: X. : Not applicable. (vi) Status : Resident Controlled Company Bumiputera Controlled Company

Transcription

1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL BACKGROUND INFORMATION 1. Issuer (i) Name : Penang Bridge Sdn Bhd ( PBSB or the Issuer ) (ii) Address : Tingkat 1, MCOBA Building, 42, Jalan Syed Putra, Kuala Lumpur (iii) Business Registration No. : X (iv) Date /Place of Incorporation : 19 September 1995/Malaysia (v) Date of Listing (in case of a public listed company) : Not applicable (vi) Status : Resident Controlled Company Bumiputera Controlled Company (vii) Principal Activities : The Issuer is principally involved in managing, maintaining and operating toll collection services of Penang Bridge. (viii) Board of Directors : Directors (as at 5 January Dato Dr. Norraesah bt Haji 2006) Mohamad Ridza Abdoh bin Hj. Salleh Adnan bin Mohammad Mohd Hussein bin Abdul Hamid 1

2 (ix) Structure of shareholdings and names of shareholders or, in the case of public company, names of all substantial shareholders (as at5 January 2006) : Substantial shareholder UEM Builders Berhad Direct Indirect No. of No. of Ordinary % Ordinary % Shares Shares 100, (x) Authorised share capital (as at 5 January 2006) Paid-up share capital (as at 5 January 2006) : RM100, comprising 100,000 ordinary shares of Ringgit Malaysia One (RM1.00) each : RM100, divided into 100,000 ordinary shares of Ringgit Malaysia One (RM1.00) each 2

3 PRINCIPAL TERMS AND CONDITIONS 2. Names of parties involved in the proposed transaction (where applicable) (i) Principal Adviser /Lead Arranger : Commerce International Merchant Bankers Berhad ( CIMB ) (ii) Arranger : Not applicable (iii) Valuers : Not applicable (iv) Solicitors : Messrs. Zaid Ibrahim & Co. (v) Financial Adviser : Not applicable (vi) Technical Adviser : Not applicable (vii) Guarantor : Not applicable (viii) Trustee : Universal Trustee (Malaysia) Berhad (ix) Facility Agent : CIMB (x) (xi) Primary Subscribers and amount subscribed (where applicable) Underwriter(s) and amount underwritten : CIMB (100%) : Not applicable (xii) Syariah Adviser : CIMB Shariah Committee, CIMB (xiii) Central Depository : Bank Negara Malaysia ( BNM ) (xiv) Paying Agent : BNM (xv) Reporting Accountant : Moores Rowland (xvi) Others (please specify) : Lead Manager: CIMB Security Trustee: Universal Trustee (Malaysia) Berhad 3

4 3 Islamic principle used : Istisna 4 Facility description : The Issuer proposes to issue redeemable zero coupon serial Sukuk Istisna ( Sukuk ) with an aggregate nominal value of up to RM695 million. The Sukuk shall be issued under the financing principle of Istisna. Istisna refers to a construction or manufacturing contract for specific assets or goods. A party will place a construction or manufacturing order with another party for assets or goods which will be delivered in the future, in accordance with the specifications provided under the Istisna contract. PBSB will enter into an Istisna contract with the Lead Manager ( First Istisna Contract ), whereby the Lead Manager agrees to construct and deliver the Istisna Asset to PBSB in consideration for the Istisna Sale Price, which is equal to the aggregate nominal value of the Sukuk. The Istisna Sale Price will be paid according to an agreed payment schedule and PBSB will issue Sukuk to evidence its obligations to pay the Istisna Sale Price to the Lead Manager. The Lead Manager will thereafter enter into an Istisna contract with PBSB ( Second Istisna Contract ), whereby PBSB agrees to construct and deliver the Istisna Asset to the Lead Manager in consideration for the Istisna Purchase Price, which will be equal to the net proceeds to be raised from the issuance of the Sukuk to be calculated in accordance with a prescribed formula. Under this transaction, the Istisna Asset is to be constructed in accordance with the construction contract ( Construction Contract ) to be entered into between PBSB and UEM Construction Sdn Bhd ( UEMC ). Delivery of the Istisna Asset to PBSB will take place upon the Lead Manager taking delivery of the same under the Second Istisna Contract. The First Istisna Contract and Second Istisna Contract will be entered into on a parallel basis. 4

