Further details pertaining to the Proposals, which are inter-conditional, are set out in the ensuing sections.

Transcription

1 MEGA FIRST CORPORATION BERHAD ( MFCB OR COMPANY ) I. PROPOSED RENOUNCEABLE RIGHTS ISSUE OF NEW ORDINARY SHARES OF RM1.00 EACH IN MFCB ( MFCB SHARES ) ( RIGHTS SHARES ) TOGETHER WITH FREE DETACHABLE WARRANTS ( WARRANTS ) TO RAISE GROSS PROCEEDS OF UP TO RM250.0 MILLION ( PROPOSED RIGHTS ISSUE WITH WARRANTS ); AND II. PROPOSED EXEMPTIONS TO GOH NAN KIOH ( GNK ) AND PERSONS ACTING IN CONCERT WITH HIM ( PACS ) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR ALL MFCB SHARES AND WARRANTS NOT HELD BY GNK AND HIS PACS UNDER PARAGRAPHS 16.1(B) AND 16.1(C), PRACTICE NOTE 9 OF THE MALAYSIAN CODE ON TAKE-OVERS AND MERGERS, 2010 ( CODE ) ( PROPOSED EXEMPTIONS ) (COLLECTIVELY, THE PROPOSALS ) For purposes of this Announcement, USD refers to United States Dollar and RM refers to Ringgit Malaysia. Unless otherwise stated, the exchange rate of USD1.00:RM4.2855, being the middle rate as quoted by Bank Negara Malaysia ( BNM ) as at 5.00 p.m. on 20 November 2015, being the latest practicable date prior to the date of this Announcement ( LPD ) is used throughout this Announcement. 1. INTRODUCTION On behalf of the Board of Directors of MFCB ( Board ), CIMB Investment Bank Berhad ( CIMB ) and Maybank Investment Bank Berhad ( Maybank IB ) (collectively, the Joint Principal Advisers ) wish to announce that the Company proposes to undertake the Proposals. Further details pertaining to the Proposals, which are inter-conditional, are set out in the ensuing sections. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Rights Issue with Warrants Basis and quantum MFCB proposes to undertake a renounceable rights issue of new MFCB Shares together with free Warrants to the shareholders of MFCB as at the close of business on an entitlement date to be determined later ( Entitlement Date ) ( Entitled Shareholders ) to raise gross proceeds of up to RM250.0 million ( Intended Gross Proceeds ). The entitlement basis for the Proposed Rights Issue with Warrants ( Entitlement Basis ) and the issue price for the Rights Shares ( Issue Price ) have not been fixed at this juncture to provide flexibility to the Board in respect of the pricing of the Rights Shares and consequently, the number of Rights Shares to be issued. Notwithstanding the above, the Intended Gross Proceeds have been determined upfront to provide clarity to the shareholders of MFCB with respect to the estimated capital outlay required to fully subscribe for their respective entitlements under the Proposed Rights Issue with Warrants, which can be approximated by multiplying the Intended Gross Proceeds with their respective percentage shareholdings in MFCB. 1

2 For illustration purposes only, based on the Intended Gross Proceeds and the 222,847,800 MFCB Shares in issue, excluding 20,497,200 MFCB Shares retained as treasury shares ( Treasury Shares ), as at the LPD, the estimated capital outlay required from an Entitled Shareholder holding 1,000 MFCB Shares who wishes to fully subscribe for his/her entitlement is approximately RM1, The actual capital outlay required by the Entitled Shareholders to fully subscribe for their entitlements under the Proposed Rights Issue with Warrants will depend on the Issue Price and the Entitlement Basis to be determined by the Board and announced closer to the implementation of the Proposed Rights Issue with Warrants after obtaining all relevant approvals for the Proposed Rights Issue with Warrants ( Price-Fixing Date ). The Issue Price and the Entitlement Basis will be determined after taking into consideration, amongst others: (iii) (iv) (v) the Intended Gross Proceeds; the then prevailing market condition; the then prevailing market price of the MFCB Shares; the issued and paid-up share capital of MFCB as at the Price-Fixing Date; and the theoretical ex-rights price ( TERP ) of the MFCB Shares based on the five (5)-day volume weighted average market price ( VWAMP ) of the MFCB Shares immediately preceding the Price-Fixing Date. The Issue Price is expected to be at a discount of not less than 15% to the TERP of the MFCB Shares immediately preceding the Price-Fixing Date (rounded up to the nearest whole sen) but shall in no event be lower than the par value of the MFCB Shares of RM1.00 each. The Entitlement Basis and the corresponding number of Rights Shares to be issued can only be determined in conjunction with the fixing of the Issue Price such that the Intended Gross Proceeds will be raised. It is also the intention of the Board to fix an Entitlement Basis which will minimise the occurrences of odd lots and fractional entitlements. The Warrants will be attached to the Rights Shares and be issued for free to the Entitled Shareholders and/or their renouncees who subscribe for the Rights Shares based on their respective entitlements under the Proposed Rights Issue with Warrants. The number of Warrants to be issued and its exercise price will be determined by the Board on the Price-Fixing Date after taking into account, amongst others, the funding requirements of MFCB and the expected timing of such requirements over the next four (4) years. The exercise price of the Warrants is expected to be fixed at a premium of at least 10.0% over the TERP of the MFCB Shares immediately preceding the Price- Fixing Date but shall in no event be lower than the par value of the MFCB Shares of RM1.00 each. The Warrants will be immediately detached from the Rights Shares upon issuance and allotment, and will be separately traded on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Securities ). The Warrants will have a tenure of up to four (4) years from the date of its issuance and allotment. The indicative salient terms of the Warrants are set out in Section of this Announcement Option to subscribe for the Rights Shares either solely in RM or solely in USD ( Subscription Option ) Details of the Subscription Option MFCB is currently undertaking the Don Sahong Hydropower Project (as defined in Section 3.1 of this Announcement). 2

