Bhd 10,000, Khazanah Nasional Berhad 10,000,

3 x. Authorized and Paid-Up Capital : Authorized share capital as at 30 November 2007 is RM500,000,001 comprising of 500,000,000 ordinary shares at RM1.00 each and 1 special share at RM1.00 each. Paid-up capital as at 30 November 2007 is RM200,000,001 comprising of 200,000,000 ordinary shares at RM1.00 each and 1 special share at RM1.00 each. PRINCIPAL TERMS AND CONDITIONS (a) Names of parties involved in the proposed transaction (where applicable). i. Principal Adviser(s)/ Lead Arranger(s) ii. Arranger(s) iii. Valuers iv. Solicitors : OSK Investment Bank Berhad (14152-V) (formerly known as OSK Securities Berhad) ( OSK ). : Not Applicable. : Not Applicable. : (i) Lee Hishammuddin Allen & Gledhill. (ii) Aziz Hon Annuar (for the Issuer). v. Financial Adviser : Not Applicable. vi. Technical Adviser vii. Guarantor viii. Trustee ix. Facility Agent x. Primary Subscriber(s) and Amount Subscribed (where applicable) xi. Underwriter(s) and Amount Underwritten xii. Syariah Adviser xiii. Central Depository xiv. Paying Agent : Not Applicable. : Not Applicable. : OSK Trustees Berhad ( U). OSK. : If applicable, the Primary Subscriber will be determined prior to each issuance of the Sukuk Musyarakah MTN. : Not Applicable. : Dr. Mohd. Daud Bakar. : Bank Negara Malaysia ( BNM ). : BNM. xv. Reporting Accountant : Horwath (AF 1018). 3

4 xvi. Others (please specify) Assets Trustee Registered and Beneficial Owner of Trust Assets Security Trustee Tender Panel Member : : : : Westports. Westports. OSK Trustees Berhad ( U). Persons to whom an issue of, or an offer or invitation to subscribe, the Sukuk Musyarakah MTN would fall within Section 4(6) of the Companies Act, 1965 of Malaysia (as amended from time to time). Shall not be applicable should the Sukuk Musyarakah MTN be issued on a Bought Deal basis to the Primary Subscriber. (b) Islamic Principle Used (c) Facility Description : Musyarakah. : Sukuk Musyarakah MTN Programme of up to RM800.0 million in nominal value. A partnership agreement between two parties or more to finance a business venture whereby all parties contribute either in the form of cash or in kind for the purpose of financing the business venture. Any profit derived from the venture will be distributed based on a pre-agreed profit sharing ratio, but a loss will be shared on the basis of equity participation. Facility Description (i) Under the principle of Musyarakah, a series of partnership contracts shall be entered into by investors (the Sukukholders or the Musyarakah Partner ) with the Issuer (the Musyarakah Partner ) for the purpose of investing in the Issuer s Syariah-compliant businesses, i.e. development and management of port operations ( Musyarakah Venture ). Westports shall be appointed by the Sukukholders as the Manager for the Musyarakah Venture. 4

5 (ii) The Issuer will issue Sukuk Musyarakah MTN Notes evidencing the Sukukholders 95% proportionate capital contribution and undivided proportionate beneficial ownership in the Musyarakah Venture. At the same time Westports will also contribute the balance of the capital in form of in kind to the Musyarakah Venture. The capital in kind shall be in the form of machineries and equipment owned by Westports to be contributed based on Westports capital contribution in the Musyarakah Venture. The machineries and equipment will only be determined at the point of each issuance of the respective Sukuk Musyarakah MTN and agreed between the Issuer and the Sukukholders. (iii) The Sukuk Musyarakah MTN proceeds shall be utilized in accordance with item (k). (iv) The expected return to the Sukukholders under the Musyarakah Venture ( Expected Profit ) shall be the yield for the Sukuk Musyarakah MTN up to the maturity date or the date of declaration of Event of Default (as defined in item ((aa)(x)) ( Dissolution Date ), whichever is applicable. (v) Profit of the Musyarakah Venture shall be shared by the Musyarakah Partners based on a pre-agreed profit sharing ratio which will only be determined at the point of each issuance of the respective Sukuk Musyarakah MTN and agreed between the Issuer and the Sukukholders. The Expected Profit from the Musyarakah Venture for the Sukukholders shall be distributed on a semi-annually basis in accordance with the amount and tenor of each Sukukholders capital contribution. The Sukukholders shall waive (tanazul) their rights over any income above the expected profit from the Musyarakah Venture for the benefit of Westports being the Manager as an incentive fee. 5

