Please refer to Section 2 of this Announcement for further details of the Proposals.

Transcription

1 EMAS KIARA INDUSTRIES BERHAD ( EKIB OR COMPANY ) (I) (II) (III) PROPOSED ACQUISITION; PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND PROPOSED AMENDMENT (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of EKIB ( Board ), Kenanga Investment Bank Berhad ( Kenanga IB ) wishes to announce that EKIB had, on 15 April 2016, entered into a conditional share sale agreement ( SSA ) with Kim Feng Capital Sdn Bhd ( KF Capital ) for the proposed acquisition of the entire equity interest in Cocoa Valley Development Sdn Bhd ( CV Development ) ( Proposed Acquisition ). In conjunction with the Proposed Acquisition, EKIB intends to increase its authorised share capital from RM50 million comprising 100 million ordinary shares of RM0.50 each in EKIB ( EKIB Shares ) to RM500 million comprising one (1) billion EKIB Shares ( Proposed Increase in Authorised Share Capital ) as well as amend its Memorandum of Association to facilitate the Proposed Increase in Authorised Share Capital ( Proposed Amendment ). Please refer to Section 2 of this Announcement for further details of the Proposals. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Acquisition The Proposed Acquisition entails the acquisition by EKIB of 400,000 ordinary shares of RM1.00 each in CV Development ( CVD Shares ), representing the entire equity interest in CV Development, for a consideration of RM76.0 million ( Purchase Consideration ) to be satisfied via the issuance of approximately 65.5 million new EKIB Shares ( Consideration Shares ) at an issue price of RM1.16 per Consideration Share ( Issue Price ). CV Development is a wholly-owned subsidiary of KF Capital, which in turn holds 47.0% equity interest in EKIB as at 13 April 2016, being the latest practicable date prior to the date of this Announcement ( LPD ). Upon completion of the SSA, CV Development will become a whollyowned subsidiary of EKIB. Please refer to Appendix I of this Announcement for the salient terms of the SSA. 1

2 CV Development had also, on 25 March 2016, entered into a conditional development rights agreement ( DRA ) with Cocoa Valley Sdn Bhd ( Cocoa Valley ) for the acquisition of the development rights to two (2) parcels of adjoining leasehold land held under PTD 1414 H.S.(D) and PTD 1467 H.S.(D) 13161, both in Mukim Pantai Timur, Daerah Kota Tinggi ( Land ) ( Development Rights ) to be paid in the following manner: Within thirty (30) days of the DRA becoming unconditional, RM75.0 million ( CV Cash ) as well as a RM17.0 million debt owing by Cocoa Valley to KF Capital ( CV Debt ) pursuant to advances granted by KF Capital to Cocoa Valley for its working capital, including payment of costs in relation to the Development; and Upon issuance of the Certificate of Completion and Compliance and/or when completed, a sum and/or properties equivalent to ten percent (10%) of the net selling price of the properties to be developed on the Land ( Development ) ( CV Entitlement ), subject to two (2) advance payments of RM5.0 million each payable upon execution of the DRA and within fourteen (14) days from the date of receipt by Cocoa Valley of the notices that land revenue is due in the format of Borang 5A issued by the Director of Land and Mines of Johor for the Development ( Development Form 5A ) respectively, which shall be deducted from the CV Entitlement. CV Development is acquiring the Development Rights instead of the Land due to a Bumiputera ownership condition imposed by the the Director of Land and Mines of Johor on the company holding the Land. Pursuant to the DRA, all of Cocoa Valley s estate, right, title, benefit, interest, advantage, property and claim in relation to the Development shall be absolutely assigned unto CV Development. Please refer to Appendices II and III of this Announcement for the salient terms of the DRA and background information on Cocoa Valley and details of the Land respectively Basis and justification of the Purchase Consideration The Purchase Consideration was arrived at on a willing buyer-willing seller basis after taking into consideration, among others, the following: (iii) the market value of the Development Rights to be held by CV Development of RM260.0 million, as appraised by Messrs C H Williams Talhar & Wong ( Valuer ) (being the independent valuer appointed by the Company for the valuation of the Development Rights) in its valuation certificate dated 13 April 2016 ( Valuation Certificate ). The method of valuation of the Development Rights adopted by the Valuer was the Residual Method (Cash Flow Approach); the investment cost of RM75.0 million to be paid by KF Capital as payment of the CV Cash as well as the CV Debt and the net present value of the CV Entitlement of RM133.7 million*; and the rationale for the Proposed Acquisition as set out in Section 3 of this Announcement. Note: * Discounted at a rate of 7.5% based on the Group s weighted average long-term borrowings interest rate. 2