3 MFCB intends to utilise up to RM150.0 million, representing 60.0% of the Intended Gross Proceeds, to partially fund the construction of the Don Sahong Hydropower Project, which will be financed in USD. Further details on the Don Sahong Hydropower Project are set out in Section 3.1 of this Announcement. In order to match the risk profiles and USD funding requirements of the Don Sahong Hydropower Project, the subscription of the Proposed Rights Issue with Warrants will be undertaken in either RM or USD. In this regard, the shareholders of MFCB will be provided with the Subscription Option, whereby the shareholders of MFCB can opt to subscribe for the Rights Shares either solely in RM or solely in USD. Assuming MFCB raises up to RM150.0 million from the Proposed Rights Issue with Warrants in USD, the said proceeds in USD will be channelled directly into the Don Sahong Hydropower Project without MFCB incurring further foreign exchange translation costs. On 22 October 2015, BNM has given its conditional approval for the Subscription Option and the investment abroad by MFCB in relation to the Don Sahong Hydropower Project vide its letter dated 22 October Such approval has been granted subject to conditions to be complied with by MFCB over the tenure of the Don Sahong Hydropower Project. Should MFCB fail to comply with any of the conditions imposed by BNM, the approval granted will be revoked. Pursuant to the condition imposed by BNM in relation to the Subscription Option, only resident Entitled Shareholders with existing USD funds are allowed to subscribe for the Rights Shares in USD and any conversion of RM to USD for the purposes of subscribing for the Rights Shares is not allowed ( Subscription Condition ). The Issue Price to be denominated in both RM and USD will be fixed on the Price-Fixing Date based on the exchange rate of RM to USD according to the middle rate as quoted by BNM as at 5.00 p.m. on the market day immediately preceding the Price-Fixing Date. Subscription for the Rights Shares shall be made either in RM or in USD, and combination of these currencies will not be allowed. For the avoidance of doubt, the exercise price of the Warrants to be issued pursuant to the Proposed Rights Issue with Warrants will be in RM only. Benefits of the Subscription Option The Board considers that the Subscription Option will be beneficial to the shareholders of MFCB as it provides flexibility for them to subscribe for the Rights Shares either solely in RM or solely in USD, subject to the Subscription Condition. Furthermore, the Subscription Option will be beneficial to MFCB, for the following reasons: (a) (b) (c) matching risk profiles with the USD funding requirements of the Don Sahong Hydropower Project and the Intended Gross Proceeds in USD; lower transaction costs incurred arising from the conversion of the Intended Gross Proceeds in RM; and reduced exposure to the volatility of foreign currencies movements from the Price-Fixing Date to the completion of the Proposed Rights Issue with Warrants. 3

4 2.1.3 Ranking of the Rights Shares and new MFCB Shares arising from the exercise of the Warrants ( Exercised Shares ) The Rights Shares and Exercised Shares shall, upon issuance and allotment, rank equally in all respects with the then existing MFCB Shares, save and except that the Rights Shares and Exercised Shares shall not be entitled to any dividend, right, allotment and/or other distribution which may be declared, made or paid in respect of which the entitlement date is before the allotment date of the Rights Shares and Exercised Shares Listing of and quotation for the Rights Shares, Warrants and Exercised Shares The Rights Shares, Warrants and Exercised Shares will be listed on the Main Market of Bursa Securities. An application will be made to Bursa Securities for: the admission of the Warrants to the Official List of Bursa Securities; and the listing of and quotation for the Rights Shares, Warrants and Exercised Shares on the Main Market of Bursa Securities Renunciation of the Proposed Rights Issue with Warrants The Rights Shares with Warrants will be provisionally allotted to the Entitled Shareholders. 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 with Warrants 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 pursuant to the Proposed Rights Issue with Warrants. 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 Shares entitlements. For the avoidance of doubt, the Rights Shares and the Warrants are not separately renounceable. Any fractional entitlements of the Rights Shares with Warrants under the Proposed Rights Issue with Warrants will be disregarded and shall be dealt with in such manner as the Board shall in its absolute discretion deems fit and in the best interest of MFCB. The Rights Shares which are not taken up or validly taken up shall be made available for excess applications by the Entitled Shareholders and/or their renouncees. It is the intention of the Board to allocate the excess Rights Shares with Warrants to the Entitled Shareholders and/or their renouncees who have applied for the excess Rights Shares with Warrants, based on their respective shareholdings in MFCB on the Entitlement Date in a fair and equitable manner on a basis to be determined by the Board and announced later Shareholders undertakings and underwriting arrangement The Proposed Rights Issue with Warrants is intended to be undertaken on a full subscription basis ( Full Subscription Level ). To meet the Full Subscription Level, the Company intends to procure: irrevocable undertakings in writing from the shareholders as set out in Section 2.2 of this Announcement ( Undertaking Shareholders ), to subscribe in full for their respective entitlements under the Proposed Rights Issue with Warrants ( Undertakings ). As at the LPD, the Undertaking Shareholders collectively hold directly 73,232,400 MFCB Shares, representing 32.86% of the issued and paid-up share capital of MFCB; 4