5 5 Issue Size (RM) : The outstanding nominal value of the Sukuk issued at any point in time shall not exceed RM695,000, Issue Price (RM) : The Sukuk shall be issued at a discount and the issue price is calculated in accordance with the Rules on Fully Automated System for Issuing/Tendering ("FAST") issued by BNM, as amended or substituted from time to time ( FAST Rules ). 7 Tenor of the Facility /Issue : Up to 13 years from the date of the first issue as follows, provided that the first issue of Sukuk shall not be later than 6 months from the date of the Securities Commission s ( SC ) approval. Series Maturity (years from date of issuance) Coupon/ profit or equivalent rate (%) (please specify) : The Sukuk will be issued on a zero-coupon basis. 9 Coupon/ profit Payment frequency and basis : Not applicable. The Sukuk will be issued on a zerocoupon basis. 10 Yield to Maturity (%) : The applicable yields to maturity calculated on a semi annual basis shall be agreed between the Issuer and CIMB closer to the issue date. 11 Security /Collateral (if any) : (1) Assignment and charge over the Sukuk Proceeds Account, Project Operations Account and Reserve Account (collectively the Additional Designated Accounts ) and the credit balances therein. (2) As soon as practicable after the last tranche of the Issuer s existing RM785 million Al-Bai Bithaman Ajil Islamic Debt Securities ( BaIDS ) have been redeemed, an assignment and charge over the Issuer s rights, titles and benefits to all Project Documents which are subsisting at that time. Such security, other than that created over the CA (as defined below), is to be shared on a pari passu basis 5

6 with the Government of Malaysia ( GOM ) in relation to the GSL (as defined below). Project Documents means all documents, contracts and agreements which set out the terms for the concession of the operation, maintenance, management and collection of tolls for the Penang Bridge granted under the CA (as defined below) and the supply and installation of tolling equipment, the management, operation, maintenance works, the design and construction of the improvements to the Penang Bridge and interchanges and all things incidental thereto, including: (a) (b) (c) (d) the Concession Agreement ( CA ) (including the Novation Agreement dated 23 November 1995 and the Supplemental Concession Agreement (once executed)); Agreement for the Implementation of the Renong Common Payment System dated 24 November 1997 ( Service Provider Agreement ), for the establishment of the electronic payment system utilising contactless smartcard technology (including Supplemental Service Provider Agreement dated 1 June 2001, amending the terms of the Service Provider Agreement); Trust Deed dated 13 September 1999 ( Trust Deed ) entered into between Rangkaian Segar Sdn Bhd ( Rsegar ) and Universal Trustee (Malaysia) Berhad ( Trustee ) for the creation of a trust over the money received or receivable by Rsegar from Touch N Go card users (including the Deed of Adherence dated 24 July 2000 entered by PBSB); Routine Maintenance Contract dated 1 June 2001 ( RMC ) appointing Projek Penyelenggaraan Lebuhraya Berhad as the maintenance contractor for Penang Bridge (including Supplemental Routine Maintenance Contract dated 11 February 2004, extending the RMC for a further 3 years); 6

7 (e) (f) (g) Contract for the Design, Supply, Delivery to Site, Testing and Commissioning of Loyalty and Flexi Programmes for the Touch N Go Users at Penang Bridge dated 28 November 2002, engaging Teras Teknologi Sdn Bhd ( Teras ) as the contractor for the said works; Maintenance Services Agreement for Data, Software and Electronic Device dated 1 March 2004, for the appointment of Teras as the contractor to provide basic maintenance services and additional services in relation to the equipment or system that carries the software and the data application related to toll collection and revenue systems, video enforcement systems, automatic vehicle classification system, Smart Tag system and Touch N Go System; Contract for Penang Bridge Stay Cables Upgrading Works dated 14 August 2000, for the appointment of Freyssinet PSC (M) Sdn Bhd as the contractor for the Penang Bridge stay cables upgrading works; and (h) Operation Service Agreement dated 30 December 2003, for the appointment of PLUS Expressways Berhad to provide operational, maintenance and support services in respect of the Penang Bridge. 12 Details on utilisation of proceeds : The issue proceeds from the Sukuk amounting to approximately RM334.0 million shall be utilised to part finance the, cost of the Project, which includes amongst others, the design and construction costs and other costs related thereto ( Project Costs ) and for payments of fees, expenses, costs and all other amounts payable under the Sukuk. Project means the improvement works to the Penang Bridge comprising: (i) widening of the low level approach viaducts from dual 2 lane to dual 3 lane carriageways and the construction of two (2) meter wide road shoulder for use of motorcycles on both sides of carriageway of the Middle Bank bridge and the Prai Shore Approach bridge by re-marking 7

8 the existing lane from 3.75 meter to 3.5 meter and constructing an additional width of 1.05 meter; (ii) (iii) (iv) (v) closure of the U-turn at the toll plaza and to construct two (2) ramps, ie. an entry and an exit ramp located at the North-South Expressway from the Prai industrial area heading North and/ or towards Butterworth; widening the existing carriageway on the bridge (sub-bridge 8), carriageway heading towards Bayan Lepas (sub-bridge 3) and to widen the carriageway from Pulau Pinang towards the bridge (sub-bridge 7); extension of toll plaza from 17 to 25 lanes; and site supervision, project management and administration services of the works. 13 Sinking Fund (if any) : Not applicable. 14 Rating - Indicative Credit Rating Assigned : The indicative rating for the Sukuk is AA2. - Name of Rating Agency - Minimum Rating : : Rating Agency Malaysia Berhad ( RAM ) The rating for the Sukuk shall be at least AA2 (or its equivalent) on the issue date. 15 Form and Denomination : The Sukuk shall be issued in accordance with (1) the Code of Conduct and Market Practices for the Malaysian Corporate Bond Market issued by the Institut Peniaga Bon Malaysia and approved by BNM ( IPBM Code ) and (2) the Rules on the Scripless Securities under the Real Time Electronic Transfer of Funds and Securities ( Rentas ) system issued by BNM ( Rentas Rules ) and (3) the FAST Rules, or their replacement thereof (collectively the Codes of Conduct ) applicable from time to time. The Rentas Rules shall prevail to the extent of any inconsistency between the Rentas Rules and the IPBM Code. Each series of the Sukuk shall be represented by a global certificate to be deposited with BNM, and is exchanged for definitive bearer form only in certain 8

