proposed amendments to the Memorandum and Articles of Association of ITCB ( Proposed Amendments );

Transcription

1 IRE-TEX CORPORATION BERHAD ( ITCB OR THE COMPANY ) (I) (II) (III) (IV) (V) PROPOSED SHARE SPLIT; PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; PROPOSED AMENDMENTS; PROPOSED PRIVATE PLACEMENT; AND PROPOSED RIGHTS ISSUE OF ICULS WITH WARRANTS (COLLECTIVELY, THE PROPOSALS ) 1.0 INTRODUCTION On behalf of the Board of Directors of ITCB ( Board ), KAF Investment Bank Berhad ( KAF ) wishes to announce that the Company is proposing to undertake the following proposals:- (i) (iii) (iv) (v) proposed share split involving the subdivision of every one (1) existing ordinary share of RM1.00 each in ITCB ( Existing Share(s) ) into two and a half (2.5) ordinary shares of RM0.40 each in ITCB ( Resultant Shares or ITCB Shares ) on an entitlement date to be determined later ( Proposed Share Split ); proposed increase in the authorised share capital of ITCB from RM50,000,000 comprising 50,000,000 Existing Shares to RM500,000,000 comprising 1,250,000,000 Resultant Shares ( Proposed Increase in Authorised Share Capital ); proposed amendments to the Memorandum and Articles of Association of ITCB ( Proposed Amendments ); proposed private placement of up to 11,870,000 new ITCB Shares, representing up to approximately 10% of the issued and paid-up share capital of ITCB after the Proposed Share Split, based on a shareholders mandate procured pursuant to Section 132D of the Companies Act, 1965 ( Act ) ( Proposed Private Placement ); and proposed renounceable rights issue of up to RM39,172,350 nominal value of five (5)-year, 1%, irredeemable convertible unsecured loan stocks ( ICULS ) at 100% of the nominal value of RM0.075 each ( Rights ICULS ) on the basis of RM0.30 nominal value of the Rights ICULS for every one (1) ITCB Share held by the entitled shareholders of the Company after the Proposed Share Split, on an entitlement date to be determined later together with up to 65,287,250 free detachable warrants ( Warrants ) on the basis of one (1) Warrant for every RM0.60 nominal value of the Rights ICULS subscribed for ( Proposed Rights Issue of ICULS with Warrants ). Further details of the Proposals are set out in the ensuing sections. 2.0 DETAILS OF THE PROPOSALS 2.1 Proposed Share Split Details of the Proposed Share Split The Proposed Share Split entails the subdivision of every one (1) Existing Share held by the shareholders, whose names appear in the Record of Depositors of the Company as at the close of business on an entitlement date to be determined later after the approvals from the relevant authorities and shareholders of ITCB have been obtained ( Share Split Entitlement Date ), into two and a half (2.5) Resultant Shares. [The rest of this page is intentionally left blank] 1

2 As at 31 December 2013, being the latest practicable date prior to this announcement ( LPD ), the issued and paid-up share capital of ITCB is RM46,218,900 comprising 46,218,900 Existing Shares. In addition, there are 1,262,900 outstanding options granted pursuant to the Company s subsisting employee share option scheme ( ESOS ) ( ESOS Options ) which are exercisable into 1,262,900 Existing Shares as at the LPD. Save and except for the said outstanding ESOS Options, the Company does not intend to grant any further options to the eligible Directors and employees under its subsisting ESOS from the LPD up to the expiry of the ESOS. The actual resultant issued and paid-up share capital of ITCB after the Proposed Share Split would depend on the issued and paid-up share capital of the Company on the Share Split Entitlement Date. For illustration purposes, assuming none of the outstanding ESOS Options are exercised into new Existing Shares prior to the Share Split Entitlement Date, the resultant issued and paid-up share capital of ITCB after the Proposed Share Split shall be RM46,218,900 comprising 115,547,250 Resultant Shares. Alternatively, assuming all the outstanding ESOS Options are exercised into new Existing Shares prior to the Share Split Entitlement Date, the resultant issued and paid-up share capital of ITCB after the Proposed Share Split shall be RM47,481,800 comprising 118,704,500 Resultant Shares. Any fractional entitlements arising from the Proposed Share Split shall be dealt with in such manner as the Board shall in its absolute discretion deem fit, expedient and in the best interests of the Company Ranking of the Resultant Shares The Resultant Shares shall, upon allotment and issue, rank pari passu in all respects with each other Theoretical price of the Resultant Shares For the purpose of illustration only, the theoretical adjusted market price of the Resultant Shares pursuant to the implementation of the Proposed Share Split shall be as follows:- Assumed no. of ordinary shares Par value (RM) Market/Theoretical price per share (RM) Total value (RM) As at the LPD 1, * 1,730 After the Proposed 2, ,730 Share Split Note:- * Being the closing market price of the Existing Shares as at the LPD. As illustrated above, the Proposed Share Split is not expected to affect the total value of ordinary shares in ITCB held by the Company s shareholders Procedures for the issuance of the Resultant Shares As the Existing Shares are prescribed securities, the Resultant Shares will be credited directly into the respective central depository system accounts of the entitled shareholders whose names appear in the Record of Depositors of the Company on the Share Split Entitlement Date and no physical share certificate will be issued. In addition, the trading of the Existing Shares will not be suspended for the purpose of implementing the Proposed Share Split. 2

