Appendix I PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL BACKGROUND INFORMATION. - Name. Redmax Sdn Bhd ( RSB or Company ) -Address

Transcription

1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL BACKGROUND INFORMATION 1(A) Issuer - Name Redmax Sdn Bhd ( RSB or Company ) -Address 2 nd Floor, Lot 8241, Wisma G.A.M., Jalan 225, Section 51A, Petaling Jaya, Selangor Darul Ehsan - Business Registration No K - Date/Place of Incorporation 21 March 1990 / Kuala Lumpur, Malaysia - Date of Listing Not listed - Status Resident controlled company Bumiputera controlled company Page 1 of 15

2 - Principal Activities General Contractor - Board of Directors Zaharen Bin Zakaria ~ Managing Director Mohd Radzman Bin Othman ~ Director Siti Faireena Bte Dato Mohamed ~ Director Dato Mohamed Bin Sulaiman ~ Chairman - Structure of shareholdings and names of shareholders as at 25 February 2003 Type of Share Holder Number of Issued Shares % Ordinary Zaharen Bin Zakaria 800, Ordinary Siti Faireena Bte Mohamed 770, Ordinary Mohamed Feizal Bin Mohamed 330, Ordinary Mohd Radzman Bin Othman 100, Authorised and paid-up capital Type of Share Authorised : Ordinary shares of RM1 each No. of Shares : 5,000,000 Authorised Capital(RM) : 5,000,000 Paid-up Capital (RM) : 2,000,000 PRINCIPAL TERMS AND CONDITIONS 2. Names of parties in the proposed transaction (where applicable) i) Principal Adviser(s) / Lead Arranger(s) KAF Discounts Berhad ( KAF ) (20657-W) Page 2 of 15

3 ii) Arranger(s) Not applicable iii) Valuers Not applicable iv) Lead Arranger s Solicitors Zain & Co., Advocates & Solicitors v) Financial Adviser Incam Consulting Sdn Bhd ( K) vi) Technical Adviser Not applicable vii) Guarantor Not applicable viii) Trustee & Security Agent AmTrustee Berhad (formerly known as Arab-Malaysian Trustee Berhad) ( V) ix) Facility Agent KAF x) Primary Subscriber(s) and Amount subscribed (where applicable) Primary Subscriber Amount Subscribed (RM) KAF 20,000, Page 3 of 15

4 Hwang-DBS Securities Berhad 80,000, xi) Underwriter(s) and amount underwritten Not applicable xii) Syariah Adviser Muamalah Financial Consulting Sdn Bhd ( H) xiii) Central Depository Bank Negara Malaysia ( BNM ) xiv) Paying Agent BNM xv) Reporting Accountant Moores Rowland (No. AF: 0539) Chartered Accountants xvi) Others (please specify) None 3 Principal Islamic 4. Facility Description Al-Bai Bithaman Ajil Fixed Rate Secured Bonds ( Al-Bai Bithaman Ajil Bonds ) 5. Issue Size (RM) Page 4 of 15

5 Primary Bonds (representing the principal or cost portion) of RM100,000, nominal value and Secondary Bonds (representing the profit portion) of RM24,535, nominal value. 6. Issue Price (RM) At par 7. Tenor of the facility/issue Up to RM100.0 million nominal value to be issued in two (2) series as follows: Series Tenure (yrs) Amount (RM Million) Interest / Coupon / Profit or equivalent rate (%) Series Tenure (yrs) Coupon/IRR Profit Margin (RM Million) % % 9.52 The Coupon or IRR are applicable if the issue of the Al-Bai Bithaman Ajil Bonds is made on or before 28 February 2004 or any other date as prescribed by the Lead Arranger, failing which, the Primary Subscribers reserve the right to review the coupon or IRR, which shall be agreed upon before the actual issue date. 9. Interest/Coupon/ Profit Payment frequency The Coupon/Secondary Bonds Payment is to be made semi-annually with the first instalment payable six (6) months from the issue date of the Al-Bai Bithaman Ajil Bonds. 10. Interest/Coupon/ Profit Payment basis On actual/actual days basis. 11. Yield to Maturity (%) As follows: Page 5 of 15

