asiaep RESOURCES BERHAD

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1 (1) PROPOSED CAPITAL REDUCTION PURSUANT TO SECTION 64(1) OF THE COMPANIES ACT, INVOLVING THE CANCELLATION OF RM0.095 OF THE PAR VALUE OF EVERY EXISTING ORDINARY SHARE OF RM0.10 EACH IN asiaep RESULTING IN THE REDUCTION OF THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY FROM RM80,968,892 COMPRISING 809,688,919 ORDINARY SHARES OF RM0.10 EACH (AFTER THE PROPOSED TREASURY SHARES CANCELLATION) TO RM4,048,445 COMPRISING 809,688,919 ORDINARY SHARES OF RM0.005 EACH AND THE CREDIT ARISING FROM THE SAID CANCELLATION OF RM76,920,447 WILL BE USED TO REDUCE THE ACCUMULATED LOSSES OF THE COMPANY ( PROPOSED CAPITAL REDUCTION ); (2) PROPOSED CONSOLIDATION OF TWENTY (20) ORDINARY SHARES OF RM0.005 EACH OF THE COMPANY AFTER THE PROPOSED CAPITAL REDUCTION TO ONE (1) NEW ORDINARY SHARE OF RM0.10 EACH RESULTING IN AN ISSUED AND PAID-UP SHARE CAPITAL OF RM4,048,445 COMPRISING 40,484,445 ORDINARY SHARES OF RM0.10 EACH ( PROPOSED CONSOLIDATION ); (3) PROPOSED REDUCTION OF THE ACCUMULATED LOSSES OF THE COMPANY FROM RM16,190,653 (AFTER THE CANCELLATION OF 28,000,000 UNITS OF ESOS OF THE COMPANY AND THE PROPOSED CAPITAL REDUCTION) TO RM2,248,553 BY USING THE CREDIT BALANCES OF THE ESOS RESERVE ACCOUNT (SUBJECT TO THE IMPLEMENTATION OF THE PROPOSED CANCELLATION OF ESOS) AND THE WARRANT RESERVE ACCOUNT (SUBJECT TO THE IMPLEMENTATION OF THE PROPOSED CANCELLATION OF WARRANTS B IN EXCHANGE FOR WARRANTS A) TO OFFSET THE ACCUMULATED LOSSES ( PROPOSED REDUCTION OF ACCUMULATED LOSSES ); (4) PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF GFM BY GFM SERVICES FROM THE VENDORS COMPRISING 750,000 GFM SHARES FOR A TOTAL PURCHASE CONSIDERATION OF RM40,000,000 TO BE SATISFIED WHOLLY BY THE ISSUANCE OF 400,000,000 GFM SERVICES SHARES TO THE VENDORS ( PROPOSED ACQUISITION OF GFM ); (5) PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL OF GFMS BY GFM SERVICES FROM GFM COMPRISING 10,000 GFMS SHARES FOR A TOTAL PURCHASE CONSIDERATION OF RM1.00 TO BE SATISFIED WHOLLY BY THE ISSUANCE OF TEN (10) GFM SERVICES SHARES TO THE VENDORS THROUGH THE ASSIGNMENT BY GFM ( PROPOSED ACQUISITION OF GFMS ); (6) PROPOSED SHARE EXCHANGE OF THE ENTIRE ISSUED AND PAID-UP SHARE CAPITAL IN THE COMPANY COMPRISING 40,484,445 ORDINARY SHARES OF RM0.10 EACH FOR 17,601,932 NEW ORDINARY SHARES OF GFM SERVICES AT AN ISSUE PRICE OF RM0.10 PER ORDINARY SHARE EACH ON THE BASIS OF ONE (1) ORDINARY SHARE OF GFM SERVICES FOR EVERY TWO POINT THREE (2.3) ORDINARY SHARES HELD IN THE COMPANY AFTER THE PROPOSED CAPITAL REDUCTION AND PROPOSED CONSOLIDATION ( PROPOSED SHARE EXCHANGE ); (7) PROPOSED CANCELLATION OF 241,894,985 WARRANTS B OF THE COMPANY IN EXCHANGE FOR 5,258,586 WARRANTS A OF GFM SERVICES ON THE BASIS OF ONE (1) NEW WARRANT A OF GFM SERVICES FOR EVERY FORTY SIX (46) EXISTING WARRANTS B OF THE COMPANY ( PROPOSED CANCELLATION OF WARRANTS B IN EXCHANGE FOR WARRANTS A ); (8) PROPOSED EXEMPTION TO THE VENDORS UNDER PRACTICE NOTE 9 OF THE CODE, FROM THE OBLIGATION TO UNDERTAKE A MANDATORY GENERAL OFFER FOR ALL THE REMAINING ORDINARY SHARES AND OUTSTANDING WARRANTS OF GFM SERVICES NOT ALREADY HELD BY THEM ( PROPOSED EXEMPTION );