3 The Resultant Shares will be listed and quoted on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Securities ) on the next market day after the Share Split Entitlement Date. The notices of allotment will be issued and despatched to the entitled shareholders within four (4) market days after the date of listing and quotation for the Resultant Shares. 2.2 Proposed Increase in Authorised Share Capital As at the LPD, the authorised share capital of ITCB is RM50,000,000 comprising 50,000,000 Existing Shares, of which 46,218,900 Existing Shares have been issued and fully paid-up. After the implementation of the Proposed Share Split, the authorised share capital of ITCB shall be RM50,000,000 comprising 125,000,000 Resultant Shares. In order to accommodate any future issuance of new ITCB Shares, including the new ITCB Shares to be issued pursuant to the Proposed Private Placement, the conversion of the ICULS and the exercise of the Warrants, ITCB proposes to increase its authorised share capital from RM50,000,000 comprising 125,000,000 Resultant Shares to RM500,000,000 comprising 1,250,000,000 Resultant Shares after the Proposed Share Split. 2.3 Proposed Amendments To facilitate the implementation of the Proposed Share Split and the Proposed Increase in Authorised Share Capital, ITCB proposes to amend its Memorandum and Articles of Association as follows:- (i) proposed amendments to the Memorandum and Articles of Association of the Company to facilitate the subdivision of the par value of the Existing Shares of RM1.00 each to RM0.40 each; and proposed alteration of the authorised share capital of ITCB from RM50,000,000 comprising 50,000,000 Existing Shares to RM500,000,000 comprising 1,250,000,000 Resultant Shares. 2.4 Proposed Private Placement Details of the Proposed Private Placement The Proposed Private Placement is intended to be implemented after the completion of the Proposed Share Split. Assuming all the outstanding ESOS Options are exercised into new Existing Shares prior to the Share Split Entitlement Date, the Proposed Private Placement entails the issuance of up to 11,870,000 new ITCB Shares ( Placement Shares ), representing up to approximately 10% of the issued and paid-up share capital of ITCB after the Proposed Share Split. It is the Company s existing plan to place out the Placement Shares to third party investor(s) to be identified at a later date, in which case the Placement Shares are planned to be issued under an existing general mandate approved by the shareholders of ITCB at the Company s Annual General Meeting ( AGM ) held on 27 June 2013 pursuant to Section 132D of the Act ( General Mandate ). The General Mandate authorises the Board to allot and issue new ITCB Shares at any time upon such terms and conditions and for such purposes as the Board may, in its absolute discretion, deem fit provided that the aggregate number of ITCB Shares to be issued pursuant to the General Mandate does not exceed 10% of the issued and paid-up share capital of ITCB Placement arrangement The Company intends to place out the Placement Shares via KAF acting as the placement agent to third party investor(s) to be identified at a later date. Such investor(s) shall be person(s) who qualify under Schedules 6 and 7 of the Capital Markets & Services Act, In order to optimise the proceeds which may be raised from the Proposed Private Placement, with regard to market conditions and the market traded prices of ITCB Shares, the Proposed Private Placement may be implemented in tranches up to such number of Placement Shares 3

4 representing 10% of the issued and paid-up share capital of ITCB and at different issue prices for each tranche to be determined at the relevant price fixing dates Basis and justification of arriving at the issue price The issue price of the Placement Shares shall be determined by the Board at a later date after the completion of the Proposed Share Split ( Price Fixing Date ) and may be pegged at a discount of not more than 10%, if deemed appropriate by the Board, to the five (5)-day volume weighted average market price ( VWAMP ) of the Existing Shares immediately prior to the Price Fixing Date. In any event, the issue price of the Placement Shares shall not be lower than the par value of ITCB Shares of RM0.40 each after the Proposed Share Split Ranking of the Placement Shares The Placement Shares shall, upon allotment and issue, rank pari passu in all respects with the then existing ITCB Shares, save and except that the Placement Shares shall not be entitled to any dividends, rights, allotments and/or any other forms of distribution which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of such Placement Shares Listing of and quotation for the Placement Shares An application will be made to Bursa Securities for the listing of and quotation for the Placement Shares on the Main Market of Bursa Securities in due course Utilisation of proceeds The quantum of proceeds to be received by the Company pursuant to the Proposed Private Placement would depend on the actual number of Placement Shares issued. For the purpose of illustration only, the Proposed Private Placement may raise gross proceeds of up to approximately RM7.48 million, assuming 11,870,000 Placement Shares are placed out at an indicative issue price of RM0.63 per Placement Share, which represents a discount of approximately 8.70% to the theoretical ex-price of ITCB Shares after the Proposed Share Split of RM0.69, calculated based on the five (5)-day VWAMP of the Existing Shares up to and including the LPD of RM per Existing Share. The proceeds raised are proposed to be utilised as follows:- Utilisation of proceeds Expected timeframe for utilisation RM 000 Working capital requirements of ITCB and its subsidiaries ( ITCB Group or the Group ) (1) Within 24 months 7,478 Total 7,478 Note:- (1) Intended to be utilised for the ITCB Group s working capital requirements which comprise of, amongst others, payment to creditors, salaries, purchase of raw materials and operating expenses. The proceeds to be utilised for each component of working capital are subject to the operating requirements of the ITCB Group at the time of utilisation and therefore has not been determined at this juncture. [The rest of this page is intentionally left blank] 4