6 (vi) However, should the actual profit be less than the Expected Profit, the said shortfall shall be paid by Westports, the Musyarakah Partner as an advance part payment of the Exercise Price (as defined in item ((aa)(x)). The advance part payment will be set-off against the Exercise Price payable by Westports pursuant to the Purchase Undertaking under the Wa d Principle (as defined in item ((aa)(x)). (vii) Westports as the Musyarakah Partner shall also undertake to purchase the assets ( Trust Assets ) in the Musyarakah Venture from the Sukukholders via the Purchase Undertaking. (viii) Upon exercise and full payment of the Issuer s obligation under the Purchase Undertaking, the Sukuk Musyarakah MTN will expire and will be cancelled on the dissolution of the Musyarakah Venture. Please refer to Annex 1 for The Transaction and Structure of the Sukuk Musyarakah MTN Programme. (d) Issue Size (RM) : Up to RM800.0 million in nominal value. The issue size of up to RM800.0 million in nominal value shall be reduced in the following manner: Reduction Date (Years from date of first issuance) Reduction Amount (RM Mil) Cumulative Limit (RM Mil) Subject to the reduction schedule above, the Issuer shall in consultation with the Facility Agent determine the maturity of each Sukuk Musyarakah MTN issuance. (e) Issue Price : The Sukuk Musyarakah MTN will be either issued at par, discount or premium to the nominal value. The issue price is calculated in accordance with 6

7 Rules on Fully Automated System for Issuing/ Tendering ( FAST ) issued by BNM as amended or substituted from time to time. (f) Tenor of the Facility/Issue : Fifteen (15) years from the date of first issuance under the Sukuk Musyarakah MTN Programme. The tenor of each Sukuk Musyarakah MTN issuance shall be more than one (1) year and up to ten (10) years, or other maturity as may be agreed between the Issuer and Lead Arranger but shall not in any case exceed the Sukuk Musyarakah MTN Programme tenor. (g) Coupon/Profit or Equivalent Rate (%) (please specify) (h) Coupon/Profit Payment Frequency and Basis : To be determined at the point of each issuance of the respective Sukuk Musyarakah MTN and agreed between the Issuer and the Sukukholders. : Payable semi-annually in arrears with the first profit payment commencing six (6) months from the date of issuance of each series of the Sukuk Musyarakah MTN, with the last profit payment for each series to be made on the maturity date of each series. The profit will be calculated on the basis of actual number of days in a year and the actual number of days expected. (i) Yield to Maturity (%) (j) Security/Collateral : To be determined at the point of each issuance of the respective Sukuk Musyarakah MTN and agreed between the Issuer and the Sukukholders. : A first legal charge over the Designated Accounts. 7

8 (k) Details on Utilization of Proceeds : Purpose Proceeds (up to RM Mil) (i) To refinance existing borrowings; 1 (ii) (iii) To refinance Westports existing RM350.0 million Secured Floating Rate Serial Notes ( FRN ) 2 To finance the construction of new container terminals; (iv) To finance the acquisition of machineries and equipment; (v) To pre-fund the Profit Service Reserve Account ( PSRA ) equivalent to one (1) profit payment under each issuance of Sukuk Musyarakah MTN; (vi) To finance the payment of fees and expenses relating to the issuance of Sukuk Musyarakah MTN; 6 and (vii) For working capital requirements Balance Note: 1) The Sukuk Musyarakah MTN proceeds allocated under purpose (i) shall be used to repay and/or refinance any of the following outstanding existing bank borrowings: 8

9 Financial Institution/ Facility Southern Investment Bank Berhad RM350.0 million FRN Purpose of Facility To refinance Tranches B/I and B/II of Syndicated Credit Facilities that were utilized to part finance Phase III of Westports development. Outstanding Amount As at 30 November 2007 (up to RM Mil) OSK Investment Bank Berhad RM150.0 million Bridging Term Loan To refinance the Term Loan Facility of up to RM150.0 million granted by Bank Pembangunan Malaysia Bhd to the Issuer ) The Sukuk Musyrakah MTN proceeds allocated under purpose (ii) shall be used to refinance the balance of the outstanding amount of the FRN amounting up to RM100.0 million. However, if the Issuer decides not to fully utilized the proceeds to refinance this outstanding amount of the FRN, then the unutilized amount for purpose (ii) shall be used to finance purpose (iii) and/or (iv). 3) The Sukuk Musyarakah MTN proceeds allocated under purpose (iii) shall be used to finance the construction new container terminals and other forms of capital expenditure that is of standard nature to the Issuer s business and industry, subject to the Availability Period and Cumulative Limit of the Sukuk Musyarakah MTN Programme. The disbursement for purpose (iii) shall be evidenced by including but not limited to invoices/certificates/other similar forms of documentary evidences certified by 9

10 architect/engineer and/or any other relevant documents as may be requested by the Facility Agent. The proposed capital expenditure under purpose (iii) shall be utilized for: a. Land reclamation; and/or b. Construction of the yard and wharf. If the Issuer decides not to fully utilize the proceeds for purpose (iii), then the unutilized amount for purpose (iii) shall be used for purpose (iv). 4) The Sukuk Musyarakah MTN proceeds allocated under purpose (iv) shall be used to finance the acquisition of machineries and equipment and/or other forms of capital expenditure that is of standard nature to the Issuer s business and industry, subject to the Availability Period and Cumulative Limit of the Sukuk Musyarakah MTN Programme. The disbursement for purpose (iv) above shall be evidenced by including but not limited to invoices/delivery order and/or any other relevant documents as may be requested by the Facility Agent. The proposed capital expenditure under purpose (iv) shall be utilized to acquire the following: a. Quay Cranes ( QC ); b. Rubber Tyre Gantry (RTG ); and c. Other machineries and equipment. If the Issuer decides not to fully utilize the proceeds for purpose (iv), then the unutilized amount for purpose (iv) shall be used for purpose (iii). 5) The Sukuk Musyarakah MTN proceeds allocated under purpose (v) shall be based on the agreed profit rates at the point of each issuance of the respective Sukuk Musyarakah MTN. 10