3 2.1.2 Mode of satisfaction The Purchase Consideration will be fully satisfied via the issuance of the Consideration Shares in the following manner: Within 90 days of the SSA becoming unconditional, a first payment of RM4.35 million to be satisfied via the issuance of approximately 3.75 million Consideration Shares ( First Payment ); and Six (6) months after the date of the First Payment, a second payment of RM71.65 million to be satisfied via the issuance of approximately million Consideration Shares. For avoidance of doubt, the Proposed Acquisition shall be effected upon the issuance of Consideration Shares under the First Payment, that is, CV Development shall be a whollyowned subsidiary of EKIB after the First Payment. The Issue Price was arrived at based on a discount of five percent (5%) to the five (5)-day volume-weighted average market price ( VWAP ) of EKIB Shares up to the LPD of RM1.22. For information purposes, the five (5)-day VWAP of EKIB Shares up to and including 14 April 2015, being the day immediately preceding the date of the SSA, is RM1.23. The Consideration Shares shall, upon allotment and issuance, rank pari passu in all respects with the then existing EKIB Shares, save and except that they shall not be entitled to any dividends, rights, allotments and/or other distributions that are declared, made or paid prior to the date of allotment thereof. An application will be made to Bursa Malaysia Securities Berhad ( Bursa Securities ) for the listing of and quotation for the Consideration Shares on the Main Market of Bursa Securities Background information on CV Development CV Development was incorporated in Malaysia under the Companies Act, 1965 ( Act ) on 10 March 2016 as a private limited company under its present name. CV Development is principally involved in property development. As at the LPD, CV Development s authorised share capital is RM400,000 comprising 400,000 CVD Shares, of which RM2 comprising two (2) CVD Shares have been issued and fully paidup. As part of the conditions precedent of the SSA ( Conditions Precedent ), CV Development s issued and paid-up share capital shall be increased to RM400,000 comprising 400,000 CVD Shares, all of which will be held by KF Capital. As at the LPD, the directors of CV Development are as follows: (iii) Cindi Sim; Simon Sim Yow Yung ( Simon Sim ); and Ng Liang Khiang. As at the LPD, CV Development does not have any subsidiary or associated company. As CV Development was only incorporated on 10 March 2016, it does not have any audited financial statements. 3