6 Series Tenure (years) Yield to Maturity (%) p.a p.a. 12. Security/Collateral (if any) The security of the Al-Bai Bithaman Ajil Bonds shall include but not limited to the following: (e) (f) Assignment of all contract proceeds of the Issuer under the Project Document in respect of the Rancangan Tebatan Banjir ("RTB") Sungai Muda Pakej 1; Assignment by way of charge over all Designated Accounts (elaborated under item 14) and over all investments as prescribed hereinafter in section 27 of this Appendix (hereinafter referred to as the Permitted Investments"); Assignment of all contract proceeds of the Issuer under the Project Documents for the RTB Sungai Perai Pakej 1B and 2, to be executed in escrow, and to be perfected when the Project documents for the RTB Sungai Perai Pakej 1B and 2 are executed between the Government of Malaysia and the Issuer; Debenture creating a first fixed and floating charges over all present and future assets relating to the RTB Sungai Muda Pakej 1 Project; Debenture creating a first fixed and floating charges over all present and future assets relating to the RTB Sungai Perai Pakej 1B and 2 Projects, to be executed in escrow, and to be perfected when the Project documents for the RTB Sungai Perai Pakej 1B and 2 are executed between the Government and the Issuer; Any further security arrangement as advised by the Lead Arranger's Solicitors and in consultation with the Issuer and the Issuer's Solicitors. Project is defined to refer collectively to the RTB Sungai Muda Pakej 1 and RTB Sungai Perai Pakej 1B and Details on utilization of proceeds The proceeds from the issuance of the Al-Bai Bithaman Ajil Bonds shall be utilized for the following purposes: Payments to contractors and/or suppliers and/or consultants contracted/engaged to do work for the RTB Sungai Muda Pakej 1 of up to RM26,783,000 and RTB Sungai Perai Pakej 1B and 2 of up to RM19,947,000; As cash security to financial institution(s) providing RSB with Performance Bond ( PB ) facilities in favour of the Government for purpose of the Project (with the exception of the RTB Sungai Muda Pakej 1) where the aggregate amount to be utilized for such purpose shall not exceed RM1,900,000; Page 6 of 15

7 As cash security to financial instution(s) providing RSB with Bank Guarantee facilities in favour of Project suppliers where the aggregate amount to be utilized for such purpose shall not exceed RM25,000,000; Where the total Al-Bai Bithaman Ajil Bonds proceeds to be utilized for purposes, and shall not exceed RM73,630,000. (e) (f) Defraying fees and expenses in connection with the issuance of the Al-Bai Bithaman Ajil Bonds facility of up to RM700,000; Redemption of RSB s existing borrowing from Southern Bank Berhad of up to RM8,500,000; Reimbursement of the funds utilized as cash security in order to secure PB facility in favour of the Government for the RTB Sungai Muda Pakej 1 of RM1,500,000; (g) Redemption of Secondary Bonds which will become due and payable twelve (12) months after the issue date of the Al-Bai Bithaman Ajil Bonds of RM5,670,000; and (h) Project working capital requirement of up to RM10,000,000. For specific location of the projects (RTB Sungai Muda 1 and RTB Sungai Perai 1B and 2), please refer to map in Attachment A. 14. Sinking fund (if any) RSB is required to open the following Designated Accounts as one of the conditions precedent to the draw down of the Al-Bai Bithaman Ajil Bonds: Disbursement Account; Finance Service Reserve Account; Revenue Account; and Operating Account. as security for the bondholders. The Designated Accounts except for the Operating Account shall be managed solely by the Trustee and upon enforcement of the security, the bondholders shall have priority in respect of the amounts standing to the credit of each of the Designated Accounts. The Operating Account shall be managed by RSB, subject to the relevant positive covenant. The positive covenant being pending the rating agency s reaffirmation of the initial rating following the signing and execution of the Project documents for the RTB Sungai Perai Pakej 1B and 2, RSB is to ensure that any withdrawal of funds from the Operating Account where such funds are arising from either payments received from the Government in respect of works completed for the RTB Sungai Muda Pakej 1 or the Al-Bai Bithaman Ajil Bonds proceeds shall be against documentary evidence that the withdrawal is for payments in respect of works relating to the RTB Sungai Muda Pakej 1 (and not in respect of works relating to the RTB Sungai Perai Pakej 1B and 2). Such documentary Page 7 of 15

