PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL (Information required under Paragraph 4.01 of the Revised Guidelines)

Transcription

1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL (Information required under Paragraph 4.01 of the Revised Guidelines) BACKGROUND INFORMATION 1. Issuer (i) Name : Al- Aqar Capital Sdn Bhd (formerly known as Juara Akses (M) Sdn Bhd) (Company No U) ( Al- Aqar Capital or the Issuer ) (ii) Address : Registered Office Johor Corporation (Kuala Lumpur Office) Level 2, Block A (North), Pusat Bandar Damansara Kuala Lumpur (iii) Business Registration No. : U (iv) Date / Place of Incorporation : 5 June 2006 / Malaysia (v) (vi) Date of Listing (in case of public listed company) Status Resident/nonresident controlled company Bumiputera/nonbumiputera controlled company : Not applicable : Resident Controlled Company : Bumiputera Controlled Company (vii) Principal Activities : Al- Aqar Capital s principal activities are to raise or obtain Islamic financing including to issue Islamic securities for which the proceeds from such financings are to be utilised only for its holding company, Al- Aqar KPJ REIT s ( Al- Aqar KPJ REIT ), purposes and such other transactions as may be necessary, incidental or conducive pursuant to the said Islamic financing. Page 1 of 52

2 (viii) Board of Directors : The Board of Directors of Al- Aqar Capital as at 15 July 2007 are as follows: Name Datin Paduka Siti Sa diah Binti Sheikh Bakir Dr. Mohd Hafetz Bin Ahmad Puan Zainah Binti Mustafa Resident Status I/C No. Malaysian Malaysian Malaysian (ix) Structure of shareholdings and names of shareholders or, in the case of public company, names of all substantial shareholders : The shareholders and shareholding structure of Al- Aqar Capital as at 15 July 2007 are as follows: Name Amanah Raya Berhad ( V) (as trustee of Al- Aqar KPJ REIT) No.of shares held % of shareholding TOTAL (x) Authorised & paidup share capital : Authorised Share Capital as at 15 July 2007 RM100,000 comprising 100,000 ordinary shares of par value RM1.00 each. Issued & Paid-Up Share Capital as at 15 July 2007 RM2.00 comprising 2 ordinary shares of par value RM1.00 each. [The remainder of this page is intentionally left blank] Page 2 of 52

3 2. Principal Terms and Conditions a. Names of parties involved in the proposed transaction (where applicable) i. Principal Adviser(s)/ Lead Arranger(s) AmInvestment Bank Berhad (23742-V) ( AmInvestment Bank ) ii. Arranger(s) Not applicable iii. Valuers Not applicable iv. Solicitors Kadir, Andri & Partners v. Financial Adviser Not applicable vi. Technical Adviser Not applicable vii. Guarantor Islamic Medium Term Notes ( IMTN ) Financial institution Public Bank Berhad (6463-H) ( PBB ) Amount guaranteed (RM Million) Up to 93.0 Note: PBB to provide an unconditional bank guarantee to guarantee the nominal value of Class C series of the IMTNs to be issued under the ICP/IMTN Programme of up to RM90.0 million and one profit payment in respect of the RM90.0 million amount of up to RM3.0 million. Islamic Commercial Papers ( ICP ) Not Applicable viii. Trustee AmTrustee Berhad ( V) ix. Facility Agent AmInvestment Bank x. Primary Subscriber(s) and Amount subscribed (where applicable) IMTN If issued on bought deal basis: Financial Institution AmInvestment Bank Amount Subscribed (RM million) Up to RM215.0 Page 3 of 52

4 PBB Total Up to RM70.0 Up to RM285.0 xi. xii. Underwriter(s) and amount underwritten Syariah Adviser ICP Not applicable The ICP shall be underwritten by AmInvestment Bank and/or a selection of financial institutions licensed under the Banking and Financial Institutions Act 1989 ("BAFIA") and/or Islamic Banking Act 1983, insurance companies registered under the Insurance Act 1996, Takaful companies registered under the Takaful Act 1984 and approved corporations and such other persons as specified in Section 4(6) of the Companies Act 1965 (as amended) up to a nominal value of RM15.0 million at an underwritten rate which will be pegged at a margin above the cost of funds. Throughout the tenure of the ICP/IMTN Programme, the Underwriter(s) shall have the right to transfer and reduce their underwriting commitments provided that the underwriting commitments are transferred to a new Underwriter(s). The underwriting shall be unconditional and irrevocable. For avoidance of doubt, the IMTN will not be underwritten. Dr. Mohd Daud Bakar xiii. Central Depository xiv. Paying Agent Bank Negara Malaysia ( BNM ) BNM xv. Reporting Accountant Deloitte KassimChan (AF 0080) xvi. Others (please specify) Security Trustee: Tender Panel Member(s) ( TPM ): AmTrustee Berhad Eligible investors approved by BNM and /or other relevant authority comprising, investment banks, commercial banks and/or Page 4 of 52

