PROPOSED RIGHTS ISSUE OF SHARES WITH WARRANTS; AND

Transcription

1 PCCS GROUP BERHAD ( PCCS OR THE COMPANY ) PROPOSED RIGHTS ISSUE OF SHARES WITH WARRANTS; AND PROPOSED EXEMPTION 1. INTRODUCTION On behalf of the Board of Directors of PCCS ( Board ), Kenanga Investment Bank Berhad ( Kenanga IB ) wishes to announce that the Company proposes to implement the following: (i) (ii) proposed renounceable rights issue of up to 150,030,005 new ordinary shares in PCCS ( PCCS Shares ) ( Rights Shares ) on the basis of 5 Rights Shares for every 2 existing PCCS Shares held, together with up to 90,018,003 free detachable warrants ( Warrants ) on the basis of 3 Warrants for every 5 Rights Shares subscribed at an entitlement date to be determined later ( Entitlement Date ) ( Proposed Rights Issue of Shares with Warrants ); and proposed exemption to CCS Capital Sdn Bhd ( CCS Capital ) under Paragraph 4.08 of the Rules on Take-Overs, Mergers and Compulsory Acquisitions ( Rules ) from the obligation to undertake a mandatory take-over offer for all the remaining PCCS Shares not already owned by CCS Capital and persons acting in concert with it ( PACs ) upon completion of the Proposed Rights Issue of Shares with Warrants ( Proposed Exemption ). (Collectively referred to as the Proposals ) 2. DETAILS OF THE PROPOSALS 2.1. Proposed Rights Issue of Shares with Warrants The Company is proposing to issue up to 150,030,005 Rights Shares on the basis of 5 Rights Shares for every 2 existing PCCS Shares held, together with up to 90,018,003 Warrants on the basis of 3 Warrants for every 5 Rights Shares subscribed for by the shareholders of PCCS whose names appear in the Record of Depositors of the Company as at the close of business on the Entitlement Date ( Entitled Shareholders ). The entitlements for the Rights Shares with Warrants are renounceable in full or in part. Only the Entitled Shareholders and/or their renouncee(s) who successfully subscribe for the Rights Shares will be entitled to the Warrants. The Entitled Shareholders who renounce all or any part of their entitlements to the Rights Shares provisionally allotted to them under the Proposed Rights Issue of Shares with Warrants will simultaneously relinquish their corresponding entitlements to the Warrants. The Rights Shares and the Warrants cannot be renounced separately. In determining the shareholders entitlements to the Rights Shares and Warrants under the Proposed Rights Issue of Shares with Warrants, fractional entitlements, if any, will be dealt with by the Board in such manner at its absolute discretion as it may deem fit or expedient or in the best interest of the Company. 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 renouncee(s). It is the intention of the Board to allocate the excess Rights Shares in a fair and equitable manner on a basis to be determined by the Board and announced later by the Company. 1

2 The Warrants will be immediately detached from the Rights Shares upon issuance and separately traded from the Rights Shares on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Securities ). The Warrants will be issued in registered form and constituted by a deed poll to be executed by PCCS ( Deed Poll ) Basis of determining the issue price of the Rights Shares and the exercise price of the Warrants (i) Rights Shares The issue price of the Rights Shares shall be determined by the Board at a later date with the basis of and justification to be announced by the Company immediately, after taking into consideration the following: (a) (b) the theoretical ex-rights price ( TERP ) of PCCS Shares based on the 5-day volume weighted average market price ( 5D-VWAP ) of PCCS Shares immediately preceding the price-fixing date, with a discount to the TERP to be determined by the Board. As at the date of this announcement, the Board has yet to determine the range of discount to be applied; and the funding requirements of PCCS and its subsidiaries ( PCCS Group or Group ), as detailed in Section 3 of this announcement. For illustrative purposes, the indicative issue price of the Rights Shares is assumed at RM0.25 each throughout this announcement, which is at a discount of RM or 16.53% to the TERP of PCCS Shares of RM0.2995, based on the 5D-VWAP of PCCS Shares up to and including 3 May 2017, being the latest practicable date prior to the date of this announcement ( LPD ), of RM (ii) Warrants The Warrants will be issued at no cost to Entitled Shareholders who successfully subscribe for the Rights Shares. The exercise price of the Warrants will be determined and fixed by the Board at a later date after taking into consideration the TERP of PCCS Shares based on the 5D-VWAP of PCCS Shares immediately preceding the price-fixing date. For illustrative purposes, the indicative exercise price of the Warrants is assumed to be RM0.40 throughout this announcement, which is at a premium of RM or 33.56% to the TERP of PCCS Shares of RM0.2995, based on the 5D-VWAP of PCCS Shares up to and including the LPD of RM Ranking of the Rights Shares and the new PCCS Shares to be issued arising from the exercise of the Warrants The holders of the Warrants will not be entitled to any voting right or participation in any form of distribution and/or offer of further securities in PCCS until and unless such holders of the Warrants exercise their Warrants into new PCCS Shares. 2