8 evidence shall be provided to the Trustee three (3) days prior to any withdrawal from the Operating Account. The Issuer may, without the approval of the Trustee, make other withdrawals from the Operating Account not relating to payments to contractors and/or suppliers and/or consultants contracted/engaged to do work for the Project. Within seven (7) business days after the end of each month, the Issuer shall deliver to the Trustee a statement of withdrawals made from the Operating Account detailing the expenditure incurred for which the withdrawal was made. For avoidance of doubt, these obligations shall cease upon the reaffirmation of the initial rating and the Operating Account shall then be managed solely by the Issuer. 15. Rating Credit Rating Assigned : A1 Name of Rating Agency : Rating Agency Malaysia Berhad ( RAM ) The A1 rating is subject to the following conditions: Signing and execution of the subcontract agreement between RSB and See Song & Sons Sdn Bhd in relation to works for the RTB Sungai Muda Pakej 1 in form and substance acceptable to RAM. Please note that on 13 June 2003, RAM had given its confirmation that the said subcontract agreement is in form and substance acceptable to RAM. The Al-Bai Bithaman Ajil Bonds proceeds are to be utilized solely for the purpose of funding RTB Sungai Muda Pakej 1, until the relevant Project documents and subcontract agreements for the RTB Sungai Perai Pakej 1B and 2 have been signed and executed in form and substance agreeable to RAM; RSB incorporates the following negative covenant in its Memorandum and Articles of Association. The condition being: RSB, shall not without the prior consent of the majority Bondholders, with the exception of the Project, undertake or be involved in any other activities including the future packages of the flood mitigation works of Sungai Perai and Sungai Muda and their tributaries which have yet to be awarded by the Government unless RAM confirms that RSB s undertaking of the new activities will not result in a downgrade to the A1 rating; RAM receives documentary evidence that RSB s shareholders funds has been increased to a minimum RM7,000,000 prior to drawdown of the Al-Bai Bithaman Ajil Bonds, and that the debt to equity ratio of 80 : 20 is to be maintained at all times. 16. Form and Denomination The Al-Bai Bithaman Ajil Bonds shall be issued in accordance with the (i) Code of Conduct and Market Practices for the Malaysian Corporate Bond Market issued by Institut Peniaga Bon Malaysia and approved by BNM; and (ii) the Rules On The Scripless Securities Under The Real Time Electronic Transfer of Funds and Securities (RENTAS) System issued by Page 8 of 15

