UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia)

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from, or in reliance upon the whole or any part of the contents of this Circular. The Securities Commission Malaysia ( SC ) has notified that it has no further comments to the contents of the independent advice letter ( IAL ) for the Proposed Exemption (as defined herein) pursuant to Paragraph 4.08(3)(e) of Rule 4, Part B of the Rules on Take-overs, Mergers and Compulsory Acquisitions ( Rules ). However, such notification shall not be taken to suggest that the SC agrees with the recommendation of the independent adviser or assumes responsibility for the correctness of any statements made or opinions or reports expressed in the IAL. (I) (II) (III) (IV) UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PART A PROPOSED RENOUNCEABLE RIGHTS ISSUE OF UP TO 6,053,600,000 NEW ORDINARY SHARES IN UMW OIL & GAS CORPORATION BERHAD ( UMW-OG ) ( RIGHTS SHARES ) AT AN ISSUE PRICE OF RM0.30 PER RIGHTS SHARE ON THE BASIS OF FOURTEEN (14) RIGHTS SHARES FOR EVERY FIVE (5) ORDINARY SHARES IN UMW-OG ( UMW-OG SHARES ) HELD AT AN ENTITLEMENT DATE TO BE DETERMINED LATER TOGETHER WITH UP TO 1,513,400,000 FREE DETACHABLE WARRANTS ( WARRANTS ) ON THE BASIS OF ONE (1) WARRANT FOR EVERY FOUR (4) RIGHTS SHARES SUBSCRIBED; PROPOSED ISSUANCE OF UP TO 4,847,539,594 NEW ISLAMIC REDEEMABLE CONVERTIBLE PREFERENCE SHARES IN UMW-OG ( RCPS-i ) TO BE SUBSCRIBED AT A SUBSCRIPTION PRICE OF RM0.30 PER RCPS-i BY PERMODALAN NASIONAL BERHAD ( PNB ), AND IF APPLICABLE, AMANAH SAHAM BUMIPUTERA ( ASB ) AND/OR OTHER FUNDS UNDER PNB S MANAGEMENT TOGETHER WITH UP TO 1,211,884,898 WARRANTS ON THE BASIS OF ONE (1) WARRANT FOR EVERY FOUR (4) RCPS-i SUBSCRIBED; PROPOSED EXEMPTION FOR PNB, ASB AND PERSONS ACTING IN CONCERT WITH THEM FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR ALL THE REMAINING UMW-OG SHARES AND WARRANTS NOT ALREADY OWNED BY THEM PURSUANT TO PARAGRAPHS 4.08(1)(B) AND 4.08(1)(C) OF RULE 4, PART B OF THE RULES; AND PROPOSED AMENDMENT TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF UMW-OG S CONSTITUTION PART B INDEPENDENT ADVICE LETTER FROM MERCURY SECURITIES SDN BHD TO THE NON-INTERESTED SHAREHOLDERS OF UMW-OG IN RELATION TO THE PROPOSED EXEMPTION AND NOTICE OF EXTRAORDINARY GENERAL MEETING Principal Adviser Independent Adviser The Notice of Extraordinary General Meeting ( EGM ) of UMW-OG in relation to the above proposals and the Form of Proxy are enclosed in this Circular. The EGM will be held at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, Kuala Lumpur, Malaysia on Friday, 25 August 2017 at 3.00 p.m., or any adjournment thereof. If you are unable to attend and vote in person at the EGM, you may appoint a proxy to attend and vote on your behalf. If you wish to do so, you must complete and deposit the Form of Proxy at the registrar s office, Securities Services (Holdings) Sdn Bhd at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia not later than twenty-four (24) hours before the time appointed for the taking of the poll or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently decide to do so. Last date and time for lodging the Form of Proxy : Thursday, 24 August 2017 at 4.00 p.m. (being the approximate time appointed for the taking of the poll at the EGM) Date and time of the EGM : Friday, 25 August 2017 at 3.00 p.m. This Circular is dated 3 August 2017 Mercury Securities Sdn Bhd ( W) (A Participating Organisation of Bursa Malaysia Securities Berhad)

2 DEFINITIONS The following definitions apply throughout this Circular unless the context requires otherwise: Act : Companies Act, 2016 Announcement LPD : 28 April 2017, being the latest practicable date prior to UMW-OG s announcement on 4 May 2017 in relation to the Proposals ART-ASB : AmanahRaya Trustees Berhad - Amanah Saham Bumiputera ASB : Amanah Saham Bumiputera ASEAN : Association of Southeast Asian Nations ASG : Amanah Saham Gemilang, the umbrella fund for ASG-Pendidikan, ASG-Kesihatan and ASG-Persaraan BFAR : Encik Badrul Feisal bin Abdul Rahim BNM : Bank Negara Malaysia Board : Board of Directors of UMW-OG Bursa Depository : Bursa Malaysia Depository Sdn Bhd Bursa Securities : Bursa Malaysia Securities Berhad Circular : This circular to the shareholders of the Company in relation to the Proposals dated 3 August 2017 CMSA : Capital Markets & Services Act, 2007 Collective Shareholding : The collective shareholding of PNB, ASB and the Funds in UMW-OG Collective Shareholding Threshold : The threshold of the Collective Shareholding of 65% of the enlarged issued share capital of UMW-OG upon the subscription of their respective entitlements and applications for the Excess Rights Shares, if any Constitution : The memorandum and articles of association of UMW-OG s constitution Conversion Period Conversion Ratio : Any time from the date of issuance of the RCPS-i up to the day immediately preceding the fifth (5 th ) anniversary from the date of issuance : Conversion ratio for the RCPS-i of one (1) new UMW-OG Share for one (1) RCPS-i, subject to adjustments to be determined by the Board in the event of any alteration to the Company s share capital Conversion Shares : New UMW-OG Shares to be issued upon conversion of the RCPS-i DAR : Dato Abdul Rahman bin Ahmad Deed Poll : The deed poll constituting the Warrants to be executed by the Company i

3 DEFINITIONS (Cont d) Distribution : Distribution of 1,204,777,400 UMW-OG Shares, being the entire shareholding of UMWH in UMW-OG, on the basis of UMW-OG Shares for every one (1) share held in UMWH to the entitled shareholders of UMWH by way of a reduction to the issued share capital of UMWH by RM704,759,950, which was completed on 11 July 2017 Drilling Services : Provision of drilling services for exploration, development and production wells through the Company s fleet of offshore drilling rigs and provision of workover services through its hydraulic workover units EGM : Extraordinary general meeting Entitled Shareholders : Shareholders of UMW-OG whose names appear in the Record of Depositors of UMW-OG on the Entitlement Date Entitlement Date : A date to be determined and announced later by the Board, on which the names of the shareholders of the Company must appear in the Record of Depositors of the Company as at 5.00 p.m. in order to be entitled to participate in the Proposed Rights Issue With Warrants EPF : Employees Provident Fund Board EPS : Earnings per UMW-OG Share Excess Rights Shares : Rights Shares not taken up or not validly taken up by the Entitled Shareholders and/or their renouncee(s) prior to excess application Exercise Price : The exercise price of the Warrants of RM0.395 per Warrant Exercised Shares : New UMW-OG Shares to be issued upon exercise of the Warrants Foreign Addressed Shareholders : Entitled Shareholders who have not provided an address in Malaysia for the service of documents to be issued for purposes of the Proposed Rights Issue With Warrants Funds : Funds under PNB s management, namely Amanah Saham Wawasan 2020, Amanah Saham Malaysia, Amanah Saham 1Malaysia, Amanah Saham Didik, Amanah Saham Bumiputera 2, Amanah Saham Nasional, Amanah Saham Nasional 2, Amanah Saham Nasional 3 Imbang, ASG and Yayasan Tun Ismail Mohamed Ali (Berdaftar), other than ASB Funds RCPS-i : The number of RCPS-i to be offered to ASB and/or the Funds for subscription, equivalent to the number of Rights Shares not being able to be subscribed by ASB and/or the Funds (based on ASB and/or the Funds respective entitlements and applications of the Excess Rights Shares, if any) as a consequence of the Collective Shareholding Threshold FYE : Financial year ended/ending, as the case may be IAL : Independent advice letter Implied Conversion Price : The implied conversion price for the RCPS-i of RM0.30 for every new UMW-OG Share Intended Gross Proceeds : The intended gross proceeds of RM1,816,080,000 to be raised by the Company from the Proposed Rights Issue With Warrants and if applicable, the Proposed Subscription ii

4 DEFINITIONS (Cont d) KWAP : Kumpulan Wang Persaraan (Diperbadankan) Listing Requirements : Main Market Listing Requirements of Bursa Securities LPD : 30 June 2017, being the latest practicable date prior to the printing of this Circular Maybank IB or Principal Adviser Maybank Islamic or Shariah Adviser : Maybank Investment Bank Berhad : Maybank Islamic Berhad Mandatory Offer : The obligation of PNB, ASB and the PACs to undertake a mandatory take-over offer to acquire: (i) (ii) all the remaining UMW-OG Shares and Warrants not already owned by them after the Proposed Rights Issue With Warrants; and/or all the remaining UMW-OG Shares following the exercise of the Warrants during the tenure of the Warrants and/or the conversion of the RCPS-i during the tenure of the RCPS-i Market Day : A day on which the stock market of Bursa Securities is open for trading in securities Mercury Securities or Independent Adviser : Mercury Securities Sdn Bhd, the independent adviser for the Proposed Exemption NA : Net assets Non-Interested Entitled Shareholders : Being the Entitled Shareholders other than PNB, ASB, Amanah Saham Wawasan 2020, Amanah Saham Malaysia, Amanah Saham 1Malaysia, Amanah Saham Didik, Amanah Saham Bumiputera 2, Amanah Saham Nasional, Amanah Saham Nasional 2, Amanah Saham Nasional 3 Imbang and ASG O&G : Oil and gas Oilfield Services : Provision of threading, inspection and repair services for oil country tubular goods, focusing on premium connections used in high-end and complex wells OPEC : Organisation of the Petroleum Exporting Countries PAC Group : PNB, ASB and the PACs PACs : Persons deemed to be acting in concert with PNB and ASB in accordance with Sections 216(2) and/or 216(3) of the CMSA, namely UMWH and the Funds PNB : Permodalan Nasional Berhad Proposals : Collectively, the Proposed Rights Issue With Warrants, the Proposed Subscription, the Proposed Exemption and the Proposed Amendment Proposed Amendment : Proposed amendment to the Constitution iii

5 DEFINITIONS (Cont d) Proposed Exemption Proposed Funds Subscription Proposed PNB Subscription Proposed Rights Issue With Warrants : Proposed exemption to the PAC Group from the obligation to undertake the Mandatory Offer pursuant to Paragraphs 4.08(1)(b) and 4.08(1)(c) of Rule 4, Part B of the Rules : Proposed issuance of the Funds RCPS-i to be subscribed by ASB and/or the Funds at the Subscription Price together with Warrants on the basis of one (1) Warrant for every four (4) RCPS-i subscribed : Proposed issuance of up to 4,847,539,594 new RCPS-i to be subscribed by PNB at the Subscription Price together with up to 1,211,884,898 Warrants on the basis of one (1) Warrant for every four (4) RCPS-i subscribed : Proposed renounceable rights issue of up to 6,053,600,000 Rights Shares at the Rights Issue Price on the basis of fourteen (14) Rights Shares for every five (5) UMW-OG Shares held on the Entitlement Date together with up to 1,513,400,000 Warrants on the basis of one (1) Warrant for every four (4) Rights Shares subscribed Proposed Subscription : Proposed issuance of up to 4,847,539,594 new RCPS-i to be subscribed at the Subscription Price by PNB, ASB and/or the Funds together with up to 1,211,884,898 Warrants on the basis of one (1) Warrant for every four (4) RCPS-i subscribed pursuant to the Proposed PNB Subscription and, if applicable, the Proposed Funds Subscription RCPS-i : Islamic redeemable convertible preference shares in UMW-OG RCPS-i Undertaking : The undertaking from PNB to subscribe for such amounts of new RCPS-i to be issued pursuant to the Proposed PNB Subscription, after the Proposed Rights Issue With Warrants and if applicable, the Proposed Funds Subscription, so as to ensure that UMW-OG will be able to raise the Intended Gross Proceeds Record of Depositors : A record provided by Bursa Depository pursuant to Chapter 24 of the Rules of Bursa Depository Rights Issue Price : The issue price of RM0.30 per Rights Share Rights Issue Undertakings : The irrevocable undertakings from PNB to subscribe in full its entitlement to the Rights Shares based on its shareholding as at the Entitlement Date (including any increase in its entitlement arising from the increase in PNB s shareholding in UMW-OG as a result of the Distribution from the date of the Undertakings and Subscription Letter), and to apply for all the remaining Excess Rights Shares via excess application, pursuant to the Undertakings and Subscription Letter Rights Shares : New UMW-OG Shares to be issued pursuant to the Proposed Rights Issue With Warrants Rules : Rules on Take-Overs, Mergers and Compulsory Acquisitions SC : Securities Commission Malaysia Scenario I : Assuming all the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants iv

6 DEFINITIONS (Cont d) Scenario II : Assuming none of the Entitled Shareholders subscribes for their respective entitlements under the Proposed Rights Issue With Warrants other than PNB such that the Collective Shareholding after the Proposed Rights Issue With Warrants will be 65%, and the remaining amount of proceeds to enable the Intended Gross Proceeds to be raised will be via the Proposed PNB Subscription Shareholder Loan : The intercompany loan provided by UMWH to UMW-OG amounting to RM308 million on 2 June 2016 Shariah Pronouncement Letter : Pronouncement letter issued by the Shariah Adviser in relation to the RCPS-i Subscription Price : The subscription price of RM0.30 per RCPS-i TERP : Theoretical ex-rights price UMW-OG or Company : UMW Oil & Gas Corporation Berhad UMW-OG Group or Group : Collectively, UMW-OG and its subsidiaries UMW-OG Shares : Ordinary shares in UMW-OG UMWH : UMW Holdings Berhad UMWH Group : Collectively, UMWH and its subsidiaries Undertakings and Subscription Letter : Letter dated 9 June 2017 issued by PNB and accepted by UMW-OG in relation to, amongst others, the Rights Issue Undertakings and the Proposed PNB Subscription United States or U.S. : The United States of America VWAMP : Volume weighted average market price Warrants : Free detachable warrants in UMW-OG to be issued pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription (if applicable) YPB : Yayasan Pelaburan Bumiputra CURRENCIES RM and sen : Ringgit Malaysia and sen USD : United States Dollar All references to you in this Circular are to the shareholders of the Company. Unless specifically referred to, words denoting the singular shall, where applicable, include the plural and vice versa, and words denoting the masculine gender shall, where applicable, include the feminine and/or neuter genders, and vice versa. Reference to persons shall include corporations, unless otherwise specified. Any reference to any enactment, code, rules, regulations and guidelines in this Circular is a reference to that enactment, code, rules, regulations and guidelines as amended or re-enacted from time to time. Any discrepancy in the figures included in this Circular between the amounts stated and the totals thereof are due to rounding. v

7 DEFINITIONS (Cont d) Any reference to a time of day in this Circular is a reference to Malaysian time, unless otherwise stated. This Circular includes forward-looking statements. All statements other than statements of historical facts included in this Circular including, without limitation, those regarding the Group s financial position, business strategies, prospects, plans and objectives of the Company for future operations, are forward-looking statements. There can be no assurance that such forward-looking statements will materialise, be fulfilled or be achieved. vi

8 CONTENTS PAGE PART A LETTER FROM THE BOARD TO THE SHAREHOLDERS OF UMW-OG IN RELATION TO THE PROPOSALS: 1. INTRODUCTION DETAILS OF THE PROPOSED RIGHTS ISSUE WITH WARRANTS DETAILS OF THE PROPOSED SUBSCRIPTION DETAILS OF THE PROPOSED EXEMPTION DETAILS OF THE PROPOSED AMENDMENT USE OF PROCEEDS RATIONALE FOR THE PROPOSALS INDUSTRY OVERVIEW AND PROSPECTS EFFECTS OF THE PROPOSALS APPROVALS REQUIRED INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM DIRECTORS RECOMMENDATION TENTATIVE TIMETABLE HISTORICAL SHARE PRICES CORPORATE EXERCISE/SCHEME ANNOUNCED BUT PENDING COMPLETION EGM FURTHER INFORMATION PART B IAL FROM MERCURY SECURITIES TO THE NON-INTERESTED SHAREHOLDERS OF UMW-OG IN RELATION TO THE PROPOSED EXEMPTION vii

9 CONTENTS (Cont d) APPENDICES PAGE I SALIENT TERMS OF THE WARRANTS 136 II SALIENT TERMS OF THE RCPS-i 137 III DETAILS OF THE PROPOSED AMENDMENT 140 IV SHARIAH PRONOUNCEMENT LETTER 145 V FURTHER INFORMATION 151 NOTICE OF EGM FORM OF PROXY ADMINISTRATIVE GUIDE ENCLOSED ENCLOSED ENCLOSED viii

10 PART A LETTER FROM THE BOARD TO THE SHAREHOLDERS OF UMW-OG IN RELATION TO THE PROPOSALS

11 UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) Registered Office Level 18, Block 3A, Plaza Sentral Jalan Stesen Sentral Kuala Lumpur Malaysia Board of Directors Dato Abdul Rahman bin Ahmad (Chairman, Non-Independent Non-Executive Director) Rohaizad bin Darus (President, Non-Independent Executive Director) Razalee bin Amin (Independent Non-Executive Director) Dato Afifuddin bin Abdul Kadir (Senior Independent Non-Executive Director) Cheah Tek Kuang (Independent Non-Executive Director) Dato Ibrahim bin Marsidi (Independent Non-Executive Director) Mohd Rashid bin Mohd Yusof (Independent Non-Executive Director) Rowina Ghazali Seth (Independent Non-Executive Director) Haida Shenny binti Hazri (Non-Independent Non-Executive Director) To : The Shareholders of UMW-OG 3 August 2017 Dear Sir/Madam, (I) (II) (III) (IV) PROPOSED RIGHTS ISSUE WITH WARRANTS; PROPOSED SUBSCRIPTION; PROPOSED EXEMPTION; AND PROPOSED AMENDMENT 1. INTRODUCTION On 4 May 2017, Maybank IB, on behalf of the Board, announced that UMW-OG intends to undertake the following: (i) (ii) (iii) Proposed Rights Issue With Warrants; Proposed PNB Subscription; and Proposed Amendment. In the same announcement, it was also announced that in conjunction with the Proposed Rights Issue With Warrants, an exemption from the SC will be sought by the PAC Group under Paragraph 4.08(1)(b) of Rule 4, Part B of the Rules from the obligation to undertake the Mandatory Offer. 1

12 Subsequently on 9 June 2017, Maybank IB, on behalf of the Board, announced that PNB had on 9 June 2017 issued and UMW-OG had on even date accepted the Undertakings and Subscription Letter providing, amongst others, the Rights Issue Undertakings which are subject to the Collective Shareholding Threshold. The threshold of 65% to the Collective Shareholding of the enlarged issued share capital of UMW-OG upon the subscription of the PAC Group s respective entitlements and/or applications for the Excess Rights Shares was arrived at after taking into consideration the following: (i) (ii) public shareholding spread requirement of 25% pursuant to Paragraph 8.02(1) of the Listing Requirements; and potential emergence of other non-public shareholders following the Proposed Rights Issue With Warrants where, based on the Collective Shareholding Threshold of 65%, up to 10% of the enlarged issued share capital of UMW-OG can be in the hands of these new non-public shareholders without UMW-OG falling below the public shareholding spread requirement of 25%. As at the LPD, the public shareholding spread of the Company is approximately 35.2%. In the event that UMW-OG is unable to raise the Intended Gross Proceeds from the Proposed Rights Issue With Warrants as a result of the Rights Issue Undertakings being subject to the Collective Shareholding Threshold, PNB has further undertaken, via the Undertakings and Subscription Letter, to subscribe for up to 4,847,539,594 new RCPS-i together with up to 1,211,884,898 Warrants pursuant to the RCPS-i Undertaking so as to ensure that UMW-OG will be able to raise the Intended Gross Proceeds. In the same announcement, it was further announced that in view of the Collective Shareholding Threshold, the Company proposes to undertake the Proposed Funds Subscription to allow the RCPS-i to be offered to ASB and/or the Funds to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. For the avoidance of doubt, in view of the RCPS-i Undertaking, in the event the Proposed Funds Subscription is applicable, ASB and/or the Funds will be offered the RCPS-i prior to such offer being made to PNB. Thereafter, PNB shall subscribe for such number of RCPS-i in order to raise the Intended Gross Proceeds. Further to the above, the Company has been notified that the PAC Group intends to seek exemption from the obligation to undertake a Mandatory Offer in relation to the exercise of any conversion or subscription rights or options into new voting shares or voting rights pursuant to Paragraph 4.08(1)(c) of Rule 4, Part B of the Rules. Mercury Securities Sdn Bhd has been appointed by UMW-OG pursuant to the Rules to act as the Independent Adviser to the non-interested Directors and non-interested shareholders of UMW-OG on the Proposed Exemption. On 23 June 2017, Maybank IB, on behalf of the Board, announced that Bursa Securities had, vide its letter dated 22 June 2017, approved the following: (i) (ii) (iii) admission to the Official List of Bursa Securities and the listing and quotation of up to 1,513,400,000 new Warrants to be issued pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription (if applicable); listing and quotation of up to 6,053,600,000 new UMW-OG Shares to be issued pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription (if applicable) on the Main Market of Bursa Securities; and listing and quotation of up to 1,513,400,000 new UMW-OG Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities, subject to the conditions set out in Section 10 of Part A of this Circular. 2

13 Based on the foregoing, the total number of Rights Shares, RCPS-i and Warrants to be issued under Scenario I and Scenario II will be as follows: Maximum no. of Rights Shares Maximum no. of Warrants attached to the Rights Shares Maximum no. of RCPS-i Maximum no. of Warrants attached to the RCPS-i Maximum no. of new UMW-OG Shares assuming full exercise of Warrants and conversion of RCPS-i Scenario I 6,053,600,000 1,513,400, ,567,000,000 Scenario II 1,206,060,406 (1) 301,515,101 4,847,539,594 1,211,884,898 (1) 7,566,999,999 Note: (1) Due to the entitlement basis of the Warrants, one (1) less Warrant will be allotted under Scenario II compared to Scenario I. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE DETAILS OF THE PROPOSALS AND TO SEEK YOUR APPROVAL FOR THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF EGM TOGETHER WITH THE FORM OF PROXY ARE ENCLOSED IN THIS CIRCULAR. YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR AND THE IAL FROM MERCURY SECURITIES AS SET OUT IN PART B OF THIS CIRCULAR BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE PROPOSALS TO BE TABLED AT THE FORTHCOMING EGM. 2. DETAILS OF THE PROPOSED RIGHTS ISSUE WITH WARRANTS 2.1 Background information on the Proposed Rights Issue With Warrants The Proposed Rights Issue With Warrants entails the issuance by the Company of up to 6,053,600,000 Rights Shares together with up to 1,513,400,000 Warrants to the Entitled Shareholders at the Rights Issue Price on the basis of fourteen (14) Rights Shares for every five (5) UMW-OG Shares held by the Entitled Shareholders on the Entitlement Date. The Warrants shall be issued free to the Entitled Shareholders and/or their renouncee(s) who subscribe for the Right Shares on the basis of one (1) Warrant for every four (4) Rights Shares subscribed. The basis for the Warrants was determined after taking into consideration the proceeds that can be raised from the potential exercise of the Warrants. The Rights Shares will be provisionally allotted to the Entitled Shareholders. In determining shareholders entitlements under the Proposed Rights Issue With Warrants, fractional entitlements, if any, will be disregarded and dealt with in such manner as the Board in its absolute discretion deems fit and expedient, and in the best interest of the Company. The Proposed Rights Issue With Warrants is renounceable in full or in part. Accordingly, the Entitled Shareholders can subscribe for and/or renounce their entitlements to the Rights Shares in full or in part. The renunciation of the Rights Shares by the Entitled Shareholders will entail the renunciation of the Warrants to be issued together with the Rights Shares. However, if the Entitled Shareholders decide to accept only part of their Rights Shares entitlements, they shall be entitled to the Warrants in the proportion of their acceptance of their Rights 3

14 Shares entitlements. For the avoidance of doubt, the Rights Shares and the Warrants are not separately renounceable. The actual number of Warrants to be issued pursuant to the Proposed Rights Issue With Warrants will depend on the total number of Rights Shares subscribed by the Entitled Shareholders. As at the LPD, the total number of UMW-OG Shares in issue is 2,162,000,000. Assuming the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants, a total of 1,513,400,000 Warrants will be issued. Assuming full exercise of all the Warrants issued pursuant to the Proposed Rights Issue With Warrants, a total of 1,513,400,000 new UMW-OG Shares will be issued. The salient terms of the Warrants are set out in Appendix I of this Circular. 2.2 Basis and justification for the Rights Issue Price and Exercise Price Rights Issue Price The Rights Issue Price represents a discount of approximately 24.05% to the TERP of UMW-OG Shares of RM0.395 based on the five (5)-day VWAMP of UMW-OG Shares up to and including the Announcement LPD of RM0.66. The Rights Issue Price was determined after taking into consideration the following: (i) (ii) (iii) prevailing market price of the UMW-OG Shares; TERP of UMW-OG Shares of RM0.395; and prevailing market conditions which include, among others, market sentiment and performance of the Malaysian stock market. As at the Announcement LPD, the FTSE Bursa Malaysia KLCI Index stood at 1, The Board is of the opinion that the discount is reasonably attractive to encourage the Entitled Shareholders to subscribe for their respective entitlements under the Proposed Rights Issue With Warrants Exercise Price The Exercise Price is based on the TERP of UMW-OG Shares of RM0.395 which was arrived at based on the five (5)-day VWAMP of UMW-OG Shares up to and including the Announcement LPD of RM0.66, and was determined after taking into consideration, among others, the potential proceeds from the exercise of the Warrants towards meeting the future funding requirements of the UMW-OG Group and the expected timing of such requirements over the next seven (7) years. 2.3 Ranking of the Rights Shares and Exercised Shares The Rights Shares will, upon allotment and issuance, rank equally in all respects with the existing UMW-OG Shares except that they will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of the Rights Shares. The Exercised Shares will, upon allotment and issuance, rank equally in all respects with the existing UMW-OG Shares except that they will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of the Exercised Shares. 4

15 2.4 Listing and quotation of the Rights Shares, Warrants and Exercised Shares Bursa Securities had, vide its letter dated 22 June 2017, granted its approval for the listing and quotation of the Rights Shares, Warrants and Exercised Shares on the Main Market of Bursa Securities, subject to the conditions set out in Section 10 of Part A of this Circular. 2.5 Allocation of Excess Rights Shares The Rights Shares which are not taken up or not validly taken up will be made available for excess application by the Entitled Shareholders and/or their renouncee(s). In this regard, AmanahRaya Trustees Berhad (being the trustee and the registered legal owner of the UMW-OG Shares held by ASB, Amanah Saham Wawasan 2020, Amanah Saham Malaysia, Amanah Saham 1Malaysia, Amanah Saham Didik, Amanah Saham Bumiputera 2, Amanah Saham Nasional, Amanah Saham Nasional 2, Amanah Saham Nasional 3 Imbang and ASG) had on 25 July 2017 notified the Board that since the Proposed Funds Subscription is only being offered to ASB and the Funds, AmanahRaya Trustees Berhad has no objection to UMW-OG giving priority to the other Entitled Shareholders and their renouncee(s) with regards to the allocation of the Excess Rights Shares such that those Funds whose UMW-OG Shares are registered under AmanahRaya Trustees Berhad are allocated their Excess Rights Shares only after all the other Entitled Shareholders and their renouncee(s) who have applied for Excess Rights Shares have been allocated their Excess Rights Shares. Further, in view of the Rights Issue Undertakings, PNB had on 25 July 2017 notified UMW-OG that it has no objection to being allocated the balance number of the Excess Rights Shares (subject always to the Collective Shareholding Threshold) after the allocation of the Excess Rights Shares to all the other Entitled Shareholders and their renouncee(s), including the funds under its management whose UMW-OG Shares are registered under AmanahRaya Trustees Berhad. In view of the above, in determining the priority of allocation for the Excess Rights Shares, the Non-Interested Entitled Shareholders and/or their renouncee(s), if any, shall be given priority of allocation for the Excess Rights Shares applied for, if any. Following such allocation to the Non-Interested Entitled Shareholders and/or their renouncee(s), the Excess Rights Shares will then be allocated to all the remaining Entitled Shareholders and their renouncee(s) other than PNB such that PNB will only be allocated the balance number of undersubscribed Excess Rights Shares (subject always to the Collective Shareholding Threshold) after the allocation of the Excess Rights Shares to all the other Entitled Shareholders and/or their renouncee(s) based on their respective applications. For the avoidance of doubt, in the event the Company determines that the Collective Shareholding Threshold may be breached as a result of the subscription by PNB, AmanahRaya Trustees Berhad on behalf of ASB and/or the Funds for their respective entitlements of the Rights Shares and/or Excess Rights Shares, the Funds RCPS-i will be offered to ASB and/or the Funds to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. 2.6 Shareholder s undertaking and underwriting arrangement UMWH, the former holding company of UMW-OG, had on 4 May 2017 obtained the approval of its shareholders for the Distribution, details of which are set out in UMWH s circular to its shareholders dated 12 April On 13 June 2017, the High Court of Malaya granted an order confirming, amongst others, the special resolution for the Distribution. The entitlement date for the Distribution was on 5 July 2017 and the Distribution was subsequently completed on 11 July Following the Distribution, PNB, ASB and the Funds directly collectively hold approximately 983,159,866 UMW-OG Shares (excluding the 34,971 residual UMW-OG Shares held by UMWH), representing approximately 45.47% of the issued share capital 5

16 of UMW-OG, which will entitle PNB, ASB and the Funds to subscribe for approximately 45.47% of the total number of Rights Shares, or approximately 2,752,847,622 Rights Shares. The Company has obtained the Rights Issue Undertakings from PNB, via the Undertakings and Subscription Letter, which are subject to the following: (i) (ii) (iii) (iv) the Collective Shareholding not exceeding the Collective Shareholding Threshold; receipt of the Proposed Exemption; approval of UMW-OG s shareholders for the Proposals; and approval of Bursa Securities for the admission of the Warrants to the Official List of Bursa Securities and the listing and quotation of the Rights Shares, Warrants, Exercised Shares and Conversion Shares on the Main Market of Bursa Securities. PNB has also confirmed via the Undertakings and Subscription Letter that it has sufficient financial resources to fulfil its commitment under the Rights Issue Undertakings. Maybank IB has verified that PNB has sufficient financial resources to fulfil its commitment pursuant to the Rights Issue Undertakings. In the event that none of the Non-Interested Entitled Shareholders subscribe for their respective entitlements under the Proposed Rights Issue With Warrants, the PAC Group will be obliged to undertake a mandatory take-over offer for all the remaining UMW-OG Shares not already owned by them after the Proposed Rights Issue With Warrants. The PAC Group intends to seek an exemption via the Proposed Exemption, details of which are set out in Section 4 of Part A of this Circular. Assuming none of the other Entitled Shareholders subscribe for their respective entitlements under the Proposed Rights Issue With Warrants, PNB will subscribe for approximately 1,206,060,406 Rights Shares pursuant to its entitlement and allocation of the Excess Rights Shares based on its excess application up to the Collective Shareholding Threshold ( Minimum Scenario ). Under the Minimum Scenario, the amount of proceeds that will be raised by the Company will be approximately RM361.8 million only, which gives rise to a shortfall of approximately RM1,454.3 million from the Intended Gross Proceeds. PNB will subscribe for such amount of RCPS-i pursuant to the Proposed PNB Subscription to raise the remaining amount of the Intended Gross Proceeds. In view of the Rights Issue Undertakings and the Proposed PNB Subscription, UMW-OG will not procure any underwriting for the Excess Rights Shares. 2.7 Put option arrangement On 25 July 2017, PNB has further informed UMW-OG that it has been approached by potential third party investors to explore the possibility of entering into an option arrangement to place up to RM300 million in value of UMW-OG Shares together with Warrants on the basis of one (1) Warrant for every four (4) UMW-OG Shares to third party investors upon the exercise of the put option ( Put Option ). UMW-OG was further informed that based on on-going preliminary discussions and negotiations between PNB and these potential third party investors, the Put Option would only be exercisable after the Proposed Rights Issue With Warrants has been completed, at an option price of RM0.30 per UMW-OG Share which is equivalent to the Rights Issue Price. Based on these on-going preliminary discussions and negotiations, no consideration would be payable for the Warrants. If entered into and based on the indicative terms as stated above, the Put Option will entail: 6

17 (i) (ii) (iii) up to 1,000,000,000 UMW-OG Shares, representing up to approximately 16.5% of the Proposed Rights Issue With Warrants; or assuming all the Entitled Shareholders subscribe in full their entitlements under the Proposed Rights Issue With Warrants (but prior to the exercise of any Warrants), approximately 12.2% of the enlarged issued share capital of UMW- OG, comprising 8,215,600,000 UMW-OG Shares; and up to 250,000,000 Warrants. The Company will make the relevant announcement setting out the details of the Put Option once UMW-OG has been notified by PNB in the event PNB and the potential third party investors enter into a Put Option arrangement. 2.8 Foreign Addressed Shareholders The abridged prospectus together with the accompanying documents to be issued by the Company in connection with the Proposed Rights Issue With Warrants are not and will not be made to comply with the laws of any countries or jurisdictions other than Malaysia, and have not been and will not be lodged, registered or approved under any applicable securities legislation of any countries or jurisdictions other than Malaysia. The Proposed Rights Issue With Warrants will not be offered for purchase or subscription in any country or jurisdiction other than Malaysia. Accordingly, the abridged prospectus together with the accompanying documents will only be sent to Entitled Shareholders who have a registered address or an address for service in Malaysia as registered in the Company s Record of Depositors as at the Entitlement Date. Foreign Addressed Shareholders who wish to provide a Malaysian address should inform their respective stockbrokers to effect the change of address prior to the Entitlement Date. Alternatively, such Foreign Addressed Shareholders may collect the abridged prospectus from the Company s share registrar who shall be entitled to request for such evidence as they deem necessary to satisfy themselves as to the identity and authority of the person collecting the abridged prospectus together with the accompanying documents. The Company will not make or be bound to make any enquiry as to whether the Entitled Shareholders have a registered address other than as stated in the Company s Record of Depositors as at the Entitlement Date and will not accept or be deemed to accept any liability whether or not any enquiry or investigation is made in connection therewith. Foreign Addressed Shareholders may only exercise their rights in respect of the Proposed Rights Issue With Warrants to the extent that it would be lawful to do so, and the Company, the Company s share registrar and/or the Company s advisers, in connection with the Proposed Rights Issue With Warrants, would not be in breach of the laws of any country or jurisdiction which the Foreign Addressed Shareholders and/or their renouncee(s) might be subject to. Foreign Addressed Shareholders will be responsible for payment of any issue, transfer or any other taxes or other requisite payments due in such foreign country or jurisdiction and the Company shall be entitled to be fully indemnified and held harmless by such Foreign Addressed Shareholders for any issue, transfer or any other taxes or duties as such person may be required to pay. They will have no claims whatsoever against the Company, the Company s share registrar and/or the Company s advisers in respect of their rights or entitlements under the Proposed Rights Issue With Warrants. Such Foreign Addressed Shareholders should also consult their professional advisers as to whether they require any governmental, exchange control or other consents or need to comply with any other applicable legal requirements to enable them to exercise their rights in respect of the Proposed Rights Issue With Warrants. Foreign Addressed Shareholders shall be solely responsible to seek advice as to the laws of any country or jurisdiction to which they may be subject, and participation by the 7

18 Foreign Addressed Shareholders in the Proposed Rights Issue With Warrants shall be on the basis of a representation and warranty by them that they may lawfully so participate without the Company, the Company s share registrar and/or the Company s advisers being in breach of the laws of any country or jurisdiction. None of the Company, the Company s share registrar nor the Company s advisers to the Proposed Rights Issue With Warrants shall accept any responsibility or liability in the event that any acceptance of a Foreign Addressed Shareholder of his/her entitlements in respect of the Proposed Rights Issue With Warrants is or shall become illegal, unenforceable, voidable or void in any country or jurisdiction. The Company reserves the right in its absolute discretion to treat any acceptance as being invalid if the Company believes or has reason to believe that such acceptance may violate applicable legal or regulatory requirements. 3. DETAILS OF THE PROPOSED SUBSCRIPTION 3.1 Background information on the Proposed Subscription The Proposed Subscription entails the Proposed PNB Subscription and, if applicable, the Proposed Funds Subscription, as follows: Background information on the Proposed PNB Subscription The Proposed PNB Subscription entails the issuance by the Company and subscription by PNB of up to 4,847,539,594 RCPS-i together with up to 1,211,884,898 Warrants at the Subscription Price in cash. The Warrants shall be issued on the basis of one (1) Warrant for every four (4) RCPS-i subscribed. The Proposed PNB Subscription will be undertaken in the event that the Company is unable to raise the Intended Gross Proceeds entirely from the Proposed Rights Issue With Warrants and if applicable, the Proposed Funds Subscription. Based on the Minimum Scenario, there would be a shortfall of approximately RM1,454.3 million which will require the issuance of 4,847,539,594 RCPS-i at the Subscription Price to raise the said amount. The Proposed PNB Subscription is subject to the terms and conditions of the Undertakings and Subscription Letter Background information on the Proposed Funds Subscription Up to 4,847,539,594 RCPS-i together with up to 1,211,884,898 Warrants will also be offered to ASB and/or the Funds to ensure that ASB and/or the Funds can participate in full in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. The Proposed Funds Subscription will only be offered in the event the Company determines that the Collective Shareholding Threshold may be breached as a result of the subscription by PNB, ASB and/or the Funds for their respective entitlements of the Rights Shares and/or applications for the Excess Rights Shares. For the avoidance of doubt, in view of the RCPS-i Undertaking, in the event the Proposed Funds Subscription is applicable, ASB and/or the Funds will be offered the RCPS-i prior to such offer being made to PNB. Thereafter, PNB shall subscribe for such number of RCPS-i in order to raise the Intended Gross Proceeds. The total number of RCPS-i to be offered to ASB and/or the Funds shall be equivalent to the total number of Rights Shares that ASB and/or the Funds 8

19 not able to subscribe based on their respective entitlements and/or applications of the Excess Rights Shares as a consequence of the Collective Shareholding Threshold. The actual number of RCPS-i to be offered to ASB and/or the Funds cannot be determined at this juncture as it is dependent upon the actual number of Rights Shares and Excess Rights Shares subscribed and applied for by ASB and/or the Funds, the actual number of Rights Shares and Excess Rights Shares subscribed and applied for by the other Entitled Shareholders, and the basis of allocation of Excess Rights Shares as set out in Section 2.5 of Part A of this Circular. Assuming: (i) (ii) none of the other Entitled Shareholders subscribes for their respective entitlements under the Proposed Rights Issue With Warrants; and ASB and/or the Funds subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants and apply for all Excess Rights Shares, ASB and/or the Funds may only be able to subscribe for up to 1,206,060,406 Rights Shares in view of the Collective Shareholding Threshold. Accordingly, ASB and/or the Funds will be offered up to 4,847,539,594 RCPS-i together with up to 1,211,884,898 Warrants under the Proposed Funds Subscription. The total number of Rights Shares, RCPS-i and Warrants to be issued under Scenario I and Scenario II, will be as follows: Maximum no. of Rights Shares Maximum no. of Warrants attached to the Rights Shares Maximum no. of RCPS-i Maximum no. of Warrants attached to the RCPS-i Maximum no. of new UMW-OG Shares assuming full exercise of Warrants and conversion of RCPS-i Scenario I 6,053,600,000 1,513,400, ,567,000,000 Scenario II 1,206,060,406 (1) 301,515,101 4,847,539,594 1,211,884,898 (1) 7,566,999,999 Note: (1) Due to the entitlement basis of the Warrants, one (1) less Warrant will be allotted under Scenario II compared to Scenario I. 3.2 Salient terms of the RCPS-i and Warrants The salient terms of the RCPS-i are set out in Appendix II of this Circular. The Warrants attached to the RCPS-i are the same as the Warrants attached to the Rights Shares, the salient terms of which are set out in Appendix I of this Circular. 3.3 Background information on PNB PNB was incorporated in Malaysia on 17 March 1978 and is approximately 99.99% owned by YPB. As at the LPD, the issued share capital of PNB is RM100,000,000 comprising 100,000,000 ordinary shares in PNB ( PNB Shares ). YPB holds 99,999,999 PNB Shares, whilst Minister of Finance, Incorporated holds one (1) PNB Share. 9