5 (iii) an irrevocable undertaking in writing from GNK or his nominees to be identified from the list of his PACs, to subscribe, by way of excess Rights Shares application, in aggregate with the Undertakings, for 50% of the total Rights Shares pursuant to the Proposed Rights Issue with Warrants ( Additional Undertaking ); and an underwriting arrangement for the remaining portion of the Rights Shares for which no undertaking has been obtained ( Underwritten Portion ) ( Underwriting Arrangement ). The Underwriting Arrangement for the Underwritten Portion will be finalised at a later date subject to the underwriting agreement(s) to be executed. The Undertaking Shareholders who have existing USD funds have indicated that they are willing to provide the Undertakings and Additional Undertaking in USD. The Company intends to procure the Undertakings and Additional Undertaking prior to the issuance of the circular to the shareholders of MFCB for the Proposals. The Undertakings and Additional Undertaking together with the Underwriting Arrangement will constitute the Full Subscription Level Proposed utilisation of the Intended Gross Proceeds The Intended Gross Proceeds is proposed to be utilised as follows: Details of utilisation RM million Working capital and other general corporate purposes (1) Repayment of short-term bank borrowings (2) 65.0 Estimated expenses in relation to the Proposals (3) 3.7 Total gross proceeds Notes: (1) MFCB intends to utilise up to RM181.3 million to fund the working capital and other general corporate purposes of the core business activities of MFCB and its subsidiaries ( MFCB Group ) in the power generation, mineral resources, property development and investment divisions. The Board wishes to highlight in particular that up to RM150.0 million of the Intended Gross Proceeds are expected to be utilised for the Don Sahong Hydropower Project. Please see Section 3.1 of this Announcement for further details. (2) MFCB intends to utilise up to RM65.0 million of the Intended Gross Proceeds for the repayment of the short-term bank borrowings of the MFCB Group. The repayment of the short-term bank borrowings is expected to result in interest savings of approximately RM3.0 million per annum based on the average effective interest rate of 4.65% per annum. (3) Include professional fees, fees to the authorities, printing costs and other incidental expenses in relation to the Proposals. Any variation to the amount of estimated expenses incurred in relation to the Proposals will be adjusted against the amount allocated for working capital and other general corporate purposes of the MFCB Group. The actual gross proceeds to be raised cannot be determined at this juncture as it would depend on the final Issue Price and Entitlement Basis. Any difference between the actual gross proceeds to be raised and the Intended Gross Proceeds or any deviation of the actual expenses in relation to the Proposals will be correspondingly adjusted to the amount allocated for working capital and other general corporate purposes of the MFCB Group. The gross proceeds to be raised by the Company from the exercise of the Warrants are dependent on the total number of the Warrants exercised during the tenure of the Warrants. Proceeds arising from the exercise of the Warrants will be utilised for working capital and other general corporate purposes of the MFCB Group. 5

6 Pending utilisation of the Intended Gross Proceeds for the purposes as set out above, the proceeds will be placed in interest-bearing deposits with financial institutions or short-term money market instruments as the Board deems fit. The interest derived from the deposits with financial institutions or any gains arising from the short-term money market instruments will be utilised for working capital and other general corporate purposes of the MFCB Group. However, as disclosed in Section of this Announcement, the Issue Price to be denominated in both RM and USD will be fixed on the Price-Fixing Date. As such, due to the volatility of foreign currency movements from the Price-Fixing Date up until the last date of acceptance and payment for the Rights Shares, depending on the currency of subscription by the Entitled Shareholders pursuant to the Subscription Option, the Intended Gross Proceeds to be raised may differ. For illustration purposes only, assuming the exchange rate is USD1.00:RM (based on the exchange rate as at the LPD) immediately preceding the Price-Fixing Date, the Intended Gross Proceeds on the Price-Fixing Date will be RM250.0 million or approximately USD58.3 million, or a combination of both. In the event the RM strengthens by 5.0% against the USD to USD1.00:RM after the Price-Fixing Date, it is assumed that all Entitled Shareholders including the Undertaking Shareholders with existing USD funds will subscribe for the Rights Shares in USD. MFCB will, in such scenario, raise approximately USD58.3 million, which will be consistent with the Intended Gross Proceeds in USD; or In the event the RM weakens by 5.0% against the USD to USD1.00:RM after the Price-Fixing Date, it is assumed that all Entitled Shareholders other than the Undertaking Shareholders with existing USD funds will subscribe for the Rights Shares in RM. MFCB will, in such scenario raise less proceeds as compared to the Intended Gross Proceeds in USD. The potential proceeds raised based on the above illustration are summarised below: Potential proceeds raised in USD (1) if: All Entitled Shareholders subscribe with their existing USD funds All Entitled Shareholders other than the Undertaking Shareholders (2) with existing USD funds subscribe in RM Proposed Rights Issue with Warrants is offered only in RM RM strengthens to USD1.00:RM Approximately USD58.3 million or RM237.5 million (3) equivalent Approximately USD60.4 million (2)(4) or RM245.9 million (3) equivalent Approximately USD61.4 million (3) or RM250.0 million equivalent RM weakens to USD1.00:RM Approximately USD58.3 million or RM262.5 million (5) equivalent Approximately USD56.5 million (2)(6) or RM254.1 million (5) equivalent Approximately USD55.6 million (5) or RM250.0 million equivalent Notes: (1) After conversion of the Intended Gross Proceeds received in RM or USD at the assumed prevailing exchange rate after the Price-Fixing Date. (2) Assuming all Undertaking Shareholders subscribe for their respective entitlements with their existing USD funds amounting to approximately USD19.2 million (equivalent to approximately RM82.1 million), based on their collective shareholdings of 32.86%. (3) Based on the assumed exchange rate of USD1.00:RM (4) Assuming the remaining shareholders of MFCB subscribe for their respective entitlements in RM amounting to approximately RM167.9 million based on the exchange rate of USD1.00:RM (5) Based on the assumed exchange rate of USD1.00:RM