3 The Rights Shares and the new PCCS Shares to be issued arising from the exercise of the Warrants shall, upon issuance and allotment, rank pari passu in all respects with the then existing PCCS Shares, save and except that the Rights Shares and the new PCCS Shares shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of issuance and allotment of the Rights Shares and the new PCCS Shares arising from the exercise of the Warrants Listing and quotation An application will be made to Bursa Securities for the admission of the Warrants to the Official List of the Main Market of Bursa Securities and the listing of and quotation for the Rights Shares, Warrants and the new PCCS Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities Salient terms of the Warrants The salient terms of the Warrants are as follows: Terms Details Issue size : Up to 90,018,003 Warrants. Form and denomination : The Warrants which are free will be issued in registered form and will be constituted by the Deed Poll. Exercise period : The Warrants may be exercised at any time within 5 years commencing on and including the date of issuance of the Warrants until 5:00 p.m. on the expiry date. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid. Exercise price : The exercise price of the Warrants shall be determined and fixed by the Board at a later date after obtaining the relevant approvals but before an entitlement date to be determined later. Expiry date : The day falling 5 years from and including the date of issue of the Warrants, provided that if such day falls on a day which is not a market day, then on the preceding market day. Exercise rights : Each Warrant carries the entitlement to subscribe for 1 new PCCS Share at any time during the exercise period at the exercise price (subject to adjustments in accordance with the provisions of the Deed Poll). Mode of exercise : The registered holder of the Warrants is required to lodge an exercise form, as set out in the Deed Poll, with the Company s registrar, duly completed, signed and stamped together with payment of the exercise price for the new PCCS Shares subscribed for by banker s draft or cashier s order or money order or postal order in Ringgit Malaysia drawn on a bank or post office operating in Malaysia. 3

4 Board lot : For the purpose of trading on Bursa Securities, 1 board lot of Warrants shall comprise 100 Warrants carrying the rights to subscribe for 100 new PCCS Shares at any time during the exercise period, or such other denomination as determined by Bursa Securities from time to time. Adjustments in the exercise price and/or number of the Warrants Provision for changes in the terms of the Warrants Rights of the Warrant holders Rights in the event of winding-up, liquidation, compromise and/or arrangement : The exercise price and/or number of unexercised Warrants shall from time to time be adjusted in the event of alteration to the share capital by reason of any issue of shares, consolidation, subdivision, conversion or capital distribution in accordance with the provisions of the Deed Poll. : Any modification to the Deed Poll (including the form and content of the warrant certificate) may be effected only by a deed poll executed by the Company and expressed to be supplemental to the Deed Poll, subject to Clause 8.1 of the Deed Poll. Any modification shall however be subject to the approval of Bursa Securities (if so required). : The new PCCS Shares issued pursuant to the exercise of the Warrants are not entitled to any dividends, rights, allotments and/or distributions, the entitlement date of which is prior to the date of allotment and issuance of the new PCCS Shares upon the exercise of the Warrants. The Warrants holders are not entitled to vote in any general meeting of the Company or to participate in any distribution and/or offer of further securities in the Company unless and until the Warrant holders become shareholders of the Company by exercising their Warrants into new PCCS Shares. : Where a resolution has been passed for a members voluntary winding-up of the Company or where there is a compromise or arrangement, whether or not for the purpose of or in connection with a scheme for the reconstruction of the Company or the amalgamation of the Company with one or more companies, then every Warrant holder shall be entitled upon and subject to the provisions of the Deed Poll at any time within 6 weeks after the passing of such resolution for a member s voluntary winding-up of the Company or the granting of the court order approving the compromise or arrangement, by the irrevocable surrender of his/her Warrants to the Company, elect to be treated as if he/she had immediately prior to the commencement of such winding-up, compromise or arrangement, exercised the exercise rights represented by his/her Warrants to the extent specified in the relevant exercise forms and had on such date been the holder of the new PCCS Shares to which he/she would have been entitled to pursuant to such exercise and the liquidator of the Company shall give effect to such election accordingly. 4