9 16 Mode of Issue : Via bought deal basis. limited circumstances. The denomination of the Sukuk shall be RM1,000 or in multiples of RM1,000 at the time of issuance. 17 Selling Restrictions : The Sukuk may only be offered, sold, transferred or otherwise disposed directly or indirectly to persons falling within the relevant category of the persons specified in Section 4(6) of the Companies Act, 1965, as amended from time to time. 18 Listing Status : The Sukuk will not be listed on Bursa Malaysia Securities Berhad or any other stock exchange. 19 Minimum Level of Subscription (RM or %) 20 Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained (please specify) : 100% : None 21 Identified Assets : The assets currently identified by the Issuer is the additional third lane of the Penang Bridge, which will be constructed in accordance with the descriptions of the Construction Contract. The Identified Asset has a fair value of approximately RM340 million, based on the value as set out under the Construction Contract to be entered into between the Issuer and UEMC. The Istisna Purchase Price is expected to represent 0.98 times the value of the Identified Asset; the SC s Syariah Advisory Council Pricing Guidelines dated 30 April 2004 is therefore complied with. 22 Purchase and selling price/rental (where applicable) : Purchase Price The Istisna Purchase Price in relation to the Second Istisna' Contract will be equal to the proceeds to be raised from the issuance of the Sukuk to be calculated in accordance with a prescribed formula. Sale Price The Istisna Sale Price in relation to the First Istisna Contract equals the aggregate nominal value of the Sukuk. 9

10 23 Conditions Precedent : To include but not limited to the following (all have to be in form and substance mutually acceptable to the Primary Subscriber) A. Main Documentation (i) The transaction documents have been signed and, where applicable, stamped and presented for registration. (ii) All relevant notices and acknowledgements (where applicable) shall have been made or received as the case may be. B. The Issuer (i) Certified true copies of the Certificate of Incorporation, and the Memorandum and Articles of Association of the Issuer. (ii) Certified true copies of the latest Forms 24 and 49 of the Issuer. (iii) A certified true copy of a board resolution of the Issuer authorising, among others, the execution of the transaction documents. (iv) A list of the Issuer s authorised signatories and their respective specimen signatures. (v) A report of the relevant company search of the Issuer. (vi) A report of the relevant winding up search or the relevant statutory declaration of the Issuer. C. General (i) The approval from the SC and, where applicable, all other regulatory authorities. (ii) The Sukuk have received the requisite rating as stated in this Principal Terms and Conditions. (iii) Evidence that all transaction fees, costs and expenses will be paid in full. 10

11 (iv) The Lead Manager has received from its legal counsel a favourable legal opinion addressed to it and the Trustee advising with respect to, among others, the legality, validity and enforceability of the transaction documents and a confirmation addressed to the Lead Manager that all the conditions precedent have been fulfilled. (v) Satisfactory evidence that the Issuer has opened and maintained all Additional Designated Accounts in accordance with the provisions as stipulated in this Principal Terms and Conditions. (vi) Receipt of consent and/or indulgence from the holders of the BaIDS for the following: (a) issuance of the Sukuk; (b) incur indebtedness under the proposed RM183.1 million soft loan facility to be extended by the GOM to the Issuer ( GSL ); (c) creation of security in favour of the Sukuk holders and agreement to create security in favour of the Sukuk holders and the GOM upon redemption of the last tranche of the BaIDS; (d) use of the Identified Asset to facilitate the Sukuk transaction; (e) opening of the Additional Designated Accounts and other account(s) as may be required under the GSL ( GSL Accounts ); and (f) the release and exclusion of the Additional Designated Accounts and GSL Accounts and all credit balances standing to the credit of the Additional Designated Accounts and the GSL Accounts from the existing debenture and other security documents under the BaIDS. (vii) Receipt of consent and/or indulgence from the GOM under the CA for the following: (a) the material terms of the Sukuk; and 11