20 3.4 Salient terms of the Undertakings and Subscription Letter The salient terms of the Undertakings and Subscription Letter in connection with the Proposed PNB Subscription are as follows: (i) In the event that UMW-OG is unable to raise the Intended Gross Proceeds upon completion of the Proposed Rights Issue With Warrants and if applicable, the Proposed Funds Subscription, PNB shall subscribe to such amount of RCPS-i (up to 4,847,539,594 RCPS-i) so as to ensure that UMW-OG shall be able to raise the Intended Gross Proceeds ( Subscription RCPS-i ) together with up to 1,211,884,898 Warrants at the Subscription Price, subject to the following: (a) (b) (c) receipt of the Proposed Exemption; approval of UMW-OG s shareholders for the Proposals; and approval of Bursa Securities for the admission of the Warrants to the Official List of Bursa Securities and the listing and quotation of the Rights Shares, Warrants, Exercised Shares and Conversion Shares on the Main Market of Bursa Securities. (ii) (iii) (iv) (v) (vi) On the date of the announcement on the level of subscription in relation to the Proposed Rights Issue With Warrants on the official website of Bursa Malaysia Berhad, UMW-OG shall issue a notice ( Subscription Notice ) to PNB on the quantum of the Subscription RCPS-i and the Subscription Consideration to fulfil its obligations in accordance with the Undertakings and Subscription Letter. Upon receipt of the Subscription Notice, PNB shall pay the full amount of the total consideration payable for the Subscription RCPS-i at the Subscription Price ( Subscription Consideration ) to UMW-OG by way of cash payment to UMW- OG within two (2) Market Days. In the event that PNB s obligations as stated in item (i) above applies, UMW-OG shall allot and issue the Subscription RCPS-i to PNB, enter PNB s name in its register of members as holder of the Subscription RCPS-i within eight (8) Market Days from the closing date of the Proposed Rights Issue With Warrants, subject always to UMW-OG s receipt of the payment of the Subscription Consideration from PNB. Further, if applied by PNB, UMW-OG shall deliver to PNB the share certificates in respect of the Subscription RCPS-i within sixty (60) days from the receipt of such application. The Subscription RCPS-i shall be issued to PNB free from all encumbrances. Upon the subscription of the Subscription RCPS-i, the Warrants shall be issued by UMW-OG to PNB on the basis of one (1) Warrant for every four (4) RCPS-i subscribed by PNB. The Warrants shall be issued to PNB free from all encumbrances. 3.5 Basis and justification for the Subscription Price and Conversion Ratio The Subscription Price is based on the Rights Issue Price as the Proposed Subscription will only be undertaken if PNB, ASB and/or the Funds are unable to subscribe in full their respective entitlements and apply for Excess Rights Shares under the Proposed Rights Issue With Warrants. This was formulated with a view to allow UMW-OG to raise the remaining proceeds required in the event UMW-OG is unable to raise the Intended Gross Proceeds entirely from the Proposed Rights Issue With Warrants. 10

21 For illustrative purposes, based on the Subscription Price and the Conversion Ratio, the Implied Conversion Price is RM0.30 for every Conversion Share which represents a discount of approximately 24.05% to the TERP of UMW-OG Shares of RM0.395 based on the five (5)-day VWAMP of UMW-OG Shares up to and including the Announcement LPD of RM0.66. For the avoidance of doubt, no consideration will be received by UMW- OG upon conversion of the RCPS-i. The Subscription Price and the Conversion Ratio were determined after taking into consideration the following: (i) (ii) prevailing market price of the UMW-OG Shares; and the RCPS-i can be converted into new UMW-OG Shares at any time during the Conversion Period. Assuming all the RCPS-i issued pursuant to the Proposed Subscription are converted, a total of 4,847,539,594 new UMW-OG Shares will be issued. 3.6 Ranking of the Conversion Shares The Conversion Shares will, upon allotment and issuance, rank equally in all respects with the then existing UMW-OG Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of the Conversion Shares. 3.7 Listing and quotation of the Conversion Shares Bursa Securities had, vide its letter dated 22 June 2017, granted its approval for the listing and quotation of the Conversion Shares on the Main Market of Bursa Securities, subject to the conditions set out in Section 10 of Part A of this Circular. 4. DETAILS OF THE PROPOSED EXEMPTION 4.1 Background information on the Proposed Exemption After the Distribution, the shareholdings of the PAC Group in UMW-OG are as follows: No. of UMW-OG Shareholding in Shares UMW-OG ( 000) % PNB 81, ASB 688, Amanah Saham Wawasan , Amanah Saham Malaysia 65, Amanah Saham 1Malaysia 21, Amanah Saham Didik 20, Amanah Saham Bumiputera 2 14, Amanah Saham Nasional 7, Amanah Saham Nasional 2 4, Amanah Saham Nasional 3 Imbang 1, ASG Pendidikan 3, ASG Kesihatan 5, ASG Persaraan 2, Yayasan Tun Ismail Mohamed Ali (Berdaftar) PAC Group (1) 983,

22 Note: (1) Assuming UMWH disposes of its 34,971 residual shares in UMW-OG, representing less than 0.01% of the issued share capital of UMW-OG, prior to the submission of the application to the SC for the Proposed Exemption. The Proposed Exemption is being sought by the PAC Group pursuant to the following: (i) (ii) (iii) subscription for any Rights Shares (including Excess Rights Shares) by PNB, ASB and/or the PACs; exercise of any Warrants held by PNB, ASB and/or the PACs pursuant to the Proposed Rights Issue With Warrants and/or the Proposed Subscription; and conversion of any RCPS-i held by PNB, ASB and/or the PACs pursuant to the Proposed Subscription, which may result in the following: (i) (ii) (iii) an increase in the individual shareholding of PNB and/or ASB to above 33% of the enlarged issued share capital of UMW-OG pursuant to the subscription of the Rights Shares, conversion of the RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants; following the subscription of such number of Rights Shares, and/or conversion of RCPS-i and/or exercise of Warrants by PNB or ASB such that the individual shareholding of PNB or ASB increases above 33% of the enlarged issued share capital of UMW-OG, a further increase in the individual shareholding of PNB or ASB by more than 2% of the enlarged issued share capital of UMW-OG in any period of six (6) months pursuant to the conversion of the RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants; and an increase in the collective shareholding of the PAC Group by more than 2% of the enlarged issued share capital of UMW-OG in any period of six (6) months pursuant to the subscription of the Rights Shares, conversion of the RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants. The shareholding limit to be established for the exemption sought by the PAC Group from the obligation to undertake the Mandatory Offer will be based on the actual number and percentage of voting rights that: a) PNB individually; b) ASB individually; and c) the PAC Group collectively, will hold upon completion of the Proposed Rights Issue With Warrants and the Proposed Subscription, if applicable, and assuming PNB, ASB and/or the PAC Group exercise in full their rights to the conversion of the RCPS-i and exercise of Warrants held based on the actual number of RCPS-i and Warrants held by PNB, ASB and the PAC Group at the time of completion of the Proposed Rights Issue With Warrants and the Proposed Subscription, if applicable ( Exemption Shareholding Limit ). Should PNB, ASB or the PAC Group breach the Exemption Shareholding Limit, the PAC Group would be obliged to observe the requirement of the Rules. 12

23 4.2 Mandatory Offer and exemption sought The obligation to undertake the Mandatory Offer will depend upon, amongst others, the actual subscription rate of the Rights Shares, conversion of the RCPS-i and exercise of the Warrants by the Entitled Shareholders and/or their renouncee(s). For illustrative purposes, below are the scenarios and the parties who are obliged to undertake the Mandatory Offer: a) under Scenario II, PNB would individually, and the PAC Group would collectively, trigger the Mandatory Offer obligation; and b) in the event ASB subscribes in full its entitlement and/or subsequently subscribes for and converts the RCPS-i and/or exercise the Warrants it holds, ASB would individually, and the PAC Group would collectively, trigger the Mandatory Offer obligation. The above scenarios are for illustrative purpose only and are not exhaustive as there may be other circumstances that may give rise to a Mandatory Offer obligation PNB individually and the PAC Group collectively triggering the Mandatory Offer obligation Shareholding in UMW-OG after the Distribution No. of UMW-OG Shares % Under Scenario II, PNB would trigger the Mandatory Offer obligation as a result of an increase in its shareholding to above 33% of the enlarged issued share capital of UMW-OG following its subscription of the Rights Shares, and thereafter, a further increase in its individual shareholding in the issued share capital of UMW-OG by more than 2% in any period of six (6) months pursuant to the conversion of the RCPS-i into new UMW-OG Shares during the tenure of the RCPS-i, as illustrated below: Maximum shareholding pursuant to the Proposed Rights Issue With Warrants Maximum shareholding pursuant to the conversion of the RCPS-i Maximum shareholding pursuant to the exercise of the Warrants Direct Direct Direct Direct No. of No. of UMW-OG UMW-OG Shares % Shares % ( 000) ( 000) ( 000) ( 000) No. of UMW-OG Shares % PNB 81, (2) 1,287, (3) 6,135,382 (5) (4) 7,648,782 (5) The PAC Group would also trigger the Mandatory Offer obligation under Scenario II as a result of the increase in the collective shareholding of the PAC Group in the enlarged issued share capital of UMW-OG by more than 2% in any period of six (6) months pursuant to the subscription of the Rights Shares, as illustrated below: 13

24 Shareholding in UMW-OG after the Distribution No. of UMW-OG Shares % Maximum shareholding pursuant to the Proposed Rights Issue With Warrants Maximum shareholding pursuant to the conversion of the RCPS-i Maximum shareholding pursuant to the exercise of the Warrants Direct Direct Direct Direct No. of No. of UMW-OG UMW-OG Shares % Shares % ( 000) ( 000) ( 000) ( 000) No. of UMW-OG Shares % PAC Group (1) 983, (2) 2,189, (3) 7,036,760 (5) (4) 8,550,160 (5) Notes: (1) Assuming UMWH disposes of its 34,971 residual shares in UMW-OG, representing less than 0.01% of the issued share capital of UMW-OG, prior to the submission of the application to the SC for the Proposed Exemption. (2) Assuming none of the other Entitled Shareholders (including ASB and the Funds) subscribes for the Rights Shares and assuming the allocation of 1,206,060,406 Rights Shares to PNB pursuant to the Rights Issue Undertakings. (3) Assuming the allotment and conversion of 4,847,539,594 RCPS-i into new UMW-OG Shares, being the number of RCPS-i to be subscribed by PNB to raise the Intended Gross Proceeds in the event none of the other Entitled Shareholders subscribes for the Rights Shares. (4) Assuming the exercise of 1,513,399,999 Warrants, being the number of Warrants to be allocated to PNB pursuant to 1,206,060,406 Rights Shares and 4,847,539,594 RCPS-i being allocated to PNB. (5) PNB, via the Undertakings and Subscription Letter, has undertaken to ensure that any increase to the Collective Shareholding, whether achieved through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG remaining in compliance with the public shareholding spread requirement as set out in the Listing Requirements. As such, the maximum shareholding is purely illustrative ASB individually and the PAC Group collectively triggering the Mandatory Offer obligation In the event none of the other Entitled Shareholders subscribes for the Rights Shares and ASB subscribes in full its entitlement of 1,929,064,536 Rights Shares based on its shareholding after the Distribution and further applies for 4,124,535,464 Excess Rights Shares such that it is offered 4,124,535,464 RCPS-i pursuant to the Proposed Funds Subscription in view of the Collective Shareholding Threshold, ASB would trigger the Mandatory Offer obligation as a result of the increase in its shareholding to above 33% of the enlarged issued share capital of UMW-OG following its subscription of the Rights Shares, as illustrated below: 14

25 Shareholding in UMW-OG after the Distribution No. of UMW-OG Shares % Maximum shareholding pursuant to the Proposed Rights Issue With Warrants Maximum shareholding pursuant to the conversion of the RCPS-i Maximum shareholding pursuant to the exercise of the Warrants Direct Direct Direct Direct No. of No. of UMW-OG UMW-OG Shares % Shares % ( 000) ( 000) ( 000) ( 000) No. of UMW-OG Shares % ART- 688, (2) 2,618, (3) 6,742, (4) 8,255, ASB Shareholding in UMW-OG after the Distribution No. of UMW-OG Shares % In addition, the PAC Group would also trigger the Mandatory Offer obligation as a result of an increase in the collective shareholding of the PAC Group in the enlarged issued share capital of UMW-OG by more than 2% in any period of six (6) months pursuant to the subscription of the Rights Shares, as illustrated below: Maximum shareholding pursuant to the Proposed Rights Issue With Warrants Maximum shareholding pursuant to the conversion of the RCPS-i Maximum shareholding pursuant to the exercise of the Warrants Direct Direct Direct Direct No. of No. of UMW-OG UMW-OG Shares % Shares % ( 000) ( 000) ( 000) ( 000) No. of UMW-OG Shares % PAC Group (1) 983, (2) 2,912, (3) 7,036, (4) 8,550, Notes: (1) Assuming UMWH disposes of its 34,971 residual shares in UMW-OG, representing less than 0.01% of the issued share capital of UMW-OG, prior to the submission of the application to the SC for the Proposed Exemption. (2) Assuming none of the other Entitled Shareholders subscribes for any Rights Shares and assuming ASB subscribes in full its entitlement of 1,929,064,536 Rights Shares based on its shareholding in UMW-OG after the Distribution. (3) Assuming the allotment and conversion of 4,124,535,464 RCPS-i into new UMW-OG Shares, being the number of RCPS-i to be offered to ASB pursuant to the Proposed Funds Subscription, assuming ASB subscribes in full its entitlement based on its shareholding in UMW-OG after the Distribution, and further applies for 4,124,535,464 Excess Rights Shares such that it is offered 4,124,535,464 RCPS-i pursuant to the Proposed Funds Subscription. (4) Assuming the exercise of 1,513,400,000 Warrants, being the number of Warrants to be allocated to ASB pursuant to its allocation of 1,929,064,536 Rights Shares and 4,124,535,464 RCPS-i. As it is not the intention of the PAC Group to undertake the Mandatory Offer, the PAC Group intends to seek an exemption from the SC pursuant to the Paragraphs 4.08(1)(b) and 4.08(1)(c) of Rule 4, Part B of the Rules from the obligation to undertake the Mandatory Offer. An application for the Proposed Exemption will only be submitted to the SC by PNB on behalf of the PAC Group after the approval of the non-interested shareholders of UMW-OG has been obtained at the forthcoming EGM. 15

26 The Proposed Rights Issue With Warrants and Proposed Exemption are interconditional. Hence, in the event that the non-interested shareholders of UMW-OG or the SC does not approve the Proposed Exemption, the Proposed Rights Issue With Warrants will not be implemented. 5. DETAILS OF THE PROPOSED AMENDMENT The Proposed Amendment entails an amendment to the relevant clauses of the Constitution to facilitate the issuance of the RCPS-i pursuant to the Proposed Subscription, details of which are set out in Appendix III of this Circular. 6. USE OF PROCEEDS The Company expects to raise the Intended Gross Proceeds from the Proposed Rights Issue With Warrants and Proposed PNB Subscription, as follows: Scenario I Scenario II (RM million) (RM million) (1) Via the Proposed Rights Issue With Warrants By way of subscription of entitlement of the Rights Shares: - PNB ASB and the Funds Remaining Entitled Shareholders (2) Via the Proposed PNB Subscription By way of subscription by PNB - 1,454.3 Total gross proceeds 1, ,816.1 The Company intends to use the Intended Gross Proceeds in the following Shariah-compliant manner: Description of use of proceeds Estimated timeframe from date of listing of the Rights Shares and issuance of the RCPS-i, if applicable Amount (RM million) Part repayment of the bank borrowings of the Within 4 months 1,500.0 UMW-OG Group (1) Working capital requirements of the UMW-OG Within 24 months Group (2) Defray estimated expenses relating to the Within 2 months 6.1 Proposals (3) Total gross proceeds 1,

27 Notes: (1) As at 31 March 2017, the total bank borrowings of the UMW-OG Group is approximately RM3.7 billion (excluding the Shareholder Loan). The part repayment of the bank borrowings of the UMW-OG Group is expected to result in interest savings of approximately RM60 million per annum based on interest rate of approximately 4% per annum. The breakdown of the total bank borrowings of the UMW-OG Group as at 31 March 2017 is as follows: USD million RM million Bank borrowings denominated in USD 835 (a) 3,695 Bank borrowings denominated in RM - 10 Less: unamortised transaction costs - (17) 835 3,688 Note: (a) Approximate RM value based on BNM s middle rate of USD1.00 : RM at 5.00 p.m. as at 31 March (2) The breakdown of the working capital requirements of the UMW-OG Group is as follows: Description Amount (RM million) Raw materials, parts and consumables (a) Repair and maintenance of equipment and rigs, periodic survey and dry-docking costs (b) Other operating expenses (c) 55.0 Total Notes: (a) (b) (c) Comprises spare parts, consumables, tools, accessories and lubricants. Comprises surveys, inspections, repair and maintenance of equipment and rigs, as well as expenditures related to the periodic survey and dry-docking of offshore drilling rigs to be incurred within the next two (2) FYE 31 December 2018 and 31 December Comprises expenses related to rental of equipment, third party manpower supply, catering fees, insurance and warehouse expenses. (3) Comprising professional fees, fees payable to relevant authorities, printing and despatch costs and other incidental expenses relating to the Proposals. In the event that the actual expenses are lower than estimated, the surplus will be allocated for working capital. Pending use of the proceeds from the Proposed Rights Issue With Warrants, the Company will place the proceeds in interest-bearing deposits with financial institutions and/or short-term money market instruments as the Board deems fit. The interest derived from deposits with financial institutions and/or any gains arising from short-term money market instruments will be used for working capital purposes. Pending use of the proceeds from the Proposed Subscription, the Company will place the proceeds in deposits with Islamic financial institutions and/or Islamic short-term money market instruments. 17

28 The quantum of proceeds that may be raised by the Company pursuant to the exercise of the Warrants will depend on the number of Warrants exercised. The proceeds from the exercise of the Warrants will first be used to repay bank borrowings other than the working capital facilities of the Group and any surplus thereafter to satisfy the future working capital requirements of the Group. 7. RATIONALE FOR THE PROPOSALS 7.1 Proposed Rights Issue With Warrants The Proposed Rights Issue With Warrants is the first equity fund raising exercise by UMW-OG since its listing on 1 November 2013 on the Main Market of Bursa Securities and the Intended Gross Proceeds was determined after taking into consideration the UMW-OG Group s gearing ratio of 1.81 times as at 31 December 2016 and the working capital requirements of the UMW-OG Group. After due consideration of the various methods of fund-raising such as debt financing/bank borrowing as well as the current capital structure of UMW-OG, the Board is of the opinion that the Proposed Rights Issue With Warrants is the most appropriate means of raising funds due to the following reasons: (i) (ii) (iii) it enables the Company to raise proceeds which is to be used in the manner set out in Section 6 of Part A of this Circular; the Proposed Rights Issue With Warrants will further strengthen UMW-OG s capital base and improve its gearing level with the reduction in debts to a manageable level as well as reduced exposure to foreign exchange risk and interest rate fluctuations; and it provides the Entitled Shareholders with an opportunity to further increase their equity participation in UMW-OG via subscription of the Rights Shares at a discount to the TERP based on the prevailing market price of the UMW-OG Shares up to and including the Announcement LPD without diluting their respective percentage of shareholdings in UMW-OG, provided that such Entitled Shareholders fully subscribe their respective entitlements for the Rights Shares. The Warrants attached to the Rights Shares is meant to reward and provide the Entitled Shareholders with an option to further increase their equity participation in UMW-OG by exercising their Warrants during the Exercise Period (as defined in Appendix I of this Circular). The exercise of the Warrants will also strengthen the capital base of UMW-OG and provide additional funds to the UMW-OG Group. In addition, as the Warrants will be listed and traded separately from the UMW-OG Shares, the Entitled Shareholders will be able to monetise the Warrants should they choose to do so.. UMW-OG is looking at refinancing the remaining borrowings of the UMW-OG Group to ensure that the maturity profile of its borrowings better match the long-term useful life of its assets to further alleviate short-term liquidity pressures. The refinancing exercise will also result in cash currently pledged by UMW-OG towards the Group s borrowings to be released. Accordingly, UMW-OG may utilise the released pledged cash to reduce further the borrowings of the UMW-OG Group, which may include the Shareholder Loan provided by UMWH who will cease to be a shareholder of UMW-OG after its intended disposal of the residual UMW-OG Shares following the completion of the Distribution. UMWH currently holds 34,971 residual UMW-OG Shares, representing less than 0.01% of the issued share capital of UMW-OG. Approximately USD125.0 million (approximately RM553.1 million based on BNM s middle rate of USD1.00 : RM at 5.00 p.m. as at 31 March 2017) of pledged cash will be released following the refinancing exercise. 18

29 The Shareholder Loan is a contractual agreement between UMWH and UMW-OG where the terms were agreed upon on an arm s length basis. The Shareholder Loan has a tenure of five (5) years. As at the LPD, the outstanding amount of the Shareholder Loan is RM308 million. 7.2 Proposed Subscription The Proposed PNB Subscription will enable UMW-OG to raise the remaining proceeds required in the event UMW-OG is unable to raise the Intended Gross Proceeds entirely from the Proposed Rights Issue With Warrants and, if applicable, the Proposed Funds Subscription. The Proposed Funds Subscription will allow the Funds RCPS-i to be offered to ASB and/or the Funds to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold where the Collective Shareholding Threshold was determined after taking into consideration, inter-alia, the public shareholding spread requirement of 25% as stipulated under the Listing Requirements. The public shareholding spread of UMW-OG as at the LPD is approximately 35.2%. The Collective Shareholding Threshold of 65% was determined to allow UMW-OG to cater for the potential emergence of other non-public shareholders following the Proposed Rights Issue With Warrants by allowing up to 10% of the enlarged issued share capital of UMW-OG to be in the hands of the other new non-public shareholders. PNB, via the Undertakings and Subscription Letter, has also undertaken to ensure that any increase to the Collective Shareholding, whether through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG being in compliance with the public shareholding spread requirement. As at the LPD, none of the other non-public shareholders (i.e. excluding the PAC Group) hold a material amount of UMW-OG Shares. In the event the Board foresees that, as a result of the subscription of Rights Shares by the other Entitled Shareholders, UMW-OG may not comply with the public shareholding spread requirement, the Board will assess and take such steps necessary to comply with the public shareholding spread requirement. 7.3 Proposed Exemption The Proposed Exemption will relieve the PAC Group from the obligation to undertake the Mandatory Offer as the PAC Group does not intend to undertake the Mandatory Offer. 7.4 Proposed Amendment The Proposed Amendment is to facilitate the implementation of the Proposed Subscription. 8. INDUSTRY OVERVIEW AND PROSPECTS 8.1 Overview and outlook of the global economy Global growth is projected to increase to 3.5% in 2017 and 3.6% in 2018 compared to 3.1% in 2016 reflecting a stronger-than-expected pickup in growth in advanced economies and weaker-than-expected activity in some emerging market economies in the latter half of Economic activity in advanced economies is forecast to grow by 2.0% in 2017 and 1.9% in The outlook in advanced economies reflects a projected cyclical recovery in global manufacturing, and an uptick in confidence. The U.S. economy is projected to 19

30 expand at a faster pace in 2017 and 2018, with growth forecast at 2.1% for both 2017 and 2018, driven by a cyclical recovery in inventory accumulation, solid consumption growth, and the assumption of a looser fiscal policy stance. Meanwhile, the euro area recovery is expected to grow at a similar pace in 2017 and 2018 (1.9% and 1.7% respectively) as in The modest growth is projected to be supported by a mildly expansionary fiscal stance, accommodative financial conditions, a weaker euro, and beneficial spillovers from a likely U.S. fiscal stimulus. Growth in the group of emerging market and developing economies is forecast to rise to 4.6% and 4.8%, in 2017 and 2018 respectively (2016: 4.1%). This projected upturn reflects, a stabilisation or recovery in a number of commodity exporters, and strengthening growth in India, partially offset by a gradual slowdown of the Chinese economy. Growth in China is projected at 6.7% in 2017, slowing to 6.4% in The growth is supported due to the anticipation of continued policy support in the form of strong credit growth and reliance on public investment to achieve growth targets. In emerging and developing Asia, growth is projected to remain robust. In India, the growth forecast for 2017 has been trimmed by 0.4% to 7.2%, primarily because of the temporary negative consumption shock induced by cash shortages and payment disruptions from the currency exchange initiative. Medium-term growth prospects are favourable, with forecast to rise to about 8% over the medium-term due to the implementation of key reforms, loosening of supply-side bottlenecks, and appropriate fiscal and monetary policies. Economic activity is forecast to accelerate slightly in 2017 in Indonesia, Malaysia, Philippines and Vietnam with 2017 growth of 5.1%, 4.5%, 6.8% and 6.5% respectively. The near-term outlook for the Middle East, North Africa, Afghanistan and Pakistan region has weakened, with growth forecast to be 2.6% in The subdued pace of expansion reflects lower headline growth in the region s oil exporters, driven by the November 2016 OPEC agreement to cut oil production. With the uptick in commodity prices, an increase in headline inflation rates is projected in both advanced and developing economies. In nearly all advanced economies, inflation rates are expected to be higher in 2017 than in 2016 with 2017 forecast at 2.0% (2016: 0.8%), and to stabilise at about that level over the next few years. Inflation in emerging market and developing economies is projected to rise to 4.7% (2016: 4.4%), mostly reflecting higher commodity prices. (Source : World Economic Outlook 2017, International Monetary Fund, April 2017, World Economic Outlook Update 2017, International Monetary Fund, July 2017) 8.2 Overview and outlook of the O&G sector The plunge in oil markets since 2014 has seen crude prices halved to little more than USD50 per barrel. As crude prices get dragged down by a global supply glut, there is significant continued scale-back in capital expenditures as a result of lower drilling activities. Stockpiles climbed to the highest in at least two decades, nudging prices towards a bear market. The crude glut will take a while to dissipate, whereby the market is still in a slow process of rebalancing. The November 2016 OPEC-led output freeze to support oil prices marked the first coordinated action to bolster crude prices after two (2) years of producing near capacity in a bid for market share, that have faltered the finances of producer economies since the oil collapse began in The 1.8 million barrels per day production cut was expected to bring its ceiling to 32.5 million barrels a day effective 1 January 2017, for a 6-month period. Recently, in May 2017, OPEC and other major producers, including Russia, will roll over their six (6)-month deal to remove 1.8 million barrels a day from the market through March 2018, a nine (9)-month extension from the initial six (6)- 20

31 month, seeking to speed up market rebalancing and providing a certain level of sustained stability in oil prices. As the demand-supply balance tightens, the oil price is expected to slowly rise. However, oil prices are unlikely to recover significantly, and is expected to average around USD51 and USD52 per barrel in 2017 and 2018, respectively. Any significant rise in crude price will revive shale oil at a time of a slow global demand, starting another cycle of oversupply. Crude oil prices are gradually trending upwards, supported by narrowing global supply glut, more robust crude oil demand from China and India, and overall optimism that global crude oil prices is believed to have bottomed out. Declining charter rates and excess capacity have affected the financial performance and the fleet utilisation of offshore players. With the stabilisation of the crude oil price, more O&G players are beginning to resume investments and increase drilling activities in the upstream sector, evidenced by the higher number of surveys, bids and tender exercises, signs of a gradual but sustainable recovery. As offshore drilling picks up and the upstream capital expenditure trend improves, utilisation is expected to gradually improve. The daily charter rates, however, remain suppressed. The charter rates have plummeted by more than 50% during the oil price rout in 2014, and is not expected to rise significantly in the near to medium-term. The market outlook appears to be better in the near to medium-term, driven by OPEC s curative measures in reducing the supply glut that has spurred increased drilling activities. (Source : Investing.com, EIA Report July 2017, OPEC Secretariat, IHS Petrodata, Oil & Gas Journal January 2017) 8.3 Prospects of the UMW-OG Group With the potential recovery in the O&G industry as mentioned above, the Drilling Services segment s asset utilisation is expected to improve in the second half of Barring any unforeseen circumstances, all seven (7) of the Company s jack-up drilling rigs are likely to be utilised by the end of the third (3 rd ) quarter of 2017 pursuant to the award of two (2) contracts from Petronas Carigali Sdn Bhd. These contracts, together with other existing contracts, are expected to result in a significant increase in utilisation rate from the prior year s average of 21% utilisation rate. However, in view of the slow potential industry recovery and a significant number of idling jack-up rigs globally, charter day rates still remain subdued. Moving forward, the Company is in various stages of tendering exercises for 30 potential new jobs, with a combined estimated value of RM3.2 billion, for its jack-up drilling rigs in Malaysia and overseas. Of the total potential jobs, 13 are for overseas contracts, while 17 are in Malaysia. This is in line with UMW-OG s strategy to progressively return to the Company s previous markets in South-East Asia, namely, Vietnam, Indonesia, Myanmar and the Philippines while continuing to defend and strengthen its established market position in Malaysia. The Oilfield Services segment is also expected to recover, albeit at a much slower rate, in line with the sub-sector recovery. This is due to the various cost reduction measures taken by oil companies to use their existing stocks and reduce repair activities. However, this is not expected to impact the revenue and profit of the UMW-OG Group significantly due to the relatively low contribution of this segment. 21

32 Premised on the above and amid the current difficult economic conditions and low charter rate environment, the Board expects the future prospects of the UMW-OG Group to remain challenging. As at 31 December 2016, the total borrowings of the UMW-OG Group including the Shareholder Loan stood at approximately RM4.08 billion, representing a gearing ratio of 1.81 times, of which approximately RM1.50 billion are short-term debts due for repayment within one (1) year and approximately RM2.58 billion are long-term debts due for repayment after more than one (1) year. However, as at 31 March 2017, the total borrowings of the UMW-OG Group inclusive of the Shareholder Loan stood at approximately RM4.00 billion, representing a gearing ratio of 1.88 times, of which approximately RM1.51 billion are short-term debts due for repayment within one (1) year, and approximately RM2.49 billion are long-term debts due for repayment after more than one (1) year. In view of the foregoing, the Board intends to undertake the Proposals, the Company s first equity fund-raising exercise, to reduce the Company s reliance on debt financing and to raise proceeds for its working capital requirements. The Intended Gross Proceeds from the recapitalisation exercise is expected to strengthen the Company s capital base, improving the proforma NA from RM2.26 billion as at 31 December 2016 to RM4.65 billion post completion of the Proposals and improve the Company s gearing ratio from 1.81 times as at 31 December 2016 to 0.56 times after the completion of the Proposals. The part repayment of bank borrowings of RM1.50 billion will result in a reduction in finance costs which will contribute positively to the earnings of the UMW-OG Group. The working capital requirements relate to daily operational needs which are necessary for the drilling rigs to operate and for maintenance of the rigs. Routine and scheduled repair and maintenance are necessary to maintain the operating efficiency and reliability, minimising unscheduled downtime, and resulting in higher efficiency. A larger capital base and strengthened financial position will place the Group on a stronger financial footing to cope with the expected future challenges. The Proposals also represent an opportunity for the Entitled Shareholders to further increase their equity participation in UMW-OG via the subscription of the Rights Shares at a discount to the TERP without diluting their respective percentage of shareholdings in UMW-OG provided that such Entitled Shareholders fully subscribe their respective entitlements for the Rights Shares. Assuming the earnings of the UMW-OG Group remain unchanged, upon completion of the Proposed Rights Issue With Warrants, the EPS of the UMW-OG Group will be proportionately diluted as a result of the increase in the weighted average number of UMW-OG Shares in issue and will be further diluted as a result of the increase in the number of UMW-OG Shares arising from the exercise of the Warrants during the tenure of the Warrants and/or the conversion of the RCPS-i during the tenure of the RCPS-i. As illustrated in Section 9.3 of Part A of this Circular, the proceeds raised from the Proposed Rights Issue With Warrants and Proposed Subscription will have a positive impact on the total borrowings (inclusive of the Shareholder Loan) of the Group which will see a reduction from RM4.08 billion as at 31 December 2016 to RM2.60 billion and while the Proposed Rights Issue With Warrants and Proposed Subscription will result in an increase in shareholders' equity from RM2.26 billion as at 31 December 2016 to RM4.65 billion on proforma basis. Further, assuming cash currently pledged as security for the Group s borrowings are utilised to repay the Shareholder Loan upon its release, the total borrowings of the UMW-OG Group will reduce further from RM2.60 billion to RM2.29 billion with the Group s gearing expected to improve from 1.81 times as at 31 December 2016 to 0.49 times. In other words, the Proposals are expected to raise adequate equity financing to improve the financial position of the UMW-OG Group. 22

33 9. EFFECTS OF THE PROPOSALS The Proposed Exemption and Proposed Amendment will not have any effect on the share capital, substantial shareholders shareholdings, NA per UMW-OG Share, gearing and EPS of the UMW-OG Group. The effects of the Proposed Rights Issue With Warrants and Proposed Subscription on the share capital, substantial shareholders shareholdings, NA per UMW-OG Share, gearing and EPS of the UMW-OG Group have been shown based on Scenario I and Scenario II. 9.1 Share capital The proforma effects of the Proposed Rights Issue With Warrants and Proposed Subscription on the issued share capital of UMW-OG are as follows: Scenario I No. of UMW-OG Shares Amount ( 000) (RM 000) As at the LPD 2,162,000 (1) 2,453,819 To be issued pursuant to the Proposed Rights Issue With Warrants Allocation to warrants reserve upon issuance of the Warrants Defray estimated expenses relating to the Proposals 6,053,600 1,816,080 - (2) (196,742) - (6,100) 8,215,600 4,067,057 To be issued assuming the full exercise of the Warrants Reversal of warrants reserve to share capital pursuant to full exercise of the Warrants 1,513, , ,742 Enlarged issued share capital 9,729,000 4,861,592 23

34 Scenario II No. of UMW-OG Shares Amount No. of RCPS-i Amount ( 000) (RM 000) ( 000) (RM 000) As at the LPD 2,162,000 (1) 2,453, To be issued pursuant to the Proposed Rights Issue With Warrants 1,206, , To be issued pursuant to the Proposed Subscription - - 4,847,540 1,454,262 Allocation to warrants reserve upon issuance of the Warrants - (2) (39,197) - (2) (157,545) Defray estimated expenses relating to the Proposals - (6,100) - - 3,368,060 2, 770,340 4,847,540 1,296,717 To be issued upon full conversion of the RCPS-i 4,847,540 1,296,717 (4,847,540) (1,296,717) To be issued assuming full exercise of the Warrants 1,513, , Reversal of warrants reserve to share capital pursuant to full exercise of the Warrants - 196,742 Enlarged issued share capital 9,729,000 4,861, Notes: (1) Pursuant to the commencement of the Act, all amounts standing to the credit of the Company s share premium account has become part of the Company s share capital. (2) After recognition of the Warrants at the theoretical fair value of RM0.13 per Warrant as determined by adopting the trinomial option pricing model based on the Exercise Price, the underlying price of UMW-OG Shares of approximately RM0.34 per UMW-OG Share based on the TERP of UMW-OG Shares based on the 5-day VWAMP of UMW-OG Shares up to and including the LPD, the tenure of the Warrants of seven (7) years, the risk-free-rate of 3.841% (as extracted from Bloomberg) and the historical volatility of UMW-OG Shares of % (as extracted from Bloomberg). 24

35 9.2 Substantial shareholders shareholdings The proforma effects of the Proposed Rights Issue With Warrants and Proposed Subscription on the shareholdings of the substantial shareholders of the Company based on the Register of Substantial Shareholders of the Company as at the LPD are as follows: Scenario I Name As at the LPD After the Distribution (1) Direct Indirect Direct Indirect No. of UMW-OG Shares % No. of UMW-OG Shares % No. of UMW-OG Shares % No. of UMW-OG Shares % UMWH 1,204,777, (2) 34,971 (6) ART-ASB (8) 181,597, ,951, EPF 67,669, (3) 198,199, KWAP 52,809, ,092,600 (4) 0.33 (5) 144,807, (5) 11,141,734 (4) 0.52 Name Proforma I Proforma II After the Distribution and Proposed Rights Issue After Proforma I and assuming full exercise of the With Warrants Warrants Direct Indirect Direct Indirect No. of UMW-OG Shares % No. of UMW-OG Shares % No. of UMW-OG Shares % No. of UMW-OG Shares % UMWH 132,887 (6) ,366 (6) ART-ASB (8) 2,618,016, ,100,282, EPF 753,159, ,898, KWAP 550,267, ,338,578 (4) ,632, ,137,789 (4)

36 Scenario II As at the LPD After the Distribution (1) Direct Indirect Direct Indirect Name No. of UMW-OG Shares % No. of UMW- OG Shares % No. of UMW-OG Shares % No. of UMW-OG Shares % UMWH 1,204,777, (2) 34,971 (6) ART-ASB (8) 181,597, ,951, EPF 67,669, (3) 198,199, KWAP 52,809, ,092,600 (4) 0.33 (5) 144,807, (5) 11,141,734 (4) 0.52 PNB 12,854, ,782, YPB ,854,544 (9) ,782,220 (9) 3.78 Name Proforma I Proforma II After the Distribution and Proposed Rights Issue With After Proforma I and the Proposed Subscription Warrants Direct Indirect Direct Indirect No. of UMW-OG Shares % No. of UMW- OG Shares % No. of UMW-OG Shares % No. of UMW-OG Shares % UMWH 34,971 (6) ,971 (6) ART-ASB (8) 688,951, ,951, EPF 198,199, ,199, KWAP 144,807, ,141,734 (4) ,807, ,141,734 (4) 0.33 PNB (7) 1,287,842, ,287,842, YPB - - 1,287,842,626 (9) ,287,842,626 (9)

37 Scenario II (cont d) Name Proforma III Proforma IV After Proforma II and assuming full conversion of the RCPS-i After Proforma III and full exercise of the Warrants Direct Indirect Direct Indirect No. of UMW-OG Shares % No. of UMW- OG Shares % No. of UMW- OG Shares % No. of UMW- OG Shares % UMWH 34,971 (6) ,971 (6) ART-ASB (8) 688,951, ,951, EPF 198,199, ,199, KWAP 144,807, ,141,734 (4) ,807, ,141,734 (4) 0.11 PNB 6,135,382,220 (10) ,648,782,219 (10) YPB - - 6,135,382,220 (9)(10) ,648,782,219 (9)(10) Notes: (1) On the basis of UMW-OG Shares per share held in UMWH. (2) Being residual UMW-OG Shares held by UMWH after the Distribution which UMWH has, via its circular to shareholders in relation to the Distribution dated 12 April 2017, disclosed its intention to dispose such UMW-OG Shares via the open market. (3) EPF had on 12 July 2017 informed the Company that it has become a substantial shareholder of the Company in view of its holding of 198,199,776 UMW-OG Shares after the Distribution, or approximately 9.17% of the issued share capital of UMW-OG. (4) Deemed to have indirect interest by virtue of UMW-OG Shares held by its fund managers. (5) KWAP had on 25 July 2017 informed the Company that it has become a substantial shareholder of the Company in view of its holding of 144,807,324 UMW-OG Shares directly and 11,141,734 UMW-OG Shares indirectly after the Distribution, or approximately 7.21% of the issued share capital of UMW-OG. (6) Immaterial. (7) In the event PNB enters into the Put Option arrangement and subsequently exercises the Put Option, up to 1,000,000,000 UMW-OG Shares and 250,000,000 Warrants held by PNB will be transferred to third party investors after the completion of the Proposed Rights Issue With Warrants. (8) Shares of ASB held through AmanahRaya Trustees Berhad, the trustee of ASB. 27

38 (9) Deemed to have indirect interest by virtue of its interest in PNB pursuant to Section 8 of the Act. (10) PNB has, via the Undertakings and Subscription Letter, undertaken to ensure that any increase to the Collective Shareholding, whether to be achieved through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG being in compliance with the public shareholding spread requirement. 9.3 NA per UMW-OG Share and gearing For illustrative purposes only, based on the audited consolidated statement of the financial position of UMW-OG as at 31 December 2016 and on the assumption that the Proposals had been effected on that date, the proforma effects of the Proposed Rights Issue With Warrants and Proposed Subscription on the NA per UMW-OG Share and gearing of the UMW-OG Group are as follows: Scenario I Proforma I Proforma II Audited as at 31 December 2016 After the Proposed Rights Issue With Warrants After Proforma I and assuming full exercise of the Warrants (RM'000) (RM 000) (RM'000) Share capital 1,081,000 (1) (2) (3) 4,067,057 (6) 4,861,592 Share premium 1,372,819 (1) - - Warrants reserve - (3) 196,742 (6) - Other reserves 837, , ,298 Accumulated losses (1,033,129) (10) (1,051,960) (1, 051,960) Shareholders equity / NA 2,257,988 4,049,137 4,646,930 No. of UMW-OG Shares in issue ( 000) 2,162,000 8,215,600 9,729,000 NA per UMW-OG Share (8) (RM) Total borrowings (9) 4,080,518 (10) (13) 2, 599,349 (14) 2,599,349 Gearing (times) (7) (9) 1.81 (13) 0.64 (14)