5 So long as the Warrants remain capable of being exercised, the Company must procure that no compromise or arrangement (within the meaning of Section 366 of the Companies Act, 2016 ( Act )) affecting the share capital is proposed unless the Warrant Holders are made parties to the compromise or arrangement and the compromise or arrangement is subject to approval by the Warrant holders in the manner prescribed by Section 366 of the Act. Listing status : The Warrants will be listed and traded on the Main Market of Bursa Securities. An application will be made for the admission of the Warrants to the Official List of the Main Market of Bursa Securities and the listing of and quotation for the Warrants and the new PCCS Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities. Governing law : The laws of Malaysia Substantial shareholders undertaking The Proposed Rights Issue of Shares with Warrants will be undertaken on a minimum level of subscription of 42,346,310 Rights Shares together with 25,407,786 Warrants ( Minimum Subscription Level ). The Minimum Subscription Level has been determined by the Board after taking into consideration, inter alia, the funding requirements of the Group as set out in Section 3 of this announcement. Chan Choo Sing, together with his spouse, Tan Kwee Kee, and children, namely Chan Wee Kiang and Chan Wee Boon ( collectively the Chan Family ), intend to rationalise their direct equity interests in PCCS by transferring all their PCCS Shares (i.e., 7,138,524 PCCS Shares representing equity interest of 11.90% in PCCS as at the LPD) to their investment holding company, namely CCS Capital, before the implementation of the Proposed Rights Issue of Shares with Warrants ( Proposed Rationalisation ). In addition, Setia Sempurna Sdn Bhd ( SSSB ), the existing major shareholder of the Company with equity interest of 39.99% in the Company as at the LPD, has provided written unconditional and irrevocable undertaking that it will renounce its entire entitlement of 60,000,195 Rights Shares under the Proposed Rights Issue of Shares with Warrants to CCS Capital. In view of the above, CCS Capital s aggregate entitlement to the Rights Shares under the Proposed Rights Issue of Shares with Warrants will be 77,846,505 Rights Shares. To meet the Minimum Subscription Level, the Company has obtained written unconditional and irrevocable undertaking from CCS Capital ( Undertaking Shareholder ) that it will not dispose any of its PCCS Shares following this announcement up to the Entitlement Date and that it will subscribe for a minimum of 42,346,310 Rights Shares (with gross proceeds of approximately RM10.6 million based on the indicative issue price of RM0.25 per Rights Share) ( Undertaking ). 5

6 For illustrative purpose, the direct shareholdings and entitlements to the Rights Shares of the Chan Family and CCS Capital as well as the details of the Undertaking are as follows: As at the LPD Shares held % After the Proposed Rationalisation Shares held % No. of Rights Shares to be subscribed pursuant to the Undertaking CCS Capital s entitlement To be renounced by SSSB Total % (1) CCS Capital - - 7,138, ,846,310 24,500,000 42,346, Chan Choo Sing 2,643, Tan Kwee Kee 3,833, Chan Wee Kiang 530, Chan Wee Boon 131, Total 7,138, ,138, ,846,310 24,500,000 42,346, Note: (1) Percentages are calculated based on 42,346,310 Rights Shares pursuant to the Minimum Scenario (as defined in Section 3 of this announcement). For avoidance of doubt, CCS Capital may additionally subscribe for its full entitlement to the Rights Shares under the Maximum Scenario (as defined in Section 3 of this announcement), subject always to the Company being in compliance with the public spread requirement in accordance with Paragraph 8.02(1) of the Main Market Listing Requirements of Bursa Securities ( Listing Requirements ), wherein a listed issuer must ensure that at least 25% of its total listed shares (excluding treasury shares) are in the hands of public shareholders, upon completion of the Proposed Rights Issue of Shares with Warrants. In view of the Undertaking and that the Proposed Rights Issue of Shares with Warrants will be implemented based on the Minimum Subscription Level, no underwriting arrangement will be made for the Rights Shares under the Proposed Rights Issue of Shares with Warrants. [The rest of the page has been intentionally left blank] 6

7 2.1.6 Implication of the Rules As at the LPD, the Chan Family collectively holds 7,138,524 PCCS Shares, representing approximately 11.90% of the issued share capital of the Company, of which will then be held by CCS Capital after the Proposed Rationalisation. In view of the Undertaking, upon completion of the Proposed Rights Issue of Shares with Warrants, the shareholding of CCS Capital in the Company will increase from 11.90% to 40.46% and 48.34% based on the enlarged issued share capital under the Maximum Scenario (as defined in Section 3 of this announcement) and Minimum Scenario (as defined in Section 3 of this announcement) respectively. Pursuant to the Rules, CCS Capital would be obligated to extend a mandatory take-over offer for all the remaining PCCS Shares not already owned by CCS Capital and its PACs in accordance with Section 218 of the Capital Markets and Services Act, 2007 ( CMSA ) and Paragraph 4 of the Rules. The Chan Family and their PACs already own more than 50% of the total equity interests in the Company, i.e % as at the LPD. In relation to the above, CCS Capital will make an application to the Securities Commission Malaysia ( SC ) to seek an exemption for CCS Capital under Subparagraph 4.08(1) of the Rules from the obligation to extend a mandatory take-over offer for all the remaining PCCS Shares not already owned by CCS Capital and its PACs Proposed Exemption As at the LPD, the Chan Family holds 7,138,524 PCCS Shares, representing approximately 11.90% of the issued share capital of the Company, of which will then be held by CCS Capital after the Proposed Rationalisation. In view of the Undertaking, the shareholding of CCS Capital in the Company will increase to more than 33% based on the enlarged issued share capital upon completion of the Proposed Rights Issue of Shares with Warrants. Premised on the above, CCS Capital will be obligated to undertake a mandatory takeover offer for all the remaining PCCS Shares not already held by CCS Capital and its PACs in accordance with Subparagraph 4.01(a) of the Rules. As it is not the intention of CCS Capital to undertake a mandatory take-over offer for the remaining PCCS Shares not already held by CCS Capital and its PACs upon the completion of the Proposed Rights Issue of Shares with Warrants, an application for exemption from the obligation to undertake a mandatory take-over offer pursuant to Subparagraph 4.01(a) of the Rules will be submitted to the SC after the approval of the non-interested shareholders for the Proposed Exemption has been obtained at the extraordinary general meeting ( EGM ) to be convened. [The rest of the page has been intentionally left blank] 7