7 (6) Assuming the remaining shareholders of MFCB subscribe for their respective entitlements in RM amounting to approximately RM167.9 million based on the exchange rate of USD1.00:RM Any difference between the actual gross proceeds and the Intended Gross Proceeds arising from the fluctuating foreign exchange rates will be adjusted against the amount allocated for working capital and other general corporate purposes of the MFCB Group Indicative salient terms of the Warrants The indicative salient terms of the Warrants are set out below: Form and denomination : The Warrants, which are issued together with the Rights Shares, will be immediately detached from the Rights Shares upon issuance and allotment, separately traded and will be issued in registered form and constituted by a deed poll to be executed by MFCB ( Deed Poll ). Tenure : Four (4) years from and inclusive of the date of issuance of the Warrants up to and including the market day on the date falling four (4) years from the issuance of the Warrants or if such date is not a market day, then it shall be the market day immediately preceding the said non-market day. Exercise rights : Each Warrant entitles the registered holder, at any time during the exercise period, to subscribe for one (1) new MFCB Share at the exercise price to be satisfied in cash, subject to the provisions of the Deed Poll. Exercise period : The Warrants shall be exercisable into new MFCB Shares on any market day within the tenure. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid. Exercise price : The exercise price of the Warrants will be determined later. The exercise price of the Warrants may from time to time be adjusted in accordance with the provisions of the Deed Poll. Board lot : For the purpose of trading on Bursa Securities, a board lot of Warrants shall comprise 100 Warrants carrying the right to subscribe for 100 new MFCB Shares at any time during the exercise period, or such denomination as determined by Bursa Securities. Rights of Warrant holders Adjustments in the exercise price and/or number of Warrants : Warrant holders are not entitled to vote in any general meeting of MFCB or to participate in any distribution and/or offer of further securities in the Company unless and until the Warrant holder becomes a shareholder of MFCB by exercising his/her Warrants. : The exercise price and/or any number of Warrants in issue may be adjusted by the Board, in consultation with its professional advisers and as certified by the auditors in accordance with the provisions of the Deed Poll. 7

8 Rights of Warrants holders in the event of winding-up, liquidation, compromise and/or arrangement : If a resolution is passed for a members voluntary winding-up of the Company or if a court order approving a scheme of compromise or arrangement made pursuant to Section 176 of the Companies Act, 1965 ( Act ) is granted, then: if such winding-up is for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the Warrant holders or some person designated by them for such purpose by special resolution shall be a party, the terms of such scheme of arrangement shall be binding on all the Warrant holders; in any other case, every Warrant holder shall, within six (6) weeks after the passing of such resolution for a members voluntary winding-up or within six (6) weeks after the granting of the court order approving the compromise or arrangement (but in both cases, not later than the end of the exercise period for the Warrants), by delivery to the Company of a duly completed subscription form together with the relevant exercise price in the manner described in the Deed Poll, be entitled to be treated as if he had immediately prior to the commencement of such windingup, compromise or arrangement exercised the rights represented by such Warrants to the extent specified in the subscription form and had on such date been the holder of the MFCB Shares to which he would have become entitled pursuant to such exercise, and the liquidator of the Company shall give effect to such election accordingly; and (iii) subject to conditions and above, if the Company is wound up (other than by way of a members voluntary winding up), all exercise rights which have not been exercised prior to the date of commencement of the winding up shall lapse and the Warrants will cease to be valid for any purpose. Modification to terms and conditions of the Warrants : Subject to the approval of any relevant authority, any modification or abrogation of the covenants or provisions contained in the Deed Poll proposed or agreed to by the Company must be sanctioned by special resolution of the Warrant holders, effected by a deed poll, executed by the Company and expressed to be supplemental and comply with the requirements of the Deed Poll. The Company may, from time to time, without the consent or sanction of the Warrant holders, modify the Deed Poll, if such modification made does not materially prejudice the interests of the Warrant holders or is made to correct a manifest error or to comply with prevailing laws of Malaysia or in accordance with the Deed Poll. Listing : Application will be made to Bursa Securities for the listing of and quotation for the Warrants and the Exercised Shares. Transferability : The Warrants shall be transferable in the manner in accordance with the provisions of the Deed Poll, subject to the Securities Industry (Central Depositories) Act, 1991 and the Rules of Bursa Malaysia Depository Sdn Bhd. Governing law : Laws and regulations of Malaysia. 8

9 2.2 Proposed Exemptions For illustration purposes only, the table below illustrates the pro forma direct shareholdings of GNK and each of his PACs in MFCB as at the LPD and after the exercise of Options A (1) by GNK and GNY only: Undertaking Shareholders As at the LPD No. of MFCB After exercise of all Options A (1) held by GNK and GNY No. of MFCB GNK 713, ,213, Rubber Thread Industries (M) Sdn Berhad ( Rubber Thread ) 47,905, ,905, Keen Capital Investments Limited ( Keen Capital ) 16,260, ,260, PRT Capital Pte Ltd ( PRT Capital ) 5,802, ,802, Lanai Etika Sdn Bhd ( Lanai Etika ) 1,927, ,927, Goh Nan Yang ( GNY ) 510, ,010, Chu Beng Han ( CBH ) 113, , Total shareholdings of GNK and his PACs 73,232, ,232, Note: (1) As at the LPD, MFCB has outstanding 1,780,000 options granted pursuant to its Employees Share Option Scheme ( Options ) exercisable at any time from 21 May 2014 to 31 July 2020 ( Options A ). It is assumed that none of the Options A holders, other than GNK and GNY who each holds 500,000 Options A, exercise their Options A. For the avoidance of doubt, GNK and his PACs are the Undertaking Shareholders, whose Undertakings and/or Additional Undertaking will be given to the Company for their subscription of the Rights Shares under the Proposed Rights Issue with Warrants, as disclosed in Section of this Announcement. As set out above, the collective shareholdings of the Undertaking Shareholders in MFCB may increase from 32.86% to more than 33.00% of the enlarged issued and paid-up share capital of MFCB, upon exercise of Options A by GNK and GNY prior to the Entitlement Date, after obtaining the approvals of the non-interested shareholders of MFCB at an extraordinary general meeting ( EGM ) to be convened and the Securities Commission Malaysia ( SC ) for the Proposed Exemptions. Thereafter, the collective shareholdings of the Undertaking Shareholders in MFCB may increase by more than 2% of the enlarged issued and paid-up share capital of MFCB upon and after the completion of the Proposed Rights Issue with Warrants over a six (6)-month period, based on the following assumptions: (iii) the Undertakings and Additional Undertaking are procured by the Company; none of the Entitled Shareholders subscribe for their entitlements under the Proposed Rights Issue with Warrants other than the Undertaking Shareholders; and none of the Warrants holders exercise their Warrants other than the Undertaking Shareholders. Consequently, the Undertaking Shareholders will be obliged to undertake a mandatory takeover offer pursuant to the Code to acquire the remaining MFCB Shares and Warrants not held by them. 9