5 2.5 Proposed Rights Issue of ICULS with Warrants Details of the Proposed Rights Issue of ICULS with Warrants The Proposed Rights Issue of ICULS with Warrants, to be undertaken on a renounceable basis, entails the issuance of up to RM39,172,350 nominal value of ICULS at 100% of the nominal value of RM0.075 each on the basis of RM0.30 nominal value of the Rights ICULS for every one (1) ITCB Share held by the entitled shareholders of the Company after the Proposed Share Split, on an entitlement date to be determined later ( Rights Issue Entitlement Date ) together with up to 65,287,250 Warrants on the basis of one (1) Warrant for every RM0.60 nominal value of the Rights ICULS subscribed for. The maximum of RM39,172,350 nominal value of ICULS ( Maximum Subscription Level ) was arrived at after taking into consideration of the resultant issued and paid-up share capital of ITCB after the Proposed Share Split of 115,547,250 ITCB Shares and on the assumptions that all the outstanding ESOS Options will be exercised into new Existing Shares prior to the Share Split Entitlement Date, all the Placement Shares will be placed out prior to the Rights Issue Entitlement Date and all the Entitled Shareholders (as defined hereinafter) will subscribe for their respective entitlements in full pursuant the Proposed Rights Issue of ICULS with Warrants. The actual number of ICULS and Warrants to be issued pursuant to the Proposed Rights Issue of ICULS with Warrants would depend on the issued and paid-up share capital of the Company on the Rights Issue Entitlement Date and the level of subscription by the Entitled Shareholders. The Placement Shares shall only be entitled to the Proposed Rights Issue of ICULS with Warrants if such Placement Shares are being allotted and issued prior to the Rights Issue Entitlement Date. The shareholders whose names appear on the Record of Depositors of the Company as at the close of business on the Rights Issue Entitlement Date shall be entitled to participate in the Proposed Rights Issue of ICULS with Warrants ( Entitled Shareholders ). The Entitled Shareholders can fully or partially subscribe for and/or renounce their entitlements to the Rights ICULS together with Warrants. Any unsubscribed Rights ICULS together with Warrants shall be made available for excess applications by the Entitled Shareholders and/or their renouncee(s)/transferee(s). The Warrants are attached to the Rights ICULS without any cost and will only be issued to the Entitled Shareholders who subscribe for the Rights ICULS. The renunciation of the Rights ICULS by the Entitled Shareholders will accordingly entail the renunciation of the Warrants to be issued together with the Rights ICULS pursuant to the Proposed Rights Issue of ICULS with Warrants. However, if the Entitled Shareholders decide to accept only part of their Rights ICULS entitlements, they shall be entitled to the Warrants in proportion to the acceptance of their Rights ICULS entitlements. The Warrants will be immediately detached from the Rights ICULS upon issuance and will be separately traded. Any fractional entitlements of the Rights ICULS and the Warrants under the Proposed Rights Issue of ICULS with Warrants will be disregarded and shall be dealt with in such manner as the Board shall in its absolute discretion deem fit, expedient and in the best interests of the Company. The ICULS will be issued in registered form and constituted by a trust deed to be executed by the Company and a trustee to be appointed acting for the benefits of the ICULS holders ( Trust Deed ), whilst the Warrants will be issued in registered form and constituted by a deed poll to be executed by the Company ( Deed Poll ). The indicative principal terms of the ICULS and the Warrants are set out in Appendix I and Appendix II of this announcement respectively. 5

6 2.5.2 Basis and justifications of arriving at the issue price and the conversion price of the ICULS The Rights ICULS shall be issued at 100% of the nominal value of RM0.075 each and the Board has fixed the conversion price of the ICULS at RM0.60 for one (1) new ITCB Share. The conversion price of the ICULS was arrived at after taking into consideration the following:- (i) par value of ITCB Shares of RM0.40 each; and theoretical ex-price of RM0.69 per ITCB Share after the Proposed Share Split and the Proposed Rights Issue of ICULS with Warrants, calculated based on the five (5)-day VWAMP of the Existing Shares up to and including the LPD of RM per Existing Share. For illustration purposes, the conversion price of the ICULS of RM0.60 represents a discount of RM0.09 or approximately 13.04% to the theoretical ex-price of RM0.69 per ITCB Share after the Proposed Share Split and the Proposed Rights Issue of ICULS with Warrants, calculated based on the five (5)-day VWAMP of the Existing Shares up to and including the LPD of RM per Existing Share. The discount of the conversion price to the theoretical ex-price of RM0.69 per ITCB Share after the Proposed Share Split and the Proposed Rights Issue of ICULS with Warrants serves to entice the Entitled Shareholders to subscribe for their entitlements to the Rights ICULS. As set out in the indicative principal terms of the ICULS and based on the conversion price of RM0.60, the ICULS may be converted into new ITCB Shares in the following manner:- (i) by surrendering RM0.60 nominal value of ICULS for one (1) new ITCB Share; or by surrendering such number of ICULS together with cash such that in aggregate it amounts to RM0.60 for one (1) new ITCB Share Basis and justifications of arriving at the issue price and the exercise price of the Warrants The Warrants will be issued at no cost to the shareholders of ITCB who subscribed for the Rights ICULS and the Board has fixed the exercise price of the Warrants at RM0.80 for one (1) new ITCB Share. The exercise price of the Warrants was arrived at after taking into consideration the following:- (i) (iii) (iv) par value of ITCB Shares of RM0.40 each; theoretical ex-price of RM0.69 per ITCB Share after the Proposed Share Split and the Proposed Rights Issue of ICULS with Warrants, calculated based on the five (5)-day VWAMP of the Existing Shares up to and including the LPD of RM per Existing Share; the historical price movement of the Existing Shares; and the potential future earnings of the ITCB Group. For illustration purposes, the exercise price of the Warrants of RM0.80 represents a premium of RM0.11 or approximately 15.94% to the theoretical ex-price of RM0.69 per ITCB Share after the Proposed Share Split and the Proposed Rights Issue of ICULS with Warrants, calculated based on the five (5)-day VWAMP of the Existing Shares up to and including the LPD of RM per Existing Share. 6