39 Scenario II Audited as at 31 December 2016 Proforma I Proforma II Proforma III Proforma IV After the Proposed Rights Issue With Warrants After Proforma I and the Proposed Subscription After Proforma II and full conversion of RCPS-i After Proforma III and assuming full exercise of the Warrants (RM'000) (RM 000) (RM 000) (RM 000) (RM 000) Share capital 1,081,000 (1) (2) (3) 2,770,340 2,770,340 (5) 4,067,057 (6) 4,861,592 Share premium 1,372,819 (1) RCPS-i - - (4) 1,296,717 (5) - - Warrants reserve - (3) 39,197 (3) 196, ,742 Other reserves 837, , , , ,298 Accumulated losses (1,033,129) (1,033,129) (12) (1,051,960) (1,051,960) (1,051,960) Shareholders equity / NA 2,257,988 2,613,706 4,049,137 4,049,137 4,646,930 (6) - No. of UMW-OG Shares in issue ( 000) NA per UMW-OG Share (8) (RM) 2,162,000 3,368,060 3,368,060 8,215,600 9,729, Total borrowings (9) 4,080,518 (11) 3,724,800 (12) (13) 2,599,349 2,599,349 (14) 2,599,349 Gearing (times) (7) (9) (13) (14) 0.56 Notes: (1) Pursuant to the commencement of the Act, all amounts standing to the credit of the Company s share premium account has become part of the Company s share capital. (2) After recognition of the expenses relating to the Proposals of approximately RM6.1 million. (3) After recognition of the Warrants at the theoretical fair value of RM0.13 per Warrant as determined by adopting the trinomial option pricing model based on the Exercise Price, the underlying price of UMW-OG Shares of approximately RM0.34 per UMW-OG Share based on the TERP of UMW-OG Shares based on the 5-day VWAMP of UMW-OG Shares up to and including the LPD, the tenure of the Warrants of seven (7) years, the risk-free-rate of 3.841% (as extracted from Bloomberg) and the historical volatility of UMW-OG Shares of % (as extracted from Bloomberg). 29

40 (4) Being the total subscription consideration for 4,847,539,594 RCPS-i at the Subscription Price, less the theoretical fair value of the 1,211,884,898 Warrants at RM0.13 per Warrant attached therefrom being recognised in the Warrants reserve. (5) After full conversion of 4,847,539,594 RCPS-i into UMW-OG Shares at the Implied Conversion Price of RM0.30, less the theoretical fair value of the 1,211,884,898 Warrants at RM0.13 per Warrant being previously recognised in the Warrants reserve. (6) After adjusting for full exercise of the Warrants at the Exercise Price and the reversal of the Warrants reserve. (7) Computed based on total borrowings divided by shareholders equity/na. (8) Computed based on shareholders equity/na divided by number of UMW-OG Shares in issue. (9) Being the total borrowings and gearing (times) of the Group inclusive of the Shareholder Loan of approximately RM308.0 million. (10) After the proposed repayment of RM1.5 billion, resulting in the accelerated amortisation of transaction costs of approximately RM18.8 million as at 31 December 2016 to the accumulated losses of the Company. (11) After the proposed repayment of RM355.7 million raised from the Proposed Rights Issue With Warrants (net of defrayed expenses of approximately RM6.1 million) under Scenario II, out of the total of RM1.5 billion to be repaid. (12) After the proposed repayment of RM1,144.3 million raised from the Proposed Subscription under Scenario II, out of the total of RM1.5 billion to be repaid, resulting in the accelerated amortisation of transaction costs of approximately RM18.8 million as at 31 December 2016 to the accumulated losses of the Company. (13) It is the intention of the Board to use the released cash currently pledged towards the bank borrowings of the UMW-OG Group to further pare down the debts of the UMW-OG Group, which may include the Shareholder Loan. For illustrative purposes, upon repayment of the Shareholder Loan, total borrowings will reduce to approximately RM2,291.3 million and gearing ratio to 0.57 times. (14) For illustrative purposes, assuming UMW-OG has repaid the Shareholder Loan such that total borrowings has been reduced to approximately RM2,291.3 million, the full exercise of the Warrants will reduce gearing ratio to approximately 0.49 times. 30

41 9.4 EPS The Proposed Rights Issue With Warrants and Proposed Subscription, if implemented, are expected to have a material effect on the EPS of the UMW-OG Group for the FYE 31 December 2017 with the increase in the weighted average number of UMW-OG Shares in issue. Assuming the earnings of the UMW-OG Group remain unchanged, upon completion of the Proposed Rights Issue With Warrants, the EPS of the UMW-OG Group will be proportionately diluted as a result of the increase in the weighted average number of UMW-OG Shares in issue and will be further diluted as a result of the increase in the number of UMW-OG Shares arising from the exercise of the Warrants during the tenure of the Warrants and/or the conversion of the RCPS-i during the tenure of the RCPS-i. Going forward, the Proposed Rights Issue With Warrants and Proposed Subscription, if implemented, are expected to contribute positively to the earnings of the Group as the proceeds raised will be utilised towards reducing the indebtedness of the Group and consequently reducing the Group s finance costs. 9.5 Convertible securities As at the LPD, the Company does not have any convertible securities in issue. 10. APPROVALS REQUIRED The Proposals are subject to the following approvals being obtained: (i) Bursa Securities for the following: (a) (b) (c) admission to the Official List of Bursa Securities and the listing and quotation of up to 1,513,400,000 new Warrants to be issued pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription (if applicable); listing and quotation of up to 6,053,600,000 new UMW-OG Shares to be issued pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription (if applicable) on the Main Market of Bursa Securities; and listing and quotation of up to 1,513,400,000 new UMW-OG Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities, which was obtained on 22 June 2017 subject to, amongst others, the following conditions: 31

42 No. Condition Status of compliance (aa) UMW-OG and Maybank IB must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the Proposed Rights Issue With Warrants and the Proposed Subscription Noted (bb) (cc) (dd) UMW-OG and Maybank IB to inform Bursa Securities upon the completion of the Proposed Rights Issue With Warrants and the Proposed Subscription UMW-OG and Maybank IB to furnish Bursa Securities with a written confirmation of its compliance with the terms and conditions of Bursa Securities approval once the Proposed Rights Issue With Warrants and Proposed Subscription are completed UMW-OG to furnish Bursa Securities on a quarterly basis a summary of the total number of shares listed pursuant to the exercise of the Warrants and/or conversion of RCPS-i as at the end of each quarter together with a detailed computation of listing fees payable To be complied To be complied To be complied (ii) (iii) (iv) the shareholders of UMW-OG at the forthcoming EGM; the SC for the Proposed Exemption; and any other relevant authorities and/or parties, if required. The Proposed Rights Issue With Warrants and the Proposed Exemption are inter-conditional. The Proposed Subscription is conditional upon the Proposed Rights Issue With Warrants but not vice-versa. The Proposed Subscription and the Proposed Amendment are inter-conditional. The Proposals are not conditional upon any other corporate exercise/scheme of the Company. 11. INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM 11.1 Proposed Rights Issue With Warrants None of the Directors and/or major shareholders of UMW-OG and/or persons connected with them has any interest, direct or indirect, in the Proposed Rights Issue With Warrants other than their entitlements as shareholders of UMW-OG and their right to apply for Excess Rights Shares, for which all other Entitled Shareholders are also similarly entitled Proposed Subscription Save as disclosed below, none of the Directors and/or major shareholders of UMW-OG and/or persons connected with them has any interest, direct or indirect, in the Proposed Subscription: (i) PNB, being a person connected to ASB, by virtue of PNB being the investment manager of ASB and a party to the Proposed Subscription. Further, Amanah Saham Nasional Berhad ( ASNB ), the unit trust management company of ASB, is a wholly-owned subsidiary of PNB; 32

43 (ii) (iii) (iv) ASB, a major shareholder of UMW-OG following the Distribution ( Interested Major Shareholder ); ASB, Amanah Saham Wawasan 2020, Amanah Saham Malaysia, Amanah Saham 1Malaysia, Amanah Saham Didik, Amanah Saham Bumiputera 2, Amanah Saham Nasional, Amanah Saham Nasional 2, Amanah Saham Nasional 3 Imbang and ASG (the umbrella fund for ASG-Pendidikan, ASG- Kesihatan and ASG-Persaraan) (collectively, the UTFs ), by virtue of PNB being the investment manager of the UTFs. Further, ASNB, the unit trust management company of the UTFs, is a wholly-owned subsidiary of PNB; and Yayasan Tun Ismail Mohamed Ali (Berdaftar) ( YTI ), by virtue of PNB being the investment manager of YTI; (PNB, the UTFs and YTI are to be collectively referred to as Interested Persons ) (v) (vi) DAR, being the Chairman and a Non-Independent Non-Executive Director of UMW-OG, by virtue of him being the President and Group Chief Executive of PNB and a nominee director of PNB on the Board; and BFAR, being a Non-Independent Non-Executive Director of UMW-OG until his resignation from the Board on 23 June 2017, by virtue of him being the President and Group CEO and Executive Director of UMWH and a nominee director of UMWH on the Board up until 23 June DAR has abstained and will continue to abstain from all deliberations and voting at the relevant Board meetings in relation to the Proposed Subscription. BFAR has abstained from all deliberations and voting at the relevant Board meetings in relation to the Proposed Subscription. DAR, the Interested Major Shareholder and the Interested Persons will abstain from voting in respect of their direct and/or indirect shareholdings in UMW-OG, if any, on the resolution pertaining to the Proposed Subscription to be tabled at the forthcoming EGM. They will also ensure that persons connected with them will abstain from voting in respect of their direct and/or indirect shareholdings in UMW-OG, if any, on the resolution pertaining to the Proposed Subscription to be tabled at the forthcoming EGM. UMWH, being a person connected to ASB by virtue of ASB being a major shareholder of UMWH, will abstain from voting in respect of the residual UMW-OG Shares held following the completion of the Distribution on the resolution pertaining to the Proposed Subscription to be tabled at the forthcoming EGM. UMWH will also ensure that persons connected with it will abstain from voting in respect of their direct and/or indirect shareholdings in UMW-OG, if any, on the resolution pertaining to the Proposed Subscription to be tabled at the forthcoming EGM Proposed Exemption Save for DAR, the Interested Major Shareholder and the Interested Persons, none of the Directors and/or major shareholders of UMW-OG and/or persons connected with them has any interest, direct or indirect, in the Proposed Exemption. DAR has abstained and will continue to abstain from all deliberations and voting at the relevant Board meetings in relation to the Proposed Exemption. BFAR has abstained from all deliberations and voting at the relevant Board meetings in relation to the Proposed Exemption. DAR, the Interested Major Shareholder and the Interested Persons will abstain from voting in respect of their direct and/or indirect shareholdings in UMW-OG, if any, on the resolution pertaining to the Proposed Exemption to be tabled at the forthcoming EGM. 33

44 They will also ensure that persons connected with them will abstain from voting in respect of their direct and/or indirect shareholdings in UMW-OG, if any, on the resolution pertaining to the Proposed Exemption to be tabled at the forthcoming EGM. UMWH, being a person connected to ASB by virtue of ASB being a major shareholder of UMWH, will abstain from voting in respect of the residual UMW-OG Shares held following the completion of the Distribution on the resolution pertaining to the Proposed Exemption to be tabled at the forthcoming EGM. UMWH will also ensure that persons connected with it will abstain from voting in respect of their direct and/or indirect shareholdings in UMW-OG, if any, on the resolution pertaining to the Proposed Exemption to be tabled at the forthcoming EGM Proposed Amendment None of the Directors and/or major shareholders of UMW-OG and/or persons connected to them has any interest, direct or indirect, in the Proposed Amendment. 12. DIRECTORS RECOMMENDATION The Board (save for DAR in respect of the Proposed Subscription and Proposed Exemption, who has abstained for the reasons set out in Section 11 of Part A of this Circular), having considered all aspects of the Proposals including the rationale for and effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company. Accordingly, the Board (save for DAR in respect of the Proposed Subscription and Proposed Exemption, who has abstained for the reasons set out in Section 11 of Part A of this Circular) recommends that you vote in favour of the resolutions pertaining to the Proposals to be tabled at the forthcoming EGM. 34

45 13. TENTATIVE TIMETABLE The tentative timetable for the Proposals is as follows: Event Tentative timeline EGM for the Proposals 25 August 2017 Announcement of the Entitlement Date Early September 2017 Entitlement Date Mid September 2017 Despatch of the abridged prospectus, notice of provisional allotment and rights subscription form for the Proposed Rights Issue With Warrants Last day for the sale of provisional allotment of the Rights Shares Mid September 2017 Last day for the transfer of provisional allotment of the Rights Shares Last day for acceptance and payment of the Rights Shares Mid October 2017 Issuance and allotment of the Rights Shares and Warrants Listing and quotation of the Rights Shares and Warrants on the Main Market of Bursa Securities End October 2017 Completion of the Proposed Rights Issue With Warrants Completion of the Proposed Subscription (if applicable) End October HISTORICAL SHARE PRICES The monthly high and low market prices of UMW-OG Shares as traded on Bursa Securities for the past twelve (12) months preceding the date of this Circular are as follows: 2016 August September October November December January February March April May June July High RM Low 35

46 Last transacted market price of the UMW-OG Shares on Bursa Securities on 3 May 2017, being the last trading day immediately before the Announcement on 4 May 2017 RM0.690 Last transacted market price of the UMW-OG Shares on Bursa Securities as at the LPD RM0.440 (Source: Bloomberg) 15. CORPORATE EXERCISE/SCHEME ANNOUNCED BUT PENDING COMPLETION Save for the Proposals, there are no other corporate exercise or scheme which have been announced by the Company but is pending completion as at the LPD. 16. EGM The EGM will be held at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, Kuala Lumpur, Malaysia on Friday, 25 August 2017 at 3.00 p.m. or any adjournment thereof, for the purpose of considering and if deemed fit, passing the resolutions to give effect to the Proposals. You are advised to refer to the Notice of EGM and Form of Proxy which are enclosed in this Circular. If you are unable to attend and vote in person at the EGM, you may appoint a proxy to attend and vote on your behalf. If you wish to do so, you must complete and deposit the Form of Proxy at the registrar s office, Securities Services (Holdings) Sdn Bhd at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia by Thursday, 24 August 2017 at 4.00 p.m. (being the approximate time appointed for the taking of the poll at the EGM), not less than 24 hours before the time appointed for the taking of the poll or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently decide to do so. 17. FURTHER INFORMATION You are advised to refer to the attached appendices for further information. Yours faithfully for and on behalf of the Board of UMW OIL & GAS CORPORATION BERHAD ROHAIZAD BIN DARUS President, Executive Director 36

47 PART B IAL FROM MERCURY SECURITIES TO THE NON-INTERESTED SHAREHOLDERS OF UMW-OG IN RELATION TO THE PROPOSED EXEMPTION

48 EXECUTIVE SUMMARY All definitions used in this Executive Summary shall have the same meaning as the words and expressions defined in the Definitions section of the Circular, except where the context otherwise requires or where otherwise defined in this IAL. All references to we, us or our in this IAL are references to Mercury Securities, being the Independent Adviser for the Proposed Exemption. This Executive Summary summarises this IAL. You are advised to read and understand this IAL in its entirety, together with the letter from the Board to the shareholders of UMW-OG in relation to the Proposals in Part A of the Circular and the accompanying appendices for other relevant information and not to rely solely on this Executive Summary in forming an opinion on the Proposed Exemption. You are also advised to carefully consider the recommendations contained in both the letters before voting on the ordinary resolution in respect of the Proposed Exemption to be tabled at the forthcoming EGM. If you are in doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately. 1. INTRODUCTION On 4 May 2017, Maybank IB, on behalf of the Board, announced that UMW-OG intends to undertake a recapitalisation exercise to raise the Intended Gross Proceeds (i.e. a total of RM1,816,080,000) via the Proposed Rights Issue With Warrants and Proposed PNB Subscription (if applicable). In conjunction with the Proposed Rights Issue With Warrants, an exemption from the SC will also be sought by the PAC Group pursuant to Paragraph 4.08(1)(b) of the Rules from the obligation to undertake the Mandatory Offer. Subsequently on 9 June 2017, Maybank IB, on behalf of the Board, announced that PNB had on 9 June 2017 issued and UMW-OG had on even date accepted the Undertakings and Subscription Letter providing, amongst others, the Rights Issue Undertakings, which are subject to the Collective Shareholding Threshold. In the event that UMW-OG is unable to raise the Intended Gross Proceeds from the Proposed Rights Issue With Warrants as a result of the Rights Issue Undertakings being subject to the Collective Shareholding Threshold, PNB has further undertaken, via the Undertakings and Subscription Letter, to subscribe for up to 4,847,539,594 new RCPS-i together with up to 1,211,884,898 Warrants pursuant to the RCPS-i Undertaking so as to ensure that UMW-OG will be able to raise the Intended Gross Proceeds. It was further announced that in view of the Collective Shareholding Threshold, the Company proposed to undertake the Proposed Funds Subscription to allow the RCPS-i to be offered to ASB and/or the Funds to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. Further to the above, the Company has been notified that the PAC Group intends to seek an exemption from the obligation to undertake a Mandatory Offer in relation to the exercise of any conversion or subscription rights or options into new voting shares or voting rights pursuant to Paragraph 4.08(1)(c) of the Rules. Please refer to Section 4, Part A of the Circular and Section 1 of this IAL for further details. On 26 May 2017, Mercury Securities had been appointed by UMW-OG pursuant to the Rules to act as the Independent Adviser to advise the non-interested Directors and non-interested shareholders of UMW-OG on the Proposed Exemption. Mercury Securities subsequently declared its independence from any conflict of interest or potential conflict of interest to the SC in relation to its role as the Independent Adviser for the Proposed Exemption. 37

49 EXECUTIVE SUMMARY (cont d) The SC had on 2 August 2017 notified that it has no further comments to the contents of this IAL. However, such notification shall not be taken to suggest that the SC agrees with the recommendation of the Independent Adviser or assumes responsibility for the correctness of any statements made or opinions or reports expressed in this IAL. The Proposed Rights Issue With Warrants and Proposed Exemption are inter-conditional. The Proposed Subscription is conditional upon the Proposed Rights Issue With Warrants but not vice versa. The Proposed Subscription and Proposed Amendment are inter-conditional. Although the Proposed Subscription and Proposed Rights Issue With Warrants are not interconditional, the Intended Gross Proceeds to be raised from the recapitalisation exercise of UMW-OG (i.e. the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable)) is RM1,816,080,000. The purpose of this IAL is to provide the non-interested shareholders of UMW-OG with an independent evaluation on the Proposed Exemption on a holistic basis together with our recommendation on whether the non-interested shareholders of UMW-OG should vote in favour of the Proposed Exemption. Please refer to Section 1 of this IAL for further details. 2. EVALUATION OF THE PROPOSED EXEMPTION In arriving at our conclusion and recommendation, we have assessed and evaluated the Proposed Exemption on a holistic basis in accordance with Schedule 2: Part III of the Rules. In our evaluation of the Proposed Exemption, we have considered the following factors (see Section 5 of this IAL for further details):- (I) Rationale for the Proposals Proposed Rights Issue With Warrants The Group s business of providing drilling services for the upstream sector of the O&G industry is capital intensive in nature, whereby it requires high upfront capital expenditures as well as sizeable costs (estimated to be approximately USD12 million per rig on average) for periodic survey and dry-docking of offshore drilling rigs. Since the listing of UMW-OG on the Main Market of Bursa Securities on 1 November 2013, the Group had invested significantly (more than USD900 million) on its asset base. Post its initial public offering in end-2013, UMW-OG has not undertaken any equity fund raising exercise to raise proceeds for its capital expenditures and/or working capital requirements. The Group s funding needs have been met mainly via internally generated funds and bank borrowings. As a result, the Group s debt and gearing have grown over the years (see Section 5.1 of this IAL for further details). As the O&G industry is still in a slow process of rebalancing, with the demand-supply balance tightening, the oil price is expected to slowly rise with the benchmark Brent crude oil recovering from a low of USD27 per barrel in January 2016 to the current region of USD45 to USD55 per barrel. The charter rates, however, remains suppressed due to availability of many idle rigs. The charter rates have plummeted by more than 50% during the oil price rout in 2014, and are expected to rise slowly in the near to medium term. Declining charter rates and excess capacity have affected the financial performance and the fleet utilisation of offshore players industry-wide. With charter rates halved and not expected to rise significantly in the short term, coupled with the existing high gearing and large interest cost, it is imperative that the Group reduces its cost structure by part repayment of existing loans to lower interest cost per annum and restructure the remaining borrowings to reduce quarterly amortised loan repayment amount to a level sustainable by the current low charter rates. This will enable the reallocation of resources for higher operational cashflows, which is key for the Group s continued sustainability and demonstrated financial strength in bidding for projects. 38

50 EXECUTIVE SUMMARY (cont d) Further, as the financial performance of O&G players deteriorates industry-wide, lenders in general are looking to reduce their exposures to the industry. Therefore, in order for the Group to restructure its remaining borrowings, the lenders are expecting the Group to reduce its gearing level to be within an acceptable range so as to improve the Group s credit rating. We noted that the recapitalisation exercise will immediately increase the Group s capital base significantly and enable its gearing to be reduced from the current 1.81 times to 0.64 times, a level that is acceptable to both existing and potential lenders. As at 31 March 2017, the total borrowings of the UMW-OG Group including the Shareholder Loan stood at approximately RM4.00 billion, of which approximately RM1.51 billion are short term debts due for repayment within one (1) year and approximately RM2.49 billion are long term debts due for repayment after more than one (1) year. Further, out of this total borrowings of RM4.00 billion, an amount of approximately RM1.50 billion is to be repaid by end of UMW-OG intends to undertake the recapitalisation exercise via the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) to reduce the Group s reliance on debt financing. The Proposed Rights Issue With Warrants is the most appropriate means of raising funds for the Group, after considering the existing lenders requirements, rationale of the recapitalisation exercise, intended utilisation of the proceeds and benefits of the Proposed Rights Issue With Warrants to all shareholders of UMW-OG, whereby:- (i) approximately 83% or RM1,500,000,000 out of the Intended Gross Proceeds of RM1,816,080,000 to be raised from the recapitalisation exercise is for the repayment of bank borrowings to reduce the Group s reliance on debt financing, which will alleviate short-term liquidity pressures as well as benefit the Group in terms of strengthened financial position, interest savings, reduced exposure to interest rate fluctuations as well as foreign exchange risk (see Section of this IAL for further details). The part repayment of the bank borrowings is necessary to facilitate the refinancing of the remaining borrowings, following which an amount of USD125 million equivalent to approximately RM553 million pledged cash will be released. Thereafter, UMW-OG may use part of the released pledged cash to further reduce the Group s borrowings and/or the Shareholder Loan; (ii) the Proposed Rights Issue With Warrants provides an opportunity for all the Entitled Shareholders to further increase their equity participation in UMW-OG via subscription of the Rights Shares at a discount to the TERP based on the prevailing market price of the UMW-OG Shares up to the LPD without diluting their respective percentage of shareholdings in UMW-OG, provided that such Entitled Shareholders fully subscribe for their respective entitlements for the Rights Shares. Nevertheless, in deciding whether to further increase equity participation in UMW-OG, the Entitled Shareholders shall take into consideration that although the recapitalisation exercise may alleviate the Group s immediate short-term liquidity pressures, the Group is currently operating in difficult economic conditions and a low charter rate environment, with the O&G industry being still in a slow process of rebalancing; (iii) the free Warrants attached to the Rights Shares will provide an added incentive to the Entitled Shareholders to subscribe for the Rights Shares while providing additional funds to the Group (if exercised) to first repay bank borrowings (other than the working capital facilities of the Group) and any surplus thereafter for future working capital requirements of the Group; and 39

51 EXECUTIVE SUMMARY (cont d) (iv) as the Warrants will be listed and traded separately from the UMW-OG Shares, this will provide the Entitled Shareholders with an option to either further increase their equity participation in UMW-OG by exercising the Warrants or monetise the Warrants via disposal in the open market. Proposed Subscription The Proposed PNB Subscription will enable UMW-OG to raise the remaining proceeds required in the event UMW-OG is unable to raise the Intended Gross Proceeds entirely from (i) the Proposed Rights Issue With Warrants and (ii) the Proposed Funds Subscription (if applicable). The Proposed Funds Subscription will allow the RCPS-i to be offered to ASB and/or the Funds to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise. For the avoidance of doubt, in view of the RCPS-i Undertaking, in the event the Proposed Funds Subscription is applicable, ASB and/or the Funds will be offered the RCPS-i prior to such offer being made to PNB. Thereafter, PNB shall subscribe for such number of RCPS-i in order to raise the Intended Gross Proceeds. Proposed Exemption In view of the funding requirements of the UMW-OG Group as well as conditionality of the Proposals as set out in Section 10, Part A of the Circular, without the Proposed Exemption, the Proposals will not proceed and accordingly, the potential benefits arising from the Proposals as detailed in Section 10 of this IAL will not materialise. Proposed Amendment The Proposed Amendment entails an amendment to the relevant clauses of the Constitution to facilitate the issuance of the RCPS-i pursuant to the Proposed Subscription. (II) Rights Issue Price, Implied Conversion Price and Exercise Price We are of the view that the basis and justification for the Rights Issue Price, Implied Conversion Price and Exercise Price are justifiable after taking into consideration the following factors:- (i) the subscription by the PAC Group of the Excess Rights Shares via excess application will be on terms which are identical to those offered to all other Entitled Shareholders. In this respect, the PAC Group does not gain any advantage or additional entitlement over the non-interested shareholders of UMW-OG. On the other hand, as set out in Section 2.5, Part A of the Circular, in determining the priority of allocation for Excess Rights Shares, the priority shall be given to:- (1) the Non-Interested Entitled Shareholders and/or their renouncee(s), if any, for the Excess Rights Shares applied for, if any; then to (2) the funds under the management of AmanahRaya Trustees Berhad; and lastly to (3) PNB for the balance number of undersubscribed Excess Rights Shares (subject always to the Collective Shareholding Threshold). 40

52 EXECUTIVE SUMMARY (cont d) (ii) (iii) (iv) (v) (vi) the entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of Entitled Shareholders on the Entitlement Date. Should all the Entitled Shareholders and/or their renouncee(s) subscribe in full their entitlements under the Proposed Rights Issue With Warrants, there will not be any Excess Rights Shares or RCPS-i to be subscribed by the PAC Group; the subscription by PNB of the RCPS-i (if applicable) is supplemental to and identical to PNB s support provided for the Proposed Rights Issue With Warrants via the Rights Issue Undertakings whereas the offer of RCPS-i to ASB and/or the Funds (if applicable) is to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. Further, the issuance of new RCPS-i will be on terms not more favourable than the Rights Shares except for certain rights held by the RCPS-i holders (i.e. in terms of the entitlement to a redemption premium of 8% per annum should the Company decide to redeem all or part of the outstanding RCPS-i as well as ranking ahead in point of priority to payment upon any liquidation, dissolution or winding up of the Company) (see Section 5.2 of this IAL for our evaluation on the salient terms of the RCPS-i); the Rights Issue Price and Implied Conversion Price of RM0.30 represents discounts ranging between 12.38% and 27.26% to the TERP based on the five (5)-day, one (1)-month, three (3)-month, six (6)-month and one (1)-year VWAMPs of the UMW-OG Shares up to and including the LPD as well as a discount of 71.28% to the audited consolidated NA per UMW-OG Share as at 31 December 2016 and accordingly, should encourage the subscription of Rights Shares by the Entitled Shareholders; furthermore, the issuance of free Warrants provides an added incentive for the Entitled Shareholders and/or their renouncee(s) to subscribe for the Rights Shares. Although the Exercise Price of RM0.395 represents a premium ranging between 3.59% and 15.36% to the TERP based on the five (5)-day, one (1)-month and three (3)-month VWAMPs of the UMW-OG Shares up to and including the LPD, the Exercise Price is at a discount of 62.18% to the audited consolidated NA per UMW-OG Shares as at 31 December Furthermore, as at the LPD, the Warrants (which shall be issued free on the basis of one (1) Warrant for every four (4) Rights Shares subscribed) have a theoretical value of RM and this shall translate to a theoretical reduction in the Rights Issue Price per Rights Share and/or the Subscription Price per RCPS-i by RM0.0359; and it shall also be noted that PNB had informed UMW-OG that it has been approached by potential third party investors to explore the possibility of entering into a Put Option arrangement (see Section 2.7, Part A of the Circular for further details) wherein based on ongoing preliminary discussions and negotiations between PNB and these potential third party investors, the Put Option would only be exercisable after the Proposed Rights Issue With Warrants has been completed, at the option price of RM0.30 per UMW-OG Share which is equivalent to the Rights Issue Price and no consideration would be payable for the Warrants. If entered into and based on the indicative terms as stated above, the Put Option will entail the transfer of up to 1,000,000,000 UMW-OG Shares (representing up to 12.2% of the enlarged issued share capital of UMW-OG, comprising 8,215,600,000 UMW-OG Shares) and up to 250,000,000 Warrants to these potential third party investors. 41

53 EXECUTIVE SUMMARY (cont d) (III) Effects of the Proposals On a standalone basis, the Proposed Exemption and Proposed Amendment will not have any effect on the share capital, substantial shareholders shareholdings, NA per UMW-OG Share, gearing and EPS of the UMW-OG Group. Nonetheless, the Proposed Exemption and Proposed Amendment are necessary to facilitate the implementation of the Proposed Rights Issue With Warrants and Proposed Subscription. The pro forma effects of the Proposed Rights Issue With Warrants and Proposed Subscription (see Section 9, Part A of the Circular as well as Section 5.3 of this IAL for further details) are as follows:- (i) (ii) upon completion of the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable), the issued share capital of UMW-OG will increase significantly from RM2,453.8 million as at the LPD to RM4,067.1 million. Assuming full exercise of the Warrants into new UMW-OG Shares, the issued share capital of UMW-OG will increase further to RM4,861.6 million; the pro forma effects on the percentage of shareholdings held by the PAC Group in UMW-OG pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription are as follows:- Scenario I (All the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants and accordingly, the Proposed Subscription is not required nor applicable and will not be implemented) As the Proposed Rights Issue With Warrants will be fully subscribed in proportion to the Entitled Shareholders shareholdings, there will be no change to the percentage of shareholdings held by the PAC Group in UMW-OG. Scenario II(A) (Only PNB subscribes for the Rights Shares and Excess Rights Shares (up to the Collective Shareholding Threshold) and RCPS-i pursuant to the Proposed PNB Subscription) The increase in the maximum potential percentage of shareholdings held by PNB and the PAC Group in UMW-OG pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription is summarised below:- Percentage of shareholdings in UMW-OG PNB (%) PAC Group (%) As at the LPD and after the following events (in sequential order):- (i) Distribution (ii) Proposed Rights Issue With Warrants (iii) Proposed Subscription (iv) Full conversion of the RCPS-i (v) Full exercise of the Warrants PNB has, via the Undertakings and Subscription Letter, undertaken to ensure that any increase to the Collective Shareholding, whether through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG being in compliance with the public shareholding spread requirement. As such, the maximum potential percentage of shareholding is purely illustrative. 42

54 EXECUTIVE SUMMARY (cont d) Scenario II(B) (Only ASB subscribes for its entitlement under the Proposed Rights Issue With Warrants and RCPS-i pursuant to the Proposed Funds Subscription to raise the Intended Gross Proceeds) The increase in the maximum potential percentage of shareholdings held by ASB and the PAC Group in UMW-OG pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription is summarised below:- Percentage of shareholdings in UMW-OG ASB (%) PAC Group (%) As at the LPD and after the following events (in sequential order):- (i) Distribution (ii) Proposed Rights Issue With Warrants (iii) Proposed Subscription (iv) Full conversion of the RCPS-i (v) Full exercise of the Warrants The above scenarios are for illustrative purpose only and are not exhaustive as there may be other circumstances that may give rise to a Mandatory Offer. (iii) (iv) the NA of the Group will increase from RM2,258.0 million as at 31 December 2016 (RM1.04 per UMW-OG Share) to RM4,049.1 million upon completion of the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) (diluted to RM0.49 per UMW-OG Share, assuming full conversion of the RCPS-i (if any)) and thereafter, to RM4,646.9 million assuming the full exercise of the Warrants (further diluted to RM0.48 per UMW-OG Share); the gearing ratio of the Group will reduce from 1.81 times as at 31 December 2016 to 0.64 times upon completion of the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) and thereafter, to 0.56 times assuming the full exercise of the Warrants. The reduction in gearing of the Group above is due to part repayment of bank borrowings amounting to RM1,500.0 million as well as the enlarged NA base of the Group. Subsequent additional repayment of the Group s borrowings using part of the released pledged cash as well as the proceeds from the exercise of the Warrants in the future will further reduce the Group s gearing below 0.56 times; and (v) the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) are expected to contribute positively to the earnings of the Group as the proceeds raised will be used towards part repayment of the Group s bank borrowings which will then reduce the finance costs of the Group; As a result of the increase in weighted average number of UMW-OG Shares in issue upon issuance of the Rights Shares and new UMW-OG Shares arising from the conversion of RCPS-i (if any) and exercise of Warrants, there will be dilution in the EPS of the Group upon issuance of such new UMW-OG Shares. 43

55 EXECUTIVE SUMMARY (cont d) Notwithstanding the dilution in NA per UMW-OG Share and EPS of the Group as set out above, it is important to note that the entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of the Entitled Shareholders on the Entitlement Date. Accordingly, should all the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants, there will not be any dilution to the percentage of shareholdings held by all the Entitled Shareholders and ultimately, their share of NA and earnings of the UMW-OG Group. Based on our evaluation above, we are of the view that the overall effects of the Proposals are expected to be positive to the Group. (IV) Industry outlook and future prospects of the UMW-OG Group Subsequent to the announcement of planned production cuts on 30 November 2016, the OPEC and non-opec producer nations had on 25 May 2017, agreed to extend the oil production cuts by nine (9) months to March 2018, providing continued support to the recovery of the O&G industry with the benchmark Brent crude oil price hovering in the region of USD45 to USD55 per barrel as compared to a low of USD27 per barrel in January With a larger capital / NA base coupled with the available debt headroom upon completion of the recapitalisation exercise, the UMW-OG Group shall be wellpositioned to ride on the potential recovery of the O&G industry. In view of the above and after taking into consideration the past experience, track records and market share of the UMW-OG Group in the drilling rig industry, we are of the view that the future prospects of the UMW-OG Group appear to be positive. (V) Implications arising from the voting outcome of the Proposed Exemption If you vote in favour of the Proposed Exemption, the SC would be able to consider the application by the PAC Group for the Proposed Exemption. Should you vote against the Proposed Exemption, UMW-OG will not be able to undertake the Proposals in view of the conditionality of the Proposals as set out in Section 10, Part A of the Circular. Accordingly, the part repayment of bank borrowings and refinancing exercise will also not materialise. Consequently, UMW-OG will not be able to realise the potential benefits arising from the Proposals as detailed in Section 10 of this IAL and will continue to have current level of borrowings, of which the Group will need to seek for alternative ways to alleviate the short-term liquidity pressures. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 44

56 EXECUTIVE SUMMARY (cont d) 3. CONCLUSION AND RECOMMENDATION We have assessed and evaluated the Proposed Exemption holistically, taking into consideration the various factors set out in Section 5 of this IAL. You should carefully consider the merits and demerits of the Proposed Exemption based on all relevant and pertinent factors including those set out in this IAL as well as those highlighted by the Board in its letter to shareholders of UMW-OG in relation to the Proposals, as set out in Part A of the Circular before voting on the ordinary resolution in respect of the Proposed Exemption at the forthcoming EGM. The Proposed Exemption (if granted) will allow UMW-OG to undertake the recapitalisation exercise (if it is also approved by the shareholders of UMW-OG). Accordingly, the potential advantages of the Proposals are as follows:- Potential advantages (i) (ii) The PAC Group is currently the controlling shareholder of UMW-OG with an equity interest of 45.48% (after the Distribution). The support from PNB via the Undertakings and Subscription Letter demonstrates its interest and commitment in UMW-OG. Further, such support provides certainty to UMW-OG in raising the Intended Gross Proceeds without the requirement for an underwriting arrangement. The recapitalisation exercise serves to reduce the Group s reliance on debt financing which has grown significantly post UMW-OG s initial public offering in end In light of the current difficult economic conditions and a low charter rate environment as well as the resultant expectations of existing and prospective lenders, the part repayment of the Group s bank borrowings will alleviate short-term liquidity pressures, taking into consideration that an amount of approximately RM1.50 billion is to be repaid by end of In addition, the part repayment of bank borrowings will also benefit the Group in terms of:- (a) (b) (c) (d) (e) increasing its NA base from RM2,258.0 million as at 31 December 2016 to RM4,049.1 million upon completion of the exercise and thereafter, to RM4,646.9 million upon full exercise of the Warrants; lowering the gearing ratio of the Group from 1.81 times as at 31 December 2016 to 0.64 times upon completion of the exercise and thereafter, to 0.56 times upon full exercise of the Warrants; reducing the indebtedness of the Group and thereby reducing the Group s finance costs accordingly; reducing exposure to interest rate fluctuations as well as foreign exchange risk in view that the Group s bank borrowings largely carry a floating interest rate and substantially all of these borrowings are denominated in USD; and facilitating the refinancing of the remaining borrowings, following which an amount of USD125 million equivalent to approximately RM553 million pledged cash will be released and may be used to further reduce the Group s borrowings and/or the Shareholder Loan. (iii) Upon completion of the recapitalisation exercise, the Group will have a larger capital / NA base and improved gearing level. This may improve the credit rating and debt capacity of the Group, providing greater financial flexibility to gear up in the future should the need / opportunity arise, placing the Group in a good position to ride on the potential recovery of the O&G industry. 45

57 EXECUTIVE SUMMARY (cont d) The entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of Entitled Shareholders on the Entitlement Date. All shareholders are entitled to subscribe for their respective entitlements under the Proposed Rights Issue With Warrants as well as to apply for Excess Rights Shares via excess application. All shareholders of UMW-OG will be subscribing for the Rights Shares and Excess Rights Shares at the same Rights Issue Price and will be issued free Warrants on the same basis. Correspondingly, the PAC Group does not gain any advantage or additional entitlement over the non-interested shareholders of UMW-OG. On the other hand, in determining the priority of allocation for Excess Rights Shares, the Non-Interested Entitled Shareholders and/or their renouncee(s), if any, shall be given priority of allocation for Excess Rights Shares applied for, if any. The subscription by PNB of the RCPS-i (if applicable) is supplemental to and identical to PNB s support provided for the Proposed Rights Issue With Warrants via the Rights Issue Undertakings whereas the offer of RCPS-i to ASB and/or the Funds (if applicable) is to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. Further, the issuance of new RCPS-i will be on terms not more favourable than the Rights Shares except for certain rights held by the RCPS-i holders (i.e. in terms of the entitlement to a redemption premium of 8% per annum should the Company decide to redeem all or part of the outstanding RCPS-i as well as ranking ahead in point of priority to payment upon any liquidation, dissolution or winding up of the Company). In the event that the PAC Group subscribes for more than its entitlement under the Proposed Rights Issue With Warrants (via subscription of Excess Rights Shares and/or RCPS-i (if applicable)), the Proposals will result in the following potential disadvantages:- Potential disadvantages (i) The NA per UMW-OG Share will be diluted from RM1.04 (as at 31 December 2016) to RM0.49 (upon completion of the Proposed Rights Issue With Warrants and if applicable, the Proposed Subscription together with the full conversion of RCPS-i) and thereafter, diluted further to RM0.48 (assuming the full exercise of the Warrants) as the new UMW-OG Shares will be issued at prices lower than the NA per UMW-OG Share whereby against the audited consolidated NA per UMW-OG Share as at 31 December 2016 of RM1.0444:- (a) (b) (c) the Rights Issue Price for the Rights Shares of RM0.30 represents a discount of 71.28%; the Implied Conversion Price for the Conversion Shares of RM0.30 represents a discount of 71.28%; and the Exercise Price for the Exercised Shares of RM0.395 represents a discount of 62.18%. The EPS of the Group will be diluted as a result of the increase in weighted average number of UMW-OG Shares in issue upon issuance of the Rights Shares and new UMW-OG Shares arising from the conversion of RCPS-i (if any) and exercise of Warrants. (ii) Subject to the Exemption Shareholding Limit as set out in Section of this IAL, the Proposed Exemption will allow the increase in:- (a) the shareholding of PNB in UMW-OG from 3.78% (after the Distribution) up to the maximum potential shareholding of 78.62% of the enlarged total number of UMW-OG Shares; 46