8 3. UTILISATION OF PROCEEDS Assuming an indicative issue price of RM0.25 per Rights Share, the gross proceeds from the issuance of the Rights Shares are intended to be utilised in the following manner based on the scenarios as illustrated below: Minimum Scenario : Assuming only the Undertaking Shareholder subscribes for the Rights Shares pursuant to the Undertaking. Maximum Scenario : Assuming all the Entitled Shareholders and/or their renouncee(s) fully subscribe for their entitlements of the Rights Shares. Note Minimum Scenario Maximum Scenario Expected time frame for utilisation of proceeds (from the date of listing of the Rights Shares) Expansion of labelling business (i) 3,500 7,100 Within 12 months Working capital (ii) 6,187 29,508 Within 12 months Estimated expenses in relation to the Proposals (iii) Within 2 weeks Total estimated proceeds 10,587 37,508 Notes: (i) The Board intends to expand the Group s labelling business which recorded higher operating profit margin as compared to the Group s apparel business based on the latest audited consolidated financial statements of the Group for the financial year ended ( FYE ) 31 March 2016 as detailed below:- Apparel Labelling % % Revenue 479, * 42, * Operating profit/(loss) (12,765) NA 6,701 NA Operating profit/(loss) margin (%) (2.66) Notes: * Percentage is calculated based on the total revenue of the Group of RM million for the FYE 31 March NA Not applicable as the Group has recorded an operating loss of RM6.62 million for the FYE 31 March In view of the above, since the end of FYE 31 March 2016, the Group has been consolidating its apparel business operations in Cambodia and plans to expand its labelling business as part of the Group s efforts to improve its profitability. 8

9 The Board intends to utilise up to RM7.10 million to expand the Group s labelling business by increasing its output capacity through the purchases of new machineries, details of which are as follows: Minimum Scenario Maximum Scenario Digital press machine 3,000 3,000 Flexographic printing machine - 2,000 Rotoflex and Advanced Vision Technology ( AVT ) machines - 1,000 Logistics and installation 500 1,100 Total 3,500 7,100 The new machineries will be housed in the Group s existing production facility in Batu Pahat, Johor and are expected to be purchased within 6 months from the date of listing of the Rights Shares. The new machineries are expected to be installed and fully commissioned by the 3 rd quarter of Under the Minimum Scenario, the purchase of the digital press machine is expected to increase the production capacity of the Group s labelling business by approximately 150,000 metres per month from existing production capacity of approximately 4,000,000 metres per month. The addition of a digital press machine to the Group s production line is primarily to enable the Group to undertake orders from its customers for printing of labels with lower volume and/or multiple variations in label design as the digital press machine uses digital images and does not require printing plates to be created thus reducing the set up time and cost required for label printings with shorter production runs as compared to its existing flexographic printing machines. In addition, the new digital press machine uses powder toner instead of inkjet for printing labels which has higher production speed and lower costs (as inkjets generally cost more than powder toners) allowing the Group to undertake smaller scale job orders more competitively. Under the Maximum Scenario, in addition to the digital press machine as detailed above, the Group also intends to purchase one additional flexographic printing machine to increase the Group s production capacity by approximately additional 300,000 metres per month alongside with Rotoflex and AVT machines which allow the Group s inspection process to be fully automated and integrated with its printing machines which facilitate immediate detection of defects throughout the Group s production process automatically thus reducing wastes associated with over-printing and/or re-printing of defective labels. Any surplus or shortfall in the amount allocated for the Group s expansion of labelling business will be adjusted against the amount allocated for the working capital of the Group. (ii) The Group intends to utilise up to approximately RM29.51 million to support the Group s working capital for its existing day-to-day business operations. The breakdown of the proceeds to be utilised for the Group s working capital are as follows: Description Minimum Scenario Maximum Scenario (a) Purchase of raw materials and consumables 4,331 20,656 (b) Maintenance and improvement of plant and equipment 1,237 5,901 (c) Other administration and operating expenses 619 2,951 Total 6,187 29,508 (a) (b) Comprising payment for, amongst others, the raw materials such as fabrics, accessories and replacement parts as well as consumables for the Group s production lines. Comprising payment for the Group s periodical maintenance and upgrading works for its machineries and systems. 9