7 2.5.4 Ranking of the new ITCB Shares arising from the conversion of the ICULS and the exercise of the Warrants The new ITCB Shares to be issued arising from the conversion of the ICULS and the exercise of the Warrants shall, upon allotment and issue, rank pari passu in all respects with the then existing ITCB Shares, save and except that such new ITCB Shares shall not be entitled to any dividends, rights, allotments and/or any other forms of distribution which may be declared, made or paid, the entitlement date of which is prior to the date of allotment of such new ITCB Shares Undertakings The Proposed Rights Issue of ICULS with Warrants will be undertaken on a minimum subscription level basis of RM18,572, nominal value of ICULS ( Minimum Subscription Level ), which was determined after taking into consideration the minimum level of funds required by the ITCB Group for the purposes stated in Section of this announcement and the Company s intention to procure irrevocable undertakings from the following shareholders ( Potential Undertaking Shareholders ) to subscribe for their respective entitlements of the Rights ICULS together with Warrants under the Proposed Rights Issue of ICULS with Warrants in full based on their shareholdings as at the LPD ( Potential Undertakings ), as set out below:- Potential Undertaking Shareholders Shareholdings as at the LPD Existing Shares % Nominal value of Rights ICULS entitled and potentially undertaken to subscribe (RM) Warrants entitled Tey Por Yee 13,007, ,755, ,258,750 Ooi Kock Aun 9,908, ,431, ,385,076 Teh Eng Huat 1,848, ,386, ,310,000 Total 24,763, ,572, ,953,826 ITCB will endeavour to procure the Potential Undertakings from the Potential Undertaking Shareholders prior to the implementation of the Proposed Rights Issue of ICULS with Warrants. Such nominal value of ICULS forming the Minimum Subscription Level but for which no irrevocable undertakings to subscribe are obtained, if any, will be fully underwritten so as to achieve the Minimum Subscription Level Utilisation of proceeds from the Proposed Rights Issue of ICULS with Warrants The Proposed Rights Issue of ICULS with Warrants is expected to raise gross proceeds of between RM18.57 million (based on Minimum Subscription Level) and RM39.17 million (based on Maximum Subscription Level), which are proposed to be utilised as follows:- Utilisation of proceeds Expected timeframe for utilisation Minimum Subscription Level RM 000 Maximum Subscription Level RM 000 Working capital requirements of the Within 24 months 1,500 18,672 ITCB Group (1) Repayment of bank borrowings (2) Within 12 months 1,500 1,500 To part finance the construction costs for ITCB s new business premises in Kulim, Kedah (3) Within 12 months 8,572 12,000 7

8 Utilisation of proceeds Expected timeframe for utilisation Minimum Subscription Level RM 000 Maximum Subscription Level RM 000 Purchase of machineries and Within 12 months 6,000 6,000 equipment (4) Estimated expenses in relation to the Within 3 months 1,000 1,000 Proposals (5) Total 18,572 39,172 Notes:- (1) Intended to be utilised for the ITCB Group s working capital requirements which comprise of, amongst others, payment to creditors, salaries, purchase of raw materials and operating expenses. The proceeds to be utilised for each component of working capital are subject to the operating requirements of the ITCB Group at the time of utilisation and therefore has not been determined at this juncture. (2) Proposed part repayment of the Group s existing borrowings, namely hire purchase facilities, which are due for repayment in the next 12 months. The Group s total outstanding borrowings stood at RM27.90 million as at 31 December Such repayment is expected to result in annual interest savings of about RM0.11 million based on the prevailing interest rates incurred by the Group of 7.60% per annum. (3) The construction of ITCB s new business premises in Kulim, Kedah ( ITCB New Premises ), which comprises 2 main single storey factory buildings with total main floor area of about 244,000 square feet ( sq. ft. ) and a double storey main office building with total main floor area of about 16,000 sq. ft. attached to a single storey factory building with total main floor area of about 66,000 sq. ft., has commenced in May 2013 and is targeted to complete by 3 rd quarter of The ITCB New Premises shall, upon completion of construction, house the Group s corporate headquarters and manufacturing plant with total production capacity of about 15,000 metric tonnes per annum. The estimated total costs relating to the construction and completion of ITCB New Premises (including costs for, amongst others, structural works, architectural works, mechanical and electrical works and interior fit-out) amount to about RM24.00 million and are intended to be funded in the following manner:- (i) (iii) RM11.00 million to be financed by borrowings; between RM8.57 million (based on Minimum Subscription Level) and RM12.00 million (based on Maximum Subscription Level) to be financed by proceeds from the Proposed Rights Issue of ICULS with Warrants, either as direct payment towards the construction costs pertaining to the ITCB New Premises and/or settlement of interim financing to be taken up for the construction of the ITCB New Premises, if any; and between RM1.00 million (based on Maximum Subscription Level) and RM4.43 million (based on Minimum Subscription Level) to be financed by the Group s internally generated funds. (4) The Company intends to invest a total of RM6.00 million of the proceeds from the Proposed Rights Issue of ICULS with Warrants in new machineries and equipment for its business operations at the ITCB New Premises as follows:- Machinery / Equipment Units / Sets Estimated total costs (RM 000) In-line flexo printing slotter with stacker 2 4,000 Automatic tearing, gluing and stacking machine 2 2,000 Total 6,000 (5) The estimated expenses in relation to the Proposals of RM1.00 million comprise of, amongst others, the estimated professional fees and fees payable to the relevant authorities. 8