10 As it is not the intention of the Undertaking Shareholders to undertake a mandatory take-over offer on the remaining MFCB Shares and Warrants not held by them, approval for the Proposed Exemptions will be sought from the non-interested shareholders of MFCB and the SC. The application to the SC will be submitted after the approval of the non-interested shareholders of MFCB for the Proposed Exemptions has been obtained by MFCB at an EGM to be convened. In the event the non-interested shareholders of MFCB and the SC do not approve the Proposed Exemptions, the Proposed Rights Issue with Warrants will not be implemented as the Proposed Exemptions and the Proposed Rights Issue with Warrants are inter-conditional. 3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Rights Issue with Warrants The Proposed Rights Issue with Warrants will enable the MFCB Group to raise funds to part finance its core business activities in the power generation, mineral resources, property development and investment divisions. In particular, MFCB intends to utilise up to RM150.0 million, representing 60.0% of the Intended Gross Proceeds to partially fund the construction of the Don Sahong hydropower project in the Lao People s Democratic Republic ( Lao PDR ) ( Don Sahong Hydropower Project ), which will be financed in USD with a long gestation period. As at the LPD, the total project cost for the Don Sahong Hydropower Project is estimated to be approximately USD500.0 million (equivalent to approximately RM2.1 billion), which is expected to be financed by new equity, debt and internally generated funds. The Don Sahong Hydropower Project is a run-of-river hydropower project located at the Hou Sahong channel of the Mekong River in Khong District, Champasak Province in Lao PDR to supply electricity to Lao PDR. Upon the commencement date of commercial operation, the Don Sahong Hydropower Project will have a capacity of approximately 260 Megawatts and will be capable of generating 2,000 Gigawatt-hours of electricity per year. The Company had on 13 February 2008 signed a Project Development Agreement ( PDA ) with the Government of Lao PDR ( GOL ) to develop the Don Sahong Hydropower Project on a build, operate and transfer basis and the PDA conferred an exclusive mandate period of 18 months from the date of the PDA during which the Company has the exclusive right to negotiate the terms and conditions of the relevant project documents to build and operate the Don Sahong hydropower power plant for a period of 25 years from the commencement date of commercial operation of the Don Sahong Hydropower Project and thereafter to transfer the power plant to the GOL. Following the exclusive mandate granted by the GOL, Don Sahong Power Company Ltd ( DSPC ), being the 80%-owned indirect subsidiary of MFCB, which will be undertaking the development and implementation of the Don Sahong Hydropower Project, had entered into the following agreements with the respective parties: (iii) the concession agreement dated 15 September 2015 entered into with the GOL, whereby the GOL has granted on a build, operate and transfer basis, the concession rights to DSPC to develop the Don Sahong Hydropower Project for a period of 25 years from the commencement date of commercial operation; the power purchase agreement dated 1 October 2015 ( PPA ) entered into with Electricite Du Laos ( EDL ) for the sale by DSPC and the purchase by EDL of all electricity generated by the Don Sahong hydropower power plant on a take-or-pay basis; the letter of award dated 15 October 2015 entered into with Sinohydro Corporation Ltd, a reputable infrastructure construction company established in the People s Republic of China, for the engineering, procurement, construction and commissioning of the Don Sahong Hydropower Project. 10

11 The construction of the Don Sahong Hydropower Project has commenced with an estimated construction duration of approximately four (4) to four and a half (4.5) years. The targeted commencement date of commercial operation is scheduled to be in early As for the remaining proceeds, the Board intends to utilise up to RM65.0 million for the repayment of the short-term borrowings of the MFCB Group in order to further improve the gearing level and strengthen the financial position of the MFCB Group. The Board considers equity financing to be the most appropriate avenue of fund raising as: (iii) (iv) (v) equity financing will match the long-term tenure of the Don Sahong Hydropower Project, which will be for 25 years from the commencement date of commercial operation of the Don Sahong Hydropower Project. Part of the Intended Gross Proceeds will be used to fund the Don Sahong Hydropower Project. As at the LPD, the total project cost for the Don Sahong Hydropower Project is estimated to be approximately USD500.0 million (equivalent to approximately RM2.1 billion); equity financing will enhance the capital base of MFCB and strengthen its financial position in order to take on the debt required to finance the Don Sahong Hydropower Project; equity financing will not incur interest expenses as compared to bank borrowings, thus allowing MFCB to preserve cash for reinvestment and/or operational purposes; the Proposed Rights Issue with Warrants will provide an opportunity for the existing shareholders of MFCB to further participate in the equity of MFCB at a discount to the prevailing market prices without diluting the existing shareholders percentage shareholdings assuming all the Entitled Shareholders fully subscribe for their respective entitlements; and the Warrants which are attached to the Rights Shares will provide an added incentive to the Entitled Shareholders to subscribe for the Rights Shares while providing the Company with additional working capital as and when the Warrants are exercised. 3.2 Proposed Exemptions It is not the intention of GNK and his PACs to undertake a mandatory take-over offer on the remaining MFCB Shares and Warrants not held by them, and as such, approvals for the Proposed Exemptions will be sought from the non-interested shareholders of MFCB and the SC respectively. 4. EFFECTS OF THE PROPOSALS The Proposed Exemptions will have no effect on the issued and paid-up share capital, shareholdings of the substantial shareholder, convertible securities and the consolidated net assets ( NA ) per share, gearing, earnings and earnings per share ( EPS ) of the Company. As at the LPD, MFCB has: 222,847,800 MFCB Shares (excluding the Treasury Shares); and 14,330,000 outstanding Options, of which: (a) (b) 1,780,000 Options A, exercisable at any time from 21 May 2014; and 12,550,000 Options, 50% of which are exercisable at any time from 30 June 2018 and the remaining are exercisable at any time from 1 July 2019, to 31 July 2020 (collectively, the Outstanding Options ). 11