2 (9) PROPOSED OFFER FOR SALE OF UP TO 100,000,000 CONSIDERATION SHARES ISSUED PURSUANT TO THE PROPOSED ACQUISITIONS BY THE VENDORS TO ELIGIBLE INVESTORS TO BE IDENTIFIED AND AT A PRICE TO BE DETERMINED AT A LATER DATE ( PROPOSED OFFER FOR SALE ); (10) PROPOSED PRIVATE PLACEMENT OF UP TO 10,500,000 NEW ORDINARY SHARES OF GFM SERVICES TO PLACEES TO BE IDENTIFIED AND AT A PLACEMENT PRICE TO BE DETERMINED AT A LATER DATE ( PROPOSED PRIVATE PLACEMENT ); (11) PROPOSED TRANSFER OF THE LISTING STATUS OF asiaep TO GFM SERVICES ( PROPOSED TRANSFER OF LISTING STATUS ); AND (12) PROPOSED CANCELLATION OF ALL THE OUTSTANDING ESOS OF 28,000,000 UNITS OF THE COMPANY ( PROPOSED CANCELLATION OF ESOS ). (THE ABOVE PROPOSALS ARE TO BE COLLECTIVELY REFERRED TO AS PROPOSED REGULARISATION PLAN OR PROPOSALS ) DEFINITIONS In this announcement and the accompanying appendix, the following abbreviations shall have the following meanings unless otherwise stated:- ACE LR : Listing Requirements of Bursa Securities for the ACE Market, as may be amended from time to time ACE Market : ACE Market of Bursa Securities Acquired Date : A date when GFM Services completes the Proposed Acquisitions asiaep or Company : asiaep Resources Berhad asiaep Group : asiaep and its subsidiary companies asiaep Share(s) : Ordinary share(s) of RM0.10 each in asiaep Board : Board of directors Bursa Securities : Bursa Malaysia Securities Berhad Business Day(s) : Means a weekday, which licensed banks in Wilayah Persekutuan are open to carry on banking business under the Banking and Financial Institution Act 1989 CAGR : Compound annual growth rate CCM : Court convened meeting(s) CIQ : Custom, Immigration and Quarantine Complex, Johor Bahru CMSA : The Capital Markets and Services (Amendment) Act, 2012, as amended from time to time and any re-enactment thereof Code : The Malaysian Code on Take-Overs and Mergers, 2010, as amended from time to time and any re-enactment thereof Companies Act : The Companies Act, 1965, as amended from time to time and any re-enactment thereof 2

3 DEFINITIONS Conditional Agreement : Conditional agreement dated 30 April 2013 entered into between GFM Services, the Vendors, asiaep and certain substantial shareholders of asiaep (namely Dr. Tan Boon Nunt, Lee Suet Hong and Topclass Access Sdn Bhd through their direct and indirect shareholdings in asiaep) pursuant to the Proposed Regularisation Plan Conditional SSA 1 : Conditional share sale agreement dated 30 April 2013 entered into between GFM Services and the Vendors pursuant to the Proposed Acquisition of GFM Conditional SSA 2 : Conditional share sale agreement dated 30 April 2013 entered into between GFM Services and GFM pursuant to the Proposed Acquisition of GFMS Conditional SSAs : Conditional SSA 1 and Conditional SSA 2, collectively Consideration Share(s) Consolidated Share(s) : GFM Consideration Shares and GFMS Consideration Shares, collectively : Consolidated ordinary share(s) of RM0.10 each in asiaep pursuant to the Proposed Consolidation Court : High Court of Malaya Deed Poll : The deed poll dated 29 July 2009, constituting the Warrants B Definitive Agreements : Conditional Agreement and the Conditional SSAs, collectively EGM : Extraordinary general meeting EPS : Earnings per share ESOS : Existing employees share option scheme of asiaep ESOS Options : The rights to subscribe for new asiaep Shares granted by asiaep to the eligible persons under the ESOS FM : Facilities management Frost & Sullivan : Frost & Sullivan Malaysia Sdn Bhd, an independent market researcher FPE : Financial period ended or ending, as the case may be FYE : Financial year ended or ending, as the case may be GFM : Global Facilities Management Sdn Bhd GFM Consideration Share(s) : 400,000,000 GFM Services Share(s) to be issued to the Vendors or their nominees or other entities through the assignment or renunciation by the Vendors at an issue price of RM0.10 per GFM Services Share pursuant to the Proposed Acquisition of GFM GFM Group : GFM and its subsidiary company, collectively GFM Purchase Consideration GFM Sale Share(s) : Total purchase consideration of RM40,000,000 for the Proposed Acquisition of GFM : 750,000 GFM Shares, representing the entire issued and paid-up share capital of GFM GFM Share(s) : Ordinary share(s) of RM1.00 each in GFM 3

4 DEFINITIONS GFM Services : GFM Services Berhad, a special purpose company incorporated to facilitate the Proposed Regularisation Plan and to assume the listing status of asiaep GFM Services Deed Poll GFM Services Group GFM Services Share(s) : Deed poll constituting the GFM Services Warrants A to be executed by GFM Services : GFM Services and its subsidiary companies, collectively : Ordinary share(s) of RM0.10 each in GFM Services GFMS : GFM Solutions Sdn Bhd GFMS Consideration Share(s) GFMS Purchase Consideration GFMS Sale Share(s) 10 GFM Services Share(s) to be issued to GFM or its nominees through the assignment or renunciation by GFM at an issue price of RM0.10 per GFM Services Share pursuant to the Proposed Acquisition of GFMS : Total purchase consideration of RM1.00 for the Proposed Acquisition of GFMS : 10,000 GFMS Shares, representing the entire issued and paid-up share capital of GFMS GFMS Share(s) : Ordinary share(s) of RM1.00 each in GFMS GN3 : Guidance Note 3 of the ACE LR Grantees : Eligible employees of asiaep that are entitled to ESOS Options IFM : Integrated facilities management KAF Investment : KAF Investment Bank Berhad, the Principal Adviser to asiaep for the Proposed Regularisation Plan Moratorium Period : A period of six (6) months from the date of the Consideration Shares are admitted and listed on the ACE Market NA/NL : Net assets/net liabilities Offer Share(s) : Up to 100,000,000 Consideration Shares to be offered by the Vendors pursuant to the Proposed Offer for Sale PAT/LAT : Profit after taxation/loss after taxation PB : Price-to-book PBT/LBT : Profit before taxation/loss before taxation PE : Price-to-earnings Placement Share(s) : Up to 10,500,000 GFM Services Shares to be issued pursuant to the Proposed Private Placement Proposals 1 : The Proposed Capital Reduction, Proposed Consolidation, Proposed Acquisitions, Proposed Share Exchange, Proposed Exemption and Proposed Transfer of Listing Status, collectively Proposed Acquisitions : The Proposed Acquisition of GFM and Proposed Acquisition of GFMS, collectively 4