9 The proceeds to be received by ITCB pursuant to the conversion of the ICULS and the exercise of the Warrants, if any, are intended to be utilised for the working capital requirements and/or future business expansion of the ITCB Group. The eventual quantum of such proceeds cannot be determined at this juncture as it would be dependent on the mode of conversion of the ICULS into new ITCB Shares, i.e. the portion of cash receivable from the conversion of the ICULS as well as the total number of Warrants exercised during the tenure of the Warrants Listing of and quotation for the ICULS, the Warrants and the new ITCB Shares arising from the conversion of the ICULS and the exercise of the Warrants An application will be made to Bursa Securities for the:- (i) admission of the ICULS and the Warrants to the Official List of the Main Market of Bursa Securities; and listing of and quotation for the ICULS, the Warrants and the new ITCB Shares to be issued arising from the full conversion of the ICULS and the full exercise of the Warrants on the Main Market of Bursa Securities. 3.0 RATIONALE FOR THE PROPOSALS 3.1 Proposed Share Split The Proposed Share Split serves to enhance the marketability and trading liquidity of the ordinary shares of ITCB on Bursa Securities as a result of the increase in the number of shares in issue. By so doing, the Resultant Shares are expected to appeal to a wider group of shareholders and investors in terms of the affordability of the shares of the Company. 3.2 Proposed Increase in Authorised Share Capital The Proposed Increase in Authorised Share Capital is intended to increase the Company s existing authorised share capital to facilitate any increase in the share capital of the Company in the future, including new ITCB Shares to be issued pursuant to the Proposed Private Placement, the conversion of the ICULS and the exercise of the Warrants. 3.3 Proposed Amendments The Proposed Amendments are intended to facilitate the implementation of the Proposed Share Split and the Proposed Increase in Authorised Share Capital. 3.4 Proposed Private Placement In view that the Company has an existing General Mandate to allot and issue new shares of up to 10% of the issued and paid-up share capital of ITCB, the Board believes that the Proposed Private Placement is the most expeditious way for the Company to raise funds as opposed to other funding options given the Group s immediate funding requirements for its working capital purposes. Upon completion of the Proposed Private Placement, the enlarged capital base is also expected to further strengthen the financial position of the Company. [The rest of this page is intentionally left blank] 9

10 3.5 Proposed Rights Issue of ICULS with Warrants In addition to the fund raising exercise via the Proposed Private Placement and after due consideration of various funding options available to the Company, the Board is of the opinion that the Proposed Rights Issue of ICULS with Warrants is the most appropriate avenue of fund raising for ITCB for the purposes stated in Section of this announcement after taking into consideration the following:- (i) (iii) (iv) the Proposed Rights Issue of ICULS with Warrants enables the Group to raise funds without incurring high interest costs as in the case of borrowings from financial institutions; the ICULS and the Warrants will provide the Entitled Shareholders with the opportunity to increase their equity participation in the Company at pre-determined conversion and exercise prices during the tenure of the ICULS and the Warrants. Proceeds to be received from the conversion of the ICULS and exercise of the Warrants, if any, will provide an additional source of funds for future working capital requirements and/or business expansion of the Group; the issuance of the ICULS together with the Warrants does not have an immediate dilutive effect on the earnings per share of the ITCB Group as opposed to the issuance of new ITCB Shares and it enables the ITCB Group to strengthen its eventual capital base upon full conversion of the ICULS and full exercise of the Warrants; and the free Warrants to be issued pursuant to the Proposed Rights Issue of ICULS with Warrants will provide the shareholders of ITCB with an incentive to subscribe for the Rights ICULS. 4.0 EFFECTS OF THE PROPOSALS The Proposed Increase in Authorised Share Capital and the Proposed Amendments will not have any effects on the issued and paid-up share capital of ITCB, substantial shareholders shareholdings in ITCB, consolidated net assets ( NA ) per share, consolidated gearing, consolidated earnings and earnings per share ( EPS ) of the Company. For illustration purposes, the effects of the Proposed Share Split, the Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants shall be based on the following two (2) scenarios:- Minimum Scenario : (i) Assuming none of the outstanding ESOS Options are exercised into new Existing Shares prior to the expiry of the ESOS; (iii) (iv) Assuming none of the Placement Shares are placed out prior to the Rights Issue Entitlement Date; Assuming that the Proposed Rights Issue of ICULS with Warrants is implemented based on the Minimum Subscription Level and the Potential Undertakings are successfully procured; RM18,572, nominal value of ICULS issued to the Potential Undertaking Shareholders pursuant to the Proposed Rights Issue of ICULS with Warrants based on the Minimum Subscription Level are all converted into 30,953,826 new ITCB Shares by surrendering RM0.60 nominal value of ICULS for one (1) new ITCB Share; and (v) 30,953,826 Warrants issued to the Potential Undertaking Shareholders pursuant to the Proposed Rights Issue of ICULS with Warrants based on the Minimum Subscription Level are all exercised into 30,953,826 new ITCB Shares at an exercise price of RM0.80 per Warrant. Maximum Scenario : (i) Assuming all the outstanding ESOS Options are exercised into new Existing Shares prior to the Share Split Entitlement Date; 10