12 As at the LPD, the Board has resolved that the Company: will not grant further Options to the eligible employees and Directors of the MFCB Group; and will retain all Treasury Shares held by the Company, prior to the Entitlement Date. For the avoidance of doubt, the retained Treasury Shares will have no participation rights in the Proposed Rights Issue with Warrants. For illustration purposes only, the pro forma effects of the Proposed Rights Issue with Warrants in this Section 4 are illustrated in the scenarios and assumptions set out below: Scenarios Minimum scenario : Assuming none of the Outstanding Options are exercised into MFCB Shares prior to the Entitlement Date. Maximum scenario : Assuming all Options A are exercised into MFCB Shares prior to the Entitlement Date. Assumptions Entitlement Basis : Three (3) Rights Shares for every five (5) MFCB Shares held; and two (2) Warrants for every five (5) Rights Shares subscribed for Issue Price : RM1.77 (or its USD equivalent), representing approximately 28.6% discount to the 5-day VWAMP of MFCB Shares up to and including the LPD of RM2.48 or approximately 20.0% discount to the TERP of RM2.21 Warrants exercise price : RM2.44, representing approximately 10.4% premium to the TERP of RM2.21 Based on the above assumptions, the number of securities to be issued and proceeds to be raised are as follows: Minimum Scenario Securities issued : 133,708,680 Rights Shares based on 222,847,800 MFCB Shares in issue; and 53,483,472 Warrants Intended Gross Proceeds : Approximately RM236.7 million (or its USD equivalent) Proceeds raised assuming full exercise of Warrants : Approximately RM130.5 million Maximum Scenario Securities issued : 134,776,680 Rights Shares based on 224,627,800 MFCB Shares in issue; and 53,910,672 Warrants Intended Gross Proceeds : Approximately RM238.6 million (or its USD equivalent) Proceeds raised assuming full exercise of Warrants : Approximately RM131.5 million 12

13 The Board wishes to emphasise that the pro forma effects in this Section 4 are presented solely for illustration purposes based on the above assumptions and should not be regarded as an indication or reference to the final Issue Price or the Entitlement Basis of the Proposed Rights Issue with Warrants which will be determined by the Board and announced on the Price-Fixing Date. 4.1 Issued and paid-up share capital The pro forma effects of the Proposed Rights Issue with Warrants on the issued and paid-up share capital of MFCB as at the LPD are as follows: Minimum Scenario Maximum Scenario Shares RM Shares RM Issued and paid-up share capital as at the LPD 243,345, ,345, ,345, ,345,000 Less: Treasury Shares (20,497,200) (20,497,200) (20,497,200) (20,497,200) 222,847, ,847, ,847, ,847,800 To be issued pursuant to the full exercise of Options A - - 1,780,000 1,780, ,847, ,847, ,627, ,627,800 To be issued pursuant to the Proposed Rights Issue with Warrants 133,708, ,708, ,776, ,776, ,556, ,556, ,404, ,404,480 To be issued pursuant to the full exercise of the Warrants Enlarged issued and paid-up share capital 53,483,472 53,483,472 53,910,672 53,910, ,039, ,039, ,315, ,315,152 [The rest of this page is intentionally left blank] 13

14 4.2 Substantial shareholders shareholdings Assuming all the Rights Shares entitlements are fully subscribed by all Entitled Shareholders, the pro forma effects of the Proposed Rights Issue with Warrants on the substantial shareholders shareholdings in MFCB as at the LPD are set out below: Minimum Scenario Pro Forma I Pro Forma II As at the LPD After the Proposed Rights Issue with Warrants After I and the full exercise of the Warrants Direct Indirect Direct Indirect Direct Indirect GNK 713, ,895,800 (1) ,141, ,033,280 (1) ,313, ,288,272 (1) Rubber Thread 47,905, ,927,200 (2) ,648, ,083,520 (2) (2) ,145, ,546,048 (2) 0.86 Perbadanan Pembangunan Ekonomi Sabah 14,787, ,659, ,208, Keen Capital 16,260, ,017, ,919, Laju Riang Sdn Bhd ,832,200 (3) ,731,520 (3) ,691,248 (3) Kema Development Sdn Bhd ,832,200 (3) ,731,520 (3) ,691,248 (3) Cambrew (Malaysia) Sdn Bhd ,832,200 (3) ,731,520 (3) ,691,248 (3) Dr. Lim Thian Soo 10,000 * 49,832,200 (3) ,000 * 79,731,520 (3) ,400 * 91,691,248 (3) Lim Thiam Cheok 10,000 * 49,832,200 (3) ,000 * 79,731,520 (3) ,400 * 91,691,248 (3) Lim Yam Poh ,832,200 (3) ,731,520 (3) ,691,248 (3) FMR LLC ,187,200 (4) ,699,520 (4) ,504,448 (4) Notes: (1) Deemed interest by virtue of his interest in Rubber Thread, PRT Capital, Lanai Etika and Keen Capital pursuant to Section 6A of the Act. (2) Deemed interest by virtue of its interest in Lanai Etika pursuant to Section 6A of the Act. (3) Deemed interest by virtue of his/her/its interest in Rubber Thread pursuant to Section 6A of the Act. (4) In respect of Fidelity Northstar Fund Sub B and FID Low Priced Stock Fund. 14