5 DEFINITIONS Proposed Treasury Shares Cancellation : Proposed cancellation of the entire 3,423,300 treasury shares of the Company in accordance with Section 67A of the Companies Act PPP : Public Private Partnership, a framework by the Government of Malaysia to transfer to the private sector, the responsibility to finance and manage (including construction, management, maintenance, refurbishment and replacement) public infrastructure assets RM/sen : Ringgit/sen of Malaysia SC : Securities Commission of Malaysia Vendors : Ruslan Bin Nordin, Zainal Bin Amir and Mohammad Shahrizal Bin Mohammad Idris, collectively VWAMP : Volume weighted average market price Warrant(s) A : The 5,258,586 new warrants to be issued by GFM Services in exchange for the cancellation of Warrants B Warrant(s) B : The 241,894,985 outstanding warrants 2009/2014 as at 1 April 2013 constituted by the Deed Poll, which were issued by asiaep on 9 September 2009 and listed on Bursa Securities on 14 September Pursuant to the terms and conditions of the Deed Poll, each Warrant B is convertible into one (1) asiaep Share at the exercise price of RM0.10 per Warrant B at any time during the exercise period, being from 9 September 2009 to 8 September 2014 Unless specifically referred to, words denoting the singular shall, where applicable, include the plural and vice versa and words denoting the masculine gender shall, where applicable, include the feminine and/or neuter genders, and vice versa. Reference to persons shall include corporations, unless otherwise specified. Any reference to any enactment or guideline in this announcement is a reference to that enactment or guideline as amended or re-enacted from time to time. Any reference to day or time of day in this announcement is a reference to Malaysian time, unless otherwise stated. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 5

6 1. INTRODUCTION The Board of asiaep had, on 17 May 2012, announced that the Company is an affected listed issuer pursuant to paragraph 2.1(j) of GN3. The last day for the Company to submit a regularisation plan is on 16 May On behalf of the Board of asiaep, KAF Investment is pleased to announce that the Company had, on 30 April 2013, entered into the Conditional Agreement to undertake a series of proposals to regularise the financial condition of the Company including inter-alia, the acquisition of a new viable business. The Proposed Regularisation Plan to regularise the financial position of the Company comprises the following:- (i) (ii) (iii) (iv) (v) (vi) Proposed Capital Reduction; Proposed Consolidation; Proposed Reduction of Accumulated Losses; Proposed Acquisition of GFM; Proposed Acquisition of GFMS; Proposed Share Exchange; (vii) Proposed Cancellation of Warrants B in Exchange for Warrants A; (viii) Proposed Exemption; (ix) (x) (xi) (xii) Proposed Offer for Sale; Proposed Private Placement; Proposed Transfer of Listing Status; and Proposed Cancellation of ESOS. 2. DETAILS OF THE The Company had, on 29 March 2013, cancelled 28,000,000 units of ESOS of the Company as a result from the termination of the service contracts of certain contractors of the Company who were granted ESOS Options. The cancellation of the 28,000,000 units of ESOS of the Company will result in the amount of RM665,900 debited to the ESOS reserve account so as to reduce the ESOS reserve account from RM1,332,000 to RM666,100 and the resulting credit of RM665,900 be used to reduce the accumulated losses account of the Company from RM93,376,000 as at 31 August 2012 based on the audited financial statements of asiaep for the FPE 31 August 2012 to RM92,710,100. Further to the above, the Board of asiaep has resolved to implement the Proposed Treasury Shares Cancellation prior to the implementation of the Proposed Regularisation Plan. As at 1 April 2013, the issued and paid-up share capital of the Company is RM81,311,222 comprising 813,112,219 asiaep Shares (including 3,423,300 treasury shares). The Proposed Treasury Shares Cancellation will result in a decrease in the issued and paid-up share capital of the Company of RM342,330 by the number of treasury shares cancelled of 3,423,300. The amount of RM342,330 arising from the said cancellation of the treasury shares shall be credited to the capital redemption reserve account of the Company. The Proposed Treasury 6

7 Shares Cancellation will also result in the amount of RM268,000 debited to the share premium account resulting in the cancellation of all the amount standing in the share premium account of asiaep of RM268,000 and the amount of RM401,000 debited to the accumulated losses account of the Company resulting in an increase in the accumulated losses of the Company from RM92,710,100 (as at 31 August 2012 based on the audited financial statements of asiaep for the FPE 31 August 2012 and after the effects of the said cancellation of 28,000,000 units of ESOS of the Company arising from the said termination of the service contracts) to RM93,111,100. Arising from the Proposed Treasury Shares Cancellation, all the existing 3,423,300 treasury shares of asiaep are not to be subject to the Proposed Capital Reduction. Upon completion of the Proposed Treasury Shares Cancellation, the issued and paid-up share capital of the Company will be reduced to RM80,968,892 comprising 809,688,919 asiaep Shares. Details of the proposals forming the Proposed Regularisation Plan are as set out below. 2.1 Proposed Capital Reduction It is proposed that the par value of each existing ordinary share of the Company be reduced from RM0.10 to RM0.005 via the cancellation of RM0.095 of the par value of each existing ordinary share of RM0.10 each pursuant to Section 64(1) of the Companies Act, giving rise to a credit of RM76,920,447 that will be used to reduce the accumulated losses of the Company. The issued and paid-up share capital of the Company before the Proposed Capital Reduction (but after the Proposed Treasury Shares Cancellation) is RM80,968,892 comprising 809,688,919 asiaep Shares. The issued and paid-up share capital of the Company after the Proposed Capital Reduction will be reduced by RM76,920,447 to RM4,048,445 comprising 809,688,919 ordinary shares of asiaep of RM0.005 each. Details of the issued and paid-up share capital of asiaep before and after the Proposed Capital Reduction are as illustrated in the table below:- No. Item Par value of ordinary shares Number of ordinary shares Issued and paidup share capital (RM) (RM) 1. As at 1 April 2013 (1) ,688,919 80,968, Upon implementation of the Proposed Capital Reduction ,688,919 4,048,445 Note:- (1) Assuming after cancellation of 3,423,300 treasury shares pursuant to the Proposed Treasury Shares Cancellation. 2.2 Proposed Consolidation Upon implementation of the Proposed Treasury Shares Cancellation and the Proposed Capital Reduction, it is proposed that the resultant issued and paid-up share capital of asiaep of RM4,048,445 comprising 809,688,919 ordinary shares of asiaep of RM0.005 each be consolidated such that every twenty (20) ordinary shares of RM0.005 each in asiaep be consolidated into one (1) ordinary share of RM0.10 each. The issued and paid-up share capital of the Company after the Proposed Capital Reduction but before the Proposed Consolidation is RM4,048,445 comprising 809,688,919 ordinary shares of asiaep of RM0.005 each. The issued and paid-up share capital of the Company after the Proposed Capital Reduction and the Proposed Consolidation will be RM4,048,445 comprising 40,484,445 Consolidated Shares. 7