11 6) The Sukuk Musyarakah MTN proceeds allocated under purpose (vi) shall be based on invoices or documentary evidence received from the relevant parties. 7) Balance of funds, if any, after allocation for purposes (i) to (vi) above can be used for working capital requirements of the Issuer provided always that the issue size of the Sukuk Musyarakah MTN is not exceeded. In any case, all utilization of funds under the Sukuk Musyarakah MTN Programme shall be Syariah compliant. (l) Sinking Fund (if any) : The Sinking Fund shall be represented by the Designated Accounts. The Issuer is required to open and maintain the Designated Accounts with a licensed bank (or banks as required) in Malaysia to be acceptable by the Trustee. The Designated Accounts must be Syariah compliant. Designated Accounts: (i) Disbursement Account ( DA ); (ii) Sinking Fund Account ( SFA ); and (iii) Profit Service Reserve Account ( PSRA ). Disbursement Account The Issuer shall open a DA to capture all proceeds raised from the issuance of Sukuk Musyarakah MTN and funds from this account shall be utilized in the manner as set out under item (k) above. The Disbursement Account shall be operated solely by the Trustee or other person(s) appointed by the Trustee. Sinking Fund Account The Issuer shall open a SFA starting from the availability of the Sukuk Musyarakah MTN for: (i) Profit servicing of the Sukuk Musyarakah MTN; and (ii) Redemption of the Sukuk Musyarakah MTN or redemption of the specific amount under the Sukuk Musyarakah MTN that is not capable to 11

12 be refinanced by a new issuance of Sukuk Musyarakah MTN. In relation to profit servicing of the Sukuk Musyarakah MTN, the Issuer shall build up the minimum credit balance in the SFA equivalent to at least one (1) profit payment one (1) month prior to the profit payment date. In relation to redemption of the Sukuk Musyarakah MTN, the Issuer shall build up the minimum credit balance in the SFA equivalent to the nominal value of the maturing Sukuk Musyarakah MTN one (1) month prior to the redemption date. Should the Issuer decide to redeem the maturing Sukuk Musyarakah MTN through the issuance of new Sukuk Musyarakah MTN, the redemption amount shall be based on the nominal value of maturing Sukuk Musyarakah MTN less the nominal value of new issuance of Sukuk Musyarakah MTN. Any shortfall for the redemption of the maturing Sukuk Musyarakah MTN must be topped up by the Issuer at least five (5) working days prior to the redemption date. The Sinking Fund Account shall be operated jointly by the Trustee or other person(s) appointed by the Trustee and the Issuer. Profit Service Reserve Account The Issuer shall open a PSRA for the purpose of depositing and maintaining the minimum credit balance in the PSRA equivalent to at least one (1) profit payment in respect of the Sukuk Musyarakah MTN issuance. The PSRA shall be pre-funded from the issue proceeds of each Sukuk Musyarakah MTN issuance. The Issuer shall be required to top-up the PSRA to meet the minimum credit balance in the PSRA if insufficient for whatsoever reason. The issuer may also withdraw funds in the PSRA that are in excess of the minimum credit balance. The funds in the PSRA shall be utilized only in the event that there is a shortfall of funds to be 12

13 remitted into the SFA in relation to profit payment that is due and payable. Any amount withdrawn from the PSRA shall be replenished by the Issuer within one (1) month of such withdrawal to meet the minimum credit balance. The Profit Service Reserve Account shall be operated solely by the Trustee or other person(s) appointed by the Trustee. (m) Rating Credit Rating Assigned (please specify if this is an indicative rating) Name of Rating Agency : : AA+ IS (Indicative). Malaysian Rating Corporation Berhad ( MARC ). (n) Form and Denomination : Each issue of the Sukuk Musyarakah MTN shall be represented by Global Certificates, which shall be in bearer form, to be deposited with the Central Depository and are exchangeable for Definitive Certificates only in certain limited circumstances. The Sukuk Musyarakah MTN shall be subjected to the Rules on Fully Automated System for Issuing/Tendering ( FAST ) issued by BNM ( FAST Rules ) and/or Rules on Real Time Electronic Transfer of Funds and Securities ( RENTAS ) system ( RENTAS Rules ). The Sukuk Musyarakah MTN shall be issued in denominations of RM1,000 or in multiples of RM1,000 at the time of issuance. (o) Mode of Issue : Via tender by the Tender Panel Members ( TPMs ) and/or direct placement on a best effort basis and/or on a bought deal basis and/or book running on a best effort basis. Tender Basis The Facility Agent shall invite a selection of financial institutions and investors to participate as TPMs to bid for the Sukuk Musyarakah MTN. The composition of the tender panel may vary from time to time by the Facility Agent in consultation with the Issuer. The Sukuk Musyarakah MTN to be issued via tender basis shall be subjected to the FAST Rules and/or any other regulations to be implemented by 13