11 Maximum Scenario (cont d) 4.1 Share capital (iii) (iv) (v) Assuming all the Placement Shares are placed out prior to the Rights Issue Entitlement Date; Assuming all the Entitled Shareholders subscribe for their entitlements pursuant the Proposed Rights Issue of ICULS with Warrants; RM39,172,350 nominal value of the ICULS issued pursuant to the Proposed Rights Issue of ICULS with Warrants are all converted into 522,298,000 new ITCB Shares by surrendering RM0.075 nominal value of ICULS together with cash such that in aggregate it amounts to RM0.60 for one (1) new ITCB Share; and 65,287,250 Warrants issued pursuant to the Proposed Rights Issue of ICULS with Warrants are all exercised into 65,287,250 new ITCB Shares at an exercise price of RM0.80 per Warrant. The proforma effects of the Proposed Share Split, the Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants on the issued and paid-up share capital of ITCB are as follows:- Minimum Scenario:- ordinary shares Par value (RM) Total Value (RM) Issued and paid-up share capital as at the LPD 46,218, ,218,900 After the Proposed Share Split 115,547, ,218,900 To be issued pursuant to the Proposed Private Placement ,547, ,218,900 To be issued pursuant to the Proposed Rights Issue of ICULS with Warrants ,547, ,218,900 To be issued upon full conversion of the ICULS 30,953, ,381, ,501, ,600,430 To be issued upon full exercise of the Warrants 30,953, ,381,530 Enlarged issued and paid-up share capital 177,454, ,981,960 Maximum Scenario:- Issued and paid-up share capital as at the LPD 46,218, ,218,900 To be issued upon full exercise of the outstanding ESOS Options 1,262, ,262,900 47,481, ,481,800 After the Proposed Share Split 118,704, ,481,800 To be issued pursuant to the Proposed Private Placement 11,870, ,748, ,574, ,229,800 To be issued pursuant to the Proposed Rights Issue of ICULS with Warrants ,574, ,229,800 To be issued upon full conversion of the ICULS 522,298, ,919, ,872, ,149,000 To be issued upon full exercise of the Warrants 65,287, ,114,900 Enlarged issued and paid-up share capital 718,159, ,263,900 11

12 4.2 Earnings and EPS The Proposed Share Split will not have any effect on the consolidated earnings of ITCB except for the corresponding dilution in the consolidated EPS of ITCB as a result of the increase in the number of ITCB Shares pursuant to the Proposed Share Split. For the purpose of illustration only, based on the latest audited consolidated financial statements of ITCB for the financial year ended 31 December ( FYE ) 2012, the proforma effects of the Proposed Share Split on the consolidated earnings and EPS of ITCB are as follows:- Minimum Scenario Audited for the FYE 2012 After the Proposed Share Split Maximum Scenario Audited for the FYE 2012 After the Proposed Share Split Profit attributable to owners of the Company (RM) 2,791,696 2,791,696 2,791,696 2,791,696 ordinary shares assumed to be in issue as at the Share Split Entitlement Date 46,218, ,547,250 *47,481, ,704,500 EPS (sen) Note:- * Assuming all the 1,262,900 outstanding ESOS Options are fully exercised into 1,262,900 Existing Shares. The Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants, which are anticipated to be completed by the second (2 nd ) quarter of 2014, are expected to contribute positively to the consolidated earnings of ITCB for the financial year ending 31 December Moving forward, the Group s future earnings would depend on, inter-alia, the returns to be generated from the proposed utilisation of proceeds arising from the Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants as set out in Section of this announcement as well as the proceeds from the conversion of the ICULS/exercise of the Warrants, if any. The resultant increase in the number of ITCB Shares in issue pursuant to the Proposed Private Placement as well as upon conversion of the ICULS and exercise of the Warrants may accordingly dilute the consolidated EPS of ITCB if the earnings of the Group does not increase in tandem with such increase in the number of ITCB Shares. Nevertheless, the extent of dilution to the consolidated EPS of ITCB is dependent upon, amongst others, the eventual number of ITCB Shares to be issued pursuant to the Proposed Private Placement, the conversion of the ICULS and the exercise of the Warrants vis-àvis the future earnings of the Group. [The rest of this page is intentionally left blank] 12

13 4.3 NA and gearing The proforma effects of the Proposed Share Split, the Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants on the gearing and NA per share of the ITCB Group based on the audited consolidated financial statements of ITCB for the financial year ended 31 December 2012 are as follows:- Minimum Scenario:- Audited as at 31 December 2012 (3) (I) (II) (III) (IV) (V) (VI) Adjusted as at 31 December 2012 (4) After (I) and the Proposed Share Split After (II) and the Proposed Private Placement After (III) and the Proposed Rights Issue of ICULS with Warrants After (IV) and upon full conversion of the ICULS After (V) and upon full exercise of the Warrants RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Share capital 45,011 46,219 46,219 46,219 46,219 58,600 70,982 Share premium 4,443 4,920 4,920 4,920 4,920 11,111 23,493 Share options reserve ICULS Equity portion , Warrant reserves ,810 6,810 - Other reserves (6,810) (6,810) - (5) Accumulated losses (667) (667) (464) (464) (1,464) (1,464) (1,464) Shareholders equity/na 49,467 50,675 50,675 50,675 67,673 68,247 93,011 (7) (2) (2) (6) shares ( 000) 45,011 46, , , , , ,455 NA per share (RM) Borrowings (RM 000) (1) 24,916 24,916 24,916 24,916 24,182 23,416 23,416 Gearing (times) Notes:- (1) Comprise of all interest-bearing borrowings and liability portion of the ICULS. (2) Ordinary shares of RM1.00 each prior to the implementation of the Proposed Share Split. (3) After adjusting for the issuance of 1,207,900 new ITCB Shares from 1 January 2013 up to the LPD pursuant to the Company s ESOS. (4) Assuming the Share Split Entitlement Date is after the expiry of the Company s ESOS on 16 January (5) After the transfer of all remaining share options reserve in relation to the unexercised expired ESOS Options to retained profits of the Company. (6) Ordinary shares of RM0.40 each after the implementation of the Proposed Share Split. (7) After deducting estimated expenses of RM1,000,000 in relation to the Proposals. 13