8 Details of the issued and paid-up share capital of the Company before and after the implementation of the Proposed Consolidation are as illustrated in the table below:- No. Item Par value of ordinary shares Number of ordinary shares Issued and paidup share capital (RM) (RM) 1. Upon implementation of the Proposed Capital Reduction ,688,919 4,048, Upon implementation of the Proposed Consolidation ,484,445 4,048,445 All the Consolidated Shares to be issued pursuant to the Proposed Consolidation shall, upon allotment and issue, rank pari passu in all respects with each other, save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions which are declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the Consolidated Shares. In determining the shareholders entitlements to the Proposed Consolidation, fractional entitlements of the Consolidated Shares, if any, shall be dealt with in such manner as the Board of asiaep in its absolute discretion deems fit and expedient in the best interest of the Company. The trading in asiaep Shares on Bursa Securities has been suspended since 24 September 2012 and the Board of asiaep does not foresee the suspension in the trading of asiaep Shares to be uplifted prior to the implementation of the Proposed Consolidation. 2.3 Proposed Reduction of Accumulated Losses To further reduce the accumulated losses remaining in the Company after the cancellation of 28,000,000 units of ESOS of the Company, the Proposed Treasury Shares Cancellation, the Proposed Capital Reduction and the Proposed Consolidation of RM16,190,653, it is proposed that this remaining balance of accumulated losses be set-off against the credit arising from the cancellation of the warrant reserve account of RM13,276,000 and credit arising from the cancellation of the ESOS reserve account of RM666,100 so as to arrive at an accumulated losses of RM2,248,553 as follows:- THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 8

9 No. Scenarios Accumulated losses 1. As at 31 August ,376,000 (RM) 2. Less: Credit arising from cancellation of 28,000,000 units of ESOS of the Company arising from the termination of service contracts as at 29 March , Add: Debit arising from cancellation of treasury shares 401, Balance after the Proposed Treasury Shares Cancellation 93,111, Less: Credit arising from the implementation of the Proposed Capital Reduction Balance after the Proposed Treasury Shares Cancellation and the Proposed Capital Reduction 76,920,447 16,190, Less: Credit arising from the cancellation of the warrant reserve (1) 13,276,000 account of Warrants B Less: Credit arising from the cancellation of the ESOS reserve (2) 666,100 account Balance of accumulated losses of the Company (3) 2,248,553 Notes:- (1) Assuming the successful implementation of the Proposed Cancellation of Warrants B in Exchange for Warrants A. In the event the Proposed Cancellation of Warrants B in Exchange for Warrants A is not implemented, the balance of the accumulated losses of the Company will be RM15,524,553. (2) Assuming the successful implementation of the Proposed Cancellation of ESOS. In the event the Proposed Cancellation of ESOS is not implemented, the balance of the accumulated losses of the Company will be RM2,914,653. (3) In the event both the Proposed Cancellation of Warrants B in Exchange for Warrants A and the Proposed Cancellation of ESOS are not implemented, the Proposed Reduction of Accumulated Losses will not be implemented and the balance of the accumulated losses of the Company will be RM16,190, Proposed Acquisition of GFM Subject to the terms and conditions of the Conditional SSA 1, the Vendors shall sell and GFM Services shall purchase the entire issued and paid-up share capital of GFM comprising 750,000 GFM Shares for a purchase consideration of RM40,000,000, free from any encumbrances together with all rights, benefits and entitlements now and thereafter attached thereto, including all bonuses, rights, dividends and distributions declared made and paid as from the Acquired Date Details of the Proposed Acquisition of GFM Basis and justification of arriving at the GFM Purchase Consideration The GFM Purchase Consideration of RM40,000,000 was arrived at on a willing-buyer willing-seller basis, after taking into account the following:- (i) a PE multiple of 3.10 times over the PAT of GFM of RM12,897,325 for the FYE 31 December 2011 based on the audited financial statements of GFM for the FYE 31 December 2011; 9

10 (ii) a PB multiple of 1.42 times over the NA of GFM of RM28,224,965 as at 31 December 2011 based on the audited financial statements of GFM for the FYE 31 December 2011; (iii) a PE multiple of 2.99 times over the PAT of GFM of RM13,399,675 for the FYE 31 December 2012 based on the audited financial statements of GFM for the FYE 31 December 2012; (iv) a PB multiple of 0.96 times over the NA of GFM of RM41,613,437 as at 31 December 2012 based on the audited financial statements of GFM for the FYE 31 December 2012; and (v) the future earnings potential of GFM Mode of settlement The GFM Purchase Consideration will be satisfied entirely by the issuance of 400,000,000 GFM Services Shares at an issue price of RM0.10 per GFM Services Share for the Proposed Acquisition of GFM in the following manner in accordance with the Conditional SSA 1:- Vendors Number of GFM Shares Equity interest in GFM GFM Purchase Consideration Number of GFM Consideration Shares (%) (RM) Ruslan Bin Nordin 255, ,600, ,000,000 Zainal Bin Amir 247, ,200, ,000,000 Mohammad Shahrizal Bin Mohammad Idris 247, ,200, ,000,000 Total 750, ,000, ,000, Basis of determining the issue price of GFM Consideration Shares The issue price of RM0.10 per GFM Consideration Share was arrived at after taking into consideration the par value of the GFM Consideration Shares in GFM Services of RM0.10 each Ranking and listing of the GFM Consideration Shares All the GFM Consideration Shares to be issued pursuant to the Proposed Acquisition of GFM shall, upon allotment and issue, rank pari passu in all respects with the then existing GFM Services Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions which are declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the GFM Consideration Shares. An application will be made to Bursa Securities for the listing of and quotation for the GFM Consideration Shares on the ACE Market in conjunction with the Proposed Transfer of Listing Status. 10