14 BNM from time to time. Direct Placement Alternatively, the Sukuk Musyarakah MTN could be placed privately via the Facility Agent on a best effort basis to selected Sukukholders at a yield to be agreed between the Issuer and the Sukukholders. The Sukuk Musyarakah MTN can also be placed out via a book running basis by the Facility Agent on a best effort basis. Such private placement and book running shall be subjected to terms and conditions to be agreed between the Issuer and the Facility Agent. Bought Deal Basis The Sukuk Musyarakah MTN may also be issued via a Bought Deal basis based on the terms and conditions to be mutually agreed between the Issuer and the Primary Subscriber(s). The issuance of the Sukuk Musyarakah MTN shall be in accordance with FAST Rules and RENTAS Rules, subject to such exemptions (if any) granted from time to time. (p) Selling Restrictions (q) Listing Status (r) Minimum Level of Subscription (RM or %) : The Sukuk Musyarakah MTN may not be offered or sold, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to categories of persons specified in Section 4(6) of the Companies Act, 1965 of Malaysia (as amended from time to time). : The Sukuk Musyarakah MTN will not be listed on the Bursa Malaysia Securities Berhad or on any other stock exchange. : The minimum level of subscription for each issuance of Sukuk Musyarakah MTN is one hundred percent (100%). In respect of each issuance of the Sukuk Musyarakah MTN, the issue will be aborted should the minimum level of subscription is not met. The Issuer shall return all considerations received to the Primary Subscriber(s). 14

15 (s) Other Regulatory Approvals Required in relation to the Issue, Offer or Invitation and whether or not obtained (please specify) (t) Identified Assets (u) Purchase and Selling Price/Rental (where applicable) (v) Conditions Precedent for Initial Issuance : Not applicable. : Not Applicable. : Not applicable. : Conditions precedent to the initial issuance of the Sukuk Musyarakah MTN shall be subjected but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) completion of the due diligence exercise on the Issuer to the satisfaction of the Lead Arranger and the Solicitors; all necessary approvals and consents including the SC and the Syariah Adviser have been secured and obtained; receipt by the Lead Arranger of certified true copy of the resolution of the Board of Directors of the Issuer authorizing the acceptance of the Sukuk Musyarakah MTN and the appointment of the signatories to accept and operate the Sukuk Musyarakah MTN and to execute the relevant documents relating to the Sukuk Musyarakah MTN; receipt by the Lead Arranger of the Solicitors confirmation that the necessary legal documents pertaining to the Sukuk Musyarakah MTN have been executed, stamped (or endorsed as exempt from stamp duty) and presented for registration (where applicable); no Event of Default has occurred or is continuing or will occur as a result of the issuance of the Sukuk Musyarakah MTN; evidence that the Designated Accounts have been opened with a licensed bank (or banks) in Malaysia and that authorized signatory(ies)/person(s) has been appointed 15

16 to operate the Designated Accounts; (vii) for purpose of payment of fees and expenses relating to the issuance of the Sukuk Musyarakah MTN, confirmation by the Trustee that it has received all the invoices or such other documentary evidences from the relevant parties; (viii) for the purpose of repayment/refinancing of bank borrowings, (if any), confirmation by the Trustee that it has received the following: (a) the redemption statement and/or letters of undertaking confirming the outstanding borrowings payable from the Issuer s existing bankers/ financiers; and (b) a schedule of bank borrowings to be repaid using the Sukuk Musyarakah MTN proceeds including the bank s name, account number, amount and expected due date by the Issuer. (ix) (x) (xi) a minimum final rating of AA IS for the Sukuk Musyarakah MTN from MARC or any other equivalent rating(s) from any other rating agency acceptable to Lead Arranger; receipt by the Trustee of the expense statement for the Musyarakah Venture expenses throughout the tenor of the Sukuk Musyarakah MTN Programme that is prepared by the Issuer in consultation with the Facility Agent; and receipt by the Lead Arranger of the Solicitor s confirmation (in writing) that all conditions precedent have been complied with or waived (where applicable). (w) Conditions Precedent for Subsequent Issuance : (i) no Event of Default has occurred or is continuing or will occur as a result of the issuance of the Sukuk Musyarakah MTN; (ii) the Issuer is in compliance with all Representations and Warranties under the Issue Documents; 16

17 (iii) for the purpose of repayment/refinancing of bank borrowings (if any), confirmation by the Trustee that it has received the following: (a) the redemption statement and/or letters of undertaking confirming the outstanding borrowings payable from the Issuer s existing bankers/ financiers; and (b) a schedule of bank borrowings to be repaid using the Sukuk Musyarakah MTN proceeds including the bank s name, account number, amount and expected due date by the Issuer. (iv) the nominal value of each Sukuk Musyarakah MTN issued shall not exceed the stipulated issue size of the Sukuk Musyarakah MTN Programme; and (v) receipt by the Trustee of the expense statement for the Musyarakah Venture expenses throughout the tenor of the respective Sukuk Musyarakah MTN that is prepared by the Issuer in consultation with the Facility Agent. (x) Representations and Warranties : The Representations and Warranties by the Issuer to the Trustee and the Sukukholders shall include but not be limited to the following: (i) that it is a company duly incorporated and validly existing under the laws of Malaysia and has the power and authority to own its assets and to conduct the business which it conducts; (ii) (a) its Memorandum and Articles of Association incorporate provisions which authorize; (b) all necessary corporate action have been taken to authorize; and (c) all authorizations of any government or other authority have been duly obtained and are in full force and effect which are required to authorize, to own its assets, carry on its business as it is being conducted, and sign and deliver, and perform the transactions contemplated in the Issue Documents, and for the Issuer to issue the Sukuk Musyarakah MTN and to perform its obligations specified therein and under the Sukuk Musyarakah MTN 17