4 The costs and dates of investment by KF Capital in CV Development are as follows: Date RM million 22 March 2016 * Within thirty (30) days of the DRA becoming unconditional 75.0 Total 75.0 Note: * RM Background information on KF Capital KF Capital was incorporated in Malaysia under the Act on 13 August 2015 as a private limited company under its present name. KF Capital is principally involved in investment holding. As at the LPD, KF Capital s authorised share capital is RM400,000 comprising 400,000 ordinary shares of RM1.00 each ( KF Capital Shares ), of which RM10 comprising ten (10) KF Capital Shares have been issued and fully paid-up. KF Capital s directors and shareholders as at the LPD are Cindi Sim and Simon Sim, who hold three (3) KF Capital Shares and seven (7) KF Capital Shares respectively Liabilities to be assumed and additional financial commitment There are no liabilities, contingent liabilities or guarantees to be assumed by EKIB pursuant to the Proposed Acquisition, save for the liabilities stated in the financial statements of CV Development, which will be consolidated into the financial statements of EKIB. For avoidance of doubt, as the CV Entitlement is payable upon issuance of the Certificate of Completion and Compliance and/or when completed, the CV Entitlement shall be satisfied via sales proceeds of the completed properties within the Development and/or the said completed properties. The Board does not foresee any material financial commitments required to put the business of CV Development on-stream following the completion of the Proposed Acquisition, save for the development costs for the Development. Based on the development plan approved by the Lembaga Bandaran Johor Tenggara, the development costs for the Development are estimated to be approximately RM1.5 billion, which will be funded via internally generated funds, proceeds from sales of properties within the Development and/or bank borrowings. The actual development costs to be incurred will depend on amongst others, the timing of the projects within the Development as well as raw materials cost, construction cost and financing cost. The actual funding breakdown will be decided at a later stage after taking into consideration, amongst others, the gearing level and internal cash requirements of EKIB and its subsidiaries ( Group ), financing cost as well as the timing of the projects within the Development Implications of the Malaysian Code on Take-Overs and Mergers, 2010 ( Code ) Pursuant to terms of the SSA, the Purchase Consideration will be satisfied in two (2) tranches, whereby the First Payment will not be more than 2% of KF Capital s equity interest in EKIB, whilst the Second Payment will be six (6) months after the date of the First Payment. In addition, KF Capital shall also acquire EKIB Shares up to 2% of its equity interest in EKIB six (6) months prior to the First Payment, whereby its equity interest in EKIB after the First Payment will be more than 50%. In view of the above, the Proposed Acquisition will not give rise to any mandatory offer obligation under the Code. 4

5 2.2 Proposed Increase in Authorised Share Capital EKIB proposes to increase its authorised share capital from RM50 million comprising 100 million EKIB Shares to RM500 million comprising one (1) billion EKIB Shares to accommodate the issuance of the Consideration Shares as well as any future issuances of shares. 2.3 Proposed Amendment The Company also proposes to amend its Memorandum of Association to facilitate the implementation of the Proposed Increase in Authorised Share Capital as follows: Memorandum of Association Clause 5 Existing Provision The capital of the Company is Ringgit Fifty Million Only (RM50,000,000-00) divided into One Hundred Million ordinary shares of RM0-50 each. Proposed Provision The capital of the Company is Ringgit Five Hundred Million Only (RM500,000,000-00) divided into One Billion (1,000,000,000) ordinary shares of RM0-50 each. 3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Acquisition The Group currently only has an on-going residential development project in Johor Bahru known as Pinnacle Tower with an estimated gross development value ( GDV ) of approximately RM265 million, which is expected to be completed in June Thus, in furtherance of EKIB s diversification into property development and related businesses, the Company is embarking on the Proposed Acquisition, which will enable the Group to significantly scale up its property development business. The Proposed Acquisition will provide the Group with the development rights to approximately 461 acres of landbank located in Kota Tinggi, Johor, as compared to its current landbank size of approximately 4 acres. In addition, the development plan for the Land has been approved by the Lembaga Bandaran Johor Tenggara, which would enable commencement of the Development as scheduled. The Development is a mixed development comprising amongst others, detached, semidetached and terraced houses, and affordable homes as well as commercial and shop office lots, with an estimated GDV of approximately RM2.0 billion to be realised over a development period of seven (7) years ( Development Period ), which in turn will enhance the Group s future financial performance. The issuance of the Consideration Shares as settlement for the Proposed Acquisition will enable EKIB to conserve its cash resources for the enlarged Group s operations, whilst minimising the potential impact on its gearing. In addition, by accepting the Consideration Shares, the shareholders of KF Capital are reaffirming their commitment to participate in the Group s future growth. 3.2 Proposed Increase in Authorised Share Capital The Proposed Increase in Authorised Share Capital is required to accommodate the issuance of the Consideration Shares as well as any future issuances of EKIB Shares. 3.3 Proposed Amendment The Proposed Amendment is required to facilitate the Proposed Increase in Authorised Share Capital. 5