15 Maximum Scenario Pro Forma I Pro Forma II As at the LPD After full exercise of Options A After I the Proposed Rights Issue with Warrants Direct Indirect Direct Indirect Direct Indirect GNK 713, ,895,800 (1) ,213,600 (5) ,895,800 (1) ,941, ,033,280 (1) Rubber Thread 47,905, ,927,200 (2) ,905, ,927,200 (2) ,648, ,083,520 (2) 0.86 Perbadanan Pembangunan Ekonomi Sabah 14,787, ,787, ,659, Keen Capital 16,260, ,260, ,017, Laju Riang Sdn Bhd ,832,200 (3) ,832,200 (3) ,731,520 (3) Kema Development Sdn Bhd ,832,200 (3) ,832,200 (3) ,731,520 (3) Cambrew (Malaysia) Sdn Bhd ,832,200 (3) ,832,200 (3) ,731,520 (3) Dr. Lim Thian Soo 10,000 * 49,832,200 (3) ,000 * 49,832,200 (3) ,000 * 79,731,520 (3) Lim Thiam Cheok 10,000 * 49,832,200 (3) ,000 * 49,832,200 (3) ,000 * 79,731,520 (3) Lim Yam Poh ,832,200 (3) ,832,200 (3) ,731,520 (3) FMR LLC ,187,200 (4) ,187,200 (4) ,699,520 (4)

16 Maximum Scenario (Cont d) Pro Forma III After II and the full exercise of the Warrants Direct Indirect GNK 2,233, ,288,272 (1) Rubber Thread 88,145, ,546,048 (2) 0.86 Perbadanan Pembangunan Ekonomi Sabah 27,208, Keen Capital 29,919, Laju Riang Sdn Bhd ,691,248 (3) Kema Development Sdn Bhd ,691,248 (3) Cambrew (Malaysia) Sdn Bhd ,691,248 (3) Dr. Lim Thian Soo 18,400 * 91,691,248 (3) Lim Thiam Cheok 18,400 * 91,691,248 (3) Lim Yam Poh ,691,248 (3) FMR LLC ,504,448 (4) Notes: (1) Deemed interest by virtue of his interest in Rubber Thread, PRT Capital, Lanai Etika and Keen Capital pursuant to Section 6A of the Act. (2) Deemed interest by virtue of its interest in Lanai Etika pursuant to Section 6A of the Act. (3) Deemed interest by virtue of his/her/its interest in Rubber Thread pursuant to Section 6A of the Act. (4) In respect of Fidelity Northstar Fund Sub B and FID Low Priced Stock Fund. (5) As at the LPD, GNK holds 500,000 Options A which are exercisable into 500,000 MFCB Shares prior to the Entitlement Date. 16

17 4.3 NA per share and gearing The pro forma effects of the Proposed Rights Issue with Warrants on the consolidated NA per share and gearing of MFCB, based on the latest audited consolidated statements of financial position of MFCB as at 31 December 2014 is set out below: Minimum Scenario Pro forma I Pro forma II Pro forma III Audited as at 31 December 2014 After adjustments for subsequent events up to the LPD (1) After Pro forma I and the utilisation of the Intended Gross Proceeds After Pro forma II and the full exercise of Warrants RM 000 RM 000 RM 000 RM 000 Share capital 243, , , ,537 Treasury shares (30,025) (30,045) (30,045) (30,045) Reserves 525, ,149 (2)(3) 625,405 (4) 702,421 Equity attributable to equity holders / NA 738, , ,413 1,102,913 Non-controlling interests 146, , , ,669 Total equity 885, ,118 1,119,082 1,249,582 Shares in issue (excluding the Treasury Shares) 222, , , ,040 Total borrowings (5) 93,529 93,529 (6) 28,529 28,529 NA per MFCB Share attributable to equity holders (RM) Gearing ratio (times) (7) Notes: (1) Adjustments for the exercise of 343,000 Options A between January 2015 and the LPD at an exercise price of RM1.52 and share buy-back of 8,700 Treasury Shares amounting to approximately RM20,000. (2) After the recognition of 53,483,472 Warrants to be issued at the theoretical fair value of RM0.30 per Warrant. (3) After deducting the estimated expenses pursuant to the Proposed Rights Issue with Warrants of approximately RM3.7 million. (4) After adjusting for the full exercise of the Warrants at the exercise price of RM2.44 per Warrant and the reversal of the warrants reserve upon the full exercise of the Warrants. (5) Total borrowings include hire purchase payables of RM755,000. (6) Repayment of RM65.0 million of the bank borrowings as part of the utilisation of the Intended Gross Proceeds. (7) Calculated based on total borrowings divided by equity attributable to equity holders. 17