18 in accordance with its terms; (iii) there are no litigation or arbitration which would have a material adverse effect on the Issuer s financial ability to discharge its obligations in connection with the issue of the Sukuk Musyarakah MTN; and (iv) it has the power to enter into, exercise its rights and perform and comply with its obligations under the Trust Deed and for it to issue and perform and comply with its obligations under the Issue Documents. (y) Events of Default : Events of default for a facility of this nature shall include but not limited to the following: (i) (ii) (iii) (iv) (v) where the Issuer fails to pay any amount that is due and payable from it under any of the Issue Documents on the due date; or where the Issuer fails to observe or perform any of its obligations under the terms and conditions or provisions under the Issue Documents or any other related documents or under any undertaking arrangement entered into in connection herewith; or where any step or action is taken for the winding-up, dissolution or liquidation of the Issuer or a resolution to wind up the Issuer has been passed and no action is taken in good faith to set aside such petition within thirty (30) days from the date of service of such winding-up petition or the making of any order or the passing of any resolution for the winding-up, dissolution or liquidation of the Issuer; or where an encumbrancer takes possession of, or a trustee, liquidator, receiver or similar officer is appointed in respect of, all or any part of the business or assets of the Issuer and is not paid out, withdrawn or discharged within thirty (30) days of such appointment; or where any of the indebtedness of the Issuer becomes due and payable or capable of 18

19 being declared due or payable before its stated maturity or if any security created to secure any such indebtedness becomes enforceable; or (vi) where the Issuer defaults in the payment of any money owing in respect of the Purchase Undertaking (as defined in item (aa)(x)) when the same shall become due and payable in accordance with the terms and conditions of the Trust Deed and the Purchase Undertaking; or (vii) where the Issuer convenes a meeting of its creditors or proposes or makes any arrangement or composition with, or any assignment for the benefit of, its creditors under Section 176 of the Companies Act, 1965; or (viii) where there is a revocation, withholding or modification of a license, authorization or approval that impairs or prejudices the Issuer's ability to comply with the terms and conditions or the provisions of the Issue Documents or any other related documents. Upon the occurrence of an Event of Default, and if such Event of Default is continuing, the Trustee may at its discretion or shall upon receipt of the relevant instructions from the Sukukholders as required under the Trust Deed, declare that the outstanding Sukuk Musyarakah MTN are immediately due and payable, and exercise all its rights of enforcement in accordance with the provisions available under the Issue Documents. (z) Principle Terms and Conditions for Warrants (where applicable) : Not Applicable. (aa) Other Principle Terms and Condition for the Issue (i) Conditions of Withdrawals from the Designated Accounts : (i) All conditions precedent for initial and subsequent issuance shall remain satisfied and in effect; (ii) In relation to financing the construction of 19

20 new container terminals, receipt by the Trustee including but not limited to invoices/ certificates/ other similar forms of documentary evidences certified by the architect /engineer and/or any other relevant documents as may be requested by the Facility Agent; and (iii) In relation to financing the acquisition of machineries and equipment, receipt by the Trustee including but not limited to invoices/ delivery order and/or any other documents as may be requested by the Facility Agent. (ii) Minimum Level of Issuance : The minimum level of issuance of each Sukuk Musyarakah MTN shall be RM10,000, or such other amount as may be agreed between the Issuer and the Facility Agent from time to time. (iii) Redemption : Unless previously redeemed, purchased or cancelled, the Sukuk Musyarakah MTN will be redeemed at nominal value on the respective maturity dates. The Issuer or any of its related corporations may at any time purchase the Sukuk Musyarakah MTN in the open market at any price by private treaty for redemption purposes. Sukuk Musyarakah MTN redeemed or purchased in this manner will be cancelled but can be reissued subject to the issue size and tenor of the facility. (iv) Permitted Investments : The Issuer shall be permitted from time to time to utilize funds held in the Designated Accounts to make Permitted Investments, provided that such funds utilized for Permitted Investments shall be remitted to the corresponding Designated Account in a timely manner to meet any payment obligations of the Issuer when due and payable. The Permitted Investments shall have a maturity date to match the utilization of proceeds, denominated in Ringgit Malaysia and comply with the Syariah principle. Upon maturity, the proceeds (i.e. principal plus profit) shall be remitted to the corresponding Designated Account. 20