9 BNM, or their respective replacements (collectively, the Code of Conduct ), applicable from time to time. The Al-Bai Bithaman Ajil Bonds shall be represented by global certificates to be deposited with BNM and are exchangeable for definitive certificates only in certain limited circumstances. The Al-Bai Bithaman Ajil Bonds when represented by global certificates shall be traded scripless under the RENTAS System and in denominations of RM1,000, or multiples thereof and subject to the Rules on the Fully Automated System for Issuing/Tendering ( FAST ) issued by BNM. 17. Mode of Issue Bought deal arrangement without prospectus to be entered between RSB and the Primary Subscribers. 18. Selling Restrictions The Al-Bai Bithaman Ajil Bonds shall be tradeable in the secondary market on a willing-buyer willing-seller basis. The Al-Bai Bithaman Ajil Bonds shall not be offered, sold, transferred or otherwise disposed, directly or indirectly, nor any document or other material in connection therewith distributed, in Malaysia, other than to such persons falling within any one of the categories of persons specified in Section 4(6) of the Companies Act Each Bondholder shall not sell, transfer or otherwise dispose of all or any part of its legal or beneficial interests in the Bonds to another person or persons nor offer to do so, unless such sale, transfer, disposal or offer, is subject to the condition that such person(s) shall undertake to observe the restrictions set out herein. Without limitation to paragraphs and above, each Bondholder shall observe all applicable laws and regulations in any jurisdiction (including Malaysia) in which it may offer, sell, transfer or otherwise dispose of all or any part of its legal or beneficial interests in the Bonds or distribute any document or other material in connection therewith. 19. Listing Status The Al-Bai Bithaman Ajil Bonds will not be listed. 20. Minimum Level of Subscription (RM or %) 100% 21. Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained Page 9 of 15

10 None 22. Additional information for Islamic PDS Islamic principle: Syariah principle of Al-Bai Bithaman Ajil Description on the Issue Structure In accordance with the financing procedure under the Syariah principle of Al-Bai Bithaman Ajil, the Primary Subscribers shall first purchase the assets including but not limited to all the rights, title, benefit and interest of RSB under the Project document in respect of the RTB Sungai Muda Pakej 1, ( the Asset ) at the Asset Purchase Price (as hereinafter defined) on the terms of the Asset Purchase Agreement. Also, in accordance with the financing procedure under the Syariah principle of Al-Bai Bithaman Ajil, the Asset shall subsequently be sold to RSB at the Asset Sale Price (as hereinafter defined) which shall be made up of the Asset Purchase Price and profit margin imposed by the Primary Subscribers on the Asset Purchase Price on the terms of the Asset Sale Agreement. The obligation of RSB to settle the Asset Sale Price on a deferred payment basis shall be securitised through the issuance of the Al-Bai Bithaman Ajil Bonds (constituting Primary Bonds denoting the Asset Purchase Price and Secondary Bonds denoting the profit margin). RSB shall settle the Asset Sale Price by instalments over an agreed period coinciding with the maturity dates of the relevant Al-Bai Bithaman Ajil Bonds whether Primary or Secondary Bonds. The Secondary Bonds are redeemable six-monthly with the first redemption to commence six (6) months from the date of issue of the Al-Bai Bithaman Ajil Bonds. The Primary Bonds shall be redeemed at the end of the maturity period of each relevant series. Identified assets: All the rights, title, benefit and interest of RSB under the Project document in respect of the RTB Sungai Muda Pakej 1. The contract value of the works for the RTB Sungai Muda Pakej 1 based on an agreement made on 3 March 2003 between the Government of Malaysia and RSB is RM151,934, Asset Purchase Price: RM100,000, Asset Sale Price: RM124,535, Conditions Precedent Including but not limited to the following: No event of default has occurred or is continuing or will occur under any of RSB s existing contracts/agreements as a result of issuance of the Al-Bai Bithaman Ajil Bonds; Certified true copy of the Board of Directors Resolution authorizing the issuance of the Al-Bai Bithaman Ajil Bonds, the acceptance of the facility, the appointment of authorized signatories to accept and operate the facility, to execute the relevant documents relating to the Al-Bai Bithaman Ajil Bonds and the opening of the Designated Accounts; Page 10 of 15