18 Maximum Scenario Pro forma I Pro forma II Pro forma III Pro forma IV Audited as at 31 December 2014 After adjustments for subsequent events up to the LPD (1) After Pro forma I and the full exercise of Options A (2) After Pro Forma II and the utilisation of the Intended Gross Proceeds After Pro Forma III and the full exercise of Warrants RM 000 RM 000 RM 000 RM 000 RM 000 Share capital 243, , , , ,812 Treasury shares (30,025) (30,045) (30,045) (30,045) (30,045) Reserves 525, , ,043 (3)(4) 627,122 (5) 704,753 Equity attributable to equity holders / NA 738, , , ,978 1,108,520 Non-controlling interests 146, , , , ,669 Total equity 885, , ,792 1,123,647 1,255,189 Shares in issue (excluding the Treasury Shares) 222, , , , ,315 Total borrowings (6) 93,529 93,529 93,529 (7) 28,529 28,529 NA per MFCB Share attributable to equity holders (RM) Gearing ratio (times) (8) Notes: (1) Adjustments for the exercise of 343,000 Options A between January 2015 and the LPD at an exercise price of RM1.52 and share buy-back of 8,700 Treasury Shares amounting to approximately RM20,000. (2) Assuming all outstanding Options A are exercised into 1,780,000 MFCB Shares at RM1.50 to RM1.52 each. (3) After the recognition of 53,910,672 Warrants to be issued at the theoretical fair value of RM0.30 per Warrant. (4) After deducting the estimated expenses pursuant to the Proposed Rights Issue with Warrants of approximately RM3.7 million. (5) After adjusting for the full exercise of the Warrants at the exercise price of RM2.44 per Warrant and the reversal of the warrants reserve upon the full exercise of the Warrants. (6) Total borrowings include hire purchase payables of RM755,000. (7) Repayment of RM65.0 million of the bank borrowings as part of the utilisation of the Intended Gross Proceeds. (8) Calculated based on total borrowings divided by equity attributable to equity holders. 18

19 4.4 Earnings and EPS The Proposed Rights Issue with Warrants is not expected to have any material effect on the earnings of the MFCB Group for the financial year ending 31 December 2015 as it is only expected to be completed by the second (2 nd ) quarter of Moving forward, the Proposed Rights Issue with Warrants is expected to contribute positively to the consolidated earnings of MFCB in the ensuing financial years when the benefits of the proposed utilisation of proceeds as set out in Section of this Announcement are realised. The Proposed Rights Issue with Warrants is expected to result in the dilution of the consolidated EPS of MFCB as a result of the increase in the number of MFCB Shares in issue upon completion of the Proposed Rights Issue with Warrants and as and when the Warrants are exercised into new MFCB Shares. Nevertheless, the share price adjustment resulting from the Proposed Rights Issue with Warrants to the theoretical ex-all price will partially mitigate the impact on the intrinsic market valuation based on the price-earnings multiple ascribed to the MFCB Shares resulting from the EPS dilution. The actual impact on future earnings and consolidated EPS of MFCB will also depend on, amongst others, the actual number of Rights Shares to be issued, the number of Exercised Shares as well as the level of earnings generated from the utilisation of proceeds raised from the Proposed Rights Issue with Warrants. 4.5 Convertible securities Save for the Outstanding Options, MFCB does not have any other convertible securities as at the date of this Announcement. Any necessary adjustments to the terms and conditions of the Outstanding Options arising from the Proposed Rights Issue with Warrants will be governed by the terms of the by-laws for the Outstanding Options ( By-Laws ). Crowe Horwath ( CH ) has been appointed as the reporting accountants for the Proposed Rights Issue with Warrants. The computation of any adjustments are to be reviewed and agreed by CH to be in accordance with the terms of the By-Laws. In accordance with the terms of the By-Laws, such adjustments shall be effective on the next market day following the Entitlement Date. Any adjustments will be notified to the holders of the Outstanding Options in accordance with the By-Laws. 5. APPROVALS REQUIRED The Company has obtained a conditional approval from BNM vide its letter dated 22 October 2015 for the Subscription Option and the investment abroad by MFCB in relation to the Don Sahong Hydropower Project. On 29 October 2015, an application has been submitted by MFCB to BNM to vary certain conditions imposed by BNM and the application is currently pending a decision from BNM. In addition, the Proposals are also subject to the following approvals being obtained: approval from Bursa Securities for the: (a) (b) admission of the Warrants to the Official List of Bursa Securities; and listing of and quotation for the Rights Shares, Warrants and the Exercised Shares on the Main Market of Bursa Securities; approval from the shareholders of MFCB at the EGM to be convened for the Proposed Rights Issue with Warrants; 19

20 (iii) (iv) (v) approval from the non-interested shareholders of MFCB at the EGM to be convened for the Proposed Exemptions; approval from the SC for the Proposed Exemptions. The application to the SC for the Proposed Exemptions will be made after approval is obtained from the non-interested shareholders of MFCB at the EGM to be convened; and approval from any other regulatory authorities and/or third parties, if required. The Proposed Rights Issue with Warrants and the Proposed Exemptions are inter-conditional. The Proposals are not conditional upon any other corporate exercise/scheme announced but pending completion by the Company. Barring any unforeseen circumstances, the applications to Bursa Securities in relation to the above are expected to be made within three (3) months from the date of this Announcement. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM 6.1 Proposed Rights Issue with Warrants None of the Directors, major shareholders of MFCB and/or persons connected with them has any interest, direct or indirect, in the Proposed Rights Issue with Warrants, other than: their respective entitlements under the Proposed Rights Issue with Warrants as shareholders of MFCB; and their rights to apply for excess Rights Shares with Warrants as shareholders of MFCB (where applicable), which shall also be made available to all other Entitled Shareholders. 6.2 Proposed Exemptions Save as disclosed below, none of the Directors, major shareholders of MFCB and/or persons connected with them have any interest, direct or indirect, in the Proposed Exemptions: (iii) (iv) (v) (vi) (vii) GNK, being the Executive Chairman of MFCB, is a shareholder of MFCB; Rubber Thread, being a shareholder of the Company, is a company indirectlycontrolled by GNK; Keen Capital, being a shareholder of the Company, is a company wholly-owned by GNK; PRT Capital, being a shareholder of the Company, is a company indirectly-controlled by GNK; Lanai Etika, being a shareholder of the Company, is a company indirectly-controlled by GNK; GNY, being the Executive Director of MFCB, is a shareholder of the Company, a director of Rubber Thread and the brother of GNK; and CBH, being an employee and a shareholder of the Company, a director of Rubber Thread and the nephew of GNK, (collectively the Interested Shareholders ). 20