21 Permitted Investments shall mean: (i) (ii) (iii) deposits in profit bearing accounts and negotiable certificates of deposits issued by licensed banking and financial institutions; or bonds, treasury bills or financial instruments issued by the Government; or other finance or capital market instrument or private entities having: (a) a maturity date no later than the maturity of the Sukuk Musyarakah MTN; and (b) in the case of only investments of the type referred to in paragraph (iii), a minimum rating of AA1/P1 or AA+/MARC-1 as determined by RAM Rating Services Berhad ( RAM ) or MARC respectively or a recognized rating agency or such higher rating as is capable of being issued by the said rating agencies from time to time. In the event that such investment is downgraded to below AA1/P1 or AA+/MARC-1, whichever is applicable, such investment shall be disposed within thirty (30) days upon the rating down grade announcement. (v) Positive Covenants : The Issuer covenants and undertakes inter alia, with the Trustee and the Sukukholders that until all its liabilities and obligations under the Sukuk Musyarakah MTN has been discharged, the Issuer will, amongst others : (i) maintain the following Financial Covenants (as defined herein) commencing from the first anniversary date of first issuance under the Sukuk Musyarakah MTN Programme: (a) a Finance Service Cover Ratio ( FSCR ) of not less than 1.25 times at all times; and (b) a Finance to Equity Ratio ( FER ) of not more than 2.00 times at all times. (ii) use its reasonable diligence to carry on and conduct its affairs in a proper and efficient manner; 21

22 (iii) (iv) (v) (vi) make available to the Facility Agent, Trustee and/or an auditor appointed by the Trustee for their respective inspection the whole of the accounting or other records of the Issuer and give them such information as they may reasonably require with respect to all matters relating to the accounting records of the Issuer; provide to the Trustee annually at the end of its financial year, a certificate that the Issuer has complied with its obligations under the Trust Deed and the terms and conditions of the Sukuk Musyarakah MTN and that there did not exist or had existed, from the date of the first issuance of the Sukuk Musyarakah MTN or the 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; obtain, preserve and keep in full force and effect all necessary licenses and approvals; maintain or cause to be maintained such insurance in respect of its assets and its business against all risk in accordance with industry practice; and (vii) cause all advances made or to be made hereafter by its shareholders and directors to be subordinated to its liabilities to the Sukuk Musyarakah MTN. (vi) Negative Covenants : The Issuer covenants and undertakes inter-alia, with the Trustee and the Sukukholders that, from the signing of the Issue Documents of the Sukuk Musyarakah MTN until all its liabilities and obligations hereunder and under the Sukuk Musyarakah MTN have been discharged, the Issuer will not without prior written consent of the Trustee and Sukukholders pursuant to an extraordinary resolution: (i) amend its Memorandum and Articles of Association in a manner that is inconsistent with the provision of the Issue Documents, save and except to comply with the rules, regulations or guidelines of the relevant authorities or where such amendments that 22

23 are, in the opinion of the Trustee, not prejudicial to the interests of the Sukukholders; (ii) (iii) (iv) (v) (vi) substantially change the nature of its present business; reduce the nominal value and the total amount of its authorized, issued and paid-up share capital; dispose of major assets that contribute substantially to its revenue unless in the ordinary course of business and on an arms length basis or which are either obsolete or worn out; make any advances or loans to any persons or provide guarantees to secure advances or loans for the benefit of any shareholders, affiliates or related corporation of the Issuer (other than normal trade credits or temporary loans to staff, customers, contractors or suppliers in the ordinary course of business and other than those provided for the benefit of its subsidiaries); create or permit to subsist any other security interests, other than those disclosed; and (vii) declare any dividend on share capital if: (a) (b) (c) the Financial Covenants are breached, or following such declaration, they would be breached; an Event of Default has occurred, or if following such declaration, an Event of Default would occur; and funds in the SFA and PSRA do not meet the minimum required credit balance. (vii) Financial Covenants The following Financial Covenants shall be calculated at the end of each financial year of its financial statements: (i) Finance Service Cover Ratio ( FSCR ): Defined as the ratio of cash and bank balances at the beginning of the financial 23

24 period and net cash flow (excluding the total finance service obligations) for the relevant financial period to the Issuer s total finance service obligations in the corresponding financial period. The total finance service obligations refer to the aggregate of: (a) all principal, profit and related costs paid by the Issuer under the Sukuk Musyarakah MTN Programme; (b) net repayment of short term banking facilities (for working capital purposes), both conventional and Islamic banking facilities, including but not limited to trade related bills, revolving credits and overdrafts; and (c) all other principal, interest, profit and related costs paid for external borrowings and redeemable loan stocks. (For avoidance of doubt, the external borrowings to be categorized under item (c) shall cover both conventional and Islamic arrangements, secured and unsecured, but excluding those falling within item (a) and (b) above). Notwithstanding the above, the principal repayment under item (a) and (c) that is being repaid/refinanced by the Sukuk Musyarakah MTN and/or external borrowings shall be excluded from the computation of the total finance service obligations. (ii) Finance to Equity Ratio ( FER ): Defined as the ratio of indebtedness of the Issuer represented by: (a) all amounts outstanding under the Sukuk Musyarakah MTN Programme (less balances standing to the credit of the Designated Accounts); (b) all other outstanding external borrowings, both conventional and Islamic financing, secured and unsecured; and 24

25 (c) all outstanding redeemable loan stocks, secured and unsecured to the Issuer s shareholders funds, loan stocks (that are irredeemable and convertible) plus loans/advances from shareholders/ directors that is subordinated to the Sukuk Musyarakah MTN Programme. For the purpose of declaration of dividends, the calculations will be as follows: (i) Finance Service Cover Ratio ( FSCR ): Defined as the ratio of cash and bank balances at the beginning of the financial period and net cash flow (excluding the total finance service obligations) less dividends declared for the relevant financial period to the Issuer s total finance service obligations in the corresponding financial period. The total finance service obligations refer to the aggregate of: (a) all principal, profit and related costs paid by the Issuer under the Sukuk Musyarakah MTN Programme; (b) net repayment of short term banking facilities (for working capital purposes), both conventional and Islamic banking facilities, including but not limited to trade related bills, revolving credits and overdrafts; and (c) all other principal, interest, profit and related costs paid for external borrowings and redeemable loan stocks. (For avoidance of doubt, the external borrowings to be categorized under item (c) shall cover both conventional and Islamic arrangements, secured and unsecured, but excluding those falling within item (a) and (b) above). Notwithstanding the above, the principal repayment under item (a) and (c) that is being repaid/refinanced by the Sukuk Musyarakah MTN and/or external borrowings shall be excluded from the 25

26 computation of the total finance service obligations. (ii) Finance to Equity Ratio ( FER ): Defined as the ratio of indebtedness of the Issuer represented by: (a) all amounts outstanding under the Sukuk Musyarakah MTN Programme (less balances standing to the credit of the Designated Accounts); and (b) all other outstanding external borrowings, both conventional and Islamic financing, secured and unsecured; and (c) all outstanding redeemable loan stocks, secured and unsecured; to the Issuer s shareholders funds, loan stocks (that are irredeemable and convertible) plus loans/advances from shareholders/ directors that is subordinated to the Sukuk Musyarakah MTN Programme less dividends declared. (viii) Voluntary Redemption : The Issuer may at its absolute discretion elect, at any time, to voluntarily prepay the Sukuk Musyarakah MTN in accordance with the principles set out below. (ix) Sukuk Musyarakah MTN Early Redemption Principles : In the event that the Issuer wishes to redeem, in accordance with voluntary redemption as stated above, all or part of the Sukuk Musyarakah MTN Programme in any order of maturity before their respective maturity, such optional redemption is permissible subject to the following conditions: (i) (ii) the Issuer must issue notice to the Facility Agent not less than 21 days and not more than 60 days before the date of redemption notifying the Facility Agent that it wishes to redeem the Sukuk Musyarakah MTN, identifying the Sukuk Musyarakah MTN series to be redeemed and stating the redemption date of the Sukuk Musyarakah MTN to be redeemed; redemption shall be on the day falling on the profit payment date provided that no redemption shall be permitted prior to the 26

27 third (3 rd ) anniversary from the Sukuk Musyarakah MTN issuance date; and (iii) Redemption shall be made for all the Musyarakah MTN outstanding and no partial redemption. For each series of the Sukuk Musyarakah MTN (excluding the series maturing on the profit payment date, if any) to be redeemed, the Early Redemption Sum ( ERS ) shall be calculated by the Facility Agent based on the applicable Early Redemption Price that shall be benchmarked to: Remaining Tenor of the Sukuk Musyarakah MTN (Years) Rate (%) MGS MGS MGS MGS MGS MGS MGS MGS MGS For any avoidance of doubt, the aggregate redemption sums shall at all times be equivalent to or higher than the price paid by the investors for the subscription of the Sukuk Musyarakah MTN on a primary or secondary level. (x) Purchase Undertaking : Under the purchase undertaking, Westports shall give an undertaking to the Trustee pursuant to which Westports shall purchase the assets under the Musyarakah Venture ( Trust Assets ) from the Sukukholders at the Exercise Price upon the maturity date or in the Event of Default. Upon occurrence of either of the above, the Trust Assets shall be transferred to Westports in exchange for payment of the Exercise Price. The Exercise Price shall be calculated based on the following formula: 27

28 (i) On the Maturity Date: Exercise Price = Musyarakah Capital plus Total Expected Profit less Aggregate of Profit Distributions (ii) On the declaration of an Event of Default: Exercise Price = Musyarakah Capital plus Total Expected Profit less Aggregate of Profit Distributions less Unearned Profit (xi) (xii) Dissolution of Musyarakah Rights of Special Share On any payment of the Exercise Price, Westports will be entitled to set off such part of the Exercise Price as may already have been paid by it by way of previous part payment of the Exercise Price under the Wa d Principle. The Wa d Principle is an undertaking or promise by the Issuer to purchase the Trust Assets according to the Exercise Price. The promise by the Issuer is binding upon the Issuer whereby in the case of any breach of undertaking or promise, the Issuer is obliged to pay compensation. The Unearned Profit shall be the aggregate amounts of all expected profit payments falling due (and not including) the Profit Payment Date falling after the declaration of an Event of Default. The Aggregate of Profit Distributions shall be the aggregate amounts of all distributed profit payments included top-up on any shortfall of the Expected Profit to Sukukholders during the tenor of the Sukuk Musyarakah MTN. : Upon exercise and full payment of Westports obligation under the Purchase Undertaking, the Sukuk Musyarakah MTN will expire and will be cancelled on the dissolution of the Musyarakah Venture. The Special share can only be held by the Minister of Finance or its successors or any Minister or 28

29 representative acting on behalf of the Government of Malaysia. The Special Shareholder shall be entitled to nominate one Director to be on the Board of Directors of Westports. The Special Shareholder shall be entitled to receive notice or and to attend and speak at all general meetings and any such meetings of any class of shareholders. However the Special Share does not carry the right to vote. With regards to distribution in relation to the Winding Up of Westports, the Special Shareholder is entitled to the repayment of capital paid up on the Special Share. The Special Shareholder may require Westports by written notice, to redeem the Special Share at par by delivering the share certificate. This is subject to the provisions of the Companies Act The following are deemed to be variations of the rights attached to the Special Share. Written consent is required of the Special Shareholder in the following instances:- (a) the amendment, or removal or alteration of all or any of the articles; definitions of Special Share and Special Shareholder. (b) a proposal for the voluntary winding-up or dissolution of Westports. (c) the creation or issue of new shares in the capital of Westports with voting rights attached. (d) any disposal by any company in the Westports Group which is considered to be a material part of Westport s assets. It is deemed to be material if : (i) the aggregate book value of the asset of the total consideration to be received is more than 20% of the book value of Westports net tangible assets. 29

30 (xiii) Incidental Expenses and Legal Fees (ii) the average profits attributable are more than 20% of the average profits of Westports (Average profits means the average profits before taxation excluding interest payable and similar charges and extraordinary items for the last 3 financial years). (e) any proposals affecting the interests of the Government of Malaysia or National Interest. : All legal and professional fees including such cost relating to the due diligence exercise, stamp duties, taxes, SC submission fees and any other out-ofpocket expenses, incurred pursuant to the Issuer s acceptance of the Sukuk Musyarakah MTN and for purposes of preparation/submission of any information memorandum and the preparation of security documentation (notwithstanding nonutilization of the Sukuk Musyarakah MTN by the Issuer) shall be borne by the Issuer. All costs and expenses incurred by the Lead Arranger/Trustee for and on behalf of the Issuer including legal costs on Solicitors/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 quit rent, assessments and insurances, etc. shall be for the account of the Issuer. (xiv) Taxation : All payments under the Sukuk Musyarakah MTN shall be made free and clear of all present and future Malaysian taxes. (xv) Adverse Market : Should there occur a material adverse change in the opinion of the Lead Arranger and Issuer in the business condition (financial or otherwise) of the Issuer and/or the economic, social and political situation in Malaysia including but not limited to the adversities in the domestic or international financial market prior to the launch, offering and/or distribution of the Sukuk Musyarakah MTN, the Lead Arranger and Co-Arranger (if any) reserves the right to withdraw, cancel, terminate and/or restructure the arrangement of the Sukuk Musyarakah MTN. 30

31 (xvi) Clear Market : From the date of the appointment of the Lead Arranger to the date falling thirty (30) days after the issuance date(s) of the Sukuk Musyarakah MTN, the Issuer will ensure that no other borrowings (save and except for standby revolving credit, overdraft facilities and other indebtedness incurred in the ordinary course of business) or debt instruments or securities issued or guaranteed by the Issuer or any of their subsidiaries or affiliates are either placed or syndicated, directly or on its behalf, in any manner which might, in the sole opinion of the Lead Arranger have a detrimental effect on the successful placement of the Sukuk Musyarakah MTN. (xvii) Change in Circumstances (xviii) Issue Documents : If as a result of any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof or if compliance by the Lead Arranger for the Sukuk Musyarakah MTN with any applicable direction, request or requirement (whether or not having the force of law) will impose on the Lead Arranger any material condition burden or obligation then the commitment of the Lead Arranger to the Sukuk Musyarakah MTN will end upon notice to the Issuer of the happening of such events after becoming aware thereof. : Standard documentation for a facility of this nature, which would include, inter-alia: (xix) Currency : Ringgit Malaysia. (xx) Governing Law : The Laws of Malaysia. (i) Sukuk Musyarakah MTN Programme Agreement; (ii) the Trust Deed; (iii) Depository and Paying Agency Agreement (iv) Security Documents; and (v) any other legal documentation as advised by the Solicitors to the documentation. 31

32 ANNEX 1 THE TRANSACTION AND STRUCTURE OF THE SUKUK MUSYARAKAH MTN PROGRAMME 5. Purchase Undertaking 2. Issue Sukuk Musyarakah MTN Investors 1. Musyarakah Contracts 2. Capital Contribution (95%) 2. Capital Contribution (5%) 3. Musyarakah Venture for Agreed Utilization Purposes 4. Pre-agreed profit sharing ratio Profit Profit Derived from Musyarakah Venture 4. Pre-agreed profit sharing ratio 32