6 4. PROSPECTS OF THE PROPOSED ACQUISITION 4.1 Overview and Outlook of the Malaysian Economy The Malaysian economy registered a growth of 4.5% in the fourth quarter of 2015 (3Q 2015: 4.7%), supported mainly by the private sector demand. Despite the challenging economic environment, private sector expenditure grew by 4.9% (3Q 2015: 4.4%). Private consumption growth improved to 4.9% (3Q 2015: 4.1%), supported by stable wage growth and labour market conditions. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.5% (3Q 2015: 0.7%). For the year 2015, the Malaysian economy expanded by 5.0%. While growth in income and employment continues to support private consumption, it is expected to moderate as households continue to adjust to the higher cost of living. (Source: Quarterly Bulletin Fourth Quarter 2015, Bank Negara Malaysia) The Malaysian economy is expected to remain on a steady growth path, expanding between 4% 5% in The nominal gross national income (GNI) per capita is expected to increase by 5.6% to RM38,438 in 2016 (2015: 4.2%; RM36,397). Strong economic fundamentals such as benign inflation and stable employment supported by an accommodative monetary policy are expected to support growth. (Source: Economic Report 2015/2016, Ministry of Finance Malaysia) 4.2 Overview of the Johor Property Market With Iskandar Malaysia s comprehensive development plan entering into the 2 nd half of the 20 years plan, the region has recorded total cumulative committed investment of RM172.5 billion since Nevertheless, the property market has been experiencing a slowdown since 2H2014, especially the high-rise residential sector. Less new projects were introduced and sales took a longer time. The state government has rejected new applications to build serviced apartments, outlined more stringent conditions and implemented a 1% property tax on serviced apartments. The 1% is computed based on the development GDV. Although there is an increased level of cautiousness in the overall property market, interest in land acquisitions and other means of development cooperation continued to be active in (Source: Property Market 2016, Valuer) 4.3 Prospects of CV Development The Land is located to the immediate north-east of Taman Desaru Utama, the only wellplanned and established township development in the Tanjung Surat, Pantai Timur and Pengerang locality. Presently, launched and developed units within Taman Desaru Utama include single and double-storey terraced houses, semi-detached houses, detached houses and double-storey shopoffices. All the residential and commercial units that were launched by the developer over the last five (5) years had recorded a take-up rate of nearly 100%. Currently, the township developer is developing a multi-storey hotel and a double-storey shopping mall to cater the needs of locals as well as leisure and business visitors drawn by the large developments nearby, namely Desaru Coast and Pengerang Integrated Petroleum Complex ( PIPC ). 6