14 Maximum Scenario:- Audited as at 31 December 2012 (3) (I) (II) (III) (IV) (V) (VI) Adjusted as at 31 December 2013 and assuming full exercise of the outstanding ESOS Options After (I) and the Proposed Share Split After (II) and the Proposed Private Placement After (III) and the Proposed Rights Issue of ICULS with Warrants After (IV) and upon full conversion of the ICULS After (V) and upon full exercise of the Warrants RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Share capital 45,011 47,482 47,482 52,230 52, , ,264 Share premium 4,443 5,123 5,123 (5) 7,853 7, , ,427 Share options reserve ICULS-equity portion , Warrant reserves ,363 14,363 - Other reserves (14,363) (14,363) - Accumulated losses (667) (667) (667) (667) (6) (1,667) (1,667) (1,667) Shareholders equity/na 49,467 51,938 51,938 59,416 96, , ,024 (2) (2) (4) shares ( 000) 45,011 47, , , , , ,160 NA per share (RM) Borrowings (RM 000) (1) 24,916 24,916 24,916 24,916 25,031 23,416 23,416 Gearing (times) Notes:- (1) Comprise of all interest bearing borrowings and liability portion of ICULS. (2) Ordinary shares of RM1.00 each prior to the implementation of the Proposed Share Split. (3) After adjusting for the issuance of 1,207,900 new ITCB Shares from 1 January 2013 up to the LPD and 1,262,900 new ITCB Shares upon full exercise of the outstanding 1.262,900 ESOS Options pursuant to the Company s ESOS. (4) Ordinary shares of RM0.40 each after the implementation of the Proposed Share Split. (5) Based on the indicative issue price of RM0.63 per Placement Share. (6) After deducting estimated expenses of RM1,000,000 in relation to the Proposals. 14

15 4.4 Substantial shareholders shareholdings The proforma effects of the Proposed Share Split and the Proposed Private Placement on the substantial shareholders shareholdings in the Company are as follows:- Minimum Scenario:- (I) (II) As at the LPD After the Proposed Share Split After (I) and the Proposed Private Placement Direct Indirect Direct Indirect Direct Indirect Dato Dr Yap Tatt Keat 5,505, ,763, ,763, Ooi Kock Aun 9,908, ,770, ,770, Tey Por Yee 13,007, ,517, ,517, Teh Eng Huat 1,848, ,620, ,620, (III) (IV) (V) After (II) and the Proposed Rights Issue of ICULS with Warrants After (III) and upon full conversion of the ICULS After (IV) and upon full exercise of the Warrants Direct Indirect Direct Indirect Direct Indirect Dato Dr Yap Tatt Keat 13,763, ,763, ,763, Ooi Kock Aun 24,770, ,155, ,540, Tey Por Yee 32,517, ,776, ,035, Teh Eng Huat 4,620, ,930, ,240, [The rest of this page is intentionally left blank] 15

16 Maximum Scenario:- (I) (II) Assuming full exercise of existing outstanding ESOS Options After (I) and the Proposed Share Split As at the LPD Direct Indirect Direct Direct Direct Indirect Dato Dr Yap Tatt Keat 5,505, (1) 5,814, ,535, Ooi Kock Aun 9,908, ,908, ,770, Tey Por Yee 13,007, ,007, ,517, Teh Eng Huat 1,848, ,848, ,620, (III) (IV) (V) After (II) and the Proposed Private Placement After (III) and the Proposed Rights Issue of ICULS with Warrants After (IV) and upon full conversion of the ICULS Direct Indirect Direct Indirect Direct Indirect Dato Dr Yap Tatt Keat 14,535, ,535, ,679, Ooi Kock Aun 24,770, ,770, ,850, Tey Por Yee 32,517, ,517, ,587, Teh Eng Huat 4,620, ,620, ,100, (VI) After (V) and upon full exercise of the Warrants Direct Indirect Dato Dr Yap Tatt Keat 79,947, Ooi Kock Aun 136,235, Tey Por Yee 178,846, Teh Eng Huat 25,410, Note:- (1) Pursuant to full exercise of his 309,000 outstanding ESOS Options. 16

17 4.5 Convertible securities As at the LPD, the Company has 1,262,900 ESOS Options outstanding. As it is the intention of the Company to fix the Share Split Entitlement Date on a date after 16 January 2014, being the expiry date of the ESOS Options granted, the Proposals will not result in any adjustment to the number and exercise price of the existing ESOS Options. 5.0 APPROVALS REQUIRED The Proposals are subject to the following approvals being obtained:- (a) Bursa Securities for:- (i) (iii) (iv) the Proposed Share Split; the listing of and quotation for the Placement Shares to be issued pursuant to the Proposed Private Placement on the Main Market of Bursa Securities; the admission of the ICULS and the Warrants to the Official List of the Main Market of Bursa Securities; and the listing of and quotation for the ICULS, the Warrants and the new ITCB Shares to be issued arising from the full conversion of the ICULS and the full exercise of the Warrants on the Main Market of Bursa Securities; (b) (c) (d) Securities Commission Malaysia for the issuance of the ICULS under the Guidelines on Private Debt Securities pursuant to the Proposed Rights Issue of ICULS with Warrants; the shareholders of ITCB for the Proposed Share Split, the Proposed Increase in Authorised Share Capital, Proposed Amendments and the Proposed Rights Issue of ICULS with Warrants at an extraordinary general meeting to be convened; and any other relevant authorities (if applicable). The Company had obtained the approval of its shareholders at the last AGM convened on 27 June 2013 pursuant to Section 132D of the Act that authorises the Board to issue new ordinary shares of ITCB from time to time upon such terms and conditions and for such purposes as the Board may deem fit provided that the aggregate number of ordinary shares of ITCB to be issued does not exceed 10% of the issued and paid-up share capital of ITCB. The said approval is valid until the next AGM. 6.0 CONDITIONALITY The conditionality of the Proposals is as follows:- (i) (iii) The Proposed Share Split, the Proposed Increase in Authorised Share Capital and the Proposed Amendments are inter-conditional upon one another. The Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants are conditional upon the Proposed Share Split, the Proposed Increase in Authorised Share Capital and the Proposed Amendments, but not vice-versa. The Proposed Private Placement and the Proposed Rights Issue of ICULS with Warrants are not inter-conditional upon one another. Save as disclosed above, the Proposals are not conditional upon any other corporate proposals undertaken or to be undertaken by ITCB. 17