11 The Project document relating to the RTB Sungai Muda Pakej 1 is in full force and effect with all conditions precedent thereto having been satisfied; Receipt of documentary evidence from the Government confirming that the date for completion of the RTB Sungai Muda Pakej 1 has been deferred to January 2006; (e) Receipt of certified true copies of RSB s latest forms 24, 44 and 49; (f) (g) (h) (i) (j) Duly executed security documents and evidence of all appropriate filings and presentations with respect thereto; A statement from Southern Bank Berhad, confirming the amount outstanding, not being an amount exceeding RM8,500,000; A statement from the relevant financial institution providing the Issuer with PB facility for the RTB Sungai Muda Pakej 1 of the amount that was deposited as cash security in order to secure such PB facility; A statement from the Issuer s auditors confirming the amounts received and paid relating to the RTB Sungai Muda Pakej 1 from commencement of works to date; Incorporation of the following negative covenant in the Company s Memorandum and Articles of Association and confirmation from the Issuer s Solicitors to that effect. The condition being: The Company, shall not without the prior consent of the majority Bondholders, with the exception of the Project, undertake or be involved in any other activities including the future packages of the flood mitigation works of Sungai Perai and Sungai Muda and their tributaries which have yet to be awarded by the Government UNLESS the following conditions are satisfied: (i) (ii) (iii) No arrears in the debt servicing of the Al-Bai Bithaman Ajil Bonds; and The Debt Service Cover Ratio or DSCR is not less than or would be less than 2X if recalculated taking into account the schedule of repayment of any new borrowing that the Issuer may incur in order to finance the new projects; and The rating agency s confirmation that any additional borrowing raised to finance the new activities or the Issuer s undertaking of the new projects will not result in a rating downgrade of the Al-Bai Bithaman Ajil Bonds of A1; (k) (l) (m) (n) (o) Signing and execution of the subcontract agreement between RSB and See Song & Sons Sdn Bhd in relation to works to be executed for the RTB Sungai Muda Pakej 1 in form and substance acceptable to RAM and the Arranger; Increase in the shareholders funds of the Company to a minimum of RM7,000,000 either through the injection of equity or advances made by shareholders to the Company; The obtaining of all consents, acknowledgements or endorsements in relation to the security interests granted over the Designated Accounts; Receipt of all documents evidencing the establishment of the Designated Accounts; Satisfactory legal opinion from the primary subscriber s legal counsel as to the validity and enforceability of the financing documents; Page 11 of 15

12 (p) (q) (r) (s) (t) RSB has certified to the Lead Arranger that there is no outstanding and unpaid debt apart from the facility which will be issued and bank borrowings which have been disclosed to the Lead Arranger prior to the issuance of the Al-Bai Bithaman Ajil Bonds; All necessary corporate and other required approvals and authorisation and consents shall have been secured with respect to the Al-Bai Bithaman Ajil Bonds facility; All Representations and Warranties remain true and correct; A minimum rating of A1 by RAM; Receipt of the approval of the Securities Commission of Malaysia; Such other conditions as may be advised by the Issuer s Solicitors and the Lead Arranger s Solicitors. 24. Representations and Warranties Representations and warranties typical of such issues including but not limited to the following: (e) All necessary actions, authorisations and consents required by that date under the financing documents and Project documents have been taken, fulfilled and obtained and remain in full force and effect; The financing documents and Project documents create valid and binding obligations which are enforceable on and against RSB and in respect to the Project documents enforceable against each of the parties thereto; There has been no material adverse change in the financial or operations of the Company since the date on which its last financial year ended; All information furnished in connection with the Company and the Project documents to the best of the Company s knowledge and belief, do not contain any untrue statement or omit to state any fact the omission of which makes any statement made therein misleading, and the Company is not aware of any material facts or circumstances that have not been disclosed to the Lead Arranger which might, if disclosed, adversely affect the decision of a person considering whether or not to provide finance to the Company; The Company has fully disclosed in writing to the Lead Arranger all facts relating to the Company, the Project documents which the Company knows or should reasonably know and which are material for disclosure to the Lead Arranger in the context of the Al-Bai Bithaman Ajil Bonds facility, subject to an agreed materiality test. 25. Events of Default Page 12 of 15