58 EXECUTIVE SUMMARY (cont d) Potential disadvantages (b) (c) the shareholding of ASB in UMW-OG from 31.87% (after the Distribution) up to the maximum potential shareholding of 84.86% of the enlarged total number of UMW-OG Shares; and the collective shareholdings of the PAC Group in UMW-OG by more than 2% from 45.48% (after the Distribution) up to the maximum potential collective shareholdings of 87.88% of the enlarged total number of UMW- OG Shares and on the other hand, the shareholdings held by the noninterested shareholders in UMW-OG will be diluted from 54.52% (after the Distribution) to the minimum potential shareholdings of 12.12%, without being required to undertake the Mandatory Offer. Nonetheless, PNB has, via the Undertakings and Subscription Letter, undertaken to ensure that any increase to the Collective Shareholding, whether through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG being in compliance with the public shareholding spread requirement. As such, the maximum potential percentage of shareholding of PNB, ASB and the PAC Group above is purely illustrative. In view that the Rights Issue Price and Implied Conversion Price are at a discount ranging between 12.38% and 27.26% to the TERP based on the five (5)-day, one (1)-month, three (3)-month, six (6)-month and one (1)-year VWAMPs of the UMW- OG Shares up to and including the LPD, this would mean that PNB, ASB and/or the PAC Group may obtain statutory control over UMW-OG without paying a premium. With a collective holding of more than 50% in UMW-OG, the PAC Group will have statutory control over UMW-OG and will be able to determine the outcome of all resolutions which require a simple majority of 50% plus one (1) share at general meetings (unless the PAC Group is required to abstain from voting). (iii) The Warrants shall be issued free on the basis of one (1) Warrant for every four (4) Rights Shares and/or RCPS-i (if applicable) subscribed. Accordingly, the renunciation of the Rights Shares by any Entitled Shareholders will entail the renunciation of the attached Warrants. Accordingly, they will forgo their option to either:- (a) (b) exercise the Warrants to increase equity participation in UMW-OG; or monetise the Warrants via disposal in the open market. As at the LPD, the Warrants have a theoretical value derived based on the Trinomial option pricing model of RM0.1434, which shall translate to a theoretical reduction in the Rights Issue Price per Rights Share and/or the Subscription Price per RCPS-i by RM (iv) Pursuant to the recapitalisation exercise, the weighted average cost of capital of UMW-OG will increase from 5.76% to 6.30% arising from the increase in equity financing which has a higher required rate of return as compared to debt financing. Premised on the above and our evaluation of the Proposed Exemption on a holistic basis, we are of the opinion that, on the basis of the information available to us, the Proposed Exemption is fair and reasonable. Accordingly, we recommend that you vote in favour of the ordinary resolution in respect of the Proposed Exemption to be tabled at the forthcoming EGM. 47

59 Registered Office: Ground, 1st, 2nd, 3rd Floor Wisma Umno Lorong Bagan Luar Dua Butterworth Seberang Perai 3 August 2017 To: The non-interested shareholders of UMW Oil & Gas Corporation Berhad Dear Sir / Madam, UMW OIL & GAS CORPORATION BERHAD ( UMW-OG OR THE COMPANY ) INDEPENDENT ADVICE LETTER IN RELATION TO THE PROPOSED EXEMPTION This IAL is prepared for inclusion in the Circular to the shareholders of UMW-OG. All definitions used in this IAL shall have the same meaning as the words and expressions defined in the Definitions section of the Circular, except where the context otherwise requires or where otherwise defined in this IAL. All references to we, us or our in this IAL are references to Mercury Securities, being the Independent Adviser for the Proposed Exemption. 1. INTRODUCTION On 4 May 2017, Maybank IB, on behalf of the Board, announced that UMW-OG intends to undertake a recapitalisation exercise to raise the Intended Gross Proceeds (i.e. a total of RM1,816,080,000) via the Proposed Rights Issue With Warrants and Proposed PNB Subscription (if applicable). In conjunction with the Proposed Rights Issue With Warrants, an exemption from the SC will also be sought by the PAC Group pursuant to Paragraph 4.08(1)(b) of the Rules from the obligation to undertake the Mandatory Offer. Subsequently on 9 June 2017, Maybank IB, on behalf of the Board, announced that PNB had on 9 June 2017 issued and UMW-OG had on even date accepted the Undertakings and Subscription Letter providing, amongst others, the Rights Issue Undertakings, which are subject to the Collective Shareholding Threshold. The threshold of 65% to the Collective Shareholding of the enlarged issued share capital of UMW-OG upon the subscription of the PAC Group s respective entitlements and/or applications for the Excess Rights Shares was arrived at after taking into consideration the following:- (i) (ii) public shareholding spread requirement of 25% pursuant to Paragraph 8.02(1) of the Listing Requirements; and potential emergence of other non-public shareholders following the Proposed Rights Issue With Warrants, where based on the threshold of 65%, up to 10% of the enlarged issued share capital of UMW-OG can be in the hands of these new non-public shareholders while at the same time, allowing UMW-OG to comply with the public shareholding spread requirement of 25%. 48

60 In the event that UMW-OG is unable to raise the Intended Gross Proceeds from the Proposed Rights Issue With Warrants as a result of the Rights Issue Undertakings being subject to the Collective Shareholding Threshold, PNB has further undertaken, via the Undertakings and Subscription Letter, to subscribe for up to 4,847,539,594 new RCPS-i together with up to 1,211,884,898 Warrants pursuant to the RCPS-i Undertaking so as to ensure that UMW-OG will be able to raise the Intended Gross Proceeds. It was further announced that in view of the Collective Shareholding Threshold, the Company proposed to undertake the Proposed Funds Subscription to allow the RCPS-i to be offered to ASB and/or the Funds to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. Further to the above, the Company has been notified that the PAC Group intends to seek an exemption from the obligation to undertake a Mandatory Offer in relation to the exercise of any conversion or subscription rights or options into new voting shares or voting rights pursuant to Paragraph 4.08(1)(c) of the Rules. The Proposed Exemption is being sought by the PAC Group pursuant to the following:- (i) (ii) (iii) subscription for any Rights Shares and Excess Rights Shares by the PAC Group; conversion of any RCPS-i held by PNB, ASB and/or the Funds pursuant to the Proposed Subscription; and exercise of any Warrants held by the PAC Group pursuant to the Proposed Rights Issue With Warrants and/or the Proposed Subscription, which may result in an obligation by PNB, ASB and/or the PAC Group as a whole to undertake the Mandatory Offer pursuant to Section 218(2) of the CMSA and Paragraphs 4.01(a) and 4.01(b) of the Rules arising from:- (i) an increase in the individual shareholding of PNB and/or ASB in UMW-OG to above 33% pursuant to the subscription of Rights Shares and Excess Rights Shares, conversion of RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants; (ii) following the subscription of such number of Rights Shares and Excess Rights Shares, conversion of RCPS-i and/or exercise of Warrants by PNB or ASB such that the individual shareholding of PNB or ASB in UMW-OG increases above 33%, a further increase in the individual shareholding of PNB or ASB in UMW-OG by more than 2% in any period of six (6) months pursuant to the conversion of RCPS-i and/or exercise of Warrants into new UMW- OG Shares during the tenure of the RCPS-i or Warrants; and (iii) an increase in the collective shareholding of the PAC Group in UMW-OG by more than 2% in any period of six (6) months pursuant to the subscription of Rights Shares and Excess Rights Shares, conversion of RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants. On 26 May 2017, Mercury Securities had been appointed by UMW-OG pursuant to the Rules to act as the Independent Adviser to advise the non-interested Directors and non-interested shareholders of UMW-OG on the Proposed Exemption. Mercury Securities subsequently declared its independence from any conflict of interest or potential conflict of interest to the SC in relation to its role as the Independent Adviser for the Proposed Exemption. 49

61 The pro forma effects on the percentage of shareholdings held by PNB and the PAC Group in UMW- OG pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription are set out in Section of this IAL. The maximum potential percentage of shareholdings of PNB and the PAC Group in UMW-OG (assuming that only PNB subscribes for the Rights Shares and Excess Rights Shares (up to the Collective Shareholding Threshold) and RCPS-i pursuant to the Proposed PNB Subscription) are as follows:- Percentage of shareholdings in UMW-OG PNB (%) PAC Group (%) As at the LPD and after the following events (in sequential order):- (i) Distribution (ii) Proposed Rights Issue With Warrants (iii) Proposed Subscription (iv) Full conversion of the RCPS-i (v) Full exercise of the Warrants In another scenario whereby only ASB subscribes for its entitlement under the Proposed Rights Issue With Warrants and RCPS-i pursuant to the Proposed Funds Subscription to raise the Intended Gross Proceeds, the increase in the maximum potential percentage of shareholdings held by ASB and the PAC Group in UMW-OG is summarised below:- Percentage of shareholdings in UMW-OG ASB (%) PAC Group (%) As at the LPD and after the following events (in sequential order):- (i) Distribution (ii) Proposed Rights Issue With Warrants (iii) Proposed Subscription (iv) Full conversion of the RCPS-i (v) Full exercise of the Warrants The above scenarios are for illustrative purpose only and are not exhaustive as there may be other circumstances that may give rise to a Mandatory Offer. The SC had on 2 August 2017 notified that it has no further comments to the contents of this IAL. However, such notification shall not be taken to suggest that the SC agrees with the recommendation of the Independent Adviser or assumes responsibility for the correctness of any statements made or opinions or reports expressed in this IAL. The Proposed Rights Issue With Warrants and Proposed Exemption are inter-conditional. The Proposed Subscription is conditional upon the Proposed Rights Issue With Warrants but not vice versa. The Proposed Subscription and Proposed Amendment are inter-conditional. Although the Proposed Subscription and Proposed Rights Issue With Warrants are not inter-conditional, the Intended Gross Proceeds to be raised from the recapitalisation exercise of UMW-OG (i.e. the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable)) is RM1,816,080,000. The purpose of this IAL is to provide the non-interested shareholders of UMW-OG with an independent evaluation on the Proposed Exemption on a holistic basis together with our recommendation on whether the non-interested shareholders of UMW-OG should vote in favour of the Proposed Exemption. Nonetheless, the non-interested shareholders of UMW-OG should rely on their own evaluation of the merits of the Proposed Exemption before making a decision on the course of action to be taken at the forthcoming EGM. 50

62 This IAL is prepared solely for the use of the non-interested shareholders of UMW-OG to consider the Proposed Exemption and should not be used or relied upon by any other party for any other purposes whatsoever. YOU ARE ADVISED TO READ AND UNDERSTAND BOTH THIS IAL AND THE LETTER FROM THE BOARD TO THE SHAREHOLDERS OF UMW-OG IN RELATION TO THE PROPOSALS AS SET OUT IN PART A OF THE CIRCULAR TOGETHER WITH THE ACCOMPANYING APPENDICES, AND TO CAREFULLY CONSIDER THE RECOMMENDATIONS CONTAINED IN BOTH THE LETTERS BEFORE VOTING ON THE ORDINARY RESOLUTION IN RESPECT OF THE PROPOSED EXEMPTION TO BE TABLED AT THE FORTHCOMING EGM. IF YOU ARE IN DOUBT AS TO THE COURSE OF ACTION TO BE TAKEN, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY. 2. SCOPE AND LIMITATIONS OF OUR EVALUATION OF THE PROPOSED EXEMPTION Mercury Securities was not involved in any formulation of or any deliberations and negotiations on the terms and conditions pertaining to the Proposals. The terms of reference of our appointment as the Independent Adviser for the Proposed Exemption are in accordance with the requirements in Paragraph 4.08 of the Rules. Our terms of reference as the Independent Adviser are limited to expressing an independent opinion on the fairness and reasonableness of the Proposed Exemption insofar as the non-interested shareholders of UMW-OG are concerned based on information and document made available to us as set out below:- (i) (ii) (iii) information contained in Part A of the Circular and the accompanying appendices; other relevant information, document, confirmation and representation furnished to us by the Board, management and/or representatives of UMW-OG; and other publicly available information which we deem to be relevant, including but not limited to annual reports and audited consolidated financial statements of UMW-OG. We have relied on the UMW-OG Group as well as their Directors, management and/or representatives to take due care in ensuring that all information, document, confirmation and representation provided to us to facilitate our evaluation and which had been used, referred to and/or relied upon in this IAL have been fully disclosed to us, are accurate, valid and complete in all material aspects. After making all reasonable enquiries, we are satisfied that sufficient information has been disclosed to us in enabling us to formulate our recommendation and the information is reasonable, accurate, complete and free from material omission. In rendering our advice, we have taken note of the pertinent matters, which we believe are necessary and of importance to an assessment of the implications of the Proposed Exemption and therefore are of general concern to the non-interested shareholders of UMW-OG to consider and form their views thereon. Notwithstanding the foregoing, we have not given consideration to the specific investment objectives, risk profiles, financial situations and particular needs of any individual non-interested shareholder or any specific group of non-interested shareholders. We recommend that any individual non-interested shareholder or group of non-interested shareholders who is / are in doubt as to the action to be taken or require advice in relation to the Proposals in the context of their investment objectives, risk profiles, financial situations and particular needs to consult their respective stockbrokers, bank managers, solicitors, accountants or other professional advisers immediately. 51

63 Our views expressed in this IAL are, amongst others, based on economic, market and other conditions prevailing, and the information and/or document made available to us as at the LPD or such other period as specified herein. Such conditions may change significantly over a short period of time. In addition, it should be noted that our evaluation and opinion expressed in this IAL do not take into account information, events or conditions arising after the LPD or such other period as specified herein, as the case may be. We shall immediately notify the SC in writing and the non-interested shareholders by way of an announcement to Bursa Securities and a press notice if after despatching this IAL, as guided by Paragraph 11.07(1) of the Rules, we become aware that this IAL:- (i) (ii) (iii) contains a material statement which is false or misleading; contains a statement from which there is a material omission; or does not contain a statement relating to a material development. If circumstances require, we shall send a supplementary IAL to the non-interested shareholders in accordance with Paragraph 11.07(2) of the Rules. 3. DETAILS OF THE PROPOSALS The details of the Proposals are set out in the following sections in Part A of the Circular and should be read in entirety by the non-interested shareholders of UMW-OG:- Proposals Proposed Rights Issue With Warrants Proposed Subscription Proposed Exemption Proposed Amendment Section in Part A of the Circular INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM The interests of the Directors, major shareholders and/or persons connected with them (together with their course of actions in relation to the Proposals) are set out in Section 11, Part A of the Circular. 5. EVALUATION OF THE PROPOSED EXEMPTION In arriving at our conclusion and recommendation, we have assessed and evaluated the Proposed Exemption on a holistic basis in accordance with Schedule 2: Part III of the Rules. In our evaluation of the Proposed Exemption, we have considered the following factors:- Consideration factors Section (i) Rationale for the Proposals 5.1 (ii) Rights Issue Price, Implied Conversion Price and Exercise Price 5.2 (iii) Effects of the Proposals 5.3 (iv) Industry outlook and future prospects of the UMW-OG Group 5.4 (v) Implications arising from the voting outcome of the Proposed Exemption

64 5.1 Rationale for the Proposals We have considered the rationale for the Proposals set out in Section 7, Part A of the Circular and our commentaries are summarised below: Proposed Rights Issue With Warrants In our assessment of the recapitalisation exercise, we view the rationale for the exercise to be reasonable based on the following analysis:- (a) the Group s asset base has grown significantly since its listing in However, it has not undertaken any equity fund raising exercise to raise proceeds for its capital expenditure and/or working capital requirements, thus contributing to a high gearing level; (b) (c) (d) amid the current difficult economic conditions and a low charter rate environment, it is essential for the Group to be cost competitive and to maintain a level of operational sustainable cashflow; expectations of existing and prospective lenders; and utilisation of the Intended Gross Proceeds. Further details of the abovesaid points are elaborated below:- (A) The Group s asset base has grown significantly since its listing in However, it has not undertaken any equity fund raising exercise to raise proceeds for its capital expenditure and/or working capital requirements, thus contributing to a high gearing level UMW-OG is a Malaysia-based multinational provider of drilling and oilfield services for the upstream sector of the O&G industry whereby:- (i) (ii) Drilling Services involve the provision of drilling services for exploration, development and production wells, and workover services to the upstream sector of the O&G industry; and Oilfield Services involve the provision of threading, inspection and repair services for oil country tubular goods in Malaysia and overseas, with a focus on premium connections used in high-end and complex wells. Currently, the Group operates from six (6) oilfield plants in four (4) countries, namely in Malaysia, Thailand, China and Turkmenistan. In terms of financial contribution, the Drilling Services segment has been the Group s major business segment, contributing approximately 95% to the consolidated revenue of UMW-OG for the past five (5) financial years. This business segment is capital intensive in nature, whereby it requires high upfront capital expenditures as well as sizeable costs (estimated to be approximately USD12 million per rig on average) for periodic survey and dry-docking of offshore drilling rigs. 53

65 In line with the business strategies and future plans as set out in the prospectus of the Company dated 3 October 2013, UMW-OG had since its listing on the Main Market of Bursa Securities on 1 November 2013, invested significantly (more than USD900 million) on its asset base with the following additions to its stable of assets:- Offshore drilling rigs (Jack-up drilling rigs) UMW NAGA 5 (delivered in April 2014) UMW NAGA 6 (delivered in September 2014) UMW NAGA 7 (delivered in January 2015) UMW NAGA 8 (delivered in August 2015) Hydraulic workover unit UMW GAIT 6 (delivered in August 2014) Following the additions above and recent disposal of NAGA 1, the UMW-OG Group currently has a fleet of seven (7) offshore drilling rigs (all premium jack-up rigs) and five (5) hydraulic workover units. Post its initial public offering in end-2013, UMW-OG has not undertaken any equity fund raising exercise to raise proceeds for its capital expenditures and/or working capital requirements. The Group s funding needs have been met mainly via internally generated funds and bank borrowings. As a result, the Group s debt and gearing have grown over the years as set out below:- Audited as at 31 December Unaudited As at 31 December 2012 (RM million) (RM million) (RM million) (RM million) (RM million) (I) (II) (III) Long-term borrowings - Term loan 2, , , Finance lease liabilities - - * * 0.5 2, , , Short-term borrowings - Term loan Finance lease liabilities - * * Murabahah term financing Short term financing Revolving credits 1, Bank overdrafts , , , Interest-bearing advances - Amount due to holding company Amount due to related companies Total interest-bearing borrowings and advances (D) = (I) + (II) + (III) 4, , , ,568.5 (E) Total equity 2, , , , Gearing ratio (1) (times) (D)/(E) * Negligible n/a Not applicable 54

66 As shown in the table above, the gearing ratio of the Group had been increasing subsequent to its listing on the Main Market of Bursa Securities to 1.81 times as at 31 December 2016 as more reliance was placed on debt financing to meet capital expenditures as well as working capital requirements (coupled with lower total equity due to high impairment losses incurred in respect of the Group s property, plant and equipment for the FYE 31 December 2015 and 31 December 2016). Note:- (1) Set out below is the historical gearing ratio of other companies listed on Bursa Securities whose principal activities include the provision of jack-up drilling rigs for the upstream sector of the O&G industry:- Name of company Market capitalisation as at the LPD (RM million) Financial year end / Gearing ratio (times) as at / / Sapura Energy Berhad (formerly known as Sapurakencana Petroleum Berhad) 9,527.5 January Perisai Petroleum Teknologi Bhd 69.3 December 2.06* UMW-OG December * Computed based on the unaudited financial statements of Perisai Petroleum Teknologi Bhd for twelve (12)-month financial period ended ( FPE ) 31 December The compilation above is solely for illustration purposes only as there is no company listed on Bursa Securities which is directly comparable to the UMW-OG Group in view of differences in terms of amongst others, principal activities, market capitalisation and financial conditions whereby:- (i) (ii) Sapura Energy Berhad (formerly known as Sapurakencana Petroleum Berhad) is a large integrated O&G services and solutions provider (with a market capitalisation of close to RM10 billion as at the LPD) operating across the entire upstream value chain, including offshore engineering and construction activities as well as having interest in various exploration and development assets; and Perisai Petroleum Teknologi Bhd is a relatively smaller player in the drilling rig industry in terms of market capitalisation (RM69.3 million as at the LPD) and scale of operations, in addition to its provision of offshore support vessels. Further, we noted the high gearing ratio of the company and understand that the company is in the midst of formulating a plan to regularise its financial conditions. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 55

67 As for the interest cover ratio (as computed in the table below), the Group has a negative interest cover ratio for both FYE 31 December 2015 and 31 December 2016, mainly attributable to the losses incurred arising from lower contract revenue and high impairment losses due to weak demand for the Group s assets and services as well as high finance costs for both financial years:- FYE 31 December 2016 (RM million) 2015 (RM million) Audited 2014 (RM million) 2013 (RM million) Unaudited 2012 (RM million) Continuing operations (A) (Loss) / Profit before interest expense and tax (1,063.0) (284.4) Interest expenses - Bank borrowings Amount owing to:- (i) holding company (ii) related companies Others Less: Interest expenses capitalised - Property, plant and equipment - (7.8) (6.7) (4.5) (4.1) (B) Net interest expenses Interest cover ratio (times) (A)/(B) n/a n/a n/a Not applicable (B) Amid the current difficult economic conditions and a low charter rate environment, it is essential for the Group to be cost competitive and to maintain a level of operational sustainable cashflow As the O&G industry is still in a slow process of rebalancing, with the demandsupply balance tightening, the oil price is expected to slowly rise with the benchmark Brent crude oil recovering from a low of USD27 per barrel in January 2016 to the current region of USD45 to USD55 per barrel. The charter rates, however, remains suppressed due to availability of many idle rigs. The charter rates have plummeted by more than 50% during the oil price rout in 2014, and are expected to rise slowly in the near to medium term. Declining charter rates and excess capacity have affected the financial performance and the fleet utilisation of offshore players industry-wide. With charter rates halved and not expected to rise significantly in the short term, coupled with the existing high gearing and large interest cost, it is imperative that the Group reduces its cost structure by part repayment of existing loans to lower interest cost per annum and restructure the remaining borrowings to reduce quarterly amortised loan repayment amount to a level sustainable by the current low charter rates. This will enable the reallocation of resources for higher operational cashflows, which is key for the Group s continued sustainability and demonstrated financial strength in bidding for projects. With the weaker financial performance of the Group in recent years, UMW-OG is unable to rely entirely on internally generated funds to repay its bank borrowings and the higher interest costs resulting from the lower credit rating for O&G companies. 56

68 (C) Expectations of existing and prospective lenders Against the backdrop of uncertainties surrounding developments within the O&G industry, many lenders had downgraded the risk profiles of O&G companies and reduced credit exposures in the O&G industry, by amongst others, not renewing revolving credit facilities and not extending short-term borrowings. As the financial performance of O&G players deteriorates industry-wide, lenders in general are looking to reduce their exposures to the industry. Therefore, in order for the Group to restructure its remaining borrowings, the lenders are expecting the Group to reduce its gearing level to be within an acceptable range so as to improve the Group s credit rating. We noted that the recapitalisation exercise will immediately increase the Group s capital base significantly and enable its gearing to be reduced from the current 1.81 times to 0.64 times, a level that is acceptable to both existing and potential lenders. As at 31 March 2017, the total borrowings of the UMW-OG Group including the Shareholder Loan stood at approximately RM4.00 billion, of which approximately RM1.51 billion are short term debts due for repayment within one (1) year and approximately RM2.49 billion are long term debts due for repayment after more than one (1) year. Further, out of this total borrowings of RM4.00 billion, an amount of approximately RM1.50 billion is to be repaid by end of (D) Utilisation of the Intended Gross Proceeds As set out in Section 6, Part A of the Circular, the Company expects to raise the Intended Gross Proceeds of RM1,816,080,000 from its recapitalisation exercise, which is intended to be used in the following Shariah-compliant manner:- Description of use of proceeds Estimated timeframe from date of listing of the Rights Shares and/or issuance of the RCPS-i (if applicable) Amount RM million % Part repayment of the bank borrowings of the UMW-OG Group Working capital requirements of the UMW-OG Group Defray estimated expenses relating to the Proposals Within 4 months 1, Within 24 months Within 2 months Total gross proceeds 1, THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 57

69 (i) Part repayment of bank borrowings In line with UMW-OG s recapitalisation exercise, majority of the total gross proceeds to be raised (82.6%) will be used to repay the Group s bank borrowings. As at 31 December 2016, the Group s total bank borrowings (as disclosed in the Annual Report 2016 of UMW-OG) are approximately RM3,772.5 million, the details of which are as follows:- Type of borrowings Security pledged Fully repayable by Weighted average effective interest rates per annum (%) Within 1 year (RM million) 1-2 years (RM million) Amount repayable Amount 2-5 years (RM million) More than 5 years (RM million) Less: Unamortised transaction costs (RM million) outstanding as at 31 December 2016 (RM million) Term loan (USD) Secured by a charge over all existing and future assets of UMW Drilling 4 (L) Ltd, UMW Drilling 5 (L) Ltd, UMW Drilling 7 (L) Ltd and a charge over the debt service reserve account where an amount of USD75.0 million is placed with the licensed bank until the loan is fully repaid June (floating rate) (18.8) Term loan (USD) Unsecured Ranging from April 2017 to October (floating rate) ,823.5 Revolving credit (99% USD; 1% RM) Unsecured. However, the Group is required to maintain deposits of approximately RM221.8 million with the lender in respect of revolving credits of USD50.0 million throughout the duration of drawdown of the revolving credits and any withdrawal request requires approval from the licensed bank Repayable on demand (floating rate) 1, ,227.6 Total bank borrowings 3,

70 In addition to the main objective of alleviating short-term liquidity pressures as set out above, the other benefits to the Group arising from the part repayment of bank borrowings are as follows:- (1) Strengthened financial position The recapitalisation exercise is expected to strengthen the Group s financial position. As set out in Section 9.3, Part A of the Circular, upon completion of the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable):- (a) (b) the pro forma NA of the Group will increase from RM2,258.0 million as at 31 December 2016 to RM4,049.1 million; and the gearing ratio of the Group will reduce from 1.81 times as at 31 December 2016 to 0.64 times. Assuming full exercise of the Warrants in the future, the pro forma NA and gearing ratio of the Group will improve further to RM4,646.9 million and 0.56 times respectively. A larger NA base will enhance competitiveness of the Group to ride on the potential recovery of activities in the O&G industry (see our commentaries on the industry outlook and future prospects of the UMW-OG Group in Section 5.4 of this IAL). Furthermore, upon completion of the recapitalisation exercise, the UMW-OG Group will have more debt headroom available and will be in a more comfortable position to gear up should the need / opportunity arise. (2) Interest savings The part repayment of bank borrowings will result in a reduction in finance costs. For illustration purpose, based on an interest rate of 4% per annum, the repayment of RM1,500.0 million bank borrowings will result in interest savings (before taxation) of RM60.0 million per annum. Accordingly, the interest cover ratio of UMW-OG will also improve. (3) Reduced exposure to interest rate fluctuations The Group s bank borrowings largely carry a floating interest rate i.e. an interest rate which will vary or fluctuate over time based on an underlying benchmark interest rate or index that changes periodically. A higher underlying benchmark interest rate or index (e.g. LIBOR) will translate to an increase in interest expenses to be incurred by the Group. Currently, the Group uses interest rate swap arrangements to manage exposure to interest rate movements in respect of part of its unsecured term loan (by swapping its interest rate from a floating rate to a fixed rate). Save for the swap arrangements, the Group does not have any other hedging instrument / arrangement to hedge against movements in interest rate for all other bank borrowings. The part repayment of bank borrowings will reduce the Group s exposure to fluctuations in interest rate. 59

71 (4) Reduced exposure to foreign exchange risk Substantially all (about 99%) of the Group s borrowings are denominated in USD. Since mid-2014 up to the LPD, the USD had been strengthening against the RM and peaked at USD1 = RM as at the beginning of 2017 (see the graph below for the middle rate of RM/USD quoted as at 5.00 p.m. for the period from the beginning of 2012 up to the LPD as sourced from BNM s website). USD/RM (Source: BNM s website) A stronger USD will inevitably translate to higher liabilities (for both principal and interest portions of the Group s USD-denominated borrowings) recorded in the consolidated financial statements of UMW-OG which are presented in RM as well as exert pressure on the Group to generate sufficient USD proceeds from its drilling services contracts to service these borrowings. Upon part repayment of these borrowings, the Group will have less exposure to foreign exchange risk resulting from bank borrowings and hence, will be less affected by any downside risk resulting from the translation and/or repayment of these USD-denominated borrowings in the event of further strengthening of USD against RM. In allocating the gross proceeds of RM1,500.0 million to repay the lenders, the management of UMW-OG takes into consideration the Group s key objectives from the recapitalisation exercise which are to alleviate short-term liquidity pressures, reduce reliance on debt financing and hence, benefit from the interest savings. In addition, the part repayment of bank borrowings shall be based on such pre-determined amounts as agreed between all existing lenders so as to facilitate the refinancing of the remaining borrowings. UMW-OG is looking at refinancing the remaining borrowings of the UMW- OG Group to ensure that the maturity profile of its borrowings better match the long-term useful life of its assets to further alleviate short-term liquidity pressures. The refinancing exercise will also result in cash currently pledged by UMW-OG towards the Group s borrowings to be released. Accordingly, UMW-OG may use part of the released pledged cash to further reduce the Group s borrowings and/or the Shareholder Loan (1) provided by UMWH. 60

72 Currently, UMW-OG has obtained the support from some existing lenders to refinance and restructure the remainder of the Group s borrowings on condition that the recapitalisation exercise is successfully completed. Note:- (1) The Shareholder Loan is a contractual agreement between UMWH and UMW-OG where the terms were agreed upon on an arm s length basis. The Shareholder Loan has a tenure of five (5) years until June 2021 and is repayable on demand at the discretion of UMWH. As at the LPD, the outstanding amount of the Shareholder Loan is RM308 million. As at 31 March 2017, the cash and cash equivalents of the Group stood at RM786 million, of which approximately 70% or USD125 million equivalent to approximately RM553 million is pledged to the lenders for the Group s borrowings and hence, is not available for general use (including for repayment of borrowings and working capital purposes). The pledged cash will be released following the refinancing exercise. (ii) Working capital requirements A sum of RM310.0 million of the total gross proceeds to be raised (17.1%) is earmarked for the Group s working capital requirements as follows:- (a) (b) (c) RM100.0 million for spare parts, consumables, tools, accessories and lubricants; RM155.0 million for surveys, inspections, repair and maintenance of equipment and rigs as well as expenditures related to the periodic survey and dry-docking of offshore drilling rigs to be incurred within the next two (2) FYE 31 December 2018 and 31 December 2019; and RM55.0 million for expenses related to rental of equipment, third party manpower supply, catering fees, insurance and warehouse expenses. We noted that the amount allocated for working capital above will be used in the day-to-day operations of the Group s existing businesses, mainly for the repair and maintenance of the Group s offshore drilling rigs. Such repair and maintenance is necessary to maintain the operating efficiency and reliability of these key assets, equipment and facilities in terms of operational worthiness and compliance with safety standards. Having a routine / scheduled repair and maintenance programme shall minimise unscheduled downtime, thereby improving rig efficiency rate. (iii) Estimated expenses relating to the Proposals The estimated expenses relating to the Proposals comprise the following:- Amount Estimated expenses (RM million) Professional fees 4.7 Fees payable to relevant authorities 1.0 Printing and despatch and other incidental expenses 0.4 Total 6.1 In the event that the actual expenses are lower than estimated, the surplus will be allocated for working capital. 61

73 The Proposed Rights Issue With Warrants is the most appropriate means of raising funds for the Group, after considering the existing lenders requirements, rationale of the recapitalisation exercise, intended utilisation of the proceeds and benefits of the Proposed Rights Issue With Warrants to all shareholders of UMW-OG, whereby:- (i) majority of the total gross proceeds to be raised from the recapitalisation exercise is for the repayment of bank borrowings to reduce the Group s reliance on debt financing, which will alleviate short-term liquidity pressures as well as benefit the Group in terms of strengthened financial position, interest savings, reduced exposure to interest rate fluctuations (see above for further details). The part repayment of the bank borrowings is necessary to facilitate the refinancing of the remaining borrowings, following which an amount of USD125 million equivalent to approximately RM553 million pledged cash will be released. Thereafter, UMW-OG may use part of the released pledged cash to further reduce the Group s borrowings and/or the Shareholder Loan; (ii) the Proposed Rights Issue With Warrants provides an opportunity for all the Entitled Shareholders to further increase their equity participation in UMW- OG via subscription of the Rights Shares at a discount to the TERP based on the prevailing market price of the UMW-OG Shares up to the LPD without diluting their respective percentage of shareholdings in UMW-OG, provided that such Entitled Shareholders fully subscribe for their respective entitlements for the Rights Shares. Nevertheless, in deciding whether to further increase equity participation in UMW-OG, the Entitled Shareholders shall take into consideration that although the recapitalisation exercise may alleviate the Group s immediate short-term liquidity pressures, the Group is currently operating in difficult economic conditions and a low charter rate environment, with the O&G industry being still in a slow process of rebalancing; (iii) (iv) the free Warrants attached to the Rights Shares will provide an added incentive to the Entitled Shareholders to subscribe for the Rights Shares while providing additional funds to the Group (if exercised) to first repay bank borrowings (other than the working capital facilities of the Group) and any surplus thereafter for future working capital requirements of the Group; and as the Warrants will be listed and traded separately from the UMW-OG Shares, this will provide the Entitled Shareholders with an option to either further increase their equity participation in UMW-OG by exercising the Warrants or monetise the Warrants via disposal in the open market. Pursuant to the recapitalisation exercise, the weighted average cost of capital ( WACC ) of UMW-OG will increase from 5.76% to 6.30% (see below), arising from the increase in equity financing which has a higher required rate of return (approximately 9.20% after the repayment of RM1,500.0 million bank borrowings) as compared to debt financing (4%). Notwithstanding the increase in WACC, the implementation of the recapitalisation exercise will strengthen the Group s capital structure and also improve the credit rating and debt capacity of the Group, providing greater financial flexibility to gear up in the future should the need / opportunity arise. Before recapitalisation exercise After recapitalisation exercise WACC 5.76% 6.30% 62

74 where:- WACC = E D + E x Ke + D D + E x Kd (1 t) and:- E: market value of the firm s equity before* / after # the recapitalisation exercise. * Before - based on the five (5)-day VWAMP of UMW-OG Shares up to and including the LPD of RM and the existing issued share capital of UMW-OG comprising 2,162,000,000 UMW-OG Shares # After - based on the TERP of RM computed based on the five (5)-day VWAMP of UMW-OG Shares up to and including the LPD of RM and the enlarged issued share capital of UMW-OG comprising 8,215,600,000 UMW-OG Shares after the recapitalisation exercise (assuming full conversion of RCPS-i into new UMW-OG Shares) D: market value of the firm s debt, which is based on the Group s interest-bearing borrowings and advances as at 31 March Ke: cost of equity, representing the rate of return required by an investor on the cash flow streams generated by the Group given, amongst others, the risks associated with the cash flows and is derived using Capital Asset Pricing Model below:- Ke = Rf + β (Rm Rf) where:- Rf: risk-free rate of return, representing the expected rate of return from a riskfree investment and is derived based on the yield of ten (10)-year Malaysian Government Securities as at the LPD of 3.91%. β: beta, representing the sensitivity of an asset s returns to the changes in market returns. It measures the correlation of systematic risk between the said asset and the market. A beta of more than one (1) signifies that the asset is riskier than the market and vice versa, As extracted from Bloomberg, the adjusted three (3)-year beta of the Company up to and including the LPD is For the purpose of computing the cost of equity of UMW-OG after the recapitalisation exercise, we have un-levered the adjusted beta and relevered it based on the capital structure of UMW-OG after the part repayment of bank borrowings. Rm: expected market rate of return, representing the expected rate of return for investing in a portfolio consisting of a weighted sum of assets representing the entire equity market, The historical rate of return for FTSE Bursa Malaysia Top 100 Index is a good indicator of the equity market return in Malaysia. Given the volatility of the stock market and market cycles, a ten (10)-year historical rate of return of the said index is an appropriate estimate of the expected market rate of return as it normalises the year-on-year fluctuations of the stock market and mitigates market bias. Based on the information sourced from Bloomberg, we have derived an average expected market rate of return in Malaysia of 10.71% per annum for the past ten (10) years. Kd: pre-tax cost of debt, representing the rate of return required by the lenders and is based on an interest rate of 4% per annum, after taking into consideration the Group s current cost of borrowings. t: corporate tax rate, which is based on the latest statutory tax rate of 24%. 63

75 5.1.2 Proposed Subscription Pursuant to the Undertakings and Subscription Letter, PNB has irrevocably undertaken:- (i) (ii) to subscribe in full its entitlement under the Proposed Rights Issue With Warrants based on its shareholding as at the Entitlement Date and to apply for all the remaining Excess Rights Shares via excess application up to the Collective Shareholding Threshold; and to subscribe for up to 4,847,539,594 new RCPS-i together with up to 1,211,884,898 Warrants in the event that UMW-OG is unable to raise the Intended Gross Proceeds entirely from (a) the Proposed Rights Issue With Warrants as a result of the Rights Issue Undertakings being subject to the Collective Shareholding Threshold and (b) the Proposed Funds Subscription (if applicable). The abovementioned undertakings and subscription by PNB are subject to the following:- (i) (ii) (iii) the approval of the SC for the Proposed Exemption; the approval of UMW-OG s shareholders for the Proposals; and the approval of Bursa Securities for the admission of the Warrants to the Official List of Bursa Securities and the listing and quotation of the Rights Shares, Warrants, Exercised Shares and Conversion Shares on the Main Market of Bursa Securities, which was obtained on 22 June 2017 subject to, amongst others, the conditions set out in Section 10, Part A of the Circular. The RCPS-i will also be offered to ASB and/or the Funds to ensure that ASB and/or the Funds can participate in full in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. The Collective Shareholding Threshold in turn was determined in view of the public shareholding spread requirement of the Listing Requirements. The total number of RCPS-i to be offered to ASB and/or the Funds shall be equivalent to the total number of Rights Shares that ASB and/or the Funds are not able to subscribe based on their respective entitlements and/or applications of the Excess Rights Shares (if any) as a consequence of the Collective Shareholding Threshold. For the avoidance of doubt, UMW-OG will not be seeking any undertaking from ASB and/or the Funds. For the avoidance of doubt, in view of the RCPS-i Undertaking, in the event the Proposed Funds Subscription is applicable, ASB and/or the Funds will be offered the RCPS-i prior to such offer being made to PNB. Thereafter, PNB shall subscribe for such number of RCPS-i in order to raise the Intended Gross Proceeds. In view of the above, the Proposed PNB Subscription will enable UMW-OG to raise the remaining proceeds required in the event UMW-OG is unable to raise the Intended Gross Proceeds entirely from (i) the Proposed Rights Issue With Warrants and (ii) the Proposed Funds Subscription (if applicable). The salient terms of the Undertakings and Subscription Letter in relation to the Proposed PNB Subscription are set out in Section 3.4, Part A of the Circular. 64