7 The famous Desaru beach and resort area is located 6 kilometres ( km ) to the south-east of the subject lands. Existing hotel and resort developments within Desaru include Lotus Desaru Resort, Pulai Desaru Beach & SPA Hotel, Tiara Desaru, Desaru Tunamaya Beach & SPA Resort and Desaru Holiday Chalets. Beside the above-mentioned existing developments, development of Desaru Coast, spearheaded by Khazanah Nasional Berhad, continues to progress well. The first phase 1 Desaru Coast, which includes the 27-hole golf course with clubhouse, 386-room Desa Desaru Resort, 275-room Westin Desaru Resort, Anantara Desaru Resort & Villa is expected to be completed in The ongoing 20,000-acre PIPC development is located approximately 45 km to the southwest of the lands. The property market in the region of Pengerang and its nearby localities, namely Tanjung Surat and Pantai Timur (which is in the locality of the Land) are expected to benefit from the various activities related to PIPC. The development plan for the Land has been approved by the Lembaga Bandaran Johor Tenggara for mixed housing and commercial development and is poised to emerge as an extension of the existing Taman Desaru Utama. It is expected to benefit from the aforesaid catalytic developments and to grow as a new sustainable township in the south-eastern region of Johor. (Source: Management of EKIB) 5. RISK FACTORS IN RELATION TO THE PROPOSED ACQUISITION 5.1 Completion Risk The Proposed Acquisition is conditional upon the Conditions Precedent being fulfilled within the timeframe prescribed therein, including the approvals of EKIB s non-interested shareholders as well as the relevant authorities as set out in Section 7 of this Announcement. Failure to fulfil and/or obtain a waiver for the Conditions Precedent within the stipulated timeframe will affect the successful completion of the Proposed Acquisition, which would result in EKIB not being able to realise the expected benefits thereof. The Board will take reasonable steps to ensure that the Conditions Precedent are met within the stipulated timeframe and that every effort is made to obtain all necessary approvals in order to complete the Proposed Acquisition in a timely manner. 5.2 Investment Risk The Proposed Acquisition is being undertaken with a view to expand EKIB s property development business. However, there is no guarantee that the anticipated benefits from the Proposed Acquisition will be realised, or that the Group will be able to generate sufficient returns from the Development to offset the associated cost of investment. As such, there is no assurance that the Proposed Acquisition will result in an improvement in the Group s financial performance, or that the duration required for EKIB to recoup its investment will be as anticipated. Nevertheless, the Board has exercised due care in considering the potential risks and benefits associated with the Proposed Acquisition and believes that the Proposed Acquisition will be value-accretive to the enlarged Group. Moreover, the Board believes that its experience and expertise in property development will enable the Group to realise the expected benefits from the Proposed Acquisition. 7

8 5.3 Business Risk The Proposed Acquisition is subject to risks inherent in the property development industry. Such risks may include adverse changes in real estate market prices, changes in demand for types of residential and commercial properties, competition from other property developers, delays in completion of projects, performance of third-party sub-contractors, shortages in labour and raw materials and fluctuations in the costs thereof. Any occurrence of these events may have an adverse material effect on the enlarged Group s performance. Nevertheless, the Group is already subject to risks inherent in the property development industry through the Pinnacle Tower project and will continue to mitigate these risks through, inter alia, careful planning and close monitoring of the progress of the development projects. 5.4 Ownership Risk Pursuant to the terms of the DRA, whilst Cocoa Valley shall be the registered owner of the Land, the Development Rights pertaining thereto shall be absolutely assigned unto CV Development, which entitles CV Development to all of Cocoa Valley s estate, right, title, benefit, interest, advantage, property and claim in respect of the Development, including proceeds arising from the Development (net of the CV Entitlement). In addition, Cocoa Valley is obliged to amongst others, comply with the Housing Development (Control and Licensing) Regulations 1989 in relation to the sale of properties within the Development, including joining CV Development as a party to the sale and purchase agreements of the said properties. Further, Cocoa Valley shall also execute a Power of Attorney in CV Development s favour to sign, execute and complete the application for the Development and the sale and purchase agreements for the properties within the Development, as well as deposit the titles to the Land with CV Development. Accordingly, the Company is of the view that the risk of not having legal ownership of the Land is minimal as the specific provisions of the DRA and the irrevocable Power of Attorney granted by Cocoa Valley to CV Development effectively mitigate the risk of not having legal ownership over the Land. Cocoa Valley shall be the registered owner of the Land pursuant to a joint-venture agreement ( JVA ) (as annexed to the DRA) entered into between Cocoa Valley and Lembaga Kemajuan Johor Tenggara ( KEJORA ), a statutory body incorporated under the Lembaga Kemajuan Johor Tenggara Act 1972 (Act 75) (being the original registered owner of the Land). In the event the Development is not completed within the Development Period or Cocoa Valley falls into liquidation, KEJORA shall be entitled to amongst others, take possession of the Land and complete the Development. To mitigate this risk and as part of the conditions precedent of the DRA ( DRA Conditions Precedent ), Cocoa Valley is to obtain KEJORA s confirmation that prior to the termination of the JVA, Cocoa Valley shall have the option to complete the JVA by paying to KEJORA a sum equivalent to up to seven percent (7%) of the net selling price of the properties within the Development (which is part of CV s Entitlement), less any sums paid prior thereto as full and final settlement of KEJORA s entitlement under the JVA. CV Development shall also appoint its nominee as a Director of Cocoa Valley to mitigate the risk of Cocoa Valley going into liquidation. In addition, the Board will seek to limit the risk of non-completion of the Development within the Development Period through, inter alia, careful planning and proactive and close monitoring of the progress of the Development. 8