12 (b) incur indebtedness in excess of the specified limit of RM550 million under the CA. (viii) The approval from the GOM on the GSL. (ix) Receipt of confirmation from the Syariah Adviser that the issue of the Sukuk and the transaction documents are Syariah compliant. (x) Such other conditions precedent as may be advised by the legal counsel of the Lead Manager and agreed upon by the Issuer. 24 Representations and Warranties : To include but not limited to the following: (i) the Issuer is a company with limited liability duly incorporated and validly existing under the laws of Malaysia, has full power to carry on its business and to own its property and assets, and has full beneficial ownership of all its assets; (ii) (iii) the memorandum and articles of association of the Issuer incorporate provisions which authorise, and all necessary corporate and other relevant actions have been taken to authorise, and all relevant consents and approvals of any administrative, governmental or other authority or body in Malaysia have been duly obtained and are in full force and effect which are required to authorise, the Issuer to execute and deliver and perform the transactions contemplated in the transaction documents in accordance with their terms; neither the execution and delivery of any of the transaction documents nor the performance of any of the transactions contemplated by the transaction documents did or does as at the date this representation and warranty is made or repeated (a) contravene or constitute a default under any provision contained in any agreement, instrument, law, ordinance, decree, judgment, order, rule, regulation, licence, permit or consent by which the Issuer or any of its assets is bound or which is applicable to the Issuer or any of its assets, (b) 12

13 cause any limitation on the Issuer or the powers of its directors, whether imposed by or contained in its memorandum and articles of association or in any agreement, instrument, law, ordinance, decree, order, rule, regulation, judgment or otherwise, to be exceeded, or (c) cause the creation or imposition of any security interest or restriction of any nature on any of the Issuer s assets; (iv) (v) each of the transaction documents is or will when executed and/or issued, as the case may be, be in full force and effect and constitutes, or will when executed or issued, as the case may be, constitute, valid and legally binding obligations of the Issuer enforceable in accordance with its terms; and any other representations and warranties as advised by the legal counsel of the Lead Manager and agreed upon by the Issuer. 25 Events of Default : To include but not limited to the following: i. the Issuer fails to pay any amount due from it under any of the transaction documents on the due date or, if so payable, on demand; ii. any representation or warranty made or given by the Issuer under the transaction documents or which is contained in any certificate, document or statement furnished at any time pursuant to the terms of the Sukuk and/or any of the transaction documents proves to have been incorrect or misleading in any material respect on or as of the date made or given or deemed made or given, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy the failure within a period of thirty (30) days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the failure; 13

14 iii. iv. the Issuer fails to observe or perform its obligations under any of the transaction documents or the Sukuk or under any undertaking or arrangement entered into in connection therewith other than an obligation of the type referred to in paragraph (i) above, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy the failure within a period of thirty (30) days after the Issuer became aware or having been notified by the Trustee or Security Trustee of the failure; there has been a breach by the Issuer of any obligation under any of the Issuer s existing contractual obligations which may materially and adversely affect the Issuer s ability to perform its obligations under the transaction documents and, if in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy the breach within a period of thirty (30) days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the breach; v. any indebtedness for borrowed moneys of the Issuer becomes due or payable or capable of being declared due or payable prior to its stated maturity or any guarantee or similar obligations of the Issuer is not discharged at maturity or when called and such declaration of indebtedness being due or payable or such call on the guarantee or similar obligations is not discharged or disputed in good faith by the Issuer in a court of competent jurisdiction within thirty (30) days from the date of such declaration or call, or the Issuer goes into default under, or commits a breach of, any agreement or instrument relating to any such indebtedness, guarantee or other obligations, or any security created to secure such indebtedness becomes enforceable; 14

15 vi. an encumbrancer takes possession of, or a trustee, receiver, receiver and manager or similar officer is appointed in respect of the whole or substantial part of the business or assets of the Issuer, or distress, legal process, sequestration or any form of execution is levied or enforced or sued out against the Issuer which may have a Material Adverse Effect on the Issuer, or any security interest which may for the time being affect any of its assets becomes enforceable; For the purpose of this paragraph (vi), references to substantial shall mean such value equivalent to or more than 5% of the Issuer s net tangible assets as reflected in its latest annual audited financial statements. vii. viii. ix. the Issuer fails to satisfy any judgment passed against it by any court of competent jurisdiction and no appeal against such judgment or no application for a stay of execution has been made to any appropriate appellate court within the time prescribed by law or such appeal or application for a stay of execution has been dismissed; any step is taken for the winding up, dissolution or liquidation of the Issuer or a resolution is passed for the winding up of the Issuer or a petition for winding up is presented against the Issuer and the Issuer has not taken any action in good faith to set aside such petition within thirty (30) days from the date of service of such winding up petition or a winding up order has been made against the Issuer; the Issuer convenes a meeting of its creditors or proposes or makes any arrangement including any scheme of arrangement or composition or begins negotiations with its creditors, or takes any proceedings or other steps, with a view to a rescheduling or deferral 15