76 5.1.3 Proposed Exemption UMW-OG intends to raise the Intended Gross Proceeds of RM1,816,080,000 from its recapitalisation exercise. Towards this end, PNB had issued and UMW-OG had accepted the Undertakings and Subscription Letter on 9 June 2017, providing certainty to UMW-OG in raising the Intended Gross Proceeds without the requirement for an underwriting arrangement. As set out in Section 1 of this IAL, the Proposed Exemption is being sought by the PAC Group pursuant to the following:- (i) (ii) (iii) subscription for any Rights Shares and Excess Rights Shares by the PAC Group; conversion of any RCPS-i held by PNB, ASB and/or the Funds pursuant to the Proposed Subscription; and exercise of any Warrants held by the PAC Group pursuant to the Proposed Rights Issue With Warrants and/or the Proposed Subscription, which may result in an obligation by PNB, ASB and/or the PAC Group as a whole to undertake the Mandatory Offer pursuant to Section 218(2) of the CMSA and Paragraphs 4.01(a) and 4.01(b) of the Rules arising from:- (i) (ii) (iii) an increase in the individual shareholding of PNB and/or ASB in UMW-OG to above 33% pursuant to the subscription of Rights Shares and Excess Rights Shares, conversion of RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants; following the subscription of such number of Rights Shares and Excess Rights Shares, conversion of RCPS-i and/or exercise of Warrants by PNB or ASB such that the individual shareholding of PNB or ASB in UMW-OG increases above 33%, a further increase in the individual shareholding of PNB or ASB in UMW-OG by more than 2% in any period of six (6) months pursuant to the conversion of RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants; and an increase in the collective shareholding of the PAC Group in UMW-OG by more than 2% in any period of six (6) months pursuant to the subscription of Rights Shares and Excess Rights Shares, conversion of RCPS-i and/or exercise of Warrants into new UMW-OG Shares during the tenure of the RCPS-i or Warrants. As it is not the intention of the PAC Group to undertake the Mandatory Offer, the Proposed Exemption will relieve them from the obligation to undertake such Mandatory Offer. In view of the above and the conditionality of the Proposals as set out in Section 10, Part A of the Circular, without the Proposed Exemption, the Proposals will not proceed and accordingly, the potential benefits arising from the Proposals as detailed in Section 10 of this IAL will not materialise. It is important to note that the entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of Entitled Shareholders on the Entitlement Date. Should all the Entitled Shareholders and/or their renouncee(s) subscribe in full their entitlements under the Proposed Rights Issue With Warrants, there will not be any Excess Rights Shares or RCPS-i to be subscribed by the PAC Group. 65

77 Furthermore, pursuant to the Rights Issue Undertakings, PNB has an obligation to subscribe in full its entitlements under the Proposed Rights Issue With Warrants and to apply for all the remaining Excess Rights Shares via excess application on terms which are identical to those offered to all other Entitled Shareholders. In this respect, the PAC Group does not gain any advantage or additional entitlement over the noninterested shareholders of UMW-OG. On the other hand, as set out in Section 2.5, Part A of the Circular, in determining the priority of allocation for Excess Rights Shares, the priority shall be given to:- (1) the Non-Interested Entitled Shareholders and/or their renouncee(s), if any, for the Excess Rights Shares applied for, if any; then to (2) the funds under the management of AmanahRaya Trustees Berhad; and lastly to (3) PNB for the balance number of undersubscribed Excess Rights Shares (subject always to the Collective Shareholding Threshold). AmanahRaya Trustees Berhad (being the trustee and the registered legal owner of the UMW-OG Shares held by ASB, Amanah Saham Wawasan 2020 ( ASW 2020 ), Amanah Saham Malaysia ( ASM ), Amanah Saham 1Malaysia ( AS 1Malaysia ), Amanah Saham Didik ( ASD ), Amanah Saham Bumiputera 2 ( ASB 2 ), Amanah Saham Nasional ( ASN ), Amanah Saham Nasional 2 ( ASN 2 ), Amanah Saham Nasional 3 Imbang ( ASN 3 ) and ASG) had on 25 July 2017 notified the Board that since the Proposed Funds Subscription is only being offered to ASB and the Funds, AmanahRaya Trustees Berhad has no objection to UMW-OG giving priority to the other Entitled Shareholders and their renouncee(s) with regards to the allocation of the Excess Rights Shares such that those funds whose UMW-OG Shares are registered under AmanahRaya Trustees Berhad are allocated their Excess Rights Shares only after all the other Entitled Shareholders and their renouncee(s) who have applied for Excess Rights Shares have been allocated their Excess Rights Shares. Further, in view of the Rights Issue Undertakings, PNB had on 25 July 2017 notified UMW-OG that it has no objection to being allocated the balance number of the Excess Rights Shares (subject always to the Collective Shareholding Threshold) after the allocation of the Excess Rights Shares to all the other Entitled Shareholders and their renouncee(s), including the funds under its management whose UMW-OG Shares are registered under AmanahRaya Trustees Berhad. We have also considered the salient terms of the RCPS-i (as set out in Appendix II) and we noted that these terms are similar to the Rights Shares except for certain rights held by the RCPS-i holders. Please refer to our commentaries in Section 5.2 of this IAL Proposed Amendment The Proposed Amendment entails an amendment to the relevant clauses of the Constitution to facilitate the issuance of the RCPS-i pursuant to the Proposed Subscription. Based on the above, we are of the view that there are merits in the Proposals. 66

78 5.2 Rights Issue Price, Implied Conversion Price and Exercise Price Evaluation of the Rights Issue Price and the Implied Conversion Price The basis and justification for the Rights Issue Price and the Implied Conversion Price are set out in Sections and 3.5, Part A of the Circular respectively. The Rights Issue Price and the Implied Conversion Price were determined after taking into consideration amongst others:- (i) (ii) the prevailing market price of the UMW-OG Shares up to the Announcement LPD; and the TERP of UMW-OG Shares of RM0.395 based on the five (5)-day VWAMP of UMW-OG Shares up to and including the Announcement LPD of RM0.66. The Rights Issue Price and the Implied Conversion Price for the RCPS-i (which is convertible into new UMW-OG Shares at the ratio of one (1) new UMW-OG Share for every one (1) RCPS-i held) of RM0.30 represents a discount of approximately 24.05% to the abovementioned TERP of UMW- OG Shares of RM In evaluating the Rights Issue Price and the Implied Conversion Price, we have considered the following:- (i) Historical closing market prices The graph below sets out the historical closing market prices of UMW-OG Shares for the past twelve (12) months up to the LPD:- Volume RM Rights Issue Price / Implied Conversion Price (Source: Bloomberg) Notes:- (1) For the past twelve (12) months up to the LPD, UMW-OG has not declared any dividend or undertaken any corporate exercise which would render an adjustment to the market prices of UMW-OG Shares. (2) The principal activities of the UMW-OG Group have remained unchanged for the past twelve (12) months up to the LPD. 67

79 Based on the graph above, we noted that the historical closing market prices of UMW-OG Shares have generally been on a downward trend, with the Group delivering weak financial performance during the period. Further, there appears to be a significant movement in share price and trading volume of UMW-OG Shares following an announcement of proposals on 19 January 2017 which involve, amongst others, the following:- (i) (ii) (iii) (iv) proposed acquisition of approximately 42.3% equity interest in Icon Offshore Berhad for a purchase consideration of RM248,884,410 to be satisfied via the issuance of new UMW-OG Shares ( Proposed Icon Acquisition ); proposed acquisition of approximately 95.5% equity interest in Orkim Sdn Bhd for a cash consideration of RM472,725,000 and offer to purchase all the remaining 4.5% equity interest in Orkim Sdn Bhd for an aggregate cash consideration of RM22,275,000; proposed mandatory general offer for all the remaining ordinary shares in Icon Offshore Berhad not already owned by UMW-OG and persons acting in concert with it after the Proposed Icon Acquisition; and proposed renounceable rights issue of new UMW-OG Shares together with free detachable warrants to raise gross proceeds of approximately RM1.8 billion. On 4 May 2017, the Board announced the termination of the abovementioned proposals and subsequently, announced the Proposals on even date. The highest and lowest closing market prices and the closing price at the end of each month of the UMW-OG Shares for the period commencing from November 2016 (being six (6) months before the announcement of the Proposals on 4 May 2017) to the LPD are as follows:- Month Highest (RM) Closing market price Lowest (RM) At the end of month (RM) 2016 November December January February March April May June Closing market price from November 2016 until the LPD - Highest (on 9 January 2017) Lowest (on 30 June 2017) (Source: Bloomberg) 68

80 (ii) Discount over closing market prices and VWAMPs The Rights Issue Price and Implied Conversion Price of RM0.30 represent a discount to the following closing market prices and VWAMPs of UMW-OG Shares:- Closing market price / VWAMP TERP (1) Discount (RM) (RM) (RM) (%) Up to the LPD:- Closing market price (0.0368) (10.93) Five (5)-day VWAMP (0.0424) (12.38) One (1)-month VWAMP (0.0513) (14.60) Three (3)-month VWAMP (0.0813) (21.32) Six (6)-month VWAMP (0.0996) (24.92) One (1)-year VWAMP (0.1124) (27.26) Up to 3 May 2017 (being the last trading day prior to the announcement of the Proposals):- Closing market price (0.1014) (25.26) Five (5)-day VWAMP (0.0965) (24.34) Up to the Announcement LPD:- Closing market price (0.0992) (24.85) Five (5)-day VWAMP (0.0957) (24.18) (Source: Bloomberg) Note:- (1) Computed after taking into account the Proposed Rights Issue With Warrants as follows:- Where:- Warrants are in-the-money TERP = (A x X) + (B x Y) + (C x Z) A + B + C A = Number of existing UMW-OG Shares B = Number of Rights Shares C = Number of Warrants X = Respective closing market price / VWAMPs of UMW-OG Shares in the table above Y = Rights Issue Price Z = Exercise Price Warrants are out-of-money or at-the-money TERP = (A x X) + (B x Y) A + B A = Number of existing UMW-OG Shares B = Number of Rights Shares X = Respective closing market price / VWAMPs of UMW-OG Shares in the table above Y = Rights Issue Price 69

81 (iii) Consolidated NA per UMW-OG Share The Rights Issue Price and Implied Conversion Price of RM0.30 represent a discount to the following consolidated NA per UMW-OG Share:- (i) (ii) Unaudited consolidated NA per UMW-OG Share as at 31 March 2017 Audited consolidated NA per UMW-OG Share as at 31 December 2016 Consolidated NA per UMW- OGShare RM Discount RM % (0.6849) (69.54) (0.7444) (71.28) (Sources: Unaudited consolidated financial statements of UMW-OG for the three (3)-month FPE 31 March 2017 as well as audited consolidated financial statements of UMW-OG for the FYE 31 December 2016) Evaluation of the Exercise Price The Warrants attached to the Rights Shares shall be issued free to the Entitled Shareholders and/or their renouncee(s) who subscribe for the Rights Shares on the basis of one (1) Warrant for every four (4) Rights Shares subscribed. Similarly, the Proposed Subscription entails the issuance of free Warrants (which are identical to those to be issued pursuant to the Proposed Rights Issue With Warrants) to PNB, ASB and/or the Funds on the same basis. The Exercise Price of the Warrants was arrived at based on the TERP of UMW-OG Shares of RM0.395 computed based on the five (5)-day VWAMP of UMW-OG Shares up to and including the Announcement LPD of RM0.66. In evaluating the Exercise Price, we have considered the following:- (i) Theoretical value of the Warrants In evaluating the Exercise Price of the Warrants, we have considered the theoretical value of the Warrants by adopting the Trinomial option pricing model (1) with the following parameters:- (a) (b) (c) (d) (e) value of the underlying UMW-OG Shares of RM0.3424, being the TERP of UMW-OG Shares based on the five (5)-day VWAMP of the UMW-OG Shares up to and including the LPD of RM0.4610; Exercise Price of the Warrants of RM0.395; tenure of the Warrants of seven (7) years and taking into consideration that the Warrants may only be exercised after six (6) months from the date of issuance; risk-free rate of 3.91% based on the yield of ten (10)-year Malaysian Government Securities as at the LPD; and historical volatility of the UMW-OG Shares for the past one (1)-year up to and including the LPD of % (as extracted from Bloomberg). 70

82 Note:- (1) The Trinomial option pricing model is a simulation-based model utilising a probability tree which incorporates three (3) possible values that an underlying asset can have, stretched over an extended period of time. The theoretical value or the fair value of the Warrants is the sum of the:- (i) (ii) intrinsic value (being the difference between the value of the underlying UMW-OG Shares and the Exercise Price of the Warrants); and time value (which is the value attributed to the Warrants taking into consideration factors such as, amongst others, the tenure of the Warrants, the expected risk-free rate over the tenure of the Warrants and the volatility of the UMW-OG Shares). Based on the foregoing, the theoretical value of the Warrants is set out below:- Theoretical value of the Warrants (a) Intrinsic value - (b) Time value RM Please note that the abovementioned theoretical value may not correspond to the actual market prices of the Warrants upon listing on the Main Market of Bursa Securities. There can also be no assurance that an active market for the Warrants will develop, or if developed, that such market can be sustained. (ii) Premium / (Discount) over closing market prices and VWAMPs The Exercise Price of RM0.395 represents a premium / (discount) to the following TERPs of UMW-OG Shares computed based on the following closing market prices and VWAMPs of UMW-OG Shares:- TERP (1) Premium / (Discount) (RM) (RM) (%) Up to the LPD:- Closing market price Five (5)-day VWAMP One (1)-month VWAMP Three (3)-month VWAMP Six (6)-month VWAMP (0.0046) (1.15) One (1)-year VWAMP (0.0174) (4.22) Up to 3 May 2017 (being the last trading day prior to the announcement of the Proposals):- Closing market price (0.0064) (1.59) Five (5)-day VWAMP (0.0015) (0.38) 71

83 TERP (1) Premium / (Discount) (RM) (RM) (%) Up to the Announcement LPD:- Closing market price (0.0042) (1.05) Five (5)-day VWAMP (0.0007) (0.18) (Source: Bloomberg) Note:- (1) As computed in Section of this IAL. (iii) Consolidated NA per UMW-OG Share The Exercise Price of RM0.395 represents a discount to the following consolidated NA per UMW-OG Share:- (i) Unaudited consolidated NA per UMW-OG Share as at 31 March 2017 (ii) Audited consolidated NA per UMW-OG Share as at 31 December 2016 Consolidated NA per UMW- OGShare RM Discount RM % (0.5899) (59.89) (0.6494) (62.18) (Sources: Unaudited consolidated financial statements of UMW-OG for the three (3)-month FPE 31 March 2017 as well as audited consolidated financial statements of UMW-OG for the FYE 31 December 2016) Our commentaries:- Based on our evaluation above, we are of the view that the basis and justification for the Rights Issue Price, Implied Conversion Price and Exercise Price are justifiable after taking into consideration the following factors:- (i) (ii) the subscription by the PAC Group of the Excess Rights Shares via excess application will be on terms which are identical to those offered to all other Entitled Shareholders. In this respect, the PAC Group does not gain any advantage or additional entitlement over the noninterested shareholders of UMW-OG. On the other hand, in determining the priority of allocation for Excess Rights Shares, the Non-Interested Entitled Shareholders and/or their renouncee(s), if any, shall be given priority of allocation for Excess Rights Shares applied for, if any. the entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of Entitled Shareholders on the Entitlement Date. Should all the Entitled Shareholders and/or their renouncee(s) subscribe in full their entitlements under the Proposed Rights Issue With Warrants, there will not be any Excess Rights Share or RCPS-i to be subscribed by the PAC Group; 72

84 (iii) the subscription by PNB of the RCPS-i (if applicable) is supplemental to and identical to PNB s support provided for the Proposed Rights Issue With Warrants via the Rights Issue Undertakings whereas the offer of RCPS-i to ASB and/or the Funds (if applicable) is to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. Further, the issuance of new RCPS-i will be on terms not more favourable than the Rights Shares except for certain rights held by the RCPS-i holders (as detailed in items (e) and (i) below), whereby:- (a) (b) (c) (d) (e) (f) (g) the Subscription Price per RCPS-i of RM0.30 is identical to the Rights Issue Price; free Warrants to be issued under the Proposed Subscription will be on the same basis as the issuance of free Warrants under the Proposed Rights Issue With Warrants; no interest or dividend will be payable to the RCPS-i holders as they will waive their rights to receive any distribution of profit throughout the five (5)-year tenure of the RCPS-i; the Conversion Ratio of the RCPS-i shall be one (1) new UMW-OG Share for one (1) RCPS-i held; the Company has the discretion to redeem all or part of the outstanding RCPS-i (although such redemption is subject to a redemption premium of 8% per annum on a cumulative but non-compounding basis); any remaining RCPS-i that are not converted within the Conversion Period shall be automatically converted into new UMW-OG Shares in accordance with the Conversion Ratio; the RCPS-i holders shall be entitled to the same rights as UMW-OG s ordinary shareholders as regards to the receipt of notices (including that of general meetings), reports and audited financial statements, to attend meetings and to receive shareholders resolutions in writing. However, the RCPS-i holders shall not be entitled to vote or approve any shareholders resolution or vote at any general meeting save for the following resolutions made:- (1) on a proposal to reduce the Company s share capital; (2) on a proposal for the disposal of substantially the whole of the Company s property, business and undertaking; (3) on a proposal to wind-up the Company; (4) during the winding-up of the Company; or (5) on any proposal that affects the rights and privileges attached to the RCPS-i, including the amendments to the Constitution. (h) the RCPS-i will not be listed on the Main Market of Bursa Securities and shall not be transferable (save and except for transfers between PNB and the funds under PNB s management, subject to the applicable laws, regulations and rules); and 73

85 (i) similar to any preference share, the RCPS-i will rank ahead in point of priority to the holders of the UMW-OG Shares and all other classes of shares (if any) in the Company, in respect of payment out of the assets of the Company upon any liquidation, dissolution or winding up of the Company and the directors of UMW-OG shall not issue any preference shares (other than additional RCPS-i) which rank equally with or in priority to, the RCPS-i unless such issue has first been approved by the RCPS-i holders by way of an ordinary resolution; (iv) (v) (vi) the Rights Issue Price and Implied Conversion Price of RM0.30 represents discounts ranging between 12.38% and 27.26% to the TERP based on the five (5)-day, one (1)-month, three (3)-month, six (6)-month and one (1)-year VWAMPs of the UMW-OG Shares up to and including the LPD as well as a discount of 71.28% to the audited consolidated NA per UMW-OG Share as at 31 December 2016 and accordingly, should encourage the subscription of Rights Shares by the Entitled Shareholders; furthermore, the issuance of free Warrants provides an added incentive for the Entitled Shareholders and/or their renouncee(s) to subscribe for the Rights Shares. Although the Exercise Price of RM0.395 represents a premium ranging between 3.59% and 15.36% to the TERP based on the five (5)-day, one (1)-month and three (3)- month VWAMPs of the UMW-OG Shares up to and including the LPD, the Exercise Price is at a discount of 62.18% to the audited consolidated NA per UMW-OG Shares as at 31 December Furthermore, as at the LPD, the Warrants (which shall be issued free on the basis of one (1) Warrant for every four (4) Rights Shares subscribed) have a theoretical value of RM and this shall translate to a theoretical reduction in the Rights Issue Price per Rights Share and the Subscription Price per RCPS-i by RM0.0359; and it shall also be noted that PNB had informed UMW-OG that it has been approached by potential third party investors to explore the possibility of entering into a Put Option arrangement (see Section 2.7, Part A of the Circular for further details) wherein based on ongoing preliminary discussions and negotiations between PNB and these potential third party investors, the Put Option would only be exercisable after the Proposed Rights Issue With Warrants has been completed, at the option price of RM0.30 per UMW-OG Share which is equivalent to the Rights Issue Price and no consideration would be payable for the Warrants. If entered into and based on the indicative terms as stated above, the Put Option will entail the transfer of up to 1,000,000,000 UMW-OG Shares (representing up to 12.2% of the enlarged issued share capital of UMW-OG, comprising 8,215,600,000 UMW-OG Shares) and up to 250,000,000 Warrants to these potential third party investors. 5.3 Effects of the Proposals We noted the effects of the Proposals from Section 9, Part A of the Circular. On a standalone basis, the Proposed Exemption and Proposed Amendment will not have any effect on the share capital, substantial shareholders shareholdings, NA per UMW-OG Share, gearing and EPS of the UMW-OG Group. Nonetheless, the Proposed Exemption and Proposed Amendment are necessary to facilitate the implementation of the Proposed Rights Issue With Warrants and Proposed Subscription. 74

86 The pro forma effects of the Proposed Rights Issue With Warrants and Proposed Subscription under Scenario I, Scenario II(A) and Scenario II(B) are summarised as follows:- Scenario I : All the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants and accordingly, the Proposed Subscription is not required nor applicable and will not be implemented Scenario II(A) : Only PNB subscribes for the Rights Shares and Excess Rights Shares (up to the Collective Shareholding Threshold) and RCPS-i pursuant to the Proposed PNB Subscription Scenario II(B) : Only ASB subscribes for its entitlement under the Proposed Rights Issue With Warrants and RCPS-i pursuant to the Proposed Funds Subscription to raise the Intended Gross Proceeds (calculated based on the same relevant assumptions as Scenario II(A)) Issued share capital The increase in issued share capital of UMW-OG upon completion of the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) is as follows:- Issued share capital Scenario I UMW-OG Shares (RM million) UMW-OG Shares (RM million) Scenario II(A) RCPS-i (RM million) Total (RM million) As at the LPD 2, , ,453.8 and after the following events (in sequential order):- (i) Proposed Rights Issue With Warrants and Proposed Subscription (ii) Full conversion of the RCPS-i (iii) Full exercise of the Warrants 4,067.1 n/a 4, , , , , , , ,861.6 Issued share capital UMW-OG Shares (RM million) Scenario II(B) RCPS-i (RM million) Total (RM million) As at the LPD 2, ,453.8 and after the following events (in sequential order):- (i) Proposed Rights Issue With Warrants and Proposed Subscription (ii) Full conversion of the RCPS-i (iii) Full exercise of the Warrants 2, , , , , , ,861.6 n/a Not applicable 75

87 5.3.2 Substantial shareholders shareholdings The pro forma effects of the Proposed Rights Issue With Warrants and Proposed Subscription on the substantial shareholders shareholdings are set out in Section 9.2, Part A of the Circular. Set out below are the percentage of shareholdings of the PAC Group in UMW- OG as at the LPD and after the Distribution:- Name As at the LPD After the Distribution No. of UMW-OG Shares ( 000) % (1) No. of UMW-OG Shares ( 000) % (1) PNB 12, , ASB 181, , PACs UMWH 1,204, * ASW , , ASM 26, , AS 1Malaysia , ASD 9, , ASB 2 6, , ASN 6, , ASN 2 2, , ASN , ASG Amanah Saham Pendidikan 2, , ASG Amanah Saham Kesihatan 3, , ASG Amanah Saham Persaraan 1, , Yayasan Tun Ismail Mohamed Ali (Berdaftar) ( YTI ) 15 * 15 * PAC Group 1,486, , * Negligible Note:- (1) Computed based on the total number of 2,162,000,000 UMW-OG Shares as at the LPD. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 76

88 The pro forma effects on the percentage of shareholdings held by the PAC Group in UMW-OG pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription are as follows:- Scenario I As the Proposed Rights Issue With Warrants will be fully subscribed in proportion to the Entitled Shareholders shareholdings, there will be no change to the percentage of shareholdings held by the PAC Group in UMW-OG. Scenario II(A) In the event none of the non-interested shareholders and/or their renouncee(s) subscribes for their entitlements, the increase in the maximum potential percentage of shareholdings held by PNB and the PAC Group in UMW-OG pursuant to the Proposed Rights Issue With Warrants and the Proposed Subscription is as follows:- Name Pro forma I Pro forma II After the Distribution and Proposed Rights Issue With Warrants After Pro forma I and the Proposed Subscription (1) No. of UMW-OG Shares ( 000) % (2) No. of UMW-OG Shares ( 000) % (2) PNB 1,287, ,287, ASB 688, , PACs UMWH 35 * 35 * ASW , , ASM 65, , ASM 1Malaysia 21, , ASD 20, , ASB 2 14, , ASN 7, , ASN 2 4, , ASN 3 1, , ASG Amanah Saham Pendidikan 3, , ASG Amanah Saham Kesihatan 5, , ASG Amanah Saham Persaraan 2, , YTI 15 * 15 * PAC Group 2,189, ,189, THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 77

89 Name Pro forma III Pro forma IV After Pro forma II and assuming full conversion of the RCPS-i (3) After Pro forma III and assuming full exercise of the Warrants (4) No. of UMW-OG Shares ( 000) % (5) No. of UMW-OG Shares ( 000) % (6) PNB 6,135, ,648, ASB 688, , PACs UMWH 35 * 35 * ASW , , ASM 65, , ASM 1Malaysia 21, , ASD 20, , ASB 2 14, , ASN 7, , ASN 2 4, , ASN 3 1, , ASG Amanah Saham Pendidikan 3, , ASG Amanah Saham Kesihatan 5, , ASG Amanah Saham Persaraan 2, , YTI 15 * 15 * PAC Group 7,036, ,550, * Negligible Notes:- (1) The completion of the Proposed Subscription does not have an effect on the shareholdings as it entails the issuance of RCPS-i instead of new UMW-OG Shares. (2) Computed based on the enlarged total number of 3,368,060,406 UMW-OG Shares. (3) The RCPS-i is convertible into new UMW-OG Shares at the earliest from the date of issuance of the RCPS-i. (4) The Warrants are exercisable into new UMW-OG Shares at the earliest after six (6) months from the date of issuance of the Warrants. (5) Computed based on the enlarged total number of 8,215,600,000 UMW-OG Shares. (6) Computed based on the enlarged total number of 9,729,000,000 UMW-OG Shares. PNB has, via the Undertakings and Subscription Letter, undertaken to ensure that any increase to the Collective Shareholding, whether through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG being in compliance with the public shareholding spread requirement. As such, the maximum potential percentage of shareholding is purely illustrative. As at the LPD, none of the other non-public shareholders (i.e. excluding the PAC Group) holds a material amount of UMW-OG Shares. In the event the Board foresees that UMW-OG may not comply with the public shareholding spread requirement as a result of the subscription of Rights Shares by the other Entitled Shareholders, the Board will assess and take such steps necessary to comply with the public shareholding spread requirement. 78

90 Scenario II(B) In the event only ASB subscribes for its entitlement under the Proposed Rights Issue With Warrants and RCPS-i pursuant to the Proposed Funds Subscription to raise the Intended Gross Proceeds, the increase in the maximum potential percentage of shareholdings held by ASB and the PAC Group in UMW-OG is summarised below:- Name Pro forma I Pro forma II After the Distribution and Proposed Rights Issue With Warrants After Pro forma I and the Proposed Subscription (1) No. of UMW-OG Shares ( 000) % (2) No. of UMW-OG Shares ( 000) % (2) PNB 81, , ASB 2,618, ,618, PACs UMWH 35 * 35 * ASW , , ASM 65, , ASM 1Malaysia 21, , ASD 20, , ASB 2 14, , ASN 7, , ASN 2 4, , ASN 3 1, , ASG Amanah Saham Pendidikan 3, , ASG Amanah Saham Kesihatan 5, , ASG Amanah Saham Persaraan 2, , YTI 15 * 15 * PAC Group 2,912, ,912, Name Pro forma III Pro forma IV After Pro forma II and assuming full conversion of the RCPS-i (3) After Pro forma III and assuming full exercise of the Warrants (4) No. of UMW-OG Shares ( 000) % (5) No. of UMW-OG Shares ( 000) % (6) PNB 81, , ASB 6,742, ,255, PACs UMWH 35 * 35 * ASW , , ASM 65, , ASM 1Malaysia 21, , ASD 20, , ASB 2 14, , ASN 7, , ASN 2 4, , ASN 3 1, , ASG Amanah Saham Pendidikan 3, , ASG Amanah Saham Kesihatan 5, , ASG Amanah Saham Persaraan 2, , YTI 15 * 15 * PAC Group 7,036, ,550, * Negligible 79

91 Notes:- (1) The completion of the Proposed Subscription does not have an effect on the shareholdings as it entails the issuance of RCPS-i instead of new UMW-OG Shares. (2) Computed based on the enlarged total number of 4,091,064,536 UMW-OG Shares. (3) The RCPS-i is convertible into new UMW-OG Shares at the earliest from the date of issuance of the RCPS-i. (4) The Warrants are exercisable into new UMW-OG Shares at the earliest after six (6) months from the date of issuance of the Warrants. (5) Computed based on the enlarged total number of 8,215,600,000 UMW-OG Shares. (6) Computed based on the enlarged total number of 9,729,000,000 UMW-OG Shares. The above scenarios are for illustrative purpose only and are not exhaustive as there may be other circumstances that may give rise to a Mandatory Offer NA and gearing We noted from Section 9.3, Part A of the Circular that the recapitalisation exercise is expected to increase the Group s NA base and reduce its gearing as follows:- NA and NA per UMW-OG Share Scenario I NA (RM million) NA per UMW-OG Share (RM) Scenario II(A) NA (RM million) NA per UMW-OG Share (RM) As at 31 December , , and after the following events (in sequential order):- (i) Proposed Rights Issue With Warrants and Proposed Subscription (ii) Full conversion of the RCPS-i (iii) Full exercise of the Warrants 4,049.1 n/a 4, n/a , , , Scenario II(B) NA (RM million) NA per UMW-OG Share (RM) As at 31 December 2016 and after the following events (in sequential order):- (i) Proposed Rights Issue With Warrants and Proposed Subscription (ii) Full conversion of the RCPS-i (iii) Full exercise of the Warrants 2, , , , n/a Not applicable The dilution in NA per UMW-OG Share above is due to the issuance of:- (i) (ii) (iii) the Rights Shares at the Rights Issue Price; new UMW-OG Shares arising from the conversion of the RCPS-i (if any) at the Implied Conversion Price; and new UMW-OG Shares arising from the exercise of the Warrants at the Exercise Price, which is at prices lower than the NA per UMW-OG Share. 80

92 Gearing Gearing ratio (times) Scenario I Scenario II(A) Scenario II(B) As at 31 December and after the following events (in sequential order):- (i) Proposed Rights Issue With Warrants and Proposed Subscription (ii) Full conversion of the RCPS-i (iii) Full exercise of the Warrants 0.64 n/a The reduction in gearing of the Group above is due to part repayment of bank borrowings amounting to RM1,500.0 million as well as the enlarged NA base of the Group. Subsequent additional repayment of the Group s borrowings using part of the released pledged cash as well as the proceeds from the exercise of the Warrants in the future will further reduce the Group s gearing below 0.56 times Earnings and EPS In all scenarios, the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) are expected to contribute positively to the earnings of the Group as the proceeds raised will be utilised towards reducing the indebtedness of the Group and thereby reducing the Group s finance costs accordingly. For illustration purpose, based on an interest rate of 4% per annum, the repayment of RM1,500.0 million bank borrowings will result in interest savings (before taxation) of RM60.0 million per annum. As a result of the increase in weighted average number of UMW-OG Shares in issue upon issuance of the Rights Shares and new UMW-OG Shares arising from the conversion of RCPS-i (if any) and exercise of Warrants, there will be dilution in the EPS of the Group upon issuance of such new UMW-OG Shares. Notwithstanding the dilution in NA per UMW-OG Share and EPS of the Group as set out above, it is important to note that the entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of the Entitled Shareholders on the Entitlement Date. Accordingly, should all the Entitled Shareholders subscribe in full their respective entitlements under the Proposed Rights Issue With Warrants, there will not be any dilution to the percentage of shareholdings held by all the Entitled Shareholders and ultimately, their share of NA and earnings of the UMW-OG Group. Based on our evaluation above, we are of the view that the overall effects of the Proposals are expected to be positive to the Group. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 81

93 5.4 Industry outlook and future prospects of the UMW-OG Group We noted the industry overview and prospects as set out in Section 8, Part A of the Circular. The graph below sets out the movement of benchmark Brent crude oil price from 2014 up to the LPD:- USD / barrel (Source: Bloomberg) In 2014, the O&G industry had undergone a major change, with the benchmark Brent crude oil price plunged from a high of above USD110 per barrel in June 2014 to the region of USD50 per barrel in December Though it had since recovered slightly in the first half of 2015, the oil price continued its downtrend to a low of USD27 per barrel in January The low oil price landscape reflects a global supply glut, driven primarily by the shale oil production revolution, amid the slowing demand for oil from the growing and emerging economies after several years of high growth. The low oil price had most O&G companies scaling back their investments in exploration, development and production activities globally which in turn, had led to a significant decline in oil producers demand for drilling and workover rigs across the industry. Accordingly, this had resulted in intense competition among the players in the drilling rig industry as they compete for fewer available contracts with competitive time charter rates, exerting pressure on their profitability margins. There was no exception for the Group as the prolonged depressed oil prices adversely affected the Group s financial performance for both FYE 31 December 2015 and 31 December For both the financial years, the Group reported significant losses, mainly attributable to lower contract revenue and high impairment losses arising from weak demand for the Group s assets and services. In embracing the low oil price scenario as the new operating norm, the Group had implemented various initiatives to reduce costs (including vendors contracts renegotiation, restructuring of remuneration and centralising warehouse operations), improve efficiency in cash management and manpower rationalisation (whereby towards the fourth quarter of 2016, UMW-OG had offered a voluntary separation scheme). These initiatives serve to keep the Group s operations lean so as to offer a competitive pricing for its services to existing and potential clients. Further, the Group will continue to maximise its rig utilisation (which is at 26% for the three (3)-month FPE 31 March 2017, increased from 21% for the FYE 31 December 2016) via amongst others, aggressive marketing and tendering as well as leveraging and expanding its client base. For this purpose, the Group will remain focused in the South East Asia region while expanding internationally in the Middle East and the southern part of North Sea markets i.e. the United Kingdom, Holland, France and Belgium. 82

94 The Group believes that the announcement on 30 November 2016 of the joint decision by the OPEC and non-opec producer nations to reduce oil production signalled the start of recovery in the O&G sector as the planned production cuts brought stability to the global oil price, providing a reprieve for the two (2)-year slide in oil prices with the benchmark Brent crude oil price recovering from a low of USD27 per barrel in January 2016 to the current region of USD45 to USD55 per barrel. With a clearer indication of the floor price for the crude oil, the market witnessed an increased exploration and development activities globally as the floor price provides O&G companies with a level of certainty in making their investment decisions to resume investments in fields which are commercially viable. Although the O&G industry has shown signs of recovery, the Group will continue to tread the near future with caution. (Source: Management of UMW-OG, June 2017) Subsequent to the announcement of planned production cuts on 30 November 2016, we noted that the OPEC and non-opec producer nations had on 25 May 2017, agreed to extend the oil production cuts by nine (9) months to March 2018, providing continued support to the recovery of the O&G industry with the benchmark Brent crude oil price hovering in the region of USD45 to USD55 per barrel as compared to a low of USD27 per barrel in January With a larger capital / NA base coupled with the available debt headroom upon completion of the recapitalisation exercise, the UMW-OG Group shall be wellpositioned to ride on the potential recovery of the O&G industry. In view of the above and after taking into consideration the past experience, track records and market share of the UMW-OG Group in the drilling rig industry, we are of the view that the future prospects of the UMW-OG Group appear to be positive. 5.5 Implications arising from the voting outcome of the Proposed Exemption You should note that the SC will only consider the application for the Proposed Exemption if the PAC Group has satisfied amongst others, the following conditions pursuant to Paragraph 4.08(2) of the Rules:- (i) (ii) There has been no disqualifying transaction by the PAC Group. A disqualifying transaction refers to an acquisition of shares or instruments convertible into and options in respect of shares (other than subscriptions for, rights to subscribe for instruments convertible into or options in respect of new shares which have been disclosed in this Circular) in the six (6) months prior to the announcement of the Proposals on 4 May 2017 until completion of the subscription; and Approval has been obtained from independent holders of voting shares or voting rights of UMW-OG at a meeting of the holders of the relevant class of voting shares or voting rights to waive their rights to receive the Mandatory Offer from the PAC Group. The voting at the meeting shall be conducted by way of a poll. 83

95 Any exemption granted will be invalidated if the PAC Group has engaged or engages in a disqualifying transaction. The implications of the non-interested shareholders votes on the Proposed Exemption to be tabled at the forthcoming EGM are set out in the ensuing sections If you VOTE IN FAVOUR of the Proposed Exemption (i) The SC would be able to consider the application by the PAC Group (which will be submitted by PNB on behalf of the PAC Group, through Maybank IB) for the Proposed Exemption. An approval from the SC for the Proposed Exemption would then exempt the PAC Group from the obligation to undertake the Mandatory Offer to acquire all the remaining UMW-OG Shares and Warrants not already owned by them upon completion of the Proposals. If granted, the Proposed Exemption will be in effect for the entire tenure of five (5) years for the RCPS-i and seven (7) years for the Warrants from their respective date of issuance and no subsequent shareholders approval will be required. Throughout the duration of the Proposed Exemption (if approved by the non-interested shareholders of UMW-OG and granted by the SC), UMW-OG will be required to disclose, in its annual accounts and any public document, including annual reports, prospectuses and circulars:- (a) (b) (c) the details of the Proposed Exemption including the duration for the Proposed Exemption; the number and percentage of voting shares or voting rights and convertible securities in UMW-OG held by the PAC Group as at the latest practicable date prior to the disclosure; and the maximum potential shareholdings of the PAC Group in UMW-OG, if only the PAC Group (but not other holders) exercises the conversion or subscription rights or options in full. (ii) Your approval of the Proposed Exemption will imply that you have agreed to waive your rights and exempt the PAC Group from the obligation to undertake the Mandatory Offer (which shall be no lower than the highest price paid by the PAC Group for the UMW-OG Shares in the past six (6) months before the incurrence of such obligation to undertake the Mandatory Offer). Note:- Voting in favour of the Proposed Exemption does not in any way impede your rights to participate in the Proposed Rights Issue With Warrants. However, should you decide not to subscribe for your entitlements under the Proposed Rights Issue With Warrants, your percentage of shareholdings in UMW-OG will be diluted accordingly. 84

96 (iii) It is pertinent to note that subject to the Exemption Shareholding Limit (as defined below), the Proposed Exemption will allow:- (a) the shareholding of PNB in UMW-OG to increase from 3.78% (after the Distribution) up to the maximum potential shareholding of 78.62% of the enlarged total number of UMW- OG Shares without being required to undertake the Mandatory Offer; (b) the shareholding of ASB in UMW-OG to increase from 31.87% (after the Distribution) up to the maximum potential shareholding of 84.86% of the enlarged total number of UMW- OG Shares without being required to undertake the Mandatory Offer; and (c) the collective shareholdings of the PAC Group in UMW-OG to increase by more than 2% from 45.48% (after the Distribution) up to the maximum potential collective shareholdings of 87.88% of the enlarged total number of UMW-OG Shares without being required to undertake the Mandatory Offer. On the other hand, the shareholdings held by the non-interested shareholders in UMW-OG will be diluted from 54.52% (after the Distribution) to the minimum potential shareholdings of 12.12%. The shareholding limit to be established for the exemption sought by the PAC Group from the obligation to undertake the Mandatory Offer will be based on the actual number and percentage of voting rights that PNB (individually), ASB (individually) and the PAC Group (collectively) will hold upon completion of the Proposed Rights Issue With Warrants, and assuming that PNB, ASB and/or the PAC Group exercise in full their rights to the conversion of RCPS-i and exercise of Warrants held at the time of completion of the Proposed Rights Issue With Warrants and Proposed Subscription (if applicable) ( Exemption Shareholding Limit ). Should PNB, ASB and/or the PAC Group breach the Exemption Shareholding Limit, the PAC Group would be obliged to observe the requirement of the Rules. This means that unless otherwise exempted (up to the Exemption Shareholding Limit), in the event after the completion of the recapitalisation exercise:- (a) (b) the individual shareholding of any member of the PAC Group (including PNB and ASB) in UMW-OG is below 33%, an obligation to undertake a mandatory offer would be triggered if the said member increase its shareholding in UMW-OG to above 33% ( 33% Threshold ); the individual shareholding of any member of the PAC Group (including PNB and ASB) in UMW-OG is more than 33% but less than 50%, an obligation to undertake a mandatory offer would be triggered if the shareholding of the said member increases by more than 2% in any six (6)-month period ( 2% Creeping Threshold ); (c) the collective shareholding of the PAC Group is below 33%, the PAC Group is subject to the 33% Threshold; and (d) the collective shareholding of the PAC Group is more than 33% but less than 50%, the PAC Group is subject to the 2% Creeping Threshold. 85