18 7.0 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors, major shareholders and/or persons connected with the Directors and/or major shareholders of ITCB have any interest, direct or indirect, in the Proposals save for their respective entitlements, if any, as shareholders of ITCB under the Proposed Share Split and the Proposed Rights Issue of ICULS with Warrants, the rights of which are also available to all other shareholders of the Company as at the Share Split Entitlement Date and the Rights Issue Entitlement Date. 8.0 DIRECTORS STATEMENT The Board, having considered all aspects of the Proposals, including but not limited to the rationale and financial effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company. 9.0 ADVISER AND PLACEMENT AGENT The Board has appointed KAF as the Adviser for the Proposals and the sole placement agent for the Proposed Private Placement APPLICATIONS TO THE RELEVANT AUTHORITIES The applications to the relevant authorities are expected to be made within two (2) months from the date of this announcement ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposals are expected to be completed by the second (2 nd ) quarter of This announcement is dated 8 January

19 APPENDIX I INDICATIVE PRINCIPAL TERMS OF THE ICULS Issuer : ITCB. Issue Size : Up to RM39,172,350 nominal value of ICULS to be issued pursuant to the Proposed Rights Issue of ICULS with Warrants. Issue Price : 100% of the nominal value of RM0.075 each. Form and Denomination : The ICULS will be issued in registered form in denomination of RM0.075 and multiples thereof, and constituted by the Trust Deed. Basis of Allotment : RM0.30 nominal value of ICULS for every one (1) existing ITCB Share held by the Entitled Shareholders on the Rights Issue Entitlement Date. Tenure : Five (5) years commencing from and including the date of issue of the ICULS. Maturity Date : The date immediately preceding the fifth (5 th ) anniversary date of first issue of the ICULS, and if such date is not a market day, then on the immediate preceding market day. Coupon Rate and Payment : 1% per annum on the nominal value of the ICULS payable on an annual basis. Conversion Rights : Each registered holder of the ICULS shall have the right at any time during the Conversion Period to convert such amount of ICULS held into fully paidup new ITCB Shares at the Conversion Price. Any remaining ICULS not converted at the end of the Conversion Period shall be mandatorily converted into new ITCB Shares at the Conversion Price on the Maturity Date. Any fractional new ITCB Shares arising from the conversion of the ICULS will be disregarded and shall be dealt with in such manner as the Board shall in its absolute discretion deem fit, expedient and in the best interests of the Company. Conversion Price : The conversion price of the ICULS is RM0.60 for every one (1) new ITCB Share. Conversion Period : The ICULS shall be convertible into new ITCB Shares on any market day from and including the date of the issue of the ICULS up to and including the Maturity Date. Conversion Mode : The ICULS may be converted into new ITCB Shares in the following manner:- (i) by surrendering nominal value of ICULS equivalent to the Conversion Price; or by surrendering such number of ICULS together with cash such that in aggregate it amounts to the Conversion Price. Conversion Price Adjustment : The Company shall make the necessary adjustment to the Conversion Price in the event of any alteration to the share capital of ITCB on or before the Maturity Date, whether by way of rights issues, bonus issues, consolidation of shares, sub-division of shares or capital distribution whether on a reduction of capital or otherwise, in accordance with the provisions of the Trust Deed. Redeemability : The ICULS will not be redeemable for cash. All outstanding ICULS will be mandatorily converted into new ITCB Shares on the Maturity Date. 19

20 APPENDIX I INDICATIVE PRINCIPAL TERMS OF THE ICULS (CONT D) Purchase or Cancellation : ITCB and/or its subsidiaries may at any time purchase the ICULS on the Main Market of Bursa Securities at the market price prevailing at the time of purchase. All ICULS purchased by ITCB and/or its subsidiaries shall be cancelled, subject to regulatory procedures and cannot be resold or be convertible into new ITCB Shares. Status of ICULS : The ICULS shall constitute direct, unconditional and unsecured obligations of ITCB and subject to the provisions contained in the Trust Deed, must at all times rank pari passu, without discrimination, preference or priority between themselves and must rank at least pari passu with all present and future direct, unconditional, unsecured and unsubordinated debts and obligations of ITCB except for those which are preferred by law. ICULS holders rights to participate in any distribution and/or offer of further securities in the Company Rights of the ICULS holders on liquidation Maximum number of new ITCB Shares to be issued arising from the full conversion of the ICULS : The ICULS holders are not entitled to participate in any distribution and/or offer of securities in ITCB until and unless such ICULS holders convert the ICULS into new ITCB Shares. : In the event of the ICULS becoming payable upon the occurrence of an event of default, the amount which is immediately due and payable by ITCB to the holders of the ICULS or which the holders of the ICULS may prove for in the liquidation shall be the nominal value of the outstanding ICULS. Save as aforementioned, the ICULS shall not be liable to be redeemed in cash but only by conversion into fully paid new ITCB Shares in accordance with the provisions of the Trust Deed. : Based on the Conversion Price of RM0.60 for one (1) new ITCB Share, the maximum number of new ITCB Shares to be issued is 522,298,000 new ITCB Shares. Board Lot : The ICULS are tradable in board lots of RM7.50 nominal value of ICULS, or such denomination as may be determined by Bursa Securities upon listing. Rating : The ICULS will not be rated. Trust Deed : The ICULS will be constituted by the Trust Deed to be executed between ITCB and the trustee appointed by ITCB, acting for the benefit of the holders of the ICULS. Governing Law : Laws and regulations of Malaysia. [The rest of this page is intentionally left blank] 20