11 Liabilities to be assumed GFM Services will not be assuming any additional liabilities, including contingent liabilities and guarantees, in connection with the Proposed Acquisition of GFM, save and except those already disclosed and explicitly accepted. The existing liabilities of GFM will be settled in the normal course of business Additional financial commitment required Save for the purchase consideration of RM40,000,000 for the Proposed Acquisition of GFM, there are no other financial commitments required by GFM Services to put the Proposed Acquisition of GFM on-stream Assignment or renunciation of the GFM Consideration Shares The Vendors may assign or renounce part or whole of their GFM Consideration Shares to be received pursuant to the Proposed Acquisition of GFM to other entities or their nominees. 2.5 Proposed Acquisition of GFMS Subject to the terms and conditions of the Conditional SSA 2, GFM shall sell and GFM Services shall purchase the entire issued and paid-up share capital of GFMS comprising 10,000 GFMS Shares for a purchase consideration of RM1.00, free from any encumbrances together with all rights, benefits and entitlements now and thereafter attached thereto, including all bonuses, rights, dividends and distributions declared made and paid as from the Acquired Date Details of the Proposed Acquisition of GFMS Basis and justification of arriving at the GFMS Purchase Consideration The GFMS Purchase Consideration was arrived at on a willing-buyer willing-seller basis, after taking into account the following:- (i) (ii) (iii) (iv) the NL of GFMS of RM615,808 as at 31 December 2011 based on the audited financial statements of GFMS for the FYE 31 December 2011; the NL of GFMS of RM1,416,860 as at FYE 31 December 2012 based on the audited financial statements of GFMS for the FYE 31 December 2012; the complementary activities between GFM and GFMS; and the future earnings potential of GFMS Mode of settlement The GFMS Purchase Consideration will be satisfied entirely by the issuance of ten (10) new GFM Services Shares at an issue price of RM0.10 per GFM Services Share for the Proposed Acquisition of GFMS in the following manner in accordance with the Conditional SSA 2:- 11

12 Vendors Number of GFMS Shares Equity interest in GFMS GFMS Purchase Consideration (%) (RM) Number of GFMS Consideration Shares GFM 10, Total 10, Basis of determining the issue price of GFMS Consideration Shares The issue price of RM0.10 per GFMS Consideration Share was arrived at after taking into consideration the par value of the GFMS Consideration Shares in GFM Services of RM0.10 each Ranking and listing of the GFMS Consideration Shares All the GFMS Consideration Shares to be issued pursuant to the Proposed Acquisition of GFMS shall, upon allotment and issue, rank pari passu in all respects with the then existing GFM Services Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions which are declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the GFMS Consideration Shares. An application will be made to Bursa Securities for the listing of and quotation for the GFMS Consideration Shares on the ACE Market in conjunction with the Proposed Transfer of Listing Status Liabilities to be assumed GFM Services will not be assuming any additional liabilities, including contingent liabilities and guarantees, in connection with the Proposed Acquisition of GFMS, save and except those already disclosed and explicitly accepted. The existing liabilities of GFMS will be settled in the normal course of business Additional financial commitment required Save for the purchase consideration of RM1.00 for the Proposed Acquisition of GFMS, there are no other financial commitments required by GFM Services to put the Proposed Acquisition of GFMS on-stream Assignment or renunciation of the GFMS Consideration Shares GFM, as the vendor of GFMS, will assign or renounce all ten (10) GFMS Consideration Shares to be received pursuant to the Proposed Acquisition of GFMS to its shareholders, namely the Vendors and/or their nominees. 2.6 Proposed Share Exchange As part of the Proposed Regularisation Plan, the Company proposes to undertake a proposed share exchange such that the entire issued and paid-up share capital of RM4,048,445 comprising 40,484,445 Consolidated Shares (after the Proposed Treasury Shares Cancellation, the Proposed Capital Reduction and the Proposed Consolidation) are exchanged for 12

13 17,601,932 new GFM Services Shares on the basis of one (1) GFM Services Share for every two point three (2.3) Consolidated Shares held. The Board of asiaep is of the opinion that the exchange ratio of the Proposed Share Exchange is fair, after taking into account that the Proposed Share Exchange is part of the Proposed Regularisation Plan to regularise the Company s financial condition. The Proposed Share Exchange shall be effected pursuant to Section 176 of the Companies Act. The 17,601,932 new GFM Services Shares to be issued pursuant to the Proposed Share Exchange shall, upon allotment and issue, rank pari passu in all respects with the then existing GFM Services Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions which are declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the said GFM Services Shares. In determining the shareholders entitlements to the Proposed Share Exchange, fractional entitlements of GFM Services Shares, if any, shall be dealt with in such manner as the Board of asiaep in its absolute discretion deems fit and expedient in the best interest of the Company. Upon completion of the Proposed Share Exchange, the Company will become a wholly-owned subsidiary company of GFM Services. 2.7 Proposed Cancellation of Warrants B in Exchange for Warrants A The Proposed Cancellation of Warrants B in Exchange for Warrants A involves the cancellation of all the 241,894,985 Warrants B of asiaep in exchange for 5,258,586 new Warrants A of GFM Services at an exchange ratio of one (1) Warrant A for every forty six (46) Warrants B held. The existing exercise price of Warrants B is RM0.10 per Warrant B. The exercise price of Warrants A will be at RM0.35 per Warrant A. The number of Warrants A and the exercise price of RM0.35 per Warrant A were arrived at after taking into consideration the following:- (i) the prices of asiaep Shares of RM0.01 and Warrants B of RM0.005 respectively prior to the suspension in trading of asiaep Shares and Warrants B on 24 September 2012; (ii) the exercise price of Warrants B of RM0.10 per Warrant B; (iii) (iv) (v) (vi) (vii) the adjusted number of Warrants B and the adjusted exercise price of Warrants B of RM2.00 per Warrant B pursuant to the Proposed Consolidation in accordance with the provisions for adjustment constituted in the Deed Poll for the Proposed Consolidation; the theoretical adjustments to the number of Warrants B and the exercise price of Warrants B arising from the Proposed Share Exchange; the share exchange ratio of asiaep Shares to GFM Services Shares pursuant to the Proposed Share Exchange; the par value of GFM Services Shares of RM0.10 each; and the proforma consolidated NA per GFM Services Share of RM upon implementation of the Proposed Regularisation Plan (but before dilution effects arising from the exercise of Warrants A). 13