97 Should the individual shareholding of PNB and/or ASB in UMW-OG increase to more than 50%, any further increase in the individual shareholding of the said party (including through subsequent purchases of UMW-OG Shares in the open market) would not trigger an obligation to undertake a mandatory offer. Should the PAC Group s shareholdings in UMW-OG increase to more than 50% on a collective basis, any further increase in the collective shareholdings of the PAC Group in UMW-OG (including through subsequent purchases of UMW-OG Shares in the open market) would not trigger an obligation to undertake a mandatory offer pursuant to the Rules provided that the individual members of the PAC Group do not trigger such mandatory offer obligation on an individual basis (i.e. individually breaching the 33% Threshold or the 2% Creeping Threshold). If the PAC Group acquires further voting rights after the date of issue of the RCPS-i and/or the Warrants, the Proposed Exemption will only apply to the conversion of RCPS-i and/or exercise of Warrants such that the number of UMW-OG Shares issued, when added to the further voting rights acquired, do not exceed the Exemption Shareholding Limit approved by the non-interested shareholders pursuant to the Proposed Exemption. With a shareholding of more than 50% in UMW-OG, the PAC Group will have statutory control over UMW-OG and as such, will be able to determine the outcome of resolutions which require a simple majority of 50% plus one (1) share at general meetings (unless the PAC Group is required to abstain from voting). Further, the non-interested shareholders should note that by voting for the Proposed Exemption, they could be forgoing the opportunity to receive a take-over offer from another person who may be discouraged from making a take-over offer as the RCPS-i and/or Warrants issued will need to be included in any such offer. (iv) In view of the conditionality of the Proposals as set out in Section 10, Part A of the Circular, without the Proposed Exemption, the Proposals will not proceed. Therefore, voting in favour of the Proposed Exemption will enable UMW-OG to benefit from the Proposals (if the Proposals are approved by the shareholders of UMW-OG) If you VOTE AGAINST the Proposed Exemption (i) The SC would not be able to consider the application by the PAC Group for the Proposed Exemption. (ii) In view of the conditionality of the Proposals as set out in Section 10, Part A of the Circular, in the event that the Proposed Exemption is not approved, UMW-OG will not be able to undertake the Proposals. Accordingly, the part repayment of bank borrowings and refinancing exercise will also not materialise. Consequently, UMW-OG will not be able to realise the potential benefits arising from the Proposals as detailed in Section 10 of this IAL and will continue to have current level of borrowings, of which the Group will need to seek for alternative ways to alleviate the short-term liquidity pressures. 86

98 6. DIRECTORS INTENTION TO VOTE As at the LPD, save as disclosed below, the Directors of UMW-OG do not have any interest (direct and indirect) in the UMW-OG Shares. Their intention to vote in relation to the Proposed Exemption is as follows:- Name Direct Indirect Intention to vote in No. of UMW- OG Shares ( 000) % (1) No. of UMW- OG Shares ( 000) % (1) relation to the Proposed Exemption Rohaizad bin Darus 1, Vote in favour Razalee bin Amin Vote in favour Dato Afifuddin bin Abdul Kadir Vote in favour Cheah Tek Kuang (2) * Vote in favour Dato Ibrahim bin Marsidi 30 * - - Vote in favour * Negligible Notes:- (1) Computed based on the total number of 2,162,000,000 UMW-OG Shares as at the LPD. (2) Deemed interested through his spouse, child and pledged securities account. 7. FUTURE PLANS FOR THE UMW-OG GROUP AND ITS EMPLOYEES Pursuant to Paragraph 8, Schedule 2: Part II of the Rules, the PAC Group has confirmed that as at the LPD, they do not intend to effect any major change to the following:- (i) (ii) (iii) the continuation of the business of the UMW-OG Group; the business of the UMW-OG Group, including any plans to liquidate the Group, sell any material assets or re-deploy the fixed assets or effect any other major change in the structure of the UMW-OG Group; and the continued employment of the employees of the UMW-OG Group, except where such changes are in the ordinary course of the Group s business or are necessary to rationalise or improve the Group s operations and/or financial performance. The PAC Group shall retain the flexibility at any time to consider any options which are in the best interests of the UMW-OG Group that may present themselves including but not limited to any strategic acquisitions and/or disposals of assets or businesses. The PAC Group intends to maintain the listing status of UMW-OG on the Main Market of Bursa Securities. As at the LPD, the PAC Group is already the controlling shareholder of UMW-OG. The Undertakings and Subscription Letter provided by PNB serves to provide continued financial support to the UMW-OG Group to embrace various challenges within the O&G industry. PNB believes in the long term prospects of the O&G industry and that the completion of the recapitalisation exercise shall place the UMW-OG Group in a good position to ride on the potential recovery of the industry. 87

99 8. RESPONSIBILITY STATEMENT The Board has seen, reviewed and accepted this IAL. The Board, collectively and individually, accepts full responsibility for the accuracy of the information contained in this IAL (save for the assessment, evaluation and opinion of Mercury Securities) and confirms, after having made all reasonable enquiries, that to the best of their knowledge, there are no other facts not contained in this IAL, the omission of which would make any information in this IAL misleading. The responsibility of the Board in respect of:- (i) (ii) the information relating to the PAC Group (as provided by the PAC Group) is limited to ensuring that such information is accurately reproduced in this IAL; and the independent advice and expression of opinion by Mercury Securities in relation to the Proposed Exemption is limited to ensuring that accurate information in relation to the UMW-OG Group was provided to Mercury Securities for its evaluation of the Proposed Exemption and to ensure that all information in relation to the UMW-OG Group that are relevant to Mercury Securities evaluation of the Proposed Exemption have been completely disclosed to Mercury Securities and that there is no material fact, the omission of which would make any information provided to Mercury Securities false or misleading. 9. FURTHER INFORMATION The non-interested shareholders of UMW-OG are advised to refer to Part A of the Circular as well as the attached appendices for further information. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 88

100 10. CONCLUSION AND RECOMMENDATION We have assessed and evaluated the Proposed Exemption holistically, taking into consideration the various factors set out in Section 5 of this IAL. You should carefully consider the merits and demerits of the Proposed Exemption based on all relevant and pertinent factors including those set out in this IAL as well as those highlighted by the Board in its letter to shareholders of UMW-OG in relation to the Proposals, as set out in Part A of the Circular before voting on the ordinary resolution in respect of the Proposed Exemption at the forthcoming EGM. The Proposed Exemption (if granted) will allow UMW-OG to undertake the recapitalisation exercise (if it is also approved by the shareholders of UMW-OG). Accordingly, the potential advantages of the Proposals are as follows:- Potential advantages (i) (ii) The PAC Group is currently the controlling shareholder of UMW-OG with an equity interest of 45.48% (after the Distribution). The support from PNB via the Undertakings and Subscription Letter demonstrates its interest and commitment in UMW-OG. Further, such support provides certainty to UMW-OG in raising the Intended Gross Proceeds without the requirement for an underwriting arrangement. The recapitalisation exercise serves to reduce the Group s reliance on debt financing which has grown significantly post UMW-OG s initial public offering in end In light of the current difficult economic conditions and a low charter rate environment as well as the resultant expectations of existing and prospective lenders, the part repayment of the Group s bank borrowings will alleviate short-term liquidity pressures, taking into consideration that an amount of approximately RM1.50 billion is to be repaid by end of In addition, the part repayment of bank borrowings will also benefit the Group in terms of:- (a) (b) (c) (d) (e) increasing its NA base from RM2,258.0 million as at 31 December 2016 to RM4,049.1 million upon completion of the exercise and thereafter, to RM4,646.9 million upon full exercise of the Warrants; lowering the gearing ratio of the Group from 1.81 times as at 31 December 2016 to 0.64 times upon completion of the exercise and thereafter, to 0.56 times upon full exercise of the Warrants; reducing the indebtedness of the Group and thereby reducing the Group s finance costs accordingly; reducing exposure to interest rate fluctuations as well as foreign exchange risk in view that the Group s bank borrowings largely carry a floating interest rate and substantially all of these borrowings are denominated in USD; and facilitating the refinancing of the remaining borrowings, following which an amount of USD125 million equivalent to approximately RM553 million pledged cash will be released and may be used to further reduce the Group s borrowings and/or the Shareholder Loan. (iii) Upon completion of the recapitalisation exercise, the Group will have a larger capital / NA base and improved gearing level. This may improve the credit rating and debt capacity of the Group, providing greater financial flexibility to gear up in the future should the need / opportunity arise, placing the Group in a good position to ride on the potential recovery of the O&G industry. 89

101 The entitlements for the Proposed Rights Issue With Warrants are proportionate to the respective shareholdings of Entitled Shareholders on the Entitlement Date. All shareholders are entitled to subscribe for their respective entitlements under the Proposed Rights Issue With Warrants as well as to apply for Excess Rights Shares via excess application. All shareholders of UMW-OG will be subscribing for the Rights Shares and Excess Rights Shares at the same Rights Issue Price and will be issued free Warrants on the same basis. Correspondingly, the PAC Group does not gain any advantage or additional entitlement over the non-interested shareholders of UMW-OG. On the other hand, in determining the priority of allocation for Excess Rights Shares, the Non-Interested Entitled Shareholders and/or their renouncee(s), if any, shall be given priority of allocation for Excess Rights Shares applied for, if any. The subscription by PNB of the RCPS-i (if applicable) is supplemental to and identical to PNB s support provided for the Proposed Rights Issue With Warrants via the Rights Issue Undertakings whereas the offer of RCPS-i to ASB and/or the Funds (if applicable) is to enable ASB and/or the Funds to participate in UMW-OG s recapitalisation exercise without being restricted by the Collective Shareholding Threshold. Further, the issuance of new RCPS-i will be on terms not more favourable than the Rights Shares except for certain rights held by the RCPS-i holders (i.e. in terms of the entitlement to a redemption premium of 8% per annum should the Company decide to redeem all or part of the outstanding RCPS-i as well as ranking ahead in point of priority to payment upon any liquidation, dissolution or winding up of the Company). In the event that the PAC Group subscribes for more than its entitlement under the Proposed Rights Issue With Warrants (via subscription of Excess Rights Shares and/or RCPS-i (if applicable)), the Proposals will result in the following potential disadvantages:- Potential disadvantages (i) The NA per UMW-OG Share will be diluted from RM1.04 (as at 31 December 2016) to RM0.49 (upon completion of the Proposed Rights Issue With Warrants and if applicable, the Proposed Subscription together with the full conversion of RCPS-i) and thereafter, diluted further to RM0.48 (assuming the full exercise of the Warrants) as the new UMW-OG Shares will be issued at prices lower than the NA per UMW-OG Share whereby against the audited consolidated NA per UMW-OG Share as at 31 December 2016 of RM1.0444:- (a) (b) (c) the Rights Issue Price for the Rights Shares of RM0.30 represents a discount of 71.28%; the Implied Conversion Price for the Conversion Shares of RM0.30 represents a discount of 71.28%; and the Exercise Price for the Exercised Shares of RM0.395 represents a discount of 62.18%. The EPS of the Group will be diluted as a result of the increase in weighted average number of UMW-OG Shares in issue upon issuance of the Rights Shares and new UMW-OG Shares arising from the conversion of RCPS-i (if any) and exercise of Warrants. 90

102 Potential disadvantages (ii) Subject to the Exemption Shareholding Limit as set out in Section of this IAL, the Proposed Exemption will allow the increase in:- (a) (b) (c) the shareholding of PNB in UMW-OG from 3.78% (after the Distribution) up to the maximum potential shareholding of 78.62% of the enlarged total number of UMW-OG Shares; the shareholding of ASB in UMW-OG from 31.87% (after the Distribution) up to the maximum potential shareholding of 84.86% of the enlarged total number of UMW-OG Shares; and the collective shareholdings of the PAC Group in UMW-OG by more than 2% from 45.48% (after the Distribution) up to the maximum potential collective shareholdings of 87.88% of the enlarged total number of UMW- OG Shares and on the other hand, the shareholdings held by the noninterested shareholders in UMW-OG will be diluted from 54.52% (after the Distribution) to the minimum potential shareholdings of 12.12%, without being required to undertake the Mandatory Offer. Nonetheless, PNB has, via the Undertakings and Subscription Letter, undertaken to ensure that any increase to the Collective Shareholding, whether through the conversion of the RCPS-i, exercise of the Warrants or through any other means, shall be subject to UMW-OG being in compliance with the public shareholding spread requirement. As such, the maximum potential percentage of shareholding of PNB, ASB and the PAC Group above is purely illustrative. In view that the Rights Issue Price and Implied Conversion Price are at a discount ranging between 12.38% and 27.26% to the TERP based on the five (5)-day, one (1)-month, three (3)-month, six (6)-month and one (1)-year VWAMPs of the UMW- OG Shares up to and including the LPD, this would mean that PNB, ASB and/or the PAC Group may obtain statutory control over UMW-OG without paying a premium. With a collective holding of more than 50% in UMW-OG, the PAC Group will have statutory control over UMW-OG and will be able to determine the outcome of all resolutions which require a simple majority of 50% plus one (1) share at general meetings (unless the PAC Group is required to abstain from voting). (iii) The Warrants shall be issued free on the basis of one (1) Warrant for every four (4) Rights Shares and/or RCPS-i (if applicable) subscribed. Accordingly, the renunciation of the Rights Shares by any Entitled Shareholders will entail the renunciation of the attached Warrants. Accordingly, they will forgo their option to either:- (a) (b) exercise the Warrants to increase equity participation in UMW-OG; or monetise the Warrants via disposal in the open market. As at the LPD, the Warrants have a theoretical value derived based on the Trinomial option pricing model of RM0.1434, which shall translate to a theoretical reduction in the Rights Issue Price per Rights Share and/or the Subscription Price per RCPS-i by RM (iv) Pursuant to the recapitalisation exercise, the WACC of UMW-OG will increase from 5.76% to 6.30% arising from the increase in equity financing which has a higher required rate of return as compared to debt financing. 91

103 Premised on the above and our evaluation of the Proposed Exemption on a holistic basis, we are of the opinion that, on the basis of the information available to us, the Proposed Exemption is fair and reasonable. Accordingly, we recommend that the non-interested shareholders of UMW-OG vote in favour of the ordinary resolution in respect of the Proposed Exemption to be tabled at the forthcoming EGM. Yours faithfully For and on behalf of MERCURY SECURITIES SDN BHD CHEW SING GUAN Managing Director DENIS LIM Director / Head of Corporate Finance 92

104 ATTACHMENT I INFORMATION ON UMW-OG 1. HISTORY AND PRINCIPAL ACTIVITIES UMW-OG was incorporated in Malaysia under the Companies Act 1965 on 12 November 2009 as a private limited company under the name of UMW Oil & Gas Corporation Sdn Bhd. It was converted into a public company under its present name on 14 May 2013 and was listed on the Main Market of Bursa Securities on 1 November UMW-OG is principally involved in investment holding whilst its subsidiaries are principally engaged in the following:- (i) (ii) provision of drilling services for exploration, development and production wells, and workover services to the upstream sector of the O&G industry; and provision of threading, inspection and repair services for oil country tubular goods in Malaysia and overseas, with a focus on premium connections used in high-end and complex wells. 2. SHARE CAPITAL 2.1 Issued share capital The issued share capital of UMW-OG as at the LPD is as follows:- No. of UMW-OG Shares ( 000) Amount (RM 000) Issued share capital 2,162,000 2,453,819 As at the LPD, there is only one (1) class of shares in UMW-OG i.e. the UMW-OG Shares. All the UMW-OG Shares rank pari passu in terms of voting rights and entitlements to any dividends, rights, allotments and/or distributions (including any capital distributions) which may be declared, made or paid to shareholders. 2.2 Changes in the issued share capital Pursuant to the commencement of the Act, all amounts standing to the credit of share premium account of UMW-OG has become part of its share capital. Save for the above, there is no change in the issued share capital of UMW-OG since the end of the FYE 31 December 2016 up to the LPD. 2.3 Convertible securities As at the LPD, UMW-OG does not have any convertible securities. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 93

105 ATTACHMENT I INFORMATION ON UMW-OG (cont d) 3. SUBSTANTIAL SHAREHOLDERS The shareholders of UMW-OG holding 5% or more of the total number of UMW-OG Shares and their shareholdings in UMW-OG based on the Record of Depositors as at the LPD are as follows:- Name Direct No. of UMW- OG Shares ( 000) % (1) Indirect No. of UMW- OG Shares ( 000) % (1) UMWH 1,204, ASB 181, Note:- (1) Computed based on the total number of 2,162,000,000 UMW-OG Shares as at the LPD. 4. DIRECTORS As at the LPD, the Directors of UMW-OG (all Malaysians) and their shareholdings in UMW- OG are as follows:- Name / Designation Address Direct No. of UMW- OG Shares ( 000) % (1) Indirect No. of UMW- OG Shares ( 000) % (1) Dato Abdul Rahman bin Ahmad (Chairman, Non-Independent Non-Executive Director) Rohaizad bin Darus (President, Non-Independent Executive Director) Razalee bin Amin (Independent Non-Executive Director) Dato Afifuddin bin Abdul Kadir (Senior Independent Non-Executive Director) Cheah Tek Kuang (Independent Non-Executive Director) Dato Ibrahim bin Marsidi (Independent Non-Executive Director) Mohd Rashid bin Mohd Yusof (Independent Non-Executive Director) No. 1A, Lorong 14/47B Petaling Jaya Selangor Darul Ehsan No. 8, Jalan Cempaka 8 Taman Cempaka Ampang Selangor Darul Ehsan No. 7, SS 19/3A Subang Jaya Selangor Darul Ehsan No. 1, Jalan 3/2F Seksyen Bandar Baru Bangi Selangor Darul Ehsan No. 1, Jalan Setiabakti 10 Bukit Damansara Kuala Lumpur Wilayah Persekutuan 18, Jalan Suasana 5/3A Bandar Tun Hussein Onn Cheras Selangor Darul Ehsan No. 13, Jalan Memanah 13/55A Laman Seri Seksyen Shah Alam Selangor Darul Ehsan , (2) * 30 *

106 ATTACHMENT I INFORMATION ON UMW-OG (cont d) Name / Designation Address Direct No. of UMW- OG Shares ( 000) % (1) Indirect No. of UMW- OG Shares ( 000) % (1) Rowina Ghazali Seth (Independent Non-Executive Director) Haida Shenny binti Hazri (Non-Independent Non-Executive Director) B-3A-01, Tiffani Kiara Changkat Duta Kiara Mont Kiara Kuala Lumpur Wilayah Persekutuan 4463, Lorong Lee Hin Neo 3 Ukay Heights Ampang Selangor Darul Ehsan * Negligible Notes:- (1) Computed based on the total number of 2,162,000,000 UMW-OG Shares as at the LPD. (2) Deemed interested through his spouse, child and pledged securities account. 5. SUBSIDIARIES AND ASSOCIATED COMPANY The details of the subsidiaries of UMW-OG as at the LPD are as follows:- Name of company Country of incorporation Effective equity interest % Principal activities UMW JDC Drilling Sdn Bhd Malaysia 85 Provision of drilling operations for the O&G industry UMW Malaysian Ventures Sdn Bhd UMW Singapore Ventures Pte Ltd Malaysia 100 Investment holding Singapore 100 Investment holding UMW Rig Asset (L) Ltd Malaysia 100 Investment holding Subsidiaries of UMW Malaysian Ventures Sdn Bhd UMW Offshore Drilling Sdn Bhd UMW Oilpipe Services Sdn Bhd Malaysia 100 Contract offshore drilling business and operations and other engineering services for O&G exploration, development and production in Malaysia and overseas Malaysia 100 Provision of threading, inspection, repair and maintenance services for oil country tubular goods UMW Workover Sdn Bhd Malaysia 100 Provision of workover operations for the O&G industry UMW Oilpipe Services (Turkmenistan) Ltd Malaysia 51 Provision of threading, inspection, repair and maintenance services for oil country tubular goods 95

107 ATTACHMENT I INFORMATION ON UMW-OG (cont d) Name of company Subsidiaries of UMW Rig Asset (L) Ltd Country of incorporation Effective equity interest % Principal activities UMW Drilling Co Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 2 (L) Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 3 (L) Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 4 (L) Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 5 (L) Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 6 (L) Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 7 (L) Ltd Malaysia 100 Ownership and leasing of rig UMW Drilling 8 (L) Ltd Malaysia 100 Ownership and leasing of rig Offshore Driller 4 Ltd Subsidiary of UMW Singapore Ventures Pte Ltd UMW Oilfield Services (Tianjin) Co., Limited Subsidiary of UMW Drilling 2 (L) Ltd Cayman Islands People s Republic of China 100 Dormant 100 Provision of threading, inspection, repair and maintenance services for oil country tubular goods UMW Standard 1 Pte Ltd Singapore 100 Ownership and leasing of rig Subsidiary of UMW Drilling 3 (L) Ltd UMW Standard 3 Pte Ltd Singapore 100 Dormant Subsidiary of UMW Drilling 4 (L) Ltd Offshore Driller B324 Ltd Subsidiaries of UMW Offshore Drilling Sdn Bhd Cayman Islands 100 Dormant UMW Drilling Academy Sdn Bhd Malaysia 100 Provision of training and courses in relation to O&G drilling activities UMW Offshore Drilling Ltd Subsidiary of UMW Oilpipe Services Sdn Bhd Cayman Islands 100 Contract drilling operations and other engineering services for O&G exploration, development and production UOT (Thailand) Limited Thailand 58.8 Provision of threading, inspection, repair and maintenance services for oil country tubular goods 96

108 ATTACHMENT I INFORMATION ON UMW-OG (cont d) The details of the associated company of UMW-OG as at the LPD are as follows:- Name of company Country of incorporation Effective equity interest % Principal activities Oil-Tex (Thailand) Company Limited Thailand 20 Provision of logistic services for the O&G industry 6. PROFIT AND DIVIDEND RECORD A summary of the Group s results based on the audited consolidated financial statements of UMW-OG for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 as well as the latest unaudited consolidated financial statements of UMW-OG for the three (3)- month FPE 31 March 2017 is as follows:- Unaudited for the three (3)-month FPE 31 March 2017 (RM 000) Audited for the FYE 31 December (RM 000) (RM 000) (RM 000) Revenue 74, , ,877 1,014,903 (Loss) / Profit before tax (104,908) (1,181,264) (348,426) 284,156 Income tax expense (11) (2,183) (20,005) (30,398) (Loss) / Profit for the year (104,919) (1,183,447) (368,431) 253,758 (Loss) / Profit attributable to:- - equity holders of the Company (104,117) (1,177,379) (369,277) 251,996 - non-controlling interests (802) (6,068) 846 1,762 (104,919) (1,183,447) (368,431) 253,758 Weighted average number of ordinary shares in issue ( 000) 2,162,000 2,162,000 2,162,000 2,162,000 Basic (loss per share) / EPS (sen) (1) (4.82) (54.46) (17.08) Net dividend per UMW-OG Share (sen) Note:- (1) The Company does not have any dilutive potential ordinary shares. Accordingly, the diluted (loss per share) / EPS is not presented. Save as disclosed below, there is no material exceptional item in the audited consolidated financial statements of UMW-OG for the past three (3) financial years up to the FYE 31 December 2016 and the latest unaudited consolidated financial statements of UMW-OG for the three (3)-month FPE 31 March 2017:- (i) the Group recognised an impairment loss of RM347.7 million for the FYE 31 December 2015 (in respect of property, plant and equipment and goodwill) and RM780.3 million for the FYE 31 December 2016 (in respect of property, plant and equipment) arising from the significant downturn in the O&G industry, softer time charter rates and the lower utilisation of the drilling rigs and hydraulic workover units; and (ii) the significant strengthening of USD against RM affected the assets and liabilities upon translation of the Group s assets and liabilities denominated in USD to RM (the presentation currency of the Company). Arising therefrom, the net impact to equity for the FYE 31 December 2015 was a gain of RM501.2 million. 97

109 ATTACHMENT I INFORMATION ON UMW-OG (cont d) 7. STATEMENT OF ASSETS AND LIABILITIES The statement of assets and liabilities of UMW-OG based on its audited consolidated financial statements for the FYE 31 December 2016 as well as the latest unaudited consolidated financial statements for the three (3)-month FPE 31 March 2017 are as follows:- Unaudited as at 31 March Audited as at 31 December (RM 000) (RM 000) (RM 000) ASSETS Non-current assets Property, plant and equipment 5,161,228 5,298,125 6,081,634 Land use rights 2,487 2,514 2,631 Investment in associate 2,646 2,571 2,073 Deferred tax assets Derivative assets 6,030 5,071 2,636 Deposit at bank 331, ,450 - Total non-current assets 5,504,452 5,644,843 6,089,178 Current assets Inventories 212, , ,508 Other investments ,565 Receivables (including tax recoverable) 110, , ,027 Derivative assets Due from related companies 2,636 2,547 3,666 Deposits, cash and bank balances 454, , ,807 Total current assets 779, ,197 1,557,805 TOTAL ASSETS 6,284,267 6,550,040 7,646,983 EQUITY AND LIABILITIES Share capital (1) 2,453,819 1,081,000 1,081,000 Share premium (1) - 1,372,819 1,372,819 Other reserves 812, , ,931 (Accumulated losses) / retained profits (1,137,246) (1,033,129) 144,250 Equity attributable to equity holders of the Company 2,129,342 2,257,988 3,333,000 Non-controlling interests 2,405 3,213 10,437 Total equity 2,131,747 2,261,201 3,343,437 Non-current liabilities Deferred tax liabilities - - 1,098 Due to holding company 308, ,000 - Long term borrowings 2,182,657 2,272,773 1,746,965 Total non-current liabilities 2,490,657 2,580,773 1,748,063 Current liabilities Taxation ,143 Short term borrowings 1,505,004 1,499,745 2,257,330 Payables 149, , ,235 Due to related companies 6,283 2,290 2,775 Total current liabilities 1,661,863 1,708,066 2,555,483 Total liabilities 4,152,520 4,288,839 4,303,546 TOTAL EQUITY AND LIABILITIES 6,284,267 6,550,040 7,646,983 Note:- (1) Pursuant to the commencement of the Act, all amounts standing to the credit of share premium account of UMW-OG has become part of its share capital. 98

110 ATTACHMENT I INFORMATION ON UMW-OG (cont d) As at the LPD, there is no known material change in the financial position or prospects of UMW-OG subsequent to the latest audited consolidated financial statements for the FYE 31 December Within the knowledge of the PAC Group, there has been no material change in the financial position or prospects of UMW-OG since 31 December 2016, being the date of the last audited consolidated financial statements of UMW-OG laid before UMW-OG s shareholders at its general meeting held on 15 May ACCOUNTING POLICIES The audited consolidated financial statements of UMW-OG for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for UMW-OG s financial statements for the respective years under review. There is no change in the accounting standards adopted by UMW-OG which would result in a material variation to the comparable figures for the audited consolidated financial statements of UMW-OG for the FYE 31 December 2014, 31 December 2015 and 31 December BORROWINGS, CONTINGENT LIABILITIES AND MATERIAL COMMITMENTS As at 31 March 2017, which is not more than three (3) months preceding the LPD, the UMW- OG Group has total outstanding borrowings of approximately RM3,687.7 million, all of which are interest bearing, as follows:- Borrowings Amount (RM 000) Non-current - Secured term loans 712,685 - Unsecured term loans 1,469,972 Total non-current borrowings 2,182,657 Current - Secured term loans - - Unsecured term loans and revolving credits 1,505,004 Total current borrowings 1,505,004 Total bank borrowings 3,687,661 The details on contingent liabilities and material commitments of the UMW-OG Group as at 31 March 2017, which is not more than three (3) months preceding the LPD are as set out in Section 3, Appendix V of the Circular. 10. MATERIAL LITIGATION The details on material litigation relating to the UMW-OG Group are as set out in Section 5, Appendix V of the Circular. 11. MATERIAL CONTRACTS The details on material contracts entered into by the UMW-OG Group (not being contracts entered into in the ordinary course of business) within the two (2) years immediately preceding the LPD are as set out in Section 4, Appendix V of the Circular. 99

111 ATTACHMENT II INFORMATION ON PNB 1. HISTORY AND PRINCIPAL ACTIVITIES PNB was incorporated in Malaysia under the Companies Act 1965 on 17 March PNB is principally involved in the acquisition and holding of shares to promote greater ownership of share capital in the corporate sector in Malaysia by Bumiputeras. As at the LPD, PNB is the investment manager for the following funds:- (i) Unit trust funds (a) ASB; (b) ASW 2020; (c) (d) (e) ASM; ASM 1Malaysia; ASD; (f) ASB 2; (g) ASN; (h) ASN 2; (i) ASN 3; (j) (k) (l) ASG Amanah Saham Pendidikan; ASG Amanah Saham Kesihatan; and ASG Amanah Saham Persaraan; (ii) Other funds (a) (b) Amanah Harta Tanah PNB; and YTI. 2. SUBSTANTIAL SHAREHOLDER The shareholder of PNB holding 5% or more of the total number of shares in PNB and its shareholding in PNB as at the LPD are as follows:- Name Direct Indirect No. of shares ( 000) % (1) No. of shares ( 000) % (1) YPB (2) 99, Notes:- (1) Computed based on the total number of 100,000,000 shares in PNB as at the LPD. (2) The directors of YPB as at the LPD are as follows:- (i) Dato Sri Mohd Najib bin Tun Hj Abdul Razak; (ii) Dato Seri Dr. Ahmad Zahid bin Hamidi; (iii) Dato Sri Mustapa bin Mohamed; (iv) Datuk Johari bin Abdul Ghani; and (v) Tan Sri Abdul Wahid bin Omar. 100

112 ATTACHMENT II INFORMATION ON PNB (cont d) 3. DIRECTORS As at the LPD, the directors of PNB (all Malaysians) are as follows:- Name Designation Address Tan Sri Abdul Wahid bin Omar Chairman 111, Jalan Sri Tasik Timur Perdana Lakeview East Cyberjaya Selangor Dato Abdul Rahman bin Ahmad President & Group Chief Executive No. 1A, Lorong 14/47B Petaling Jaya Selangor Tan Sri Dr. Ali bin Hamsa Director Rumah Kediaman Rasmi Ketua Setiausaha Negara No. 1, Jalan Presint 10/5, Precint Putrajaya Wilayah Persekutuan Tan Sri Dr. Mohd. Irwan Serigar bin Abdullah Director No. 26, Jalan Presint 14 A Jalan 1/ Putrajaya Wilayah Persekutuan Tan Sri Dr. Wan Abdul Aziz bin Wan Abdullah Director No. 3, Jalan AU5C/6 Lembah Keramat Kuala Lumpur Wilayah Persekutuan Dato Dr. Awang Adek bin Hussin Director No. 6888, Lot 1056 Lorong Sek Keb Perupok Bachok Kelantan Tuan Haji Soedirman bin Haji Aini Director No. 76, Lorong 3 A Jalan Pelita, Petra Jaya Kuching Sarawak Datuk Dr. Mohd. Yaakub bin Haji Johari Director No. 135, Jln Kg Tg Aru Lama Tanjung Aru Sabah Tan Sri Zarinah Sameehah binti Anwar Director 30, Lorong Taman Pantai 7 Bukit Pantai Kuala Lumpur Wilayah Persekutuan As at the LPD, the directors of PNB do not have any interest (direct and indirect) in the shares of PNB. 101

113 ATTACHMENT II INFORMATION ON PNB (cont d) 4. PROFIT AND DIVIDEND RECORD A summary of PNB s results based on its audited financial statements for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 is as follows: (RM 000) Audited for the FYE 31 December 2015 (RM 000) 2014 (RM 000) Revenue 2,564,985 3,556,538 4,624,268 Profit before taxation and zakat 1,653,096 3,450,703 3,135,639 Taxation and zakat 12 (105,186) (84,421) Profit for the year 1,653,108 3,345,517 3,051,218 No. of shares in issue ( 000) 100, , ,000 Basic earnings per share (RM) (1)(2) Net dividend per share (RM) Notes:- (1) The basic earnings per share (which is computed based on profit for the year divided by the total number of 100,000,000 shares in PNB) is not disclosed in the audited financial statements of PNB and is shown for illustration purposes only. (2) The company does not have any dilutive potential ordinary shares. Accordingly, the diluted earnings per share is not presented. There is no material exceptional item in the audited financial statements of PNB for the past three (3) financial years up to the FYE 31 December STATEMENT OF ASSETS AND LIABILITIES The statement of assets and liabilities of PNB based on its audited financial statements for the FYE 31 December 2016 is as follows:- Audited as at 31 December (RM 000) (RM 000) ASSETS Non-current assets Property and equipment 762, ,054 Intangible assets 12,488 13,237 Investment properties 3,525,304 3,483,079 Investments in subsidiaries 6,446,700 10,991,414 Investments in associates 13,864,870 9,447,969 Other investments 9,745,390 7,044,172 Investments in unit trusts 798,971 1,055,858 Long term receivables 1,777,263 1,970,460 Total non-current assets 36,933,391 34,671,243 Current assets Tax recoverable 83,017 25,708 Receivables 1,576,154 1,120,060 Cash and bank balances 3,563,610 2,347,126 Total current assets 5,222,781 3,492,894 TOTAL ASSETS 42,156,172 38,164,

114 ATTACHMENT II INFORMATION ON PNB (cont d) Audited as at 31 December (RM 000) (RM 000) EQUITY AND LIABILITIES EQUITY Share capital 100, ,000 Sekim reserve 619,852 1,137,884 Investment reserve 500, ,000 Retained profits 26,399,684 24,707,254 Total equity 27,619,536 26,445,138 LIABILITIES Non-current liabilities Borrowings 12,322,718 10,157,397 Income for Program Pembangunan Rakyat Termiskin 123, ,341 Program for ASW Bandar 27,960 26,680 Professorial Chair Tun Ismail Mohamed Ali 4,713 4,529 Bumiputera Wealth Fund 208, ,196 Deferred tax liability - 6,360 Total non-current liabilities 12,687,161 10,518,503 Current liabilities Payables 538, ,115 Borrowings 832, ,680 Provision for bonus distribution 478, ,701 Total current liabilities 1,849,475 1,200,496 Total liabilities 14,536,636 11,718,999 TOTAL EQUITY AND LIABILITIES 42,156,172 38,164,137 As at the LPD, there is no known material change in the financial position or prospects of PNB subsequent to the latest audited financial statements for the FYE 31 December ACCOUNTING POLICIES The audited financial statements of PNB for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for PNB s financial statements for the respective years under review. There is no change in the accounting standards adopted by PNB which would result in a material variation to the comparable figures for the audited financial statements of PNB for the FYE 31 December 2014, 31 December 2015 and 31 December THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 103

115 ATTACHMENT III INFORMATION ON UMWH 1. HISTORY AND PRINCIPAL ACTIVITIES UMWH was incorporated in Malaysia under the Companies Act 1965 on 20 September 1982 as a private limited company under the name of UMW Management Services Sdn Bhd. In conjunction with a major capital reconstruction exercise, UMW Management Services Sdn Bhd changed its status to that of a public limited company on 30 July 1987 and became known as UMW Management Services Berhad. On 31 July 1987, UMW Management Services Berhad assumed its present name. UMWH was subsequently listed on the Stock Exchanges of Kuala Lumpur and Singapore on 2 December However, on 1 January 1990, in compliance with the Malaysian National Policy and the requirements of the Kuala Lumpur Stock Exchange (now known as Bursa Securities), UMWH was de-listed from the Stock Exchange of Singapore and remains listed on the Main Market of Bursa Securities. The UMWH Group is principally engaged in the following business segments:- (i) (ii) (iii) (iv) the automotive segment which involves import, assembly and marketing of passenger and commercial vehicles and related spares; the equipment segment which involves trading and leasing of a wide range of light and heavy equipment including related spares for use in the industrial, construction and agricultural sectors; the manufacturing and engineering segment which involves manufacturing, assembly and trading of automotive parts, blending, packaging, marketing and distribution of lubricants and other established agency lines in the automotive field; and the O&G segment which involves fabrication, onshore drilling, manufacturing of oil country tubular goods and line pipes, and trading of oilfield products. 2. SUBSTANTIAL SHAREHOLDERS The shareholders of UMWH holding 5% or more of the total number of shares in UMWH and their shareholdings in UMWH based on the Record of Depositors as at the LPD are as follows:- Name Direct Indirect No. of shares % (1) No. of shares % (1) ART-ASB ,004,000 (2) EPF ,633,960 (3) PNB 66,842, YPB ,842,200 (4) 5.72 KWAP 88,671, ,658,200 (5) 0.40 Notes:- (1) Computed based on the total number of 1,168,293,932 shares in UMWH as at the LPD. (2) Deemed interested through the securities account of its nominee. (3) Deemed interested through multiple securities accounts of its nominees. (4) Deemed interested through its interest in PNB pursuant to Section 8 of the Act. (5) Deemed interested through its fund manager. 104

116 ATTACHMENT III INFORMATION ON UMWH (cont d) 3. DIRECTORS As at the LPD, the directors of UMWH (all Malaysians) are as follows:- Name Designation Address Tan Sri Dato Sri Hamad Kama Piah bin Che Othman Group Chairman / Non-Independent Non-Executive Director No. 3427, Persiaran Kasawari Desa Haras, Ampang Selangor Darul Ehsan Badrul Feisal bin Abdul Rahim President & Group CEO / Executive Director No. 29, Jalan Dagang 6/3A Taman Dagang, Ampang Selangor Darul Ehsan Dato Siow Kim Siow Kim Lin Khalid bin Sufat Rohaya binti Mohammad Yusof Tan Sri Hasmah binti Abdullah Dato Eshah binti Meor Suleiman Datin Paduka Kartini binti Hj Abdul Manaf Dr Veerinderjeet Singh a/l Tejwant Singh Salwah binti Abdul Shukor Mohd Shahazwan bin Mohd Harris Senior Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director No. 30, Jalan Setiajaya Bukit Damansara Kuala Lumpur Wilayah Persekutuan No. 15, Jalan SS3/86, Kelana Jaya Petaling Jaya Selangor Darul Ehsan No. 14, Jalan 14/ Petaling Jaya Selangor Darul Ehsan No. 139, Jalan SS 22/27 Damansara Jaya Petaling Jaya Selangor Darul Ehsan No. 58, Jalan P15H 4/5 Precinct 15, Putrajaya Wilayah Persekutuan No. 1, Jalan Awan Larat U8/74B Bukit Jelutong Shah Alam Selangor Darul Ehsan Unit 3-7-6, Residence Condominium Jalan Wan Kadir 5 Taman Tun Dr Ismail Kuala Lumpur Wilayah Persekutuan No. 21, Lorong Ampang Ulu 3 Off Jalan Ampang Kiri Kuala Lumpur Wilayah Persekutuan No. 11, PJU 7/29 Mutiara Damansara Petaling Jaya Selangor Darul Ehsan As at the LPD, save for Dr Veerinderjeet Singh a/l Tejwant Singh who has a direct interest in 66 shares in UMWH, the other directors of UMWH do not have any interest (direct and indirect) in the shares of UMWH. 105

117 ATTACHMENT III INFORMATION ON UMWH (cont d) 4. PROFIT AND DIVIDEND RECORD A summary of the results of the UMWH Group based on the audited consolidated financial statements of UMWH for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 as well as the latest unaudited consolidated financial statements of UMWH for the three (3)-month FPE 31 March 2017 is as follows:- Unaudited for the three (3)- month FPE 31 March 2017 (RM 000) Audited for the FYE 31 December 2016 (RM 000) 2015 (RM 000) 2014 (RM 000) Revenue 2,803,585 10,958,515 14,441,583 14,932,490 Profit / (Loss) before taxation and zakat 14,388 (2,130,225) 269,652 1,621,460 Taxation and zakat (24,949) (139,552) (267,460) (408,455) (Loss) / Profit for the year (10,561) (2,269,777) 2,192 1,213,005 (Loss) / Profit attributable to:- - equity holders of the company 20,165 (1,658,039) (37,171) 651,970 - non-controlling interests (30,726) (611,738) 39, ,035 (10,561) (2,269,777) 2,192 1,213,005 Weighted average number of ordinary shares in issue ( 000) 1,168,294 1,168,294 1,168,294 1,168,294 Basic earnings / (loss) per share (sen) (1) 1.73 (141.92) (3.18) Net dividend per share (sen) Note:- (1) The company does not have any dilutive potential ordinary shares. Accordingly, the diluted earnings / (loss) per share is not presented. Save as disclosed below, there is no material exceptional item in the audited consolidated financial statements of UMWH for the past three (3) financial years up to the FYE 31 December 2016 and the latest unaudited consolidated financial statements of UMWH for the three (3)-month FPE 31 March 2017:- (i) (ii) (iii) the group recognised various impairment losses, net foreign exchange losses, net fair value gain on derivatives and loss on re-measurement of financial guarantee contracts for the FYE 31 December 2016 (see annual report 2016 of UMWH for further details); the group recognised various impairment losses, net foreign exchange gains, net fair value loss on derivatives, loss on disposal of non-current assets held for sale and provision for additional loss on investment in a joint venture for the FYE 31 December 2015 (see annual report 2015 of UMWH for further details); and the group recognised various impairment losses and loss on re-measurement of assets held for sale for the FYE 31 December 2014 (see annual report 2014 of UMWH for further details); 106