13 Such standard events of default for a facility of this nature and such other events of default as the Issuer s Solicitors and Lead Arranger s Solicitors may consider necessary for giving effect to the terms herein. The following shall become an automatic event of default: the Issuer fails to pay, when due, any sum payable by it in accordance with the terms of the Al-Bai Bithaman Ajil Bonds facility. The Bondholders shall have the right to declare Event of Default if one or more of the following events should occur: (e) (f) (g) (h) (i) (j) RSB fails to observe or perform any of its respective obligations under the financing documents and which is capable of being remedied and is not remedied to the satisfaction of the Trustee within the time frame stipulated and such failure has a material adverse effect; Termination of any financing and Project documents in relation to the RTB Sungai Perai Pakej 1B and 2 and RTB Sungai Muda Pakej 1; The making of any representation and warranty which is incorrect in any material respect; Cessation or change in the authorised business; Termination of any licenses, permits and approvals that may have a material adverse effect on the ability of RSB to repay its obligations; A scheme of arrangement under Section 176 of the Companies Act 1965 has been instituted against RSB; A receiver has been appointed over the whole or a substantial part of the assets of RSB; Usual cross default clauses for issues of this nature; RSB fails to observe or perform any of its respective obligations under the Project documents; If any of the security interests created cannot be perfected for whatever reason. Any other events as may be advised by the Issuer s Solicitors and Lead Arranger s Solicitors. 26. Principal terms and conditions for warrants (where applicable) Not applicable 27. Other principal terms and conditions for the issue Conditions Precedent to Utilization: Representations and warranties still remain true and correct; Page 13 of 15

14 (e) No event of default has occurred or shall occur; RSB is in compliance of its financial covenant relating to the Debt to Equity ( DE ) ratio (as hereinafter defined) obligation; and Reaffirmation of the initial rating in the event that the Al-Bai Bithaman Ajil Bonds proceeds (arising from subsequent withdrawals from the Disbursement Account) are to be utilized for the RTB Sungai Perai Pakej 1B and 2; and Such other conditions as may be advised by the Issuer s Solicitors and Lead Arranger s Solicitors. DE Ratio : RSB shall maintain a DE ratio equal to or less than 80 : 20 at all times. DE ratio is defined as the ratio of all outstanding obligations of RSB including the principal amount payable under the Al-Bai Bithaman Ajil Bonds (represented by the Primary Bonds) (other than advances) to shareholders funds with equity or shareholders advances to be contributed on a pro-rata basis with the Al-Bai Bithaman Ajil Bonds drawn/utilized from the Disbursement Account. Shareholders funds shall include paid-up capital, share premium, shareholders advances and retained earnings. Permitted Investments The Issuer shall be permitted from time to time to utilise funds held in the Designated Accounts with the exception of any credit balance in the Disbursement Account to make Permitted Investments, provided that such funds utilised for Permitted Investments shall be remitted to the Designated Accounts in a timely manner to meet any payment obligations of the Issuer when due and payable. The Permitted Investments shall have an earlier maturity date by at least one (1) month prior to the date when monies will be needed for Project payments and debt servicing. Such Permitted Investments are to be held and not traded. Permitted Investments mean: (e) Mudharabah, wadiah and other deposits under the Syariah principles with licensed financial institutions; or bankers acceptances, bills and other money market instruments issued under Syariah principles by licensed financial institutions; or treasury bills, money market instruments, and other debt instruments issued under Syariah principles by the Government; or debt securities issued under Syariah principles by quasi Government or Government related entities with a minimum short rating of P1 or MARC-1 and long term rating of AA or debt securities guaranteed under the Syariah principles by the Government; or private debt securities issued by corporations, financial institutions or guaranteed by financial institutions with a minimum short term rating of P1 or MARC-1 and long term rating of AA under Syariah principles; and denominated in Ringgit Malaysia. Page 14 of 15

15 Credit balance in the Disbursement Account shall only be permitted for the following investments: Mudharabah, wadiah and other deposits under the Syariah principles with licensed financial institutions; or bankers acceptances, bills and other money market instruments issued under Syariah principles by licensed financial institutions; or treasury bills, money market instruments, and other debt instruments issued under Syariah principles by the Government. Page 15 of 15