10 (c) Comprising payment for general and other operating expenses for the Group s operations such as distribution expenses, rental, electricity, telephone, internet and other sundry expenses. (iii) The expenses consist of professional fees, fees payable to the relevant authorities, expenses to convene the EGM and other ancillary expenses. Any surplus or shortfall for the estimated expenses in relation to the Proposals will be adjusted accordingly against the allocation for the working capital of the Group. The actual proceeds to be raised will depend on the issue price for the Rights Shares and the number of Rights Shares to be issued. Any variation between the expected and actual proceeds will be adjusted against the proceeds allocated for the working capital of the PCCS Group. Prior to being utilised, the proceeds will be placed as deposits with financial institutions or as short-term money market instruments, to be decided by the Board. The interest income arising therefrom will be used for the Group s working capital. The amount of proceeds that may be raised by PCCS from the exercise of the Warrants will depend upon the exercise price for the Warrants and the number of Warrants exercised during the tenure of the Warrants. Such proceeds, if any, will be utilised for the working capital of the PCCS Group, the timeframe and the breakdown for the utilisation of which cannot be determined at this juncture. 4. RATIONALE FOR THE PROPOSALS 4.1. Proposed Rights Issue of Shares with Warrants After considering the various fund-raising methods available to the Company, the Board is of the opinion that the Proposed Rights Issue of Shares with Warrants is currently an appropriate option as: (i) (ii) (iii) (iv) (v) it will allow the Company to raise capital without incurring interest costs as opposed to other means of financing, such as bank borrowings; new PCCS Shares can be issued without the existing shareholders equity interests being diluted (except for SSSB whom will renounce its entire entitlement of up to 60,000,195 Rights Shares under the Proposed Rights Issue of Shares with Warrants to CCS Capital), assuming all Entitled Shareholders fully subscribe for their respective entitlements and exercise their Warrants subsequently. The Undertaking would allow the Undertaking Shareholder to extend their support for the Proposed Rights Issue of Shares with Warrants and facilitate the Group s fund-raising initiative; it will provide an opportunity for the Company s existing shareholders to increase their equity participation in the Company by subscribing to the Rights Shares and exercising their Warrants; the free Warrants will increase the attractiveness of the Rights Shares by providing an incentive to the shareholders of PCCS to subscribe for their entitlements and hence, providing them with the potential capital appreciation arising from the exercise of the Warrants, depending on the future price performance of the PCCS Shares; and the Warrants will enable the Company to raise further proceeds from the equity market as and when any of the Warrants are exercised while at the same time provide the shareholders of PCCS with the opportunity to increase their equity participation in the Company at a pre-determined price over the tenure of the Warrants. 10

11 4.2. Proposed Exemption The Proposed Exemption is undertaken to:- (i) (ii) relieve CCS Capital from the potential obligation to undertake a mandatory takeover offer under the Rules as a result of the expected increase in CCS Capital s shareholding in the Company pursuant to the Undertaking under the Proposed Rights Issue of Shares with Warrants as it is not the intention of CCS Capital to undertake such mandatory take-over offer; and ensure a successful completion of the Proposed Rights Issue of Shares with Warrants without incurring further financial commitment and to allow CCS Capital to provide the Company its financial support through the Undertaking. 5. EFFECTS OF THE PROPOSALS The Proposed Exemption will not have any effect on the issued share capital of PCCS, the NA, gearing, earnings and earnings per PCCS Share ( EPS ) of the PCCS Group as well as the substantial shareholders shareholdings in PCCS Issued share capital The pro forma effects of the Proposed Rights Issue of Shares with Warrants on the issued share capital of PCCS are as follows: Issued share capital as at the LPD To be issued pursuant to the Proposed Rights Issue of Shares with Warrants To be issued pursuant to the full exercise of the Warrants Enlarged issued share capital Minimum Scenario Shares RM Maximum Scenario Shares RM 60,012,002 60,012,002 60,012,002 60,012,002 42,346,310 7,865,404 (1) 150,030,005 27,920,584 (1) 102,358,312 67,877, ,042,007 87,932,586 25,407,786 12,884,288 (2) 90,018,003 45,594,119 (2) 127,766,098 80,761, ,060, ,526,705 Notes: (1) Based on the indicative issue price of RM0.25 per Rights Share and the assumed fair values of the Warrants of RM and RM each, based on the Black-Scholes options pricing model as extracted from Bloomberg, for the Minimum Scenario and Maximum Scenario respectively. (2) Based on the indicative exercise price of RM0.40 per Warrant and the recognition of the fair value of the Warrants upon the exercise of the Warrants. [The rest of the page has been intentionally left blank] 11

12 5.2. NA and gearing The pro forma effects of the Proposed Rights Issue of Shares with Warrants on the NA and gearing of the PCCS Group based on the audited consolidated financial statements of PCCS as at 31 March 2016 are as follows: Minimum Scenario (Audited) (I) (II) As at 31 March 2016 After the Proposed Rights Issue of Shares with Warrants After (I) and assuming full exercise of the Warrants Share capital 60,012 67,877 (1) 80,762 (4) Share premium Foreign exchange reserve 7,594 7,594 7,594 Legal reserve fund Warrants reserve - 2,721 (2) - Retained earnings 28,977 28,077 (3) 28,077 Shareholders funds / NA 96, , ,763 Shares in issue ( 000) 60, , ,766 NA per PCCS Share (RM) Total borrowings 91,977 91,977 91,977 Gearing (times) Notes: (1) Based on the indicative issue price of RM0.25 per Rights Share and the assumed fair value of the Warrants of RM each based on the Black-Scholes options pricing model as extracted from Bloomberg. (2) The Warrants are assumed to have a fair value of RM based on the Black-Scholes options pricing model as extracted from Bloomberg. (3) After deducting estimated expenses of RM0.90 million for the Proposals. (4) Assuming an exercise price of RM0.40 per Warrant and the recognition of the fair value of the Warrants upon the exercise of the Warrants. [The rest of this page has been intentionally left blank] 12

13 Maximum Scenario (Audited) (I) (II) As at 31 March 2016 After the Proposed Rights Issue of Shares with Warrants After (I) and assuming full exercise of the Warrants Share capital 60,012 87,933 (1) 133,527 (4) Share premium Foreign exchange reserve 7,594 7,594 7,594 Legal reserve fund Warrants reserve - 9,587 (2) - Retained earnings 28,977 28,077 (3) 28,077 Shareholders funds / NA 96, , ,528 Shares in issue ( 000) 60, , ,060 NA per PCCS Share (RM) Total borrowings 91,977 91,977 91,977 Gearing (times) Notes: (1) Based on the indicative issue price of RM0.25 per Rights Share and the assumed fair value of the Warrants of RM each based on the Black-Scholes options pricing model as extracted from Bloomberg. (2) The Warrants are assumed to have a fair value of RM based on the Black-Scholes options pricing model as extracted from Bloomberg. (3) After deducting estimated expenses of RM0.90 million for the Proposals. (4) Assuming an exercise price of RM0.40 per Warrant and the recognition of the fair value of the Warrants upon the exercise of the Warrants Earnings and EPS The Proposed Rights Issue of Shares with Warrants will result in an immediate dilution in the Company s consolidated EPS as a result of the increase in the number of PCCS Shares in issue upon completion of the Proposed Rights Issue of Shares with Warrants. Nevertheless, the Proposed Rights Issue of Shares with Warrants is expected to contribute positively to the earnings of the Group upon utilisation of the proceeds raised as detailed in Section 3 of this announcement. The impact of the Proposed Rights Issue of Shares with Warrants on the earnings and consolidated EPS of the PCCS Group is dependent on, amongst others, the actual number of Rights Shares and the potential benefits to be derived from the utilisation of proceeds raised from the Proposed Rights Issue of Shares with Warrants. The effect of any exercise of Warrants on the Company s consolidated EPS would depend on the returns generated by the Company from the utilisation of proceeds arising from the exercise of the Warrants. 13

14 5.4. Substantial shareholders shareholdings The pro forma effects of the Proposed Rights Issue of Shares with Warrants on the substantial shareholders shareholdings in PCCS as at the LPD are as follows: Minimum Scenario Name As at the LPD (I) After the Proposed Rationalisation Direct Indirect Direct Indirect CCS Capital ,138, SSSB 24,000, ,000, Chan Chow Tek 2,272, ,000,078 (1) ,272, ,000,078 (1) Dato Chan Chor Ngiak 339, ,001,411 (2) , ,001,411 (2) Chan Chor Ang 542, ,040,078 (3) , ,040,078 (3) Chan Choo Sing 2,643, ,495,382 (4) ,138,602 (6) Tan Kwee Kee 3,833, ,305,063 (5) ,138,602 (7) Chan Wee Kiang 530, ,138,524 (8) [The rest of this page has been intentionally left blank] 14

15 Name (II) After (I) and the Proposed Rights Issue of Shares with Warrants (9) (III) After (II) and assuming full exercise of the Warrants Direct Indirect Direct Indirect CCS Capital 49,484, ,892, SSSB 24,000, ,000, Chan Chow Tek 2,272, ,000,078 (1) ,272, ,000,078 (1) Dato Chan Chor Ngiak 339, ,001,411 (2) , ,001,411 (2) Chan Chor Ang 542, ,040,078 (3) , ,040,078 (3) Chan Choo Sing ,484,912 (6) ,892,698 (6) Tan Kwee Kee ,484,912 (7) ,892,698 (7) Chan Wee Kiang ,484,834 (8) ,892,620 (8) Notes: (1) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act. (2) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act and his spouse, Datin Mok Gwa Nang s shareholding in PCCS pursuant to Section 59(11)(c) of the Act. (3) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act and his spouse, Chia Lee Kean s shareholding in PCCS pursuant to Section 59(11)(c) of the Act. (4) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act and his spouse, Tan Kwee Kee, and sons, Chan Wee Kiang and Chan Wee Boon s shareholdings in PCCS pursuant to Section 59(11)(c) of the Act. (5) Deemed interested by virtue of her spouse, Chan Choo Sing s shareholdings in SSSB and PCCS pursuant to Section 8(4) of the Act and her sons, Chan Wee Kiang and Chan Wee Boon s shareholdings in PCCS. (6) Deemed interested by virtue of his shareholding in CCS Capital and SSSB pursuant to Section 8(4) of the Act. (7) Deemed interested by virtue of her shareholding in CCS Capital and her spouse, Chan Choo Sing s shareholding in SSSB pursuant to Section 8(4) of the Act. (8) Deemed interested by virtue of his shareholding in CCS Capital pursuant to Section 8(4) of the Act. (9) Assuming only the Undertaking Shareholder subscribes to the Rights Shares pursuant to the Undertaking. 15

16 Maximum Scenario Name As at the LPD (I) After the Proposed Rationalisation Direct Indirect Direct Indirect CCS Capital ,138, SSSB 24,000, ,000, Chan Chow Tek 2,272, ,000,078 (1) ,272, ,000,078 (1) Dato Chan Chor Ngiak 339, ,001,411 (2) , ,001,411 (2) Chan Chor Ang 542, ,040,078 (3) , ,040,078 (3) Chan Choo Sing 2,643, ,495,382 (4) ,138,602 (6) Tan Kwee Kee 3,833, ,305,063 (5) ,138,602 (7) Chan Wee Kiang 530, ,138,524 (8) [The rest of this page has been intentionally left blank] 16

17 Name (II) After (I) and the Proposed Rights Issue of Shares with Warrants (9) (III) After (II) and assuming full exercise of the Warrants Direct Indirect Direct Indirect CCS Capital 84,985, ,692, SSSB 24,000, ,000, Chan Chow Tek 7,954, ,000,078 (1) ,363, ,000,078 (1) 8.00 Dato Chan Chor Ngiak 1,189, ,004,743 (2) ,699, ,006,742 (2) 8.00 Chan Chor Ang 1,898, ,140,078 (3) ,711, ,200,078 (3) 8.07 Chan Choo Sing ,985,107 (6) ,693,010 (6) Tan Kwee Kee ,985,107 (7) ,693,010 (7) Chan Wee Kiang ,985,029 (8) ,692,932 (8) Notes: (1) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act. (2) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act and his spouse, Datin Mok Gwa Nang s shareholding in PCCS pursuant to Section 59(11)(c) of the Act. (3) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act and his spouse, Chia Lee Kean s shareholding in PCCS pursuant to Section 59(11)(c) of the Act. (4) Deemed interested by virtue of his shareholding in SSSB pursuant to Section 8(4) of the Act, his spouse, Tan Kwee Kee, and sons, Chan Wee Kiang and Chan Wee Boon s shareholdings in PCCS pursuant to Section 59(11)(c) of the Act. (5) Deemed interested by virtue of her spouse, Chan Choo Sing s shareholdings in SSSB and PCCS pursuant to Section 8(4) of the Act and her sons, Chan Wee Kiang and Chan Wee Boon s shareholdings in PCCS. (6) Deemed interested by virtue of his shareholdings in CCS Capital and SSSB pursuant to Section 8(4) of the Act. (7) Deemed interested by virtue of her shareholding in CCS Capital and her spouse, Chan Choo Sing s shareholding in SSSB pursuant to Section 8(4) of the Act. (8) Deemed interested by virtue of his shareholding in CCS Capital pursuant to Section 8(4) of the Act. (9) Assuming all the Entitled Shareholders and/or their renouncee(s) fully subscribe for their entitlements of the Rights Shares. 17

18 5.5. Convertible securities As at the LPD, the Company does not have any outstanding options, warrants or convertible securities. 6. APPROVALS REQUIRED The Proposals are subject to the approvals being obtained from the following: (i) Bursa Securities for the following: (a) (b) (c) listing of and quotation for the Rights Shares; admission to the Official List and the listing of and quotation for the Warrants; and listing of and quotation for the new PCCS Shares to be issued pursuant to the exercise of the Warrants, on the Main Market of Bursa Securities; (ii) (iii) (iv) the shareholders of PCCS for the Proposals at an EGM to be convened; the SC for the Proposed Exemption. The application to the SC for the Proposed Exemption will be made after the approval is obtained from the non-interested shareholders at an EGM to be convened; and any other relevant authorities, if required. The Proposed Rationalisation is not subject to the approvals from the shareholders of the Company and/or any authorities. 7. INTER-CONDITIONALITY OF THE PROPOSALS The Proposals are inter-conditional upon each other. The Proposed Rights Issue of Shares with Warrants is conditional upon the completion of the Proposed Rationalisation but not vice versa. Save for the above, the Proposals are not conditional upon any other corporate exercises undertaken or to be undertaken by the Company. 8. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM Save as disclosed below, none of the Directors, major shareholders and/or persons connected with them (as defined in the Listing Requirements) have any interest in the Proposals, save for their respective entitlements as shareholders of PCCS under the Proposed Rights Issue of Shares with Warrants, for which all existing shareholders of PCCS are entitled to, including the right to apply for additional Rights Shares with Warrants under the excess shares application. 8.1 Shareholders interests As at the LPD, the Chan Family holds collectively 11.90% in the Company which will be transferred to CCS Capital pursuant to the Proposed Rationalisation. The board of directors of CCS Capital comprise all the members of the Chan Family and the entire equity interest in CCS Capital is held by the Chan Family. 18

19 CCS Capital is deemed interested in the Proposed Exemption in view that CCS Capital and its PACs do not intend to undertake the mandatory take-over offer and intends to submit an application to the SC for the Proposed Exemption after the approval from the non-interested shareholders for the Proposed Exemption has been obtained at an EGM to be convened. As such, the Chan Family and SSSB (being a PAC with CCS Capital) are also deemed interested in the Proposed Exemption. By virtue of the inter-conditionality of the Proposals, CCS Capital, SSSB and the Chan Family are therefore deemed interested in the Proposals. CCS Capital, SSSB and the Chan Family will abstain from voting on the resolutions pertaining to the Proposals in respect of their direct and/or indirect shareholdings in the Company at an EGM to be convened. They have also undertaken to ensure that their PACs and persons connected to them will abstain from voting on the resolutions pertaining to the Proposals in respect of their direct and/or indirect shareholdings in the Company at an EGM to be convened. 8.2 Directors interests The following directors are deemed interested in the Proposed Exemption due to the following:- (i) (ii) (iii) (iv) Chan Choo Sing, the Group Managing Director and major shareholder of PCCS (by virtue of his equity interests in SSSB and CCS Capital), is also the director and shareholder of SSSB and CCS Capital; Chan Chow Tek, the Executive Director and major shareholder of PCCS (by virtue of his equity interest in SSSB), is the brother of Chan Choo Sing; Dato Chan Chor Ngiak, the Non-Independent Non-Executive Director and major shareholder of PCCS (by virtue of his equity interest in SSSB), is the brother of Chan Choo Sing; and Chan Chor Ang, the Non-Independent Non-Executive Director and major shareholder of PCCS (by virtue of his equity interest in SSSB), is the brother of Chan Choo Sing. (Collectively referred to as the Interested Directors ) Besides CCS Capital and the Chan Family, the following persons are also deemed interested in the Proposed Exemption due to their relationships with the Interested Directors as follows:- (i) (ii) Datin Mok Gwa Nang is the spouse of Dato Chan Chor Ngiak; and Chia Lee Kean is the spouse of Chan Chor Ang. By virtue of the inter-conditionality of the Proposals, the Interested Directors are therefore deemed interested in the Proposals. Accordingly, the Interested Directors have abstained and will continue to abstain from all deliberations and voting at the relevant board meetings of PCCS in respect of the Proposals. The Interested Directors will also abstain from voting on the resolutions pertaining to the Proposals in respect of their direct and/or indirect shareholdings in the Company at an EGM to be convened. They have also undertaken to ensure that their PACs and persons connected to them will abstain from voting on the resolutions pertaining to the Proposals in respect of their direct and/or indirect shareholdings in the Company at an EGM to be convened. 19

20 9. DIRECTORS STATEMENT The Board (save for the Interested Directors), having considered all aspects of the Proposals including but not limited to the rationale and effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company and not detrimental to the interests of the non-interested shareholders of PCCS. 10. ESTIMATED TIME FRAME FOR COMPLETION The Board expects the Proposals to be completed in the 3 rd quarter of 2017, barring any unforeseen circumstances and subject to the approvals of the relevant authorities being obtained. 11. ADVISER Kenanga IB has been appointed as the Adviser for the Proposals. Pursuant to the Paragraph 4.08 of the Rules, Public Investment Bank Berhad has been appointed as the Independent Adviser, subject to the approval of the SC, to advise the noninterested Directors and non-interested shareholders of the Company on the Proposed Exemption. 12. APPLICATIONS TO THE RELEVANT AUTHORITIES Applications to the relevant authorities in relation to the Proposals are expected to be submitted within 2 months from the date of this announcement. This announcement is dated 5 May