9 6. EFFECTS OF THE PROPOSALS The Proposed Increase in Authorised Share Capital and Proposed Amendment will not have any effect on the issued and paid-up share capital, consolidated net assets ( NA ), gearing, earnings and earnings per share ( EPS ), and substantial shareholders shareholding of EKIB. 6.1 Issued and Paid-up Share Capital The proforma effects of the Proposed Acquisition on the issued and paid-up share capital of EKIB as at the LPD are as follows: No. of EKIB Shares 000 RM 000 As at the LPD 91,860 45,930 To be issued pursuant to the Proposed Acquisition 65,517 32,759 Enlarged issued and paid-up share capital 157,377 78, Consolidated NA and Gearing Based on EKIB s audited consolidated financial statements as at 31 December 2015, the proforma effects of the Proposed Acquisition on EKIB Group s NA and gearing assuming the Proposed Acquisition had been completed on 31 December 2015 are as follows: Audited as at 31 December 2015 RM 000 After the Proposed Acquisition (1) RM 000 Share capital 45,930 78,689 Reserves 32,344 (1) 75,483 Total equity 78, ,172 No. of EKIB Shares ( 000) 91, ,377 NA per EKIB Share (RM) Total borrowings 6,928 6,928 Gearing (times) Note: (1) Part of the estimated expenses of approximately RM0.1 million in relation to the Proposed Acquisition have been charged against the retained earnings, while the remaining RM1.1 million have been capitalised in accordance with the Malaysian Financial Reporting Standard 116 Property, plant and equipment. 6.3 Earnings and EPS The Proposed Acquisition is not expected to have an immediate material effect on the Group s earnings for the financial year ending 31 December 2016 as the Proposed Acquisition is only expected to be completed by the third (3 rd ) quarter of Nonetheless, the Proposed Acquisition is expected to contribute positively to the Group s future earnings in the ensuing financial years upon the undertaking of the projects within the Development by CV Development. 9

10 However, the EPS of the enlarged Group may be diluted as a result of the increase in the number of EKIB Shares in issue arising from the issuance of the Consideration Shares. 6.4 Substantial Shareholders Shareholdings The proforma effects of the Proposed Acquisition on the substantial shareholders shareholdings of EKIB as at the LPD are as follows: Name As at the LPD After the Proposed Acquisition < Direct > < Indirect > < Direct > < Indirect > No. of EKIB Shares % No. of EKIB Shares % No. of EKIB Shares % No. of EKIB Shares % See Chii Wei 5, , KF Capital 43, , Cindi Sim Simon Sim - - (1) 43, (1) 43, (1) 108, (1) 108, Note: (1) Deemed interest by virtue of his/her interest in KF Capital pursuant to Section 6A of the Act. 7. APPROVALS REQUIRED The Proposals are subject to the following approvals being obtained: (a) (b) (c) Bursa Securities for the listing of and quotation for the Consideration Shares; shareholders of EKIB for the Proposals; and any other relevant authorities and/or parties, if required. The Proposed Acquisition, Proposed Increase in Authorised Share Capital and Proposed Amendment are inter-conditional upon each other. Save for the above, the Proposals are not conditional upon any other corporate exercise undertaken or to be undertaken by the Company. 8. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM Save as disclosed below, none of the Directors and/or major shareholders of EKIB and/or persons connected with them have any interest, direct or indirect, in the Proposals: (a) KF Capital is, as at the date of this Announcement: the sole shareholder of CV Development; and a major shareholder of EKIB, holding 43.2 million EKIB Shares representing 47.0% equity interest in EKIB. 10