5 other financial institutions falling within the Selling Restrictions shall be invited to bid competitively for the ICP/IMTN. The composition of the TPM may be changed from time to time at the discretion of the Facility Agent in consultation with the Issuer. The ICP/IMTN shall be allocated to the TPM (unless directly placed) in order of descending prices, subject to the acceptance of the Issuer. Lead Manager AmInvestment Bank REIT Trustee Amanah Raya Berhad ( V) REIT Manager Vendor Lessor Lessee/ Service Agent Damansara REIT Managers Sdn Berhad ( V) REIT Trustee Issuer REIT Trustee b. Islamic Principles Used c. Facility Description Ijarah The Islamic Securities programme herein involves the issuance of Sukuk (trust certificates) based on the Syariah principles of Ijarah of up to RM300.0 million in nominal value ( Sukuk Ijarah Programme ) and the issuance of the Islamic Securities shall be in the form of Islamic Commercial Papers / Islamic Medium Term Notes ( ICP/IMTN ). Under the Sukuk Ijarah Programme, the Issuer shall identify the assets to facilitate the respective Ijarah transactions. The Issuer shall enter into a Sale and Purchase Agreement(s) ( Sale and Purchase Agreement(s) ) with the REIT Trustee ( Vendor ) to purchase the beneficial interests in Identified Hospitals (as defined under Item (2)(t) herein) held in trust by the Vendor for Al- Aqar KPJ REIT. Page 5 of 52

6 The Issuer shall issue Sukuk to the Investors to raise proceeds to settle the purchase consideration of the Identified Hospitals. The Issuer shall concurrently declare a trust over the Trust Assets (as defined in Item (2)(z)(i) herein). The Sukuk, therefore, will represent pro-rata undivided beneficial ownership in the Trust Assets. Subsequent to the asset purchase transaction, the Issuer (as Lessor ) will lease the Identified Hospitals to the REIT Trustee (as Lessee ) for a pre-determined lease period at the agreed rental amount ( Ijarah Payments ) pursuant to the terms and conditions of the Ijarah Agreement. The Issuer will distribute the Ijarah Payments due from the Lessee to the Investors as periodic distribution payments in proportion to their sukukholdings. The REIT Trustee (as Obligor and Lessee ) shall grant to the Issuer a Purchase Undertaking whereby the REIT Trustee will undertake to purchase the Identified Hospitals from the Issuer on the Ijarah Maturity Date (as defined in Appendix 1) or upon an occurrence of a Trigger Event (as defined in Item (2)(z)(ii)) or a Dissolution Event (as defined in Item (2)(x)) at the Termination Purchase Price (as defined in Item (2)(z)(v)). Simultaneously, the Issuer (as Lessor ) will grant the Lessee a Sale Undertaking whereby the Issuer will undertake to sell the Identified Hospitals to the Lessee on the Ijarah Maturity Date (as defined in Appendix 1) at a nominal value of RM1.00 (provided that all the ICP/IMTN shall have been paid in full). Upon full cash settlement of the Purchase or Sale Undertakings as the case may be, the declaration of trust over the Trust Assets will subsequently be dissolved and the Investors shall have no further rights or interests in the Trust Assets. Whenever any Identified Hospitals are utilised as the underlying asset pursuant to the sale and lease back transactions, such Identified Hospitals shall not be available for further utilisation until and upon the expiry of the lease period. Upon the expiry of the lease period and subject to fulfilment of all the lease obligations of the Issuer, such Identified Hospitals will then be available for reutilisation by the Issuer. Page 6 of 52

7 The diagrammatical illustration depicting the transactions entered into by the relevant parties under the Syariah principles of Ijarah is provided in Appendix 2. Ijarah Agreement Means the Ijarah agreement(s) to be entered into between the Lessor and the Lessee from time to time, for the lease of the Identified Hospitals, as and when the Lessor receives the beneficial ownership of the Identified Hospitals, for the duration of the lease period (which will coincide with the maturity date(s) of the ICP/IMTN) and against periodic Ijarah Payments payable by the Lessee to the Lessor. Service Agency Agreement The Issuer and the REIT Trustee will enter into a Service