14 The exercise price of RM0.10 per Warrant B represents a premium of:- (i) 826% to the five (5) day VWAMP of RM per asiaep Share up to and including 21 September 2012, being the last trading day prior to the suspension in trading of asiaep Shares on 24 September 2012; (ii) 58% to the one (1) year VWAMP of RM per asiaep Share up to and including 21 September 2012, being the last trading day prior to the suspension in trading of asiaep Shares on 24 September 2012; and (iii) 3,604% to the NA per asiaep Share of RM per asiaep Share based on the audited financial statements of asiaep for the FPE 31 August The exercise price of RM0.35 per Warrant A represents a premium of:- (i) (ii) (iii) 189% to the theoretical ex-price of RM per GFM Services Share pursuant to the Proposed Share Exchange; 183% to the theoretical ex-price of RM per GFM Services Shares pursuant to the Proposed Private Placement; 250% to the par value of RM0.10 per GFM Services Share; (iv) 3,141% to the five (5) day VWAMP of RM per asiaep Share up to and including 21 September 2012, being the last trading day prior to the suspension in trading of asiaep Shares on 24 September 2012; (v) 453% to the one (1) year VWAMP of RM per asiaep Share up to and including 21 September 2012, being the last trading day prior to the suspension in trading of asiaep Shares on 24 September 2012; and (vi) 242% to the proforma consolidated NA per GFM Services Share of RM upon implementation of the Proposed Regularisation Plan (but before dilution effects arising from the exercise of Warrants A). The expiry date of Warrants A shall be the same as that of Warrants B, which is on 8 September The Proposed Cancellation of Warrants B in Exchange for Warrants A will not raise any funds for GFM Services as Warrants A will be issued free to the Warrants B holders in exchange for the cancellation of Warrants B. Nevertheless, GFM Services could subsequently raise proceeds from the exercise of the Warrants A, the quantum of which would depend on the actual number of Warrants A exercised by Warrants A holders. These proceeds may be utilised to fund the future capital expenditure and/or working capital requirements of the GFM Services Group. The Company will seek the approval of Bursa Securities for the listing of and quotation for the 5,258,586 Warrants A issued pursuant to the Proposed Cancellation of Warrants B in Exchange for Warrants A and the 5,258,586 new GFM Services Shares to be issued assuming full exercise of the said Warrants A on the ACE Market. In the event that the Proposed Cancellation of Warrants B in Exchange for Warrants A is not successfully implemented, Warrants B holders will remain as holders of Warrants B of asiaep. Pursuant to the Proposed Transfer of Listing Status, all the 241,894,985 Warrants B of asiaep will also be delisted from the ACE Market of Bursa Securities. asiaep will be a wholly-owned subsidiary company of GFM Services upon implementation of the Proposed Regularisation Plan. 14

15 2.8 Proposed Exemption Upon completion of the Proposed Acquisitions and the Proposed Share Exchange, on a proforma basis, the resultant collective shareholdings of the Vendors in GFM Services will be approximately 95.78% (before the Proposed Offer for Sale, the Proposed Private Placement and before dilution effects arising from exercise of Warrants A). Hence, the Vendors and the parties acting in concert with them, if any, shall have an obligation to undertake a mandatory general offer for all the remaining GFM Services Shares and Warrants A (if the Proposed Cancellation of Warrants B in Exchange for Warrants A is implemented) not already held by them pursuant to Part III of the Code. The Vendors and the parties acting in concert with them, if any, do not intend to undertake a mandatory general offer to acquire all the remaining GFM Services Shares and Warrants A (or Warrants B in the event the Proposed Cancellation of Warrants B in Exchange for Warrants A is not implemented) not already held by them upon completion of the Proposed Acquisitions and Proposed Share Exchange. In this regard, they intend to seek an exemption from the SC from the obligation to undertake the said mandatory general offer under Practice Note 9 of the Code. 2.9 Proposed Offer for Sale The Vendors will undertake an offer for sale of up to 100,000,000 Consideration Shares issued pursuant to the Proposed Acquisitions, representing approximately 23.95% of the enlarged issued and paid-up share capital of GFM Services before the Proposed Offer for Sale, the Proposed Private Placement and before dilution effects arising from exercise of Warrants A, to be held by the Vendors upon completion of the Proposed Acquisitions and Proposed Share Exchange to eligible third party investors to be identified and at an offer price to be determined at a later date. The Proposed Offer for Sale will not require any prospectus to be issued should the offer of GFM Services Shares fall under the relevant categories prescribed under Schedule 6 of the CMSA which includes inter-alia offer where the purchase consideration is not less than RM250,000 and issuance made to high net worth individuals whose personal net worth exceed RM3,000,000 or corporations with net assets exceeding RM10,000,000. The final allocation basis will be determined, after taking into account, amongst others, the demand for the Offer Shares and prevailing market conditions. The Offer Shares to be offered by each Vendor under the Proposed Offer for Sale are set out below:- Vendors Number of Offer Shares Percentage of enlarged issued and paid-up GFM Services Shares before the Proposed Offer for Sale, the Proposed Private Placement and before dilution effects arising from the exercise of Warrants A (%) Ruslan Bin Nordin 34,000, Zainal Bin Amir 33,000, Mohammad Shahrizal Bin Mohammad Idris 33,000, Total 100,000,