11 (b) Simon Sim and Cindi Sim are: directors and shareholders of KF Capital, as set out in Section of this Announcement; and directors and substantial shareholders of EKIB via their interest in KF Capital. In addition, Cindi Sim holds 0.9 million EKIB Shares, representing 1.0% equity interest in EKIB. (c) (d) Ng Liang Khiang is a nominee director of KF Capital and a shareholder of EKIB via his interest in NgSinar Sdn Bhd, which holds 0.9 million EKIB Shares, representing 1.0% equity interest in EKIB. Wong Yean Ni is a nominee director of KF Capital but does not have any shareholdings in EKIB. Simon Sim, Cindi Sim, Ng Liang Khiang and Wong Yean Ni shall hereinafter be referred to as Interested Directors. Accordingly, KF Capital and the Interested Directors are deemed interested in the Proposed Acquisition. As such, the Interested Directors have abstained and will continue to abstain from all deliberations and voting at the relevant Board meetings in respect of the Proposals. In addition, KF Capital and the Interested Directors will also abstain from voting and/or undertake to ensure that persons connected to them (if any) will abstain from voting in respect of their direct and/or indirect shareholdings in EKIB on the resolutions pertaining to the Proposals to be tabled at EKIB s forthcoming EGM. Save for the Proposed Acquisition, there have been no transactions entered into between the Group and KF Capital in the twelve (12) months preceding the LPD. 9. DIRECTORS STATEMENT The Board, save for the Interested Directors, having considered all aspects of the Proposals including the rationale and fairness evaluation of the independent adviser, is of the opinion that the Proposals are in the best interest of EKIB. 10. AUDIT COMMITTEE S STATEMENT EKIB s Audit Committee, having considered all aspects of the Proposals (including but not limited to the rationale set out in Section 3 of this Announcement) and the fairness evaluation of the independent adviser, is of the opinion that the terms of the Proposals are: (iii) in the best interests of EKIB; fair, reasonable and on normal commercial terms; and not detrimental to the interests of EKIB s minority shareholders. 11

12 11. PERCENTAGE RATIOS The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Securities ( Listing Requirements ) is approximately 97.1% based on EKIB s audited consolidated financial statements for the financial year ended 31 December ADVISERS 12.1 Principal Adviser Kenanga IB has been appointed as the Principal Adviser for the Proposals Independent Adviser In view of the interests of KF Capital, the major shareholder of EKIB and the Interested Directors in the Proposed Acquisition, the Proposals are deemed as related party transactions under Paragraph of the Listing Requirements. As such, KAF Investment Bank Berhad has been appointed by EKIB as the Independent Adviser to advise EKIB s non-interested Directors and non-interested shareholders on the Proposals in accordance with the Listing Requirements. 13. ESTIMATED TIMEFRAME FOR COMPLETION The application to Bursa Securities for the listing of and quotation for the Consideration Shares is expected to be made within three (3) months from the date of this Announcement. Barring unforeseen circumstances and subject to the fulfilment and/or waiver of all Conditions Precedent, the SSA is expected to be unconditional in the third (3 rd ) quarter of DOCUMENTS AVAILABLE FOR INSPECTION Copies of the SSA, DRA and Valuation Certificate are available for inspection at the registered office of EKIB at Suite 5.11 & 5.12, 5 th Floor, Menara TJB, No. 9, Jalan Syed Mohd. Mufti, Johor Bahru, Johor during normal office hours from Mondays to Fridays (except public holidays) from the date of this Announcement for a period of three (3) months. This announcement is dated 15 April