16 of all or any part of its indebtedness or a moratorium is agreed or declared by a court of competent jurisdiction in respect of or affecting all or any part of its indebtedness or any assignment for the benefit of its creditors (other than for the purposes of and followed by a reconstruction previously approved in writing by the Trustee, unless during or following such reconstruction the Issuer becomes or is declared to be insolvent) or where a scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against the Issuer; x. where there is a revocation, withholding or modification of any license, authorisation, approval or consent which in the opinion of the Trustee may materially and adversely impair or prejudice the ability of the Issuer to comply with the terms and conditions of the Sukuk or the transaction documents; xi. xii. xiii. the Issuer is deemed unable to pay any of its debts within the meaning of Section 218(2) of the Companies Act 1965 or becomes unable to pay any of its debts as they fall due or suspend or threaten to suspend making payments with respect to all or any class of its debts; the Issuer changes or threatens to change the nature or scope of a substantial part of its business, or suspends or threatens to suspend or cease or threatens to cease the operation of a substantial part of its business which it now conducts directly or indirectly and such change or suspension or cessation in the opinion of the Trustee may have a Material Adverse Effect on the Issuer; at any time any of the provisions of the transaction documents or the CA (including any supplementals) is or becomes illegal, void, voidable or unenforceable; 16

17 xiv. xv. xvi. xvii. xviii. xix. the Issuer repudiates any of the transaction documents or the Issuer does or causes to be done any act or thing evidencing an intention to repudiate any of the transaction documents; any of the assets, undertakings, rights or revenue of the Issuer are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any governmental body which in the opinion of the Trustee may have a Material Adverse Effect on the Issuer; any event or events has or have occurred or a situation exists which in the opinion of the Trustee may have a Material Adverse Effect on the Issuer, and in the case of the occurrence of such event or situation which in the opinion of the Trustee is capable of being remedied, the Issuer does not remedy it within a period of seven (7) business days after the Issuer became aware or having been notified by the Trustee or the Security Trustee of the event or situation; the Issuer or the GOM repudiates or terminates the CA (including any supplementals); the Issuer fails to comply with the terms of the CA (including any supplementals), which failure (after the consultation period between the Trustee and the Issuer of not longer than forty five (45) days from the date of notification of such event by the Trustee to the Issuer), is not capable of remedy or being capable of remedy, is not remedied to the satisfaction of the Trustee within thirty (30) days after receipt by the Issuer of a notice from the Trustee specifying the default; or such other event as may be advised by the legal counsel of the Lead Manager and agreed upon by the Issuer. 17

18 Material Adverse Effect means any material adverse effect on the business or condition (financial or otherwise) or results of the operations of the Issuer or the occurrence of any event which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents. Upon the occurrence of an Event of Default, the Trustee may at its discretion or upon the Noteholders instructions declare that an Event of Default has occurred and that payments under the Sukuk are due and payable. 26 Principal terms and conditions for warrants (where applicable) : Not applicable 27 Other principal terms and conditions for the issue 27.1 Financial Covenants : (a) Finance Service Cover Ratio ( FSCR ) The Issuer shall maintain a FSCR of not less that 1.25 times or as may be required by RAM in order to achieve the relevant requisite rating as stated in this Principal Terms and Conditions, at all times. The FSCR on any date is the ratio of Available Cash Flow (as defined below) for the preceding 12 month period ending on that date, to the aggregate of: (i) (ii) all payments made by the Issuer under the Sukuk during the previous 12 months; plus all principal obligations paid by the Issuer under any other borrowings (including the GSL) during the previous 12 months; plus (iii) all profit/interest payments paid under any other borrowings (including the GSL) during the previous 12 months. The FSCR calculations shall be duly confirmed by the Issuer s external auditors and based on the latest audited consolidated accounts of the Issuer on an 18

19 annual basis. The Issuer shall arrange for the external auditor s confirmation to be forwarded to the Facility Agent for its distribution to the Trustee and RAM. For the avoidance of doubt, any double counting shall be disregarded. Available Cash Flow means, in any annual period, the sum of: 1. all income received by the Issuer under the CA and any other receipts of a capital or revenue nature under any agreement or contract during such annual period; 2. return on Permitted Investments (including the permitted investments under the BaIDS) received by the Issuer during such annual period; 3. all distribution, returns and realised gains received by the Issuer during such annual period; 4. all credit balances in the Reserve Account and the designated accounts under the BaIDS at the beginning of the relevant 12-month period; 5. the amount utilised from the Reserve Account and the designated accounts under the BaIDS for permitted investments at the beginning of the relevant 12-month period; and 6. all proceeds of insurance claims and amounts received by the Issuer during such annual period; Less: 1. the total amount paid on insurances/takaful, operations, maintenance, administration, management and overheads and fees for that period; 2. taxes paid or such other contributions paid by the Issuer for that period; 3. any payments made by the Issuer under the CA or other contract or agreement which are not financed by the Sukuk and GSL; and 19