16 Upon completion of the Proposed Offer for Sale but before the Proposed Private Placement, the Vendors will collectively own approximately 71.84% of the enlarged issued and paid-up GFM Services Shares of 417,602,942. All expenses to be incurred for the Proposed Offer for Sale will be borne by the Vendors. Pursuant to rule 3.19 of the ACE LR, a moratorium will be imposed on the sale, transfer or assignment of the remaining Consideration Shares after the Proposed Offer for Sale of 300,000,010 held by the Vendors as follows:- (i) (ii) The moratorium applies to the entire shareholdings held by the Vendors for the Moratorium Period; Upon the expiry of the Moratorium Period, the Vendors must ensure that their aggregate shareholdings amounting to at least 45.00% of the enlarged issued and paid-up share capital of GFM Services shall remain under moratorium for another period of six (6) months; and (iii) Thereafter, the Vendors may sell, transfer or assign up to a maximum of one-third (1/3) per annum of their Consideration Shares under moratorium on a straight-line basis. The Vendors Consideration Shares that are subject to moratorium are set out below:- Vendors Number of Consideration Shares held upon completion of the Proposed Acquisitions and Proposed Share Exchange but before the Proposed Offer for Sale, the Proposed Private Placement and before dilution effects from the exercise of Warrants A Percentage of the Consideration Shares held against the total number of shares upon completion of the Proposed Acquisitions and Proposed Share Exchange but before the Proposed Offer for Sale, the Proposed Private Placement and before dilution effects arising from the exercise of Warrants A Percentage of the Consideration Shares Number of Consideration Shares to be held under moratorium upon completion of the to be held against the total number of shares upon completion of the Proposed Offer for Sale and the Proposed Private Number of Percentage of the Consideration Shares to be held against the total number of shares upon completion of the Proposed Proposed Offer for Sale Placement but before Consideration Regularisation Plan and the Proposed Private Placement but before dilution effects arising from the Shares to be held under moratorium but before dilution effects arising from dilution effects from the exercise of Warrants after the Moratarium the exercise of exercise of Warrants A A Period Warrants A (%) (%) (%) Ruslan Bin Nordin 136,000, ,000, ,499, Mohammad Shahrizal Bin Mohammad Idris 132,000, ,000, ,573, Zainal Bin Amir 132,000, ,000, ,573, Total 400,000, ,000, ,646, Note:- The above shareholdings for the three individual shareholders (Vendors) are only for illustrative purposes as the actual number of Consideration Shares held by the Vendors individually may vary depending on the amount of Consideration Shares assigned or renounced by the Vendors to their respective nominees. 16

17 2.10 Proposed Private Placement Placement Size The Proposed Private Placement will entail the issuance of up to 10,500,000 GFM Services Shares to independent third party investors to be identified and at a placement price to be determined at a later date. The Placement Shares are not intended to be placed out to existing and/or proposed directors and/or existing and/or proposed substantial shareholders of the Company or GFM Services and/or persons connected to them upon completion of the Proposed Share Exchange Basis of determining the issue price of the Placement Shares The issue price of the Placement Shares will be fixed by the Board of GFM Services at a future date, and shall be determined after obtaining the approval of the relevant authorities for the Proposed Private Placement Ranking of the Placement Shares All the Placement Shares to be issued pursuant to the Proposed Private Placement shall, upon allotment and issue, rank pari passu in all respects with the then existing GFM Services Shares, save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions which are declared, made or paid, the entitlement date of which is prior to the date of allotment and issuance of the Placement Shares Listing Sought The Company will seek the approval of Bursa Securities for the listing of and quotation for the 10,500,000 Placement Shares to be issued pursuant to the Proposed Private Placement on the ACE Market Utilisation of Proceeds For the purpose of this announcement, we have assumed an indicative issue price of RM0.22 per Placement Share. Based on the indicative issue price of RM0.22 per Placement Share, the Company is expected to raise gross proceeds of up to RM2.31 million from the Proposed Private Placement. The funds to be raised are expected to be utilised in the following manner:- Details of utilisation Estimated timeframe for utilisation of proceeds Gross Proceeds (RM 000) To defray the estimated expenses of the Proposed Regularisation Plan Immediately 2,310 Total utilisation 2, Proposed Transfer of Listing Status It is proposed that the entire issued and paid-up share capital of asiaep be delisted from the Official List of the ACE Market and that the entire enlarged issued and paid-up share capital of GFM Services be admitted to the Official List of the ACE Market. 17

18 2.12 Proposed Cancellation of ESOS The ESOS became effective on 27 August 2004 and was to expire on 26 August The Board of asiaep had, on 20 August 2007, announced the extension of the ESOS for a further period of up to three (3) years to 26 August Further, the Board of asiaep had, on 25 August 2010, announced a further extension of the ESOS for a further period of up to four (4) years to 26 August The total asiaep Shares which have been issued pursuant to the exercise of the ESOS Options, since the commencement of the ESOS on 27 August 2004 and up to 2 April 2012, being the last date of the exercise of the ESOS Options by the Grantees, is 27,846,342 asiaep Shares. As at 1 April 2013, there are 28,000,000 outstanding ESOS Options which have been granted to the Grantees at an exercise price of RM0.10 per share but have yet to be exercised. The exercise price of the ESOS Options shall be discounted by not more than 10.00% from the weighted average of the market price of asiaep Shares as shown in the daily official list issued by the Bursa Securities for the five (5) trading days immediately preceding the respective dates of the offer in writing to the Grantees or at the par value of asiaep Shares, whichever is higher. Based on the exercise price of RM0.10 per share and the closing market price of asiaep Shares of RM0.01 on 21 September 2012, being the last day of trading of asiaep Shares prior to the suspension in the trading of asiaep Shares and Warrants B on 24 September 2012, the ESOS Options are currently out-of-the-money. Pursuant to Rule 8.20 of the ACE LR and in accordance with By-Law No.19.5 of the ESOS, subject to written consent of all the holders of the ESOS Options (if such approval is necessary and required), the Company in a general meeting may, by ordinary resolution passed by shareholders, terminate the ESOS. In the event of termination of the ESOS, no further offer of the ESOS Options shall be made from the date of such resolution, all offers of ESOS Options which have yet to be accepted by eligible employees shall automatically lapse on the date of such resolution and all outstanding ESOS Options which have yet to be exercised by Grantees, shall be automatically terminated on the date of such resolution. The effective date of the Proposed Cancellation of ESOS shall be the date of the resolution of the approval of asiaep shareholders for the Proposed Cancellation of ESOS. 3. RATIONALE FOR THE The Company had, on 17 May 2012, announced that it is classified as a GN3 company pursuant to GN3 of the ACE LR. Pursuant to the requirements under GN3 of the ACE LR, the Company has an obligation to undertake a regularisation plan which:- (i) (ii) (iii) is sufficiently comprehensive and capable of resolving all problems, financial or otherwise that had caused the Company to trigger the prescribed GN3 criteria; enables the Company to regularise its financial condition and level of operations, such that the Company no longer triggers any of the GN3 prescribed criteria; and is fair and reasonable to the Company and its shareholders and will increase shareholders' value. The main objective of the Proposed Regularisation Plan is to return the Company to a better and stronger financial standing and profitability, thereby benefitting all stakeholders of the enlarged GFM Services Group. 18