118 ATTACHMENT III INFORMATION ON UMWH (cont d) 5. STATEMENT OF ASSETS AND LIABILITIES The statement of assets and liabilities of UMWH based on its audited consolidated financial statements for the FYE 31 December 2016 as well as the latest unaudited consolidated financial statements for the three (3)-month FPE 31 March 2017 are as follows:- Unaudited as at Audited as at 31 December 31 March (RM 000) (RM 000) (RM 000) ASSETS Non-current assets Property, plant and equipment 7,558,568 7,678,533 8,102,786 Investment properties 2,078 2,457 3,172 Intangible assets ,228 Land use rights 6,415 6,482 6,761 Leased assets 268, , ,629 Receivables 46,756 47,756 42,490 Investment in joint ventures 47,608 54,875 55,951 Investment in associates 1,996,747 1,953,223 1,923,150 Deferred tax assets 92,818 93,079 74,501 Other investments 27,224 22,660 22,761 Derivative assets 6,466 11,948 13,514 Deposits, cash and bank balances 331, ,450 - Total non-current assets 10,385,100 10,477,972 10,557,943 Current assets Inventories 1,698,988 1,931,189 1,889,963 Receivables 849, ,467 1,833,401 Other investments 542, ,898 1,188,945 Tax recoverable - 7,604 9,396 Derivative assets 10,205 3,470 11,510 Deposits, cash and bank balances 2,445,666 1,857,424 2,734,143 Total current assets 5,546,731 5,785,052 7,667,358 TOTAL ASSETS 15,931,831 16,263,024 18,225,301 EQUITY AND LIABILITIES EQUITY Share capital (1) 1,378, , ,147 Share premium (1) - 794, ,482 Capital reserve Hedging reserve 3,604 3,099 - Foreign currency translation reserve 427, , ,306 Retained profits 2,948,680 2,898,645 4,760,127 4,758,837 4,718,562 6,584,458 Non-controlling interests 2,087,925 2,145,713 2,799,413 Total equity 6,846,762 6,864,275 9,383,871 LIABILITIES Non-current liabilities Provision for warranties 103, ,203 55,976 Deferred tax liabilities 23,218 22,952 27,480 Long term borrowings 3,594,698 3,715,777 2,289,762 Payables 815, ,805 50,197 Derivative liabilities ,030 Total non-current liabilities 4,536,420 4,646,737 2,503,445 Current liabilities Provision for warranties 40,906 97,270 85,171 Taxation 18,832 40,956 86,981 Short term borrowings 2,615,894 2,639,329 3,724,990 Payables 1,792,322 1,878,642 2,241,179 Derivative liabilities 80,695 95, ,664 Total current liabilities 4,548,649 4,752,012 6,337,985 Total liabilities 9,085,069 9,398,749 8,841,430 TOTAL EQUITY AND LIABILITIES 15,931,831 16,263,024 18,225,

119 ATTACHMENT III INFORMATION ON UMWH (cont d) Note:- (1) Pursuant to the commencement of the Act, all amounts standing to the credit of share premium account of UMWH has become part of its share capital. As at the LPD, there is no known material change in the financial position of UMWH subsequent to the latest audited consolidated financial statements for the FYE 31 December Subsequently, following the completion of the Distribution on 11 July 2017, the UMW- OG Group has been demerged from the UMWH Group. 6. ACCOUNTING POLICIES The audited consolidated financial statements of UMWH for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for UMWH s financial statements for the respective years under review. There is no change in the accounting standards adopted by UMWH which would result in a material variation to the comparable figures for the audited consolidated financial statements of UMWH for the FYE 31 December 2014, 31 December 2015 and 31 December THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 108

120 ATTACHMENT IV INFORMATION ON ASB 1. HISTORY AND PRINCIPAL ACTIVITIES ASB is a unit trust fund constituted on 21 October 1989 and launched on 2 January 1990 under the management of PNB. ASB invests in a portfolio of various asset classes, primarily securities listed on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured products. 2. UNITHOLDERS Eligible investors in the fund include:- (i) (ii) (iii) Malaysian Bumiputera individual who is 18 years and above; citizen of Malaysia who is (a) 18 years and above and (b) a Siamese / Thai descendant, Portuguese / Eurasian descendant or non-bumiputera Muslim convert; and guardian from the above categories applying units as the guardian for minors aged six (6) months old and above but below 18 years. There is no limitation on the fund size. 3. INVESTMENT MANAGER The investment manager of ASB is PNB. 4. MANAGEMENT COMPANY The management company of ASB is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASB s results for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 is as follows: (RM 000) FYE 31 December 2015 (RM 000) 2014 (RM 000) Total investment income 10,462,603 10,208,205 10,746,709 Net income before taxation / after taxation 9,826,229 9,113,804 10,185,483 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 31 December STATEMENT OF ASSETS AND LIABILITIES There is no statement of assets and liabilities published in the latest annual report of ASB for the FYE 31 December As at 31 December 2016, the total units holders capital was RM144,443,000,000 comprising 144,443,000,000 units. As at the LPD, there is no known material change in the financial position of ASB subsequent to the latest annual report of ASB for the FYE 31 December

121 ATTACHMENT IV INFORMATION ON ASB (cont d) 7. ACCOUNTING POLICIES Based on the annual reports of ASB for the FYE 31 December 2014, 31 December 2015 and 31 December 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASB s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASB which would result in a material variation to the comparable figures for the audited financial statements of ASB for the FYE 31 December 2014, 31 December 2015 and 31 December THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 110

122 ATTACHMENT V INFORMATION ON ASW HISTORY AND PRINCIPAL ACTIVITIES ASW 2020 is a unit trust fund constituted on 14 August 1996 and launched on 28 August 1996 under the management of PNB. ASW 2020 invests in a portfolio of various asset classes, primarily securities listed on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured products and derivatives. 2. UNITHOLDERS Eligible investors in the fund include:- (i) (ii) Malaysian individual who is 18 years and above; and guardian from the above category applying units as the guardian for minors aged six (6) months old and above but below 18 years. The approved fund size is billion units. 3. INVESTMENT MANAGER The investment manager of ASW 2020 is PNB. 4. MANAGEMENT COMPANY The management company of ASW 2020 is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASW 2020 s results for the FYE 31 August 2014, 31 August 2015 and 31 August 2016 is as follows: (RM 000) FYE 31 August 2015 (RM 000) 2014 (RM 000) Total investment income 1,410,170 1,406,441 1,379,281 Net income before taxation / after taxation 1,191,645 1,040,873 1,184,389 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 31 August STATEMENT OF ASSETS AND LIABILITIES There is no statement of assets and liabilities published in the latest annual report of ASW 2020 for the FYE 31 August As at 31 August 2016, the total units holders capital was RM18,193,100,000 comprising 18,193,100,000 units. As at the LPD, there is no known material change in the financial position of ASW 2020 subsequent to the latest annual report of ASW 2020 for the FYE 31 August

123 ATTACHMENT V INFORMATION ON ASW 2020 (cont d) 7. ACCOUNTING POLICIES Based on the annual reports of ASW 2020 for the FYE 31 August 2014, 31 August 2015 and 31 August 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASW 2020 s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASW 2020 which would result in a material variation to the comparable figures for the audited financial statements of ASW 2020 for the FYE 31 August 2014, 31 August 2015 and 31 August THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 112

124 ATTACHMENT VI INFORMATION ON ASM 1. HISTORY AND PRINCIPAL ACTIVITIES ASM is a unit trust fund constituted on 13 April 2000 and launched on 20 April 2000 under the management of PNB. ASM invests in a portfolio of various asset classes, primarily securities listed on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured products and derivatives. 2. UNITHOLDERS Eligible investors in the fund include:- (i) (ii) Malaysian individual who is 18 years and above; and guardian from the above category applying units as the guardian for minors aged six (6) months old and above but below 18 years. The approved fund size is billion units. 3. INVESTMENT MANAGER The investment manager of ASM is PNB. 4. MANAGEMENT COMPANY The management company of ASM is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASM s results for the FYE 31 March 2015, 31 March 2016 and 31 March 2017 is as follows: (RM 000) FYE 31 March 2016 (RM 000) 2015 (RM 000) Total investment income 1,277,129 1,349,731 1,250,275 Net income before taxation / after taxation 1,064,837 1,054,340 1,077,205 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 31 March STATEMENT OF ASSETS AND LIABILITIES There is no statement of assets and liabilities published in the latest annual report of ASM for the FYE 31 March As at 31 March 2017, the total units holders capital was RM17,320,815,000 comprising 17,320,815,000 units. As at the LPD, there is no known material change in the financial position of ASM subsequent to the latest annual report of ASM for the FYE 31 March

125 ATTACHMENT VI INFORMATION ON ASM (cont d) 7. ACCOUNTING POLICIES Based on the annual reports of ASM for the FYE 31 March 2015, 31 March 2016 and 31 March 2017, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASM s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASM which would result in a material variation to the comparable figures for the audited financial statements of ASM for the FYE 31 March 2015, 31 March 2016 and 31 March THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 114

126 ATTACHMENT VII INFORMATION ON AS 1MALAYSIA 1. HISTORY AND PRINCIPAL ACTIVITIES AS 1Malaysia is a unit trust fund constituted on 25 June 2009 and launched on 5 August 2009 under the management of PNB. AS 1Malaysia invests in a portfolio of various asset classes, comprising securities listed on Bursa Securities or on recognised overseas stock exchange, unlisted securities, fixed income and money market instruments as well as other capital market instruments in Malaysia, and in any recognised market as approved in the deed of AS 1Malaysia. 2. UNITHOLDERS Eligible investors in the fund include:- (i) (ii) (iii) Malaysian individual who is 18 years and above; guardian from the above category applying units as the guardian for minors aged six (6) months old and above but below 18 years; and Malaysian Development Holding Sdn Bhd for the purpose of Skim Amanah Rakyat 1Malaysia. The approved fund size is billion units. 3. INVESTMENT MANAGER The investment manager of AS 1Malaysia is PNB. 4. MANAGEMENT COMPANY The management company of AS 1Malaysia is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of AS 1Malaysia s results for the FYE 30 September 2014, 30 September 2015 and 30 September 2016 is as follows: (RM 000) FYE 30 September 2015 (RM 000) 2014 (RM 000) Total investment income 785, , ,155 Net income before taxation / after taxation 702, , ,613 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 30 September

127 ATTACHMENT VII INFORMATION ON AS 1MALAYSIA (cont d) 6. STATEMENT OF ASSETS AND LIABILITIES There is no statement of assets and liabilities published in the latest annual report of AS 1Malaysia for the FYE 30 September As at 30 September 2016, the total units holders capital was RM11,485,700,000 comprising 11,485,700,000 units. As at the LPD, there is no known material change in the financial position of AS 1Malaysia subsequent to the latest annual report of AS 1Malaysia for the FYE 30 September ACCOUNTING POLICIES Based on the annual reports of AS 1Malaysia for the FYE 30 September 2014, 30 September 2015 and 30 September 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for AS 1Malaysia s financial statements for the respective years under review. There is no change in the accounting standards adopted by AS 1Malaysia which would result in a material variation to the comparable figures for the audited financial statements of AS 1Malaysia for the FYE 30 September 2014, 30 September 2015 and 30 September THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 116

128 ATTACHMENT VIII INFORMATION ON ASD 1. HISTORY AND PRINCIPAL ACTIVITIES ASD is a unit trust fund constituted on 14 April 2001 and launched on 20 April 2001 under the management of PNB. ASD invests in a portfolio of various asset classes, primarily securities listed on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured products and derivatives. 2. UNITHOLDERS Eligible investors in the fund include:- (i) (ii) Malaysian Bumiputera individual who is 18 years and above; and guardian from the above category applying units as the guardian for minors aged six (6) months old and above but below 18 years. The approved fund size is 5.74 billion units. 3. INVESTMENT MANAGER The investment manager of ASD is PNB. 4. MANAGEMENT COMPANY The management company of ASD is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASD s results for the FYE 30 June 2014, 30 June 2015 and 30 June 2016 is as follows: (RM 000) FYE 30 June 2015 (RM 000) 2014 (RM 000) Total investment income 430, , ,687 Net income before taxation / after taxation 348, , ,179 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 30 June STATEMENT OF ASSETS AND LIABILITIES There is no statement of assets and liabilities published in the latest annual report of ASD for the FYE 30 June As at 30 June 2016, the total units holders capital was RM5,234,500,000 comprising 5,234,500,000 units. As at the LPD, there is no known material change in the financial position of ASD subsequent to the latest annual report of ASD for the FYE 30 June

129 ATTACHMENT VIII INFORMATION ON ASD (cont d) 7. ACCOUNTING POLICIES Based on the annual reports of ASD for the FYE 30 June 2014, 30 June 2015 and 30 June 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASD s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASD which would result in a material variation to the comparable figures for the audited financial statements of ASD for the FYE 30 June 2014, 30 June 2015 and 30 June THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 118

130 ATTACHMENT IX INFORMATION ON ASB 2 1. HISTORY AND PRINCIPAL ACTIVITIES ASB 2 is a unit trust fund constituted on 26 March 2014 and launched on 2 April 2014 under the management of PNB. ASB 2 invests in a mixed asset portfolio within the approved investment limits of equities, variable and fixed income securities, money market instruments as well as other securities in Malaysia, and/or any eligible market as permitted in the deed of ASB UNITHOLDERS Eligible investors in the fund include:- (i) (ii) (iii) Malaysian Bumiputera individual who is 18 years and above; citizen of Malaysia who is (a) 18 years and above and (b) a Siamese / Thai descendant, Portuguese / Eurasian descendant or non-bumiputera Muslim convert; and guardian from the above categories applying units as the guardian for minors aged six (6) months old and above but below 18 years. The approved fund size is billion units. 3. INVESTMENT MANAGER The investment manager of ASB 2 is PNB. 4. MANAGEMENT COMPANY The management company of ASB 2 is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASB 2 s results for the FYE 31 March 2015, 31 March 2016 and 31 March 2017 is as follows: (RM 000) FYE 31 March 2016 (RM 000) 2015 (RM 000) Total investment income 406, , ,968 Net income before taxation / after taxation 392, , ,307 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 31 March STATEMENT OF ASSETS AND LIABILITIES There is no statement of assets and liabilities published in the latest annual report of ASB 2 for the FYE 31 March As at 31 March 2017, the total units holders capital was RM7,385,550,000 comprising 7,385,550,000 units. As at the LPD, there is no known material change in the financial position of ASB 2 subsequent to the latest annual report of ASB 2 for the FYE 31 March

131 ATTACHMENT IX INFORMATION ON ASB 2 (cont d) 7. ACCOUNTING POLICIES Based on the annual reports of ASB 2 for the FYE 31 March 2015, 31 March 2016 and 31 March 2017, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASB 2 s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASB 2 which would result in a material variation to the comparable figures for the audited financial statements of ASB 2 for the FYE 31 March 2015, 31 March 2016 and 31 March THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 120

132 ATTACHMENT X INFORMATION ON ASN 1. HISTORY AND PRINCIPAL ACTIVITIES ASN is a unit trust fund constituted on 14 April 1981 and launched on 20 April 1981 under the management of PNB. ASN invests in a diversified portfolio of listed securities, primarily on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured products and derivatives. 2. UNITHOLDERS Eligible investors in the fund include:- (i) (ii) Malaysian Bumiputera individual who is 18 years and above; and guardian from the above category applying units as the guardian for minors aged six (6) months old and above but below 18 years. 3. INVESTMENT MANAGER The investment manager of ASN is PNB. 4. MANAGEMENT COMPANY The management company of ASN is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASN s results for the FYE 31 December 2014, 31 December 2015 and 31 December 2016 is as follows: (RM 000) FYE 31 December 2015 (RM 000) 2014 (RM 000) Total investment income 36,692 32, Net income before taxation / after taxation 16,155 11, Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 31 December THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 121

133 ATTACHMENT X INFORMATION ON ASN (cont d) 6. STATEMENT OF ASSETS AND LIABILITIES The statement of assets and liabilities of ASN based on its audited financial statements for the FYE 31 December 2016 is as follows:- Audited as at 31 December (RM 000) (RM 000) ASSETS Investments carried at fair value through other 958, ,714 comprehensive income Investments carried at fair value through profit or loss 158, ,796 Deposits with financial institutions 173, ,737 Tax recoverable 16,449 16,417 Receivables 2,692 3,980 Amounts due from stockbroker 33,372 2,691 Cash in bank 989 1,106 TOTAL ASSETS 1,344,167 1,304,441 EQUITY AND LIABILITIES EQUITY Units holders capital 1,364,379 1,294,623 Reserves (131,796) (101,072) Total equity 1,232,583 1,193,551 LIABILITIES Distribution payable 92, ,719 Amounts owing to manager 1,166 1,150 Amounts owing to stockbroker 14,815 - Payables 2,748 3,021 Total liabilities 111, ,890 TOTAL EQUITY AND LIABILITIES 1,344,167 1,304,441 As at the LPD, there is no known material change in the financial position of ASN subsequent to the latest annual report of ASN for the FYE 31 December ACCOUNTING POLICIES Based on the annual reports of ASN for the FYE 31 December 2014, 31 December 2015 and 31 December 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASN s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASN which would result in a material variation to the comparable figures for the audited financial statements of ASN for the FYE 31 December 2014, 31 December 2015 and 31 December THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 122

134 ATTACHMENT XI INFORMATION ON ASN 2 1. HISTORY AND PRINCIPAL ACTIVITIES ASN 2 is a unit trust fund constituted on 8 June 1999 and launched on 9 June 1999 under the management of PNB. ASN 2 invests in a diversified portfolio of listed securities, primarily on Bursa Securities, unlisted securities, fixed income, and money market instruments as well as other capital market instruments such as structured products and derivatives. 2. UNITHOLDERS Eligible investors in the fund are Malaysian Bumiputera individual who is 18 years and above. 3. INVESTMENT MANAGER The investment manager of ASN 2 is PNB. 4. MANAGEMENT COMPANY The management company of ASN 2 is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASN 2 s results for the FYE 30 June 2014, 30 June 2015 and 30 June 2016 as well as the six (6)-month FPE 31 December 2016 is as follows:- 6-month FPE 31 December FYE 30 June 2016 (RM 000) 2016 (RM 000) 2015 (RM 000) 2014 (RM 000) Total investment income 11,918 35,361 24,415 9,818 Net income before taxation / after taxation 5,436 22,449 15,888 6,201 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 30 June 2016 and the six (6)-month FPE 31 December THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 123

135 ATTACHMENT XI INFORMATION ON ASN 2 (cont d) 6. STATEMENT OF ASSETS AND LIABILITIES The statement of assets and liabilities of ASN 2 based on its audited financial statements for the FYE 30 June 2016 as well as for the six (6)-month FPE 31 December 2016 is as follows:- Audited As at 31 December As at 30 June (RM 000) (RM 000) (RM 000) ASSETS Investments carried at fair value through 595, , ,569 other comprehensive income Investments carried at fair value through 137,170 96,330 75,175 profit or loss Deposits with financial institutions 120, , ,266 Tax recoverable Receivables 1,879 1,661 1,926 Amounts due from stockbroker - 2,049 1,464 Amounts due from PNB 1,782 1,214 6,757 Cash in bank TOTAL ASSETS 857, , ,427 EQUITY AND LIABILITIES EQUITY Units holders capital 828, , ,036 Reserves 25,980 27,051 71,918 Total equity 854, , ,954 LIABILITIES Distribution payable - 50,090 44,153 Amounts owing to manager Amounts owing to stockbroker 1,966 1,048 5,432 Amounts due to PNB Payables Total liabilities 3,157 51,993 50,473 TOTAL EQUITY AND LIABILITIES 857, , ,427 As at the LPD, there is no known material change in the financial position of ASN 2 subsequent to the latest audited financial statements of ASN 2 for the six (6)-month FPE 31 December ACCOUNTING POLICIES Based on the annual reports of ASN 2 for the FYE 30 June 2014, 30 June 2015 and 30 June 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASN 2 s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASN 2 which would result in a material variation to the comparable figures for the audited financial statements of ASN 2 for the FYE 30 June 2014, 30 June 2015 and 30 June

136 ATTACHMENT XII INFORMATION ON ASN 3 1. HISTORY AND PRINCIPAL ACTIVITIES ASN 3 is a unit trust fund constituted on 24 September 2001 and launched on 16 October 2001 under the management of PNB. ASN 3 invests in a diversified portfolio of listed securities, primarily on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured product and derivatives. 2. UNITHOLDERS Eligible investors in the fund include Malaysian individual who is 18 years and above. 3. INVESTMENT MANAGER The investment manager of ASN 3 is PNB. 4. MANAGEMENT COMPANY The management company of ASN 3 is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of ASN 3 s results for the FYE 30 November 2014, 30 November 2015 and 30 November 2016 is as follows: (RM 000) FYE 30 November 2015 (RM 000) 2014 (RM 000) Total investment income 42,651 48,874 15,345 Net income before taxation / after taxation 25,597 34,034 8,419 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 30 November THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 125

137 ATTACHMENT XII INFORMATION ON ASN 3 (cont d) 6. STATEMENT OF ASSETS AND LIABILITIES The statement of assets and liabilities of ASN 3 based on its audited financial statements for the FYE 30 November 2016 is as follows:- Audited as at 30 November (RM 000) (RM 000) ASSETS Investments carried at fair value through other 745, ,185 comprehensive income Investments carried at fair value through profit or loss 245, ,000 Deposits with financial institutions 267, ,668 Tax recoverable Receivables 12,281 9,148 Amounts due from PNB 2,932 - Cash in bank TOTAL ASSETS 1,275,247 1,234,344 EQUITY AND LIABILITIES EQUITY Units holders capital 1,254,732 1,158,437 Reserves (51,682) 4,170 Total equity 1,203,050 1,162,607 LIABILITIES Distribution payable 70,783 67,277 Amounts owing to manager 1,107 1,065 Payables Amounts owing to stockbroker - 3,183 Total liabilities 72,197 71,737 TOTAL EQUITY AND LIABILITIES 1,275,247 1,234,344 As at the LPD, there is no known material change in the financial position of ASN 3 subsequent to the latest annual report of ASN 3 for the FYE 30 November ACCOUNTING POLICIES Based on the annual reports of ASN 3 for the FYE 30 November 2014, 30 November 2015 and 30 November 2016, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASN 3 s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASN 3 which would result in a material variation to the comparable figures for the audited financial statements of ASN 3 for the FYE 30 November 2014, 30 November 2015 and 30 November THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 126

138 ATTACHMENT XIII INFORMATION ON ASG 1. HISTORY AND PRINCIPAL ACTIVITIES ASG is a unit trust fund constituted on 11 March 2003 and launched on 17 March 2003 under the management of PNB. ASG is the umbrella fund for (i) ASG Amanah Saham Pendidikan, (ii) ASG Amanah Saham Kesihatan and (iii) ASG Amanah Saham Persaraan. ASG invests in a diversified portfolio of listed securities, primarily on Bursa Securities, unlisted securities, fixed income and money market instruments as well as other capital market instruments such as structured product and derivatives. 2. UNITHOLDERS Eligible investors in these funds include:- (i) (ii) Malaysian individual who is 18 years and above; and guardian from the above category applying units as the guardian for minors aged six (6) months old and above but below 18 years. 3. INVESTMENT MANAGER The investment manager of ASG is PNB. 4. MANAGEMENT COMPANY The management company of ASG is ASNB, which is a wholly-owned subsidiary of PNB. 5. PROFIT AND DIVIDEND RECORD A summary of the results for the FYE 31 March 2015, 31 March 2016 and 31 March 2017 is as follows:- (i) ASG Amanah Saham Pendidikan 2017 (RM 000) FYE 31 March 2016 (RM 000) 2015 (RM 000) Total investment income 41,273 20,046 10,568 Net income before taxation / after taxation 30,353 11,492 5,976 Net distribution per unit (sen) (ii) ASG Amanah Saham Kesihatan 2017 (RM 000) FYE 31 March 2016 (RM 000) 2015 (RM 000) Total investment income 56,888 32,533 14,620 Net income before taxation / after taxation 38,727 19,667 8,496 Net distribution per unit (sen)

139 ATTACHMENT XIII INFORMATION ON ASG (cont d) (iii) ASG Amanah Saham Persaraan 2017 (RM 000) FYE 31 March 2016 (RM 000) 2015 (RM 000) Total investment income 18,274 10,472 6,189 Net income before taxation / after taxation 12,881 6,508 3,980 Net distribution per unit (sen) There is no material exceptional item for the past three (3) financial years up to the FYE 31 March STATEMENT OF ASSETS AND LIABILITIES The statements of assets and liabilities of ASG based on its audited financial statements for the FYE 31 March 2017 are as follows:- (i) ASG Pendidikan As at FYE 31 March (RM 000) (RM 000) ASSETS Investments carried at fair value through other 437, ,963 comprehensive income Investments carried at fair value through profit 194, ,218 or loss Deposits with financial institutions 219, ,732 Tax recoverable Receivables 5,117 2,330 Amounts due from stockbroker 32,422 4,165 Cash in bank 3 8 TOTAL ASSETS 890, ,652 EQUITY AND LIABILITIES EQUITY Units holders capital 866, ,851 Reserve (16,548) (36,074) Total equity 849, ,777 LIABILITIES Distribution payable 39,797 40,560 Amounts owing to stockbroker - 7,493 Payables Amounts owing to manager Total liabilities 40,940 48,875 TOTAL EQUITY AND LIABILITIES 890, ,

140 ATTACHMENT XIII INFORMATION ON ASG (cont d) (ii) ASG Kesihatan As at FYE 31 March (RM 000) (RM 000) ASSETS Investments carried at fair value through other 1,075, ,585 comprehensive income Investments carried at fair value through profit 252, ,193 or loss Deposits with financial institutions 431, ,210 Tax recoverable Receivables 7,016 3,080 Amounts due from stockbroker 78,681 13,220 Cash in bank 3 8 TOTAL ASSETS 1,845,745 1,018,531 EQUITY AND LIABILITIES EQUITY Units holders capital 1,709, ,740 Reserve 17,592 (25,255) Total equity 1,727, ,485 LIABILITIES Distribution payable 73,521 66,606 Amounts owing to stockbroker 43, Payables 1, Amounts owing to manager Total liabilities 118,665 68,046 TOTAL EQUITY AND LIABILITIES 1,845,745 1,018,531 (iii) ASG Persaraan As at FYE 31 March (RM 000) (RM 000) ASSETS Investments carried at fair value through other 264, ,614 comprehensive income Investments carried at fair value through profit 106,053 41,031 or loss Deposits with financial institutions 179,481 76,279 Tax recoverable Receivables 2,637 1,397 Amounts due from stockbroker 8,837 - Cash in bank 32 8 TOTAL ASSETS 562, ,687 EQUITY AND LIABILITIES EQUITY Units holders capital 528, ,078 Reserves 7,588 (4,146) Total equity 536, ,932 LIABILITIES Distribution payable 24,693 17,406 Amounts owing to stockbroker Payables Amounts owing to manager Total liabilities 25,847 17,755 TOTAL EQUITY AND LIABILITIES 562, ,

141 ATTACHMENT XIII INFORMATION ON ASG (cont d) As at the LPD, there is no known material change in the financial position of ASG subsequent to the latest annual report of ASG for the FYE 31 March ACCOUNTING POLICIES Based on the annual reports of ASG for the FYE 31 March 2015, 31 March 2016 and 31 March 2017, the financial statements have been prepared in accordance with approved Malaysian accounting standards and there was no audit qualification for ASG s financial statements for the respective years under review. There is no change in the accounting standards adopted by ASG which would result in a material variation to the comparable figures for the audited financial statements of ASG for the FYE 31 March 2015, 31 March 2016 and 31 March THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 130

142 ATTACHMENT XIV INFORMATION ON YTI YTI is a foundation established by PNB (which is also its investment manager) on 10 October 1999, which serves to promote tertiary and professional education initiatives through the award of scholarships, establishment of professorial chairs in local universities, and to finance other educational and charitable purposes. YTI has established four (4) Professorial Chairs in the areas of finance and investment, corporate and securities law, Islamic finance and banking, as well as leadership in Universiti Kebangsaan Malaysia (UKM), Universiti Malaya (UM), Universiti Sains Islam Malaysia (USIM) and Universiti Tun Abdul Razak (UNIRAZAK) respectively. The foundation also organises the YTI International Lectures as part of knowledge sharing with the general public. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 131

143 ATTACHMENT XV FURTHER INFORMATION 1. DISCLOSURE OF INTERESTS AND DEALINGS IN SHARES 1.1 By the PAC Group (i) Interests in UMW-OG Save as disclosed below, the PAC Group does not have any interest (whether direct or indirect) in any voting shares or convertible securities of UMW-OG as at the LPD:- Name Direct No. of UMW- OG Shares ( 000) % (1) Indirect No. of UMW- OG Shares ( 000) % (1) PNB 12, ASB 181,597 (2) PACs UMWH 1,204, ASW ,000 (2) ASM 26,000 (2) AS 1Malaysia ASD 9,173 (2) ASB 2 6,050 (2) ASN 6,356 (2) ASN 2 2,919 (2) ASN ASG 2,141 (2) Amanah Saham Pendidikan ASG 3,708 (2) Amanah Saham Kesihatan ASG 1,296 (2) Amanah Saham Persaraan YTI 15 * - - * Negligible Notes:- (1) Computed based on the total number of 2,162,000,000 UMW-OG Shares as at the LPD. (2) Shares held through AmanahRaya Trustees Berhad, being the trustee. (ii) Dealings in the securities of UMW-OG The PAC Group has not dealt (directly or indirectly) in any voting shares or convertible securities of UMW-OG during the period commencing six (6) months before the announcement of the Proposals on 4 May 2017 and ending on the LPD. As set out in Section of this IAL, the shareholdings of the PAC Group in UMW-OG have changed pursuant to the Distribution which was completed subsequent to the LPD i.e. on 11 July By the directors of the PAC Group (i) Interests in UMW-OG Save for Dato Eshah binti Meor Suleiman (an Independent Non-Executive Director of UMWH) who has an indirect interest in 8,000 UMW-OG Shares via her spouse, the directors of the PAC Group do not have any interest (whether direct or indirect) in any voting shares or convertible securities of UMW-OG as at the LPD. 132

144 ATTACHMENT XV FURTHER INFORMATION (cont d) (ii) Dealings in the securities of UMW-OG The directors of the PAC Group have not dealt (directly or indirectly) in any voting shares or convertible securities of UMW-OG during the period commencing six (6) months before the announcement of the Proposals on 4 May 2017 and ending on the LPD. 1.3 By the persons who have irrevocably committed themselves to vote in favour or against the Proposals As at the LPD, there are no persons who have irrevocably committed themselves to vote in favour or against the Proposals. 1.4 By the persons with whom PNB, ASB or any persons acting in concert with them has borrowed or lent As at the LPD, there are no persons with whom PNB, ASB or any persons acting in concert with them has borrowed or lent any voting shares or convertible securities of UMW-OG. 1.5 By the persons with whom PNB, ASB or any persons acting in concert with them has any arrangement As at the LPD, there are no persons with whom PNB, ASB or any persons acting in concert with them has entered into any arrangement, including any arrangement involving rights over UMW-OG Shares, any indemnity arrangement, and any agreement or understanding, formal or informal, of whatever nature, relating to UMW- OG Shares which may be an inducement to deal or to refrain from dealing. 1.6 By UMW-OG (i) Dealings in its own securities UMW-OG has not dealt (directly or indirectly) in any of its own voting shares or convertible securities during the period commencing six (6) months before the announcement of the Proposals on 4 May 2017 and ending on the LPD. (ii) Interests in the PAC Group UMW-OG does not have any interest (whether direct or indirect) in any voting shares or convertible securities of the PAC Group as at the LPD. (iii) Dealings in the securities of the PAC Group UMW-OG has not dealt (directly or indirectly) in any voting shares or convertible securities of the PAC Group during the period commencing six (6) months before the announcement of the Proposals on 4 May 2017 and ending on the LPD. 133

145 ATTACHMENT XV FURTHER INFORMATION (cont d) 1.7 By the Directors of UMW-OG (i) Interests in UMW-OG Save as disclosed below, the Directors of UMW-OG do not have any interest (whether direct or indirect) in any voting shares or convertible securities of UMW-OG as at the LPD:- Name Direct No. of UMW- OG Shares ( 000) % (1) Indirect No. of UMW- OG Shares ( 000) % (1) Rohaizad bin Darus 1, Razalee bin Amin Dato Afifuddin bin Abdul Kadir Cheah Tek Kuang (2) * Dato Ibrahim bin Marsidi 30 * - - * Negligible Notes:- (1) Computed based on the total number of 2,162,000,000 UMW-OG Shares as at the LPD. (2) Deemed interested through his spouse, child and pledged securities account. (ii) Dealings in the securities of UMW-OG The Directors of UMW-OG have not dealt (directly or indirectly) in any voting shares or convertible securities of UMW-OG during the period commencing six (6) months before the announcement of the Proposals on 4 May 2017 and ending on the LPD. (iii) Interests in the PAC Group Save for Cheah Tek Kuang who has an indirect interest in 10,000 shares in UMWH via his spouse and child, the Directors of UMW-OG do not have any interest (whether direct or indirect) in any voting shares or convertible securities of the PAC Group as at the LPD. (iv) Dealings in the securities of the PAC Group The Directors of UMW-OG have not dealt (directly or indirectly) in any voting shares or convertible securities of the PAC Group during the period commencing six (6) months before the announcement of the Proposals on 4 May 2017 and ending on the LPD. 1.8 By the persons with whom UMW-OG or any persons acting in concert with it has borrowed or lent As at the LPD, there are no persons with whom UMW-OG or any persons acting in concert with it has borrowed or lent any voting shares or convertible securities of UMW-OG. 134

146 ATTACHMENT XV FURTHER INFORMATION (cont d) 1.9 By the persons with whom UMW-OG or any persons acting in concert with it has any arrangement As at the LPD, there are no persons with whom UMW-OG or any persons acting in concert with it has entered into any arrangement, including any arrangement involving rights over UMW-OG Shares, any indemnity arrangement, and any agreement or understanding, formal or informal, of whatever nature, relating to UMW-OG Shares which may be an inducement to deal or to refrain from dealing By Mercury Securities and funds whose investments are managed by Mercury Securities on a discretionary basis ( Discretionary Funds ) Mercury Securities and its Discretionary Funds do not have any interest, whether direct or indirect, in any voting shares or convertible securities of UMW-OG as at the LPD. 2. ARRANGEMENT AFFECTING DIRECTORS (i) (ii) (iii) (iv) As at the LPD, no payment or other benefit will be made or given to any Director of UMW-OG as compensation for loss of office or otherwise in connection with the Proposals. As at the LPD, there is no agreement or arrangement between any Director of UMW- OG and any other person which is conditional on or dependent upon the outcome of the Proposals or otherwise connected with the outcome of the Proposals. As at the LPD, the PAC Group has not entered into any material contract in which any Director of UMW-OG has a material personal interest. As at the LPD, there is no agreement, arrangement or understanding existing between the PAC Group and any of the Directors or recent Directors of UMW-OG, holders of voting shares or voting rights or recent holders of voting shares or voting rights of UMW-OG having any connection with or dependence upon the Proposals. 3. SERVICE CONTRACTS As at the LPD, save for the current contract of employment with Rohaizad bin Darus (appointing him as the President of UMW-OG) which commences in January 2017 and ends in December 2018, the UMW-OG Group does not have any service contracts with any Directors or proposed Directors of UMW-OG Group, which have been entered into or amended within six (6) months before the announcement of the Proposals on 4 May 2017 or which are fixed term contracts with more than twelve (12) months to run. For the purpose of this section, the term service contracts excludes those expiring or determinable by the employing company without payment of compensation within twelve (12) months from the date of this IAL. 135

147 APPENDIX I SALIENT TERMS OF THE WARRANTS Issue size : Up to 1,513,400,000 Warrants Issue price : The Warrants are to be issued free Warrants Issue Date : The date on which the Warrants are issued and allotted Form and constitution : The Warrants will be issued in registered form and constituted by the Deed Poll Basis of allotment : - One (1) Warrant for every four (4) Rights Shares subscribed by the Entitled Shareholders - One (1) Warrant for every four (4) RCPS-i subscribed by PNB, ASB and/or the Funds Expiry Date : A date being seven (7) years from and including the Warrants Issue Date, provided that if such day falls on a day which is not a Market Day, then on the preceding Market Day Exercise Period : The Warrants may be exercised after six (6) months from the Warrants Issue Date and ending at 5.00 p.m. on the Expiry Date Exercise Price : RM0.395 per Warrant Entitlement : Subject to the provisions of the Deed Poll, each Warrant shall entitle the registered holder to subscribe for one (1) new UMW-OG Share at the Exercise Price during the Exercise Period Mode of exercise : The registered holders shall pay cash for the Exercise Price when exercising the Warrants for new UMW-OG Shares Rights of registered holders Adjustments in the Exercise Price and/or number of Warrants : The registered holders are not entitled to any voting rights or participate in any distribution and/or offer of further securities in the Company until and unless such registered holders are issued with the Exercised Shares : The Exercise Price and/or number of Warrants in issue may be subject to adjustments under certain circumstances in accordance with the provisions of the Deed Poll Transferability : The Warrants shall be transferable in the manner provided under the Securities Industry (Central Depositories) Act, 1991 and the rules of Bursa Depository Board lot : For the purpose of trading on Bursa Securities, one (1) board lot of Warrants shall comprise 100 units of Warrants carrying the rights to subscribe for 100 new UMW-OG Shares at any time during the Exercise Period Listing status : The Warrants will be listed and quoted on the Main Market of Bursa Securities Ranking of the Exercised Shares : The new ordinary shares to be issued upon exercise of the Warrants shall upon allotment and issue rank pari passu in all respects with the then issued ordinary shares of the Company including the entitlements to dividends, rights, allotments or other distributions, except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, of which the entitlement date is before the date of allotment of such new ordinary shares 136

148 APPENDIX II SALIENT TERMS OF THE RCPS-i Issue size : Up to 4,847,539,594 RCPS-i together with up to 1,211,884,898 Warrants Issue Date : To be determined later by the Board after the completion of the Proposed Rights Issue With Warrants Subscription Price : RM0.30 per RCPS-i Form and constitution : The RCPS-i will be issued in registered form and constituted by the Constitution Maturity Date : The day immediately preceding the fifth (5 th ) anniversary from the Issue Date Tenure : Five (5) years Dividend rate : Nil By subscribing to the RCPS-i, the RPCS-i holders agree (in and for compliance with Shariah) to waive its right to receive any distribution of profit with, such waiver to be decided by the Board at the relevant time on behalf of the RCPS-i holders Conversion rights : Convertible at any time during the Conversion Period into new UMW- OG Shares at the option of the RCPS-i holders without the payment of any consideration (cash or otherwise) and in accordance with the Conversion Ratio Conversion Period : Any time from the Issue Date and up to the Maturity Date. Any remaining RCPS-i that are not converted by the Maturity Date shall be automatically converted into new UMW-OG Shares at the Conversion Ratio Conversion Ratio : The conversion ratio shall be one (1) new UMW-OG Share for one (1) RCPS-i held The Conversion Ratio shall be subject to adjustments from time to time, at the determination of the Board, in the event of any alteration to the Company s share capital, whether by way of rights issue, capitalisation issue, consolidation of shares, subdivision of shares or reduction of capital howsoever being effected, in accordance with the provisions of the Constitution The Company shall give notice in writing to the RCPS-i holders of its intention to make such adjustments to the Conversion Ratio Redemption : Subject to the Act (or such applicable legislation for the time being), the Company may at any time before the Maturity Date, at its discretion, redeem all or part of the outstanding RCPS-i by giving notice in writing to the RCPS-i holders of its intention to do so, in cash at a redemption price which shall be the aggregate of: (i) (ii) the issue price of the relevant RCPS-i being redeemed; and redemption premium of 8% per annum on a cumulative but noncompounding basis calculated from the Issue Date up to the redemption date, out of the distributable profits of the Company 137

149 APPENDIX II SALIENT TERMS OF THE RCPS-i (Cont d) Rights to receive notices, reports, and audited financial statements, and attend meetings and voting rights : The RCPS-i holders shall be entitled to the same rights as UMW-OG s ordinary shareholders as regards to the receipt of notices (including that of general meetings), reports and audited financial statements, to attend meetings and to receive shareholders resolutions in writing, but shall not be entitled to vote or approve any shareholders resolution or vote at any general meeting, save and except in respect of any resolution made: (i) (ii) (iii) (iv) (v) on a proposal to reduce the Company s share capital; on a proposal for the disposal of substantially the whole of the Company s property, business and undertaking; on a proposal to wind-up the Company; during the winding-up of the Company; or on any proposal that affects the rights and privileges attached to the RCPS-i, including the amendments to the Constitution In any of the aforesaid circumstances, the RCPS-i holders shall be entitled to vote at all general meetings of the members of its class, and on a poll at any such general meetings to one (1) vote for each RCPSi held Listing status : The RCPS-i will not be listed on the Main Market of Bursa Securities The Conversion Shares will be listed and quoted on the Main Market of Bursa Securities Ranking of the RCPS-i : As at the LPD, the Company has no other preference shares in issue The RCPS-i shall rank equally amongst themselves, and will rank ahead in point of priority to the holders of the UMW-OG Shares and all other classes of shares (if any) in the Company, in respect of payment out of the assets of the Company upon any liquidation, dissolution or winding up of the Company, provided always that the Board approves such payment out of the assets of the Company on this basis and further affirms the priority of payment to the RCPS-i holders For the avoidance of doubt, it is agreed that the passing of a resolution at the forthcoming EGM by the holders of the UMW-OG Shares shall represent their agreement (in and for compliance with Shariah) for the priority of payment out of assets to the RCPS-i holders to be decided by the Board at the point of distribution on their behalf The RCPS-i shall rank subordinated to all the Company s creditors in respect of payment of debt and payments out of assets of the Company upon liquidation, dissolution, or winding-up of the Company The Directors of the Company shall not issue any preference shares (other than additional RCPS-i) which rank equally with or in priority to, the RCPS-i unless the issue of such securities has first been approved by the RCPS-i holders by way of an ordinary resolution of such holders 138