20 4. capital expenditure incurred and paid (excluding the capital expenditure incurred in relation to the Project, up to the amount of RM585.6 million) by the Issuer. For the avoidance of doubt, any double counting shall be disregarded. (b) Such other covenants as may be required by RAM Information Covenants : To include but not limited to the following: i. the Issuer shall provide to the Trustee at least on an annual basis, a certificate confirming that it has complied with all its obligations under the transaction documents and the terms and conditions of the Sukuk and that there does not exist or had not existed, from the date the Sukuk were issued, any Event of Default, and if such is not the case, to specify the same; ii. the Issuer shall deliver to the Trustee the following: (a) as soon as they become available (and in any event within one hundred and eighty (180) days after the end of each of its financial years) copies of its consolidated financial statements for that year which shall contain the income statements and balance sheets of the Issuer and which are audited and certified without qualification by a firm of independent certified public accountants acceptable to the Trustee; (b) as soon as they become available (and in any event within ninety (90) days after the end of the first half of its financial year) copies of its unaudited half yearly consolidated financial statements for that period which shall contain the income statements and balance sheets of the Issuer which are duly certified by any one of its directors; 20

21 (c) promptly, such additional financial or other information relating to the Issuer s business and its operations as the Trustee may from time to time reasonably request; (d) within ninety (90) days after the end of each half of its financial year, a copy of the report for estimated heavy repair, maintenance and capital expenditure for the next six (6) months period; (e) within ninety (90) days after the end of each quarter of its financial year, a summary report on the traffic volume, toll revenue and collection for the said quarterly period; and (f) promptly, all notices or other documents received by the Issuer from any of its shareholders or its creditors which contents may materially and adversely affect the interests of the Sukuk holders, and a copy of all documents dispatched by the Issuer to its shareholders (or any class of them) in their capacity as shareholders or its creditors generally at the same time as these documents are dispatched to these shareholders or creditors; iii. iv. the Issuer shall promptly notify the Trustee of any change in its board of directors and/or shareholders; the Issuer shall promptly notify the Trustee of any change in its condition (financial or otherwise) and of any litigation or other proceedings of any nature whatsoever being threatened or initiated against the Issuer before any court or tribunal or administrative agency which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents; 21

22 v. the Issuer shall promptly give notice to the Trustee of the occurrence of any Event of Default or any event which, upon the giving of notice and/or lapse of time and/or the issue of a certificate and/or the fulfilment of the relevant requirement as contemplated under the relevant transaction document would constitute an Event of Default ( Potential Event of Default ) forthwith upon becoming aware thereof, and it shall take all reasonable steps and/or such other steps as may reasonably be requested by the Trustee to remedy and/or mitigate the effect of the Event of Default or the Potential Event of Default; vi. vii. the Issuer shall promptly notify the Trustee in the event the Issuer receives any lump sum cash compensation from the GOM arising from any future revision or non-revision to the toll rate structure under the CA; and any other covenants as advised by the legal counsel of the Lead Manager and agreed upon by the Issuer Positive Covenants : To include but not limited to the following: i. the Issuer shall maintain in full force and effect all relevant authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) and will promptly obtain any further authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) which is or may become necessary to enable it to own its assets, to carry on its business or for the Issuer to enter into or perform its obligations under the transaction documents and the Project Documents or to ensure the validity, enforceability, admissibility in evidence of the obligations of the Issuer or the priority or rights of the financiers under the transaction documents and the Issuer shall comply with the same; 22

23 ii. iii. iv. the Issuer shall at all times on demand execute all such further documents and do all such further acts reasonably necessary at any time or times to give further effect to the terms and conditions of the transaction documents; the Issuer shall exercise reasonable diligence in carrying out its business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices; the Issuer shall promptly perform and carry out all its obligations under all the transaction documents (including but not limited to redeeming the Sukuk on the relevant Maturity Date(s) or any other date on which the Sukuk are due and payable) and ensure that it shall immediately notify the Trustee in the event that the Issuer is unable to fulfil or comply with any of the provisions of the transaction documents; v. the Issuer shall prepare its financial statements on a basis consistently applied in accordance with approved accounting standards in Malaysia and those financial statements shall give a true and fair view of the results of the operations of the Issuer for the period to which the financial statements are made up and shall disclose or provide against all liabilities (actual or contingent) of the Issuer; vi. vii. viii. the Issuer shall promptly comply with all applicable laws including the provisions of the SCA and/or the notes, circulars, conditions or guidelines issued by SC from time to time; the Issuer shall maintain the insurances required by the Project Documents; the Issuer shall open and maintain the Additional Designated Accounts for the purposes stated and pay all relevant amounts 23

24 into the Additional Designated Accounts and make all payments from such accounts only as permitted under the transaction documents; ix. the Issuer shall use all reasonable endeavours to procure the contractors, subcontractors and consultants appointed in connection with any works pursuant to the Project Documents are property skilled, qualified and experienced to undertake the awarded contracts; x. the Issuer shall promptly perform its obligations and exercise its rights under the CA and any supplementals to the CA so as not to prejudice the rights of the Sukuk holders or the ability of the Issuer to perform its obligations under the transaction documents relating to the BaIDS; xi. xii. xiii. xiv. the Issuer shall promptly deposit the Reserve Account Required Balance into the Reserve Account in accordance with the terms relating thereto; the Issuer shall, as soon as practicable, deliver a certified true copy of any material documents related to the Project entered into subsequent to the signing of the transaction documents; the Issuer shall, as soon as practicable after the last tranche of the BaIDS have been redeemed, assign its rights, titles and benefits to all Project Documents which are subsisting at that time to the Security Trustee for the benefit of the Sukuk holders. Such security (other than that created over the CA) is to be shared on a pari passu basis with the GOM; and such other undertakings as may be advised by the legal counsel of the Lead Manager and agreed upon by the Issuer. 24

25 27.4 Negative Covenants : To include but not limited to the following: i. the Issuer shall not obtain or permit to exist any borrowings other than the Sukuk, the BaIDS, the GSL and other existing financing facilities to be disclosed to the Lead Manager prior to SC Submission; ii. the Issuer shall not create or permit to exist any encumbrance, mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment by way of security, trust arrangement for the purpose of providing security or other security interest of any kind including, without limitation, title transfer and/or retention arrangements having a similar effect or any agreement to create any of the foregoing, but excluding liens arising in the ordinary course of business by operation of law and not by way of contract, those security under the BaIDS and those security as contemplated under this Principal Terms and Conditions and the GSL; iii. the Issuer shall not provide or permit to exist any guarantee to any party; iv. the Issuer shall not dispose any assets save and except in its ordinary course of business; v. the Issuer shall not add, delete, amend or substitute its Memorandum or Articles of Association in a manner inconsistent with the provisions of the transaction documents; vi. the Issuer shall not reduce its authorised or paidup share capital whether by varying the amount, structure or value thereof or the rights attached thereto or by converting any of its share capital into stock, or by consolidating, dividing or subdividing all or any of its shares, or by any other manner; vii. the Issuer shall not declare or pay any dividends or make any distribution whether income or capital in nature to its shareholders if: (a) the FSCR is less than 2.50 times after such payment or distribution; or 25

26 (b) an Event of Default has occurred or is continuing or if following such payment or distribution, an Event of Default would occur; viii. the Issuer shall not make any payments (whether in relation to principal, interest or otherwise] to its shareholders, subsidiaries or associated companies in connection with any loans or advances from its shareholders, subsidiaries or associated companies; ix. the Issuer shall not obtain or permit to exist any loans or advances from its shareholders, subsidiaries or associated companies unless these loans and advances are subordinated to the Sukuk; x. subject to paragraph (ix) above, the Issuer shall not enter into any agreement with its shareholders, subsidiaries or associated companies unless such agreement is entered into: (a) (b) (c) in the ordinary course of its business; on an arms-length basis; and will not have a Material Adverse Effect; For the purposes of this Principal Terms and Conditions, Material Adverse Effect means any material adverse effect on the business or condition (financial or otherwise) or results of the operations of the Issuer or the occurrence of any event which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents. xi. the Issuer shall not use the proceeds of the Sukuk except for the purposes set out in this Principal Terms and Conditions; xii. the Issuer shall not lend any money to any party other than to the Issuer s directors, officers or employees as part of their terms of employment 26

27 or any advances to the Issuer s contractors/suppliers/consultants as part of the terms of the contracts entered into in the ordinary course of business in respect thereof in amounts which is not material (in the opinion of the Trustee), unless supported by advance payment guarantees for the same amount; xiii. the Issuer shall not carry on any other business other than the authorised business in accordance with the exercise of its rights and the performance of its obligations under the CA and the Project Documents; xiv. the Issuer shall not open any accounts other than the Additional Designated Accounts, the GSL Accounts and the designated accounts under the BaIDS; xv. the Issuer shall not make and incur any capital expenditure other than that as required under the CA or as directed by the Malaysian Highway Authority; xvi. the Issuer shall not or shall not agree to amend, vary or terminate (except through effluxion of time), replace or supplement, surrender, transfer, assign, relinquish or otherwise dispose of any of its rights and interest under any of the Project Documents if to do so may have a Material Adverse Effect; xvii. the Issuer shall not enter into any other contracts, agreements or other arrangements or commitments, other than the transaction documents, Project Documents and those contemplated under the Project, save and except in its ordinary course of business; xviii. the Issuer shall not do or suffer to be done any act, matter or thing whereby any insurance may be rendered void, voidable, unenforceable or incapable of being effected, maintained or renewed; and xix. such other undertakings as may be advised by the legal counsel of the Lead Manager and agreed upon by the Issuer. 27

28 27.5 Additional Designated Accounts : The Issuer shall open and maintain the following Syariah compliant Additional Designated Accounts with a bank acceptable to the Lead Manager; 1. Sukuk Proceeds Accounts ( SPA ); 2. Project Operations Account ( POA ); and 3. Reserve Account ( RA ). The SPA and RA shall be operated jointly by the Facility Agent (acting for the Security Trustee) and the Issuer. The Issuer shall be the sole signatory of the POA. Upon a declaration of an Event of Default, the Facility Agent shall be the sole signatory of the SPA, POA and RA Sukuk Proceeds Account ( SPA ) : The SPA is for the purpose of crediting and/or depositing the issuance proceeds of the Sukuk, net of fees, expenses, costs and all other amounts payable under the Facility. The balances in the SPA shall be transferred to the POA to pay for the Project Costs against satisfactory documentary evidence acceptable to the Facility Agent Project Operations Account ( POA ) : The POA is for the purpose of depositing the amounts transferred from the SPA for the payment of the Project Costs Reserve Account ( RA ) : The Issuer shall ensure that funds are deposited into the RA until the balance held in the RA is equivalent to the respective nominal value of the Sukuk as set out in the table below ( RA Required Balance ). The RA Required Balance shall be deposited into the RA not less than twelve (12) months prior to the maturity of the relevant series of the Sukuk, save for the Series 1 RA Required Balance which shall be deposited three (3) months prior to the maturity of Series 1. In the event that the balance held in the RA exceeds the RA Required Balance, the excess shall be released to the Issuer. 28

29 Series RA Required Balance Maturity Date (years from the issue date) 1 RM80 million 8 2 RM110 million 9 3 RM120 million 10 4 RM125 million 11 5 RM130 million 12 6 RM130 million 13 The Issuer may only withdraw sums from the RA for redemption of the Sukuk and payment of any other outstanding payments due under the Sukuk, if at the time the relevant payments are due, the Issuer has insufficient funds to make full payments on the said amounts from its internally generated funds. The Issuer is to re-deposit any withdrawals from the RA within 30 days from and including the date of withdrawal is made until the balance is equivalent to the RA Required Balance. For the avoidance of doubt, non-compliance of the RA Required Balance, in the case of a shortfall, shall not constitute an Event of Default Right to make Permitted Investments : Funds held in the Additional Designated Accounts shall be permitted to be invested in Permitted Investments (as defined below) by the Facility Agent upon instruction from the Issuer, provided that: 1. such funds utilised for Permitted Investments shall, where necessary, be remitted to the SPA and/or RA (as the case may be) in a timely manner to meet any payment obligations of the Issuer when due and payable; 2. such Permitted Investments are to be held and not traded (unless, in the case of debt securities, where the sale price in relation to such trade is higher than the initial purchase price plus any accrued profits); and 3. shall be denominated in Ringgit Permitted Investments : Permitted Investments shall comprise investment products approved by the Syariah Advisory Council of the SC, BNM s Syariah Council and/or other recognised Syariah authorities. For the purpose of the 29

30 Facility, Permitted Investments are as follows: 1. Mudharabah, wadiah and other deposits under Syariah principles with licensed financial institutions; or 2. Islamic bankers acceptances, bills and other money market instruments issued under Syariah principles by licensed financial institutions with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent; or 3. Treasury bills, money market instruments, and other debt instruments issued under Syariah principles by BNM or the GOM; or 4. Debt securities issued by quasi Government or Government related corporations under Syariah principles with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent or debt securities guaranteed by the GOM; or 5. Private debt securities issued by corporations under Syariah principles with a short term rating of P1 and a minimum long term rating of AA3 or their equivalent, or by financial institutions or guaranteed by licensed financial institutions with a short term rating of P1 or a minimum long term rating of AA3 and their equivalent Status : The Sukuk will constitute direct, unconditional and secured obligations of the Issuer and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, subject to those preferred by law and the transaction documents Redemption : Unless previously redeemed or purchased and cancelled, the Sukuk will be redeemed by the Issuer at 100% of their nominal value on their respective maturity dates Repurchase and Cancellation : The Issuer or any of its related corporations may at any time purchase the Sukuk at any price in the open market or by private treaty. The Issuer or any of its related corporations may at its option retain such purchased Sukuk for its own account or sell or cancel or otherwise 30

31 deal with it at their discretion but such Sukuk held by it shall not be counted for purposes of voting Availability : Upon completion of documentation and, unless waived by the Primary Subscriber, compliance of all conditions precedent and other applicable conditions to the satisfaction of the Primary Subscriber Compensation ( Ta widh ) : In the event of overdue payments of any amount due under the Sukuk, the Issuer shall pay the compensation on such overdue amount at the rate and manner prescribed by SC s Syariah Advisory Council Taxation : All payments by the Issuer shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law, in which event the payer shall be required to make such additional amount so that the payee would receive the full amount which the payee would have received if no such withholdings or deductions are made Other Expenses : All costs, charges and expenses including trustee and security trustee fees, legal and other professional fees, abortive fees, rating fees, stamp duties (if any), penalties, SC and BNM fees, and other incidental costs, charges and expenses shall be borne by the Issuer, even if the Sukuk is subsequently aborted for any reason whatsoever Governing Laws : Laws of Malaysia Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the non-exclusive jurisdiction of the courts of Malaysia Other Conditions : The Sukuk shall at all times be governed by the guidelines issued and to be issued from time to time by the SC, BNM and/or any other authority in Malaysia having jurisdiction over matters pertaining to the Sukuk, and the Code of Conduct. 31