19 3.1 Proposed Capital Reduction, Proposed Consolidation and Proposed Reduction of Accumulated Losses The Proposed Capital Reduction and Proposed Reduction of Accumulated Losses would serve to rationalise the statement of financial position of the Company by writing off part of the share capital that is not represented by available assets and to eliminate the accumulated losses of the Company and the Proposed Consolidation is implemented to arrive at the par value of RM0.10 per share. The statement of financial position is expected to be more reflective of the value of the Company s underlying assets in order to affect the implementation of the other proposals comprising the Proposed Regularisation Plan and to attain a healthier financial position going forward. 3.2 Proposed Acquisitions The Proposed Acquisitions will allow the Company to diversify its business into the FM industry as a mean to improve the financial performance of the Company and to enhance shareholder value. FM is generally understood as the provision of management services to organisations in support of their primary or core business by ensuring that the asset and services are effectively delivered to an agreed level. FM is associated with the provision of both hard services such as mechanical and electrical and soft services such as cleaning or janitorial, security, parking, landscaping, catering, helpdesk, mailing, reprography and other related services. IFM involves at least one hard and one soft FM service that are offered as a single management contract. The IFM market size in Malaysia grew at a CAGR of 5.90% from approximately RM2.374 billion in 2007 to RM2.987 billion in It is expected that the market will exhibit a CAGR of 9.10% over the period from 2011 to Much of this growth can be attributed to the implementation of large scale government projects and construction industry growth as well as a renewed focus to improve the lifecycle costs of all projects as well as ensuring a clean, safe and healthy environment for residents of a facility. The Economic Transformation Plan, planned to propel Malaysia to a developed status, has listed down several Entry Point Projects covering the National Key Economic Areas such as healthcare, education, oil, gas & energy, telecommunication and others. It is likely that this will lead to generation of opportunities across these sectors subsequently increasing the overall market demand for FM services. In addition to the above, several PPP projects including those under Private Finance Initiative and Build Operate Transfer are being planned and will be implemented over the short to medium term and this presents another market opportunity for FM service providers as FM forms a very integral part of the PPP implementation process which involves the cost optimisation of the asset life cycle. Based on the above, the Board of asiaep has chosen the FM industry for diversification and intends to undertake the Proposed Acquisitions as it would be in the best interest of the Company in the medium to long term. Please refer to Section 8.2 of this announcement for further information on FM industry and prospects. 3.3 Proposed Share Exchange and Proposed Cancellation of Warrants B in Exchange for Warrants A The Proposed Share Exchange and Proposed Cancellation of Warrants B in Exchange for Warrants A is undertaken to facilitate the implementation of the Proposed Regularisation Plan. 19

20 3.4 Proposed Exemption The Proposed Exemption will relieve the Vendors and the parties acting in concert with them, if any, from the obligation to undertake a mandatory general offer under the Code due to the emergence of their interest in the voting shares of GFM Services of approximately 95.78%, upon completion of the Proposed Acquisitions and Proposed Share Exchange (but before the Proposed Offer for Sale, the Proposed Private Placement and before dilution effects arising from exercise of Warrants A). 3.5 Proposed Offer for Sale The Proposed Offer for Sale by the Vendors will enable GFM Services to broaden its shareholders base and to comply with the public shareholding spread requirement of the ACE LR which requires GFM Services to have at least 25.00% of the total number of GFM Services Shares in the hands of a minimum number of 200 public shareholders holding not less than 100 ordinary shares each. This is to ensure the listing of GFM Services on the ACE Market. 3.6 Proposed Private Placement The Proposed Private Placement will enable the Company to raise funds expeditiously for its working capital requirements of which the full proceeds raised would be used to defray estimated related expenses in connection with the Proposed Regularisation Plan. In addition, the Proposed Private Placement will enable the Company to further broaden its shareholders base and to comply with the public shareholding spread requirement of the ACE LR. 3.7 Proposed Transfer of Listing Status The Proposed Transfer of Listing Status will enable GFM Services to assume the listing status of the Company pursuant to the Proposed Regularisation Plan. 3.8 Proposed Cancellation of ESOS The Proposed Cancellation of ESOS is to facilitate the implementation of the Proposed Regularisation Plan. 4. SALIENT TERMS OF THE DEFINITIVE AGREEMENTS 4.1 Conditional Agreement The Conditional Agreement was entered into between:- (i) (ii) (iii) (iv) GFM Services; The Vendors; asiaep; and Certain substantial shareholders of asiaep, namely, Dr. Tan Boon Nunt, Lee Suet Hong and Topclass Access Sdn Bhd. (the parties above are to be collectively referred to as Parties ) The salient terms of the Conditional Agreement are as set out below. 20