150 APPENDIX II SALIENT TERMS OF THE RCPS-i (Cont d) Ranking of the Conversion Shares : The new ordinary shares to be issued upon conversion of the RCPS-i shall upon allotment and issue rank pari passu in all respects with the then issued ordinary shares of the Company including the entitlements to dividends, rights, allotments or other distributions, except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, of which the entitlement date is before the date of allotment of such new ordinary shares Transferability : The RCPS-i shall not be transferable, save and except for transfers between PNB and the funds under PNB s management, subject to the applicable laws, regulations and rules that would apply to the securities of the Company Governing law : Laws of Malaysia Rating : The RCPS-i will not be rated 139

151 APPENDIX III DETAILS OF THE PROPOSED AMENDMENT The Company s Constitution shall be altered, modified or amended in the following manner: (i) To delete the title of the Memorandum of Association in its entirety and replace with the following new title: Existing Provisions Memorandum of Association of UMW Oil & Gas Corporation Berhad (Company No H) Proposed Amendments Memorandum of Association of the Constitution of UMW Oil & Gas Corporation Berhad (Company No H) (ii) To delete the existing Clause 7 in the Memorandum of Association in its entirety and replace with the following new Clause 7: Existing Provisions The capital of the Company is Ringgit Malaysia Two Billion and Five Hundred Million (RM2,500,000,000.00) only divided into five billion (5,000,000,000) ordinary shares of RM0.50 each. The shares in the original or any increased in capital may be divided into several classes and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividend, capital, voting or otherwise. Proposed Amendments The share capital of the Company is its issued share capital. The shares in the original or any increased in capital may be divided into several classes and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividend, capital, voting or otherwise. (iii) (iv) Whenever appearing in the Constitution, the word Article or Articles shall be amended to Clause or Clauses (except for the title of Articles of Association); To delete part of the existing title of the Constitution in its entirety and replace with the following new title: Existing Provisions Articles of Association of UMW Oil & Gas Corporation Berhad (Company No H) Proposed Amendments The Constitution of UMW Oil & Gas Corporation Berhad (Company No H) (v) Interpretation To replace and add the following new interpretation: Existing Provisions Proposed Amendments Articles These Articles of Association as originally framed or altered from time to time by special resolutions Deleted 140

152 APPENDIX III DETAILS OF THE PROPOSED AMENDMENT (Cont d) No existing provision Existing Provisions Proposed Amendments Constitution This constitution of UMW Oil & Gas Corporation Berhad including any alterations made from time to time by special resolution (vi) Clause 4A (Rights of Islamic Redeemable Convertible Preference Shares) To adopt the following new Clause 4A and to be inserted immediately after Clause 4:- (1) In this Article 4A, the following words and expressions shall, unless the context otherwise requires, have the following meanings: Bursa Securities means Bursa Malaysia Securities Berhad. Issue Date means the date of issuance of the RCPS-i, to be determined by the Board. Maturity Date means the day immediately preceding the 5 th anniversary from the Issue Date. RCPS-i means Islamic redeemable convertible preference shares. (2) Subject to the Act, any RCPS-i may be issued with the rights and privileges, and be subject to the terms set out in this Clause 4A. (3) Tenure and Listing (a) (b) The tenure of the RCPS-i shall be five (5) years from the Issue Date. The RCPS-i will not be listed on the Main Market of Bursa Securities. New ordinary shares to be issued pursuant to the conversion of the RCPS-i will be listed and quoted on the Main Market of Bursa Securities. (4) Dividend Notwithstanding Clauses 54 and 169, the RPCS-i holders agree that no dividends shall be payable and (in and for compliance with Shariah) to waive its rights to receive any distribution of realised profit, with such waiver to be decided by the Board at the relevant time on behalf of the RCPS-i holders. (5) Ranking (a) (b) The RCPS-i shall rank equally amongst themselves, and will rank ahead in point of priority to the holders of the Company's ordinary shares and all other classes of shares (if any) in the Company, in respect of payment out of the assets of the Company upon any liquidation, dissolution or winding-up of the Company, provided always that the Board approves such payment out of the assets of the Company on this basis and further affirms the priority of payment to the RCPS-i holders. For the avoidance of doubt, it is agreed that the passing of a resolution at an Extraordinary General Meeting of the holders of ordinary shares of the Company to be convened shall represent their agreement (in and for compliance with Shariah) for the priority of payment out of assets to the RCPSi holders to be decided by the Board at the point of distribution on their behalf. 141

153 APPENDIX III DETAILS OF THE PROPOSED AMENDMENT (Cont d) (c) (d) The RCPS-i shall rank subordinated to all the Company s creditors in respect of payment of debt and payments out of assets of the Company upon liquidation, dissolution or winding-up of the Company. Notwithstanding Clause 4, the Directors shall not issue any preference shares (other than additional RCPS-i) which rank equally with or in priority to, the RCPS-i unless the issue of such securities has first been approved by the RCPS-i holders by way of an ordinary resolution of such holders. (6) Voting Rights (a) The RCPS-i holders shall be entitled to the same rights as holders of the Company's ordinary shares as regards to the receipt of notices (including that of general meetings), reports and audited financial statements, to attend meetings and to receive shareholders resolutions in writing, but shall not be entitled to vote or approve any shareholders' resolution or vote at any general meeting of the Company, save and except in respect of any resolution made: (i) (ii) (iii) (iv) (v) on a proposal to reduce the Company s share capital; on a proposal for the disposal of substantially the whole of the Company s property, business and undertaking; on a proposal to wind-up the Company; during the winding-up of the Company; and on any proposal that affects the rights and privileges attached to the RCPS-i, including the amendments to this Constitution. (b) (c) In any of the aforesaid circumstances in Clause 4A(6)(a), the RCPS-i holders shall be entitled to vote at all general meetings of the members of its class, and on a poll at any such general meetings to one (1) vote for each RCPS-i held. Failure by the Company to provide any notice of any document referred to in Clause 4A(6)(a) above (save in respect of the aforesaid exceptions stated in Clauses 4A(6)(a)(i) to (v)) will not affect the validity of any meeting (or any proceedings at any meeting), transaction or document connected with the document which was not received by the RCPS-i holders. (7) Conversion (a) Conversion Ratio (i) (ii) The conversion ratio shall be one (1) new ordinary share for every one (1) RCPS-i held ( Conversion Ratio ). The Conversion Ratio shall be subject to adjustment from time to time, at the determination of the Board, in the event of any alteration to the Company s share capital, whether by way of rights issue, capitalisation issue, consolidation of shares, subdivision of shares or reduction of capital howsoever being effected, in accordance with the provisions of the Constitution. The Company shall give notice in writing to the RCPSi holders of its intention to make such adjustments to the Conversion Ratio. 142

154 APPENDIX III DETAILS OF THE PROPOSED AMENDMENT (Cont d) (iii) If the conversion results in a fractional entitlement to ordinary shares, such fractional entitlement shall be disregarded and no refund or credit, whether in the form of RCPS-i, cash or otherwise, shall be given in respect of the disregarded fractional entitlement. (b) Conversion Rights (i) (ii) (iii) (iv) (v) The fully paid-up RCPS-i shall be convertible, at the option of the RCPS-i holders, at any time commencing from the Issue Date and up to the Maturity Date, into such number of fully-paid new ordinary shares of the Company, without payment of any consideration (cash or otherwise) in accordance with the Conversion Ratio ("Conversion Rights"). Subject to the Act (or such applicable legislation for the time being) and provided that all the RCPS-i then in issue have been fully-paid, the RCPS-i holders may at any time thereafter, exercise the Conversion Right by giving notice in writing ("Conversion Notice") to the Company of its intention to convert and specifying such number of RCPS-i intended to be converted into fully-paid new ordinary shares of the Company ( Conversion Shares ). Any remaining RCPS i that are not converted by the Maturity Date shall be automatically converted into fully-paid new ordinary shares of the Company at the Conversion Ratio. Subject to compliance with all applicable laws and regulations, the Company shall take such requisite steps to allot and issue the Conversion Shares, apply for the listing of and quotation for the Conversion Shares and credit the Conversion Shares into the holders securities account created with the Central Depository System pursuant to the Central Depositories Act and the Rules, for the recording of deposit of securities and for dealing in such securities by the Depositor). No physical share certificates will be issued to the RCPS-i holders in respect of the conversion. The Company shall not be required to convert any RCPS-i of the RCPS-i holders where conversion of the RCPS-i would be contrary to the laws of Malaysia. (c) Ranking of Conversion Shares (8) Redemption The new ordinary shares to be issued upon conversion of the RCPS-i shall upon allotment and issue rank pari passu in all respects with the then issued ordinary shares of the Company including the entitlements to dividends, rights, allotments or other distributions, except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, of which the entitlement date is before the date of allotment of such new ordinary shares. (a) (b) The Company shall not redeem any RCPS-i held by the RCPS-i holders where redemption of the RCPS-i would be contrary to the laws of Malaysia. Subject to the Act (or such applicable legislation for the time being), the Company may at any time before the Maturity Date, at its discretion, redeem all or part of the outstanding RCPS-i by giving notice in writing to the RCPS-i holders of its intention to do so, in cash at a redemption price which shall be the aggregate of: 143

155 APPENDIX III DETAILS OF THE PROPOSED AMENDMENT (Cont d) (i) (ii) the issue price of the relevant RCPS-i being redeemed; and redemption premium of 8% per annum on a cumulative but noncompounding basis calculated from the Issue Date up to the redemption date, out of the distributable profits of the Company. (the aggregate of the above being the Redemption Price ). (9) Rights of RCPS-i holders on liquidation, dissolution or winding-up preference (a) (b) Notwithstanding Clause 177, on a return of capital on the dissolution, windingup or liquidation of the Company, the RCPS-i holders shall have, in priority to the holders of ordinary shares and all other classes of shares (if any) in the Company, in respect of payment out of the assets of the Company upon any liquidation, dissolution or winding-up of the Company, provided always that the Board approves such payment out of the assets of the Company on this basis and further affirms the priority of payment to the RCPS-i holders. Subject to the approval of the Board for the distribution, the holders of ordinary shares and all other classes of shares (if any) in the Company shall waive their right to receive proceeds from liquidation, dissolution or winding-up for the benefit of the RCPS-i holders until the RCPS-i holders have received their payment in full on all capital paid up on the RCPS-i by the RCPS-i holders. For the avoidance of doubt, it is agreed that the passing of a resolution at an Extraordinary General Meeting of the ordinary shareholders of the Company to amend this Constitution (embedding the rights of the RCPS-i holders), shall represent their agreement (in and for compliance with Shariah) for the priority of distribution (of assets upon the liquidation, dissolution or winding-up of the Company) to the RCPS-i holders to be decided by the Board at the point of distribution on their behalf. (10) Transferability Notwithstanding Clauses 39 to 43, the RCPS-i shall not be transferable, save and except for transfers between Permodalan Nasional Berhad and funds under its management, subject to the applicable laws, regulations and rules that would apply to the securities of the Company. The provisions of the Act (or such applicable legislation for the time being) relating to the registration of shares shall apply to the RCPS-i. (11) Share certificates The Company shall not be required to issue a share certificate unless an application by a RCPS-i holder for a certificate relating to the holder s RCPS-i has been received. Any share certificate issued and replaced by the Company for RCPS-i shall be issued and replaced in accordance with the Act (or such applicable legislation for the time being). (12) Governing law (13) Rating The RCPS-i shall be governed by the laws of Malaysia. The RCPS-i will not be rated. 144

156 APPENDIX IV SHARIAH PRONOUNCEMENT LETTER 145

157 APPENDIX IV SHARIAH PRONOUNCEMENT LETTER (Cont d) 146

158 APPENDIX IV SHARIAH PRONOUNCEMENT LETTER (Cont d) 147

159 APPENDIX IV SHARIAH PRONOUNCEMENT LETTER (Cont d) 148

160 APPENDIX IV SHARIAH PRONOUNCEMENT LETTER (Cont d) 149

161 APPENDIX IV SHARIAH PRONOUNCEMENT LETTER (Cont d) 150

162 APPENDIX V FURTHER INFORMATION 1. RESPONSIBILITY STATEMENT The Board has seen and approved this Circular and they collectively and individually accept full responsibility for the accuracy of the information contained in this Circular and confirms that, after having made all reasonable enquiries and to the best of their knowledge and belief, there are no facts, the omission of which would make any statement in this Circular misleading. 2. CONSENT AND CONFLICTS OF INTEREST 2.1 Maybank IB Maybank IB, being the Principal Adviser for the Proposals, has given and has not subsequently withdrawn its written consent to the inclusion of its name and all references thereto in the form and context in which it appears in this Circular. Maybank IB and its related and associated businesses ( Maybank Group ) form a diversified financial group and are engaged in a wide range of investment and commercial banking, brokerage, securities trading, asset and fund management and credit transaction services businesses. The Maybank Group has engaged and may in the future, engage in transactions with and perform services for UMW-OG and/or any of its affiliates, in addition to the role set out in this Circular. In addition, in the ordinary course of business, any member of the Maybank Group may at any time offer or provide its services to or engage in any transaction (on its own account or otherwise) with any member of the UMW-OG Group, UMW-OG s shareholders and/or their affiliates and/or any other entity or person, hold long or short positions in securities issued by UMW-OG and/or its affiliates, and may trade or otherwise effect transactions for its own account or the account of its other customers in debt or equity securities or senior loans of any member of the UMW-OG Group and/or its affiliates. This is a result of the businesses of the Maybank Group generally acting independent of each other and accordingly, there may be situations where parts of the Maybank Group and/or its customers now have or in the future, may have interest or take actions that may conflict with the interest of the UMW-OG Group. Nonetheless, the Maybank Group is required to comply with applicable laws and regulations issued by the relevant authorities governing its advisory business, which require, among others, segregation between dealing and advisory activities and Chinese wall between different business divisions. As at the LPD, the UMW-OG Group has existing credit facilities with the Maybank Group. UMW-OG intends to use RM1.5 billion of the Intended Gross Proceeds to pare down debts, with the amount to be repaid being agreed upon separately with each lender. The amount to be repaid to the Maybank Group under the aforementioned agreement will not exceed RM665.5 million, being the amount that would have been due to Maybank in the event that the debt repayment is undertaken on a pro-rata basis. The said credit facilities have been extended by the Maybank Group in its ordinary course of business. Maybank IB confirms that the aforesaid lending relationship would not give rise to a conflict of interest situation in its capacity as Principal Adviser for the Proposals as: (i) (ii) (iii) the extension of credit facilities arose in the ordinary course of business of the Maybank Group; the conduct of the Maybank Group in its banking business is strictly regulated by the Financial Services Act, 2013, Islamic Financial Services Act, 2013 and the Maybank Group s own internal controls and checks; and the total outstanding amount owed by the UMW-OG Group is not material when compared to the audited NA of the Maybank Group as at 31 December 2016 of RM68.5 billion. 151

163 APPENDIX V FURTHER INFORMATION (Cont d) Maybank IB confirms that as at the LPD, it is not aware of any circumstance that exists or is likely to exist which would give rise to a possible conflict of interest situation in its capacity as Principal Adviser for the Proposals. 2.2 Independent Adviser Mercury Securities, being the Independent Adviser for the Proposed Exemption, has given and has not subsequently withdrawn its written consent to the inclusion of its name, IAL and all references thereto in the form and context in which they appear in this Circular. Mercury Securities confirms that as at the LPD, it is not aware of any circumstance that exists or is likely to exist which would give rise to a possible conflict of interest situation in its capacity as Independent Adviser for the Proposed Exemption. 2.3 Shariah Adviser Maybank Islamic, being the Shariah Adviser for the Proposed Subscription, has given and has not subsequently withdrawn its written consent to the inclusion of its name and Shariah Pronouncement Letter and all references thereto in the form and context in which they appear in this Circular. Maybank Islamic is a licensed Islamic bank and its appointment as the Shariah Adviser for the Proposed Subscription is in its ordinary course of business. Maybank Islamic confirms that as at the LPD it is not aware of any conflict of interest situation that exists or is likely to exist in its capacity as Shariah Adviser for the Proposed Subscription. 3. MATERIAL COMMITMENTS AND CONTINGENT LIABILITIES 3.1 Material commitments Save as disclosed below, as at 31 March 2017, the Board is not aware of any material commitments incurred or known to be incurred by the UMW-OG Group which may have a material impact on the profits and/or NA of the UMW-OG Group: RM 000 Approved and contracted for: Land and buildings 250 Equipment, plant and machinery 9,731 Others 106 Approved but not contracted for: Land and buildings 4,400 Equipment, plant and machinery 27,845 Others 6,098 Total 48,

164 APPENDIX V FURTHER INFORMATION (Cont d) 3.2 Contingent liabilities As at 31 March 2017, the Board is not aware of any contingent liabilities which, upon becoming enforceable, may have a material impact on the profits and/or NA of the UMW-OG Group. 4. MATERIAL CONTRACTS Save as disclosed below, the UMW-OG Group has not entered into any material contracts (not being contracts entered into in the ordinary course of business) within the two (2) years immediately preceding the LPD: (i) Share purchase agreement dated 19 January 2017 between UMW-OG and Hallmark Odyssey Sdn Bhd ( HOSB ) where HOSB agreed to sell to UMW-OG and UMW-OG agree to purchase from HOSB, 497,768,820 ordinary shares, being HOSB s shareholding in ICON Offshore Berhad ( ICON ), for a total consideration of RM248,884,410 to be satisfied by the allotment of 311,105,513 UMW-OG Shares to HOSB ( ICON SPA ) subject to the terms and conditions of the ICON SPA. The ICON SPA was terminated on 4 May (ii) Share purchase agreement dated 19 January 2017 between UMW-OG and Tetap Kuasa Sdn Bhd ( TKSB ) where TKSB agreed to sell to UMW-OG and UMW-OG agreed to purchase from TKSB, 37,087,725 ordinary shares, being TKSB s shareholding in Orkim Sdn Bhd ( Orkim ), for a total cash consideration of RM472,725,000 ( Orkim SPA ) subject to the terms and conditions of the Orkim SPA. The Orkim SPA was terminated on 4 May (iii) Share and purchase agreements dated 13 February 2017 between UMW-OG and Wan Izani bin Wan Mahmood and Khoo Chin Yew, respectively for the proposed acquisition of approximately 4.5% equity interest in Orkim for an aggregate cash consideration of RM22,275,000 ( Minority SPAs ). The Minority SPAs which are conditional upon the Orkim SPA becoming unconditional, were terminated on 4 May (iv) The Undertakings and Subscription Letter, details of which are set out in Sections 3.1 and 3.4 of Part A of this Circular. 5. MATERIAL LITIGATION Save as disclosed below, as at the LPD, the UMW-OG Group is not engaged in any material litigation, claims or arbitration, either as plaintiff or defendant and the Board is not aware of any proceedings, pending or threatened, against the UMW-OG Group or of any facts likely to give rise to any proceedings which may materially affect the business or financial position of the UMW-OG Group: (i) UMW Offshore Drilling Sdn Bhd ("UOD" or Claimant ) a wholly-owned subsidiary within the UMW-OG Group, had on 10 April 2015, served a Notice of Arbitration on Frontier Oil Corporation ( FOC or Respondent ), to seek, among others, an award for damages and/or compensation for all losses arising from the Respondent s breach of contract but not limited to the early termination fee amounting to USD19.2 million. On 14 August 2015, UOD served its Statement of Claim and the Respondent filed its Statement of Defence dated 18 September 2015 denying, among others, that the Claimant is entitled to the early termination fee, damages, cost, interest or any other 153

165 APPENDIX V FURTHER INFORMATION (Cont d) sums, without any counterclaim against UOD. The Statement of Reply dated 23 October 2015 was submitted by the Claimant. On 24 August 2016, FOC served an Amended Statement of Defence and Counterclaim ("ASDC") seeking, among others, its alleged loss and damages on account of alleged non-performance and/or breach as follows: (a) (b) (c) (d) (e) USD20.00 million, being the loss of revenue or value that FOC would have obtained had UOD not breached the contract, less those costs of production saved; and/or Further or alternatively, damages reflecting loss of the extended well test value in the sum of USD9.70 million; and/or Further or alternatively, cost of wasted expenditure of USD1.36 million; and/or Further or alternatively, liquidated damages in the sum of USD3.84 million; and Interest and Respondent's costs, fees and expenses associated with the arbitration. UOD served its Amended Statement in Reply and Defence to Counterclaim ( ARDC ) on the Respondent and further amended the ARDC in response to FOC s ASDC on 13 October 2016 and 24 April Thereafter, FOC submitted its revised ASDC on 25 June 2017 and UOD submitted its revised ARDC in response on 14 July 2017 accordingly. UOD was advised by its solicitors that from the facts of its case, UOD has a good claim and a good defence to the Respondent s counterclaim. 6. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the registered office of UMW- OG at Level 18, Block 3A, Plaza Sentral, Jalan Stesen Sentral 5, Kuala Lumpur, Malaysia during normal business hours from Mondays to Fridays (except public holidays) from the date of this Circular up to and including the date of the forthcoming EGM: (i) the Constitution; (ii) audited consolidated financial statements of UMW-OG for the past two (2) FYEs 31 December 2015 and 31 December 2016, and the latest unaudited consolidated financial statements of UMW-OG for the 3-months period ended 31 March 2017; (iii) (iv) (v) (vi) (vii) letters of consent referred to in Section 2 of this Appendix; material contracts as referred to in Section 4 of this Appendix; relevant cause papers in respect of the material arbitration referred to in Section 5 of this Appendix; draft Deed Poll; and Shariah Pronouncement Letter as set out in Appendix IV of this Circular. 154

166 UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting of UMW Oil & Gas Corporation Berhad ( UMW-OG or Company ) will be held at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, Kuala Lumpur, Malaysia on Friday, 25 August 2017 at 3.00 p.m. or any adjournment thereof for the purpose of considering and if deemed fit, passing with or without modification, the following resolutions: ORDINARY RESOLUTION 1 PROPOSED RENOUNCEABLE RIGHTS ISSUE OF UP TO 6,053,600,000 NEW ORDINARY SHARES IN UMW-OG ( RIGHTS SHARES ) AT AN ISSUE PRICE OF RM0.30 PER RIGHTS SHARE ON THE BASIS OF FOURTEEN (14) RIGHTS SHARES FOR EVERY FIVE (5) ORDINARY SHARES IN UMW-OG ( UMW-OG SHARES ) HELD AT AN ENTITLEMENT DATE TO BE DETERMINED LATER TOGETHER WITH UP TO 1,513,400,000 FREE DETACHABLE WARRANTS ( WARRANTS ) ON THE BASIS OF ONE (1) WARRANT FOR EVERY FOUR (4) RIGHTS SHARES SUBSCRIBED ( PROPOSED RIGHTS ISSUE WITH WARRANTS ) THAT subject to the passing of Ordinary Resolution 3 and the relevant approvals being obtained from the relevant authorities and/or parties (where applicable), approval be and is hereby given to the Board of Directors of the Company ( Board ) for the following: (a) (b) (c) allot (provisionally or otherwise) and issue by way of a renounceable rights issue of up to 6,053,600,000 Rights Shares on the basis of fourteen (14) Rights Shares for every five (5) UMW- OG Shares held by the shareholders of the Company whose name appear in the Record of Depositors of the Company as at the close of business on an entitlement date to be determined later by the Board ( Entitled Shareholders ) at an issue price of RM0.30 per Rights Share, together with up to 1,513,400,000 Warrants on the basis of one (1) Warrant for every four (4) Rights Shares subscribed; enter into and execute the deed poll to govern the Warrants in relation to the Proposed Rights Issue With Warrants ( Deed Poll ) and to do all acts, deeds and things as it may deem fit and expedient in order to implement, finalise and give effect to the Deed Poll; and use the proceeds to be derived from the Proposed Rights Issue With Warrants in the manner set out in Section 6 of Part A of the Circular to the shareholders of the Company dated 3 August 2017 and vary the manner and/or purpose of use of such proceeds as it may deem fit and in the best interests of the Company.

167 THAT the shareholders fractional entitlements, if any, shall be disregarded and/or dealt with by the Board in such manner at its absolute discretion as it may deem fit or expedient and in the best interests of the Company; THAT the Rights Shares which are not taken up or validly taken up shall be made available for excess application by the Entitled Shareholders and/or their renouncee(s) (if applicable) and such excess Rights Shares shall be allocated by the Board in a fair and equitable manner on a basis to be determined by the Board and announced later by the Company; THAT the Rights Shares shall, upon allotment and issue, rank equally in all respects with the existing UMW-OG Shares, save and except that the Rights Shares so allotted and issued will not be entitled to any dividends, rights, allotments and other distributions that may be declared, made or paid, the entitlement date of which is prior the date of allotment of the Rights Shares; THAT the new UMW-OG Shares to be issued arising from the exercise of the Warrants shall, upon allotment and issue, rank equally in all respects with the existing UMW-OG Shares, save and except that the new UMW-OG Shares so allotted and issued will not be entitled to any dividends, rights, allotments and other distributions that may be declared, made or paid, the entitlement date of which is prior the date of allotment of the new UMW-OG Shares to be issued arising from the exercise of the Warrants; AND THAT the Board be and is hereby empowered and authorised to do all acts, deeds, and such things and to execute, enter into, sign and deliver on behalf of the Company, all such documents as they may deem necessary, expedient and/or appropriate to implement, to give full effect to and to complete the Proposed Rights Issue With Warrants, with full powers to assent and/or accept to any conditions, modifications, variations, arrangements and/or amendments as the Board in their absolute discretion may deem fit and/or as may be imposed by any relevant authorities and/or parties in connection with the Proposed Rights Issue With Warrants. ORDINARY RESOLUTION 2 PROPOSED ISSUANCE OF UP TO 4,847,539,594 NEW ISLAMIC REDEEMABLE CONVERTIBLE PREFERENCE SHARES IN UMW-OG ( RCPS-i ) TO BE SUBSCRIBED AT A SUBSCRIPTION PRICE OF RM0.30 PER RCPS-i BY PERMODALAN NASIONAL BERHAD ( PNB ), AND IF APPLICABLE, AMANAH SAHAM BUMIPUTERA ( ASB ) AND/OR OTHER FUNDS UNDER PNB S MANAGEMENT TOGETHER WITH UP TO 1,211,884,898 WARRANTS ON THE BASIS OF ONE (1) WARRANT FOR EVERY FOUR (4) RCPS-i SUBSCRIBED ( PROPOSED SUBSCRIPTION ) THAT subject to the passing of Ordinary Resolution 1, Special Resolution and the relevant approvals being obtained from the relevant authorities and/or parties, approval be and is hereby given to the Board for the following: (a) (b) (c) allot and issue up to 4,847,539,594 new RCPS-i based on the terms and conditions of the RCPSi at a subscription price of RM0.30 per RCPS-i, together with up to 1,211,884,898 Warrants to PNB, ASB and/or other funds under PNB s management to be satisfied in cash; allot and issue such number of new UMW-OG Shares credited as fully paid-up pursuant to any conversion of the RCPS-i and that such approval remain in full force and effect as long as any RCPS-i remain convertible in accordance with its term of issue; and use the proceeds to be derived from the Proposed Subscription in the manner set out in Section 6 of Part A of the Circular to the shareholders of the Company dated 3 August 2017 and vary the manner and/or purpose of use of such proceeds as it may deem fit and in the best interests of the Company. THAT the new UMW-OG Shares to be issued arising from the conversion of the RCPS-i shall, upon allotment and issue, rank equally in all respects with the existing UMW-OG Shares, save and except that the new UMW-OG Shares so allotted and issued will not be entitled to any dividends, rights, allotments and other distributions that may be declared, made or paid, the entitlement date of which is

168 prior the date of allotment of the new UMW-OG Shares to be issued arising from the conversion of the RCPS-i; AND THAT the Board be and is hereby empowered and authorised to do all acts, deeds, and such things and to execute, enter into, sign and deliver on behalf of the Company, all such documents as they may deem necessary, expedient and/or appropriate to implement, to give full effect to and to complete the Proposed Subscription, with full powers to assent and/or accept any conditions, modifications, variations, arrangements and/or amendments as the Board in their absolute discretion may deem fit and/or as may be imposed by any relevant authorities and/or parties in connection with the Proposed Subscription. ORDINARY RESOLUTION 3 PROPOSED EXEMPTION FOR PNB, ASB AND PERSONS ACTING IN CONCERT WITH THEM FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR ALL THE REMAINING UMW-OG SHARES AND WARRANTS NOT ALREADY OWNED BY THEM PURSUANT TO PARAGRAPHS 4.08(1)(B) AND 4.08(1)(C) OF RULE 4, PART B OF THE RULES ON TAKE- OVERS, MERGERS AND COMPULSORY ACQUISITIONS ( RULES ) ( PROPOSED EXEMPTION ) THAT subject to the passing of Ordinary Resolution 1 and the relevant approvals being obtained from the Securities Commission Malaysia ( SC ) and/or any other relevant authorities and/or parties including such conditions as may be imposed by the SC, approval be and is hereby given for PNB, ASB and the persons acting in concert with them under the Rules to be exempted from the obligation to undertake a mandatory take-over offer to acquire all the remaining UMW-OG Shares and Warrants not already owned by them which would arise pursuant to the completion of the Proposed Rights Issue with Warrants, the exercise of the Warrants during the tenure of the Warrants and/or the conversion of the RCPS-i during the tenure of the RCPS-i pursuant to Paragraphs 4.08(1)(b) and 4.08(1)(c) of Rule 4, Part B of the Rules; AND THAT the Board be and is hereby empowered and authorised to do all acts, deeds, and such things and to execute, enter into, sign and deliver on behalf of the Company, all such documents as they may deem necessary, expedient and/or appropriate to implement, to give full effect to and to complete the Proposed Exemption, with full powers to assent and/or accept any conditions, modifications, variations, arrangements and/or amendments as the Board in their absolute discretion may deem fit and/or as may be imposed by any relevant authorities and/or parties in connection with the Proposed Exemption. SPECIAL RESOLUTION PROPOSED AMENDMENT TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY S CONSTITUTION ( CONSTITUTION ) ( PROPOSED AMENDMENT ) THAT subject to the passing of Ordinary Resolution 2 and the relevant approvals being obtained from the relevant authorities/parties, the proposed amendments to the Constitution as set out in Appendix III of the Circular to the shareholders of the Company dated 3 August 2017 be and is hereby approved and adopted; AND THAT the Board and the Secretary of the Company be and are hereby empowered and authorised to do all acts, deeds, and such things and to execute, enter into, sign and deliver on behalf of the Company, all such documents and steps as they may deem necessary, expedient and/or appropriate to implement, to give full effect to the Proposed Amendment, with full powers to assent and/or accept any conditions, modifications, variations, arrangements and/or amendments in any manner as may be in the interests of the Company and/or as may be imposed by any relevant authorities in connection with the Proposed Amendment.

169 By Order of the Board LEE MI RYOUNG (MAICSA ) Company Secretary Kuala Lumpur 3 August 2017 Notes: (a) (b) (c) (d) A member of the Company is entitled to attend and vote at the meeting may appoint a proxy to attend and vote in his/her stead. A proxy may but need not be a member of the Company. The instrument appointing a proxy must be in writing under the hands of the appointer or his attorney duly authorised in writing or, if such appointer is a corporation, under its common seal or that of an officer or attorney duly authorised. If the Form of Proxy is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received. If the Form of Proxy is signed under the attorney duly authorised, it should be accompanied by a statement reading signed under Power of Attorney which is still in force, no notice of revocation having been received. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed. A member shall not be entitled to appoint more than one proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint a proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Every appointment submitted by an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, must specify the Central Depository System Account Number. (e) (f) (g) The instrument appointing the proxy, together with the duly registered Power of Attorney referred to in Note (b) above, if any, must be deposited at the registrar s office, Securities Services (Holdings) Sdn Bhd at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia, not less than twenty-four (24) hours before the time appointed for the taking of the poll or any adjournment thereof. For the purpose of determining a member who shall be entitled to attend the Extraordinary General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 69(2)(b) of the Company s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a General Meeting Record of Depositors as at 18 August Only a depositor whose name appears on the General Meeting Record of Depositors as at 18 August 2017 shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote in his/her stead. Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the resolutions set out in this Notice will be put to vote by poll.

170 UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) FORM OF PROXY I/We..... (NAME AS PER NRIC / PASSPORT / CERTIFICATE OF INCORPORATION IN CAPITAL LETTERS) with (New NRIC No.).../ (Old NRIC No.)... (Passport No.).../ (Company No.)... of (FULL ADDRESS IN CAPITAL LETTERS) being a member of UMW OIL & GAS CORPORATION BERHAD ( H) ( Company ) hereby appoint * * or (NAME AS PER NRIC / PASSPORT IN CAPITAL LETTERS) with (New NRIC No.)... / (Old NRIC No.)... / (Passport No.)... of... (FULL ADDRESS IN CAPITAL LETTERS) the Chairman of the Meeting, (* Please tick one (1) box only) as my/our proxy to vote for me/us and on my/our behalf at the Extraordinary General Meeting of the Company to be held at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33 Jalan Rakyat, Kuala Lumpur, Malaysia on Friday, 25 August 2017 at 3.00 p.m. or any adjournment thereof. My/Our proxy is to vote as indicated below: (Please indicate with an X in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.) ORDINARY RESOLUTIONS FOR AGAINST Proposed Rights Issue With Warrants Ordinary Resolution 1 Proposed Subscription Ordinary Resolution 2 Proposed Exemption Ordinary Resolution 3 SPECIAL RESOLUTION FOR AGAINST Proposed Amendment Special Resolution

171 Dated this day of 2017 CDS Account No. No. of Ordinary Shares Held Name of Member (If the appointor is an attorney or a corporation please see Note (b) below) Signature of Member(s) / Common Seal Notes : (a) (b) (c) (d) A member of the Company is entitled to attend and vote at the meeting may appoint a proxy to attend and vote in his/her stead. A proxy may but need not be a member of the Company. The instrument appointing a proxy must be in writing under the hands of the appointer or his attorney duly authorised in writing or, if such appointer is a corporation, under its common seal or that of an officer or attorney duly authorised. If the Form of Proxy is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received. If the Form of Proxy is signed under the attorney duly authorised, it should be accompanied by a statement reading signed under Power of Attorney which is still in force, no notice of revocation having been received. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed. A member shall not be entitled to appoint more than one proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint a proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Every appointment submitted by an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, must specify the Central Depository System Account Number. (e) (f) (g) The instrument appointing the proxy, together with the duly registered Power of Attorney referred to in Note (b) above, if any, must be deposited at the registrar s office, Securities Services (Holdings) Sdn Bhd at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia, not less than twenty-four (24) hours before the time appointed for the taking of the poll or any adjournment thereof. For the purpose of determining a member who shall be entitled to attend the Extraordinary General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 69(2)(b) of the Company s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a General Meeting Record of Depositors as at 18 August Only a depositor whose name appears on the General Meeting Record of Depositors as at 18 August 2017 shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote in his/her stead. Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the resolutions set out in this Form of Proxy will be put to vote by poll.

172 Fold this flap for sealing Then fold here THE REGISTRAR OF UMW OIL & GAS CORPORATION BERHAD (Company No H) AFFIX STAMP SECURITIES SERVICES (HOLDINGS) SDN BHD Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur Malaysia 1 st fold here

173 UMW OIL & GAS CORPORATION BERHAD (Company No.: H) ADMINISTRATIVE GUIDE EXTRAORDINARY GENERAL MEETING ( EGM ) OF UMW OIL & GAS CORPORATION BERHAD (the Company ) Date : Friday, 25 August 2017 Time : 3:00 p.m. Venue : Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33 Jalan Rakyat, Kuala Lumpur, Malaysia Registration 1. Registration is from 1:30 p.m. and will end by 3:00 p.m. or at such time as may be determined by the Chairman of the meeting. After which, registration will be closed. 2. Registration will take place at the registration counters located at the Foyer on Level Kindly present your original National Registration Identity Card ( NRIC ) or Passport for verification by the Registrar. Photocopy of NRIC or Passport is not allowed. Upon verification of your NRIC or Passport and signing of the Attendance List, you will be given a wristband for identification and a personalised passcode slip. Please ensure you collect your original NRIC or Passport thereafter and retain the personalised passcode slip for poll voting purpose. 4. No individual will be allowed to enter Hall 1 and Hall 2 of Dewan Tun Abdul Razak without the wristband. There will be no replacement in the event you lose or misplace the wristband. 5. No individual will be allowed to register on behalf of another person, registration personnel will handle only verification of identity and registration of shareholders and/or proxy holders. If you have any enquiries on other matters, please refer to our staff who will be at hand to provide assistance or you may approach our staff at the Helpdesk. General Meeting Record of Depositors Only depositors whose names appear in the General Meeting Record of Depositors as at 18 August 2017 will be entitled to attend the EGM or to appoint only one proxy to attend and/or vote on the depositor s behalf. Proxy 1. A member entitled to attend and vote is entitled to appoint only one proxy, to attend and vote in his/her stead. If you are unable to attend the meeting and wish to appoint a proxy to vote on your behalf, please submit your Form of Proxy in accordance with the instructions printed therein. 2. If you submit your Form of Proxy prior to the meeting and subsequently decide to attend the meeting personally, please revoke the appointment of your proxy at the time of registration. Your proxy, on revocation, will not be allowed to attend the meeting. 3. You may submit your Form of Proxy by fax, post or to the Registrar as follows: SECURITIES SERVICES (HOLDINGS) SDN BHD (Company No.: T) Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur Telephone No.: Facsimile No. : info@sshsb.com.my not less than 24 hours before the time appointed for the taking of the poll or any adjournment thereof. Any Form of Proxy received after the time stipulated will not be valid. Last date and time for lodging the Form of Proxy: Thursday, 24 August 2017 at 4.00 p.m. (being the approximate time appointed for the taking of the poll at the EGM). Corporate Representative Any corporate member who wishes to appoint a representative instead of a proxy to attend the EGM should present a valid instrument appointing a corporate representative which shall be in writing under the common seal of the corporation. No Door gifts There will be no distribution of door gifts for those attending the EGM. Lunch Lunch will be served from 1:00 p.m. and there will be no refreshments after the EGM.

174 Parking 1. You may park your vehicle at the parking bays at Level GB, GC, 1,1A and 1B of Menara Kembar Bank Rakyat. 2. Please validate your parking ticket for a Complimentary Parking Ticket at the counters located at the Foyer on Level 2. Kindly note that you are still required to validate the Complimentary Parking Ticket at the autopay machine before you exit the Menara Kembar Bank Rakyat s car park. Shuttle Service 1. For those using the public transportation, kindly disembark at the Kuala Lumpur Sentral Station. 2. Shuttle van/car with the Company s sticker displayed will be provided from p.m. until 3.00 p.m. every 30-minute between the pick-up point and EGM s venue. Voting Procedure All the resolutions as set out in the Notice of the EGM will be conducted on a poll in accordance with Paragraph 8.29A of Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The polling processes shall be managed by the Company s Registrar, Securities Services (Holdings) Sdn Bhd as Poll Administrator and Commercial Quest Sdn Bhd as scrutineers to verify the poll results. All shareholders/proxies are invited to cast their votes at the E-voting counters located at the Foyer on Level 2 upon the conclusion of the deliberations of all the businesses transacted at the EGM. Enquiry If you have any enquiry prior to the meeting, please contact the following persons during office hours: 1. Name Mr. Wong Piang Yoong / Mr. Jerry Tan Hor Seng / Puan Norhasliliwati Abdullah Hashim Registrar SECURITIES SERVICES (HOLDINGS) SDN BHD Telephone No Facsimile No Name Ms. Lee Mi Ryoung/ Ms. Loh Yin Fun Company UMW OIL & GAS CORPORATION BERHAD Telephone No Facsimile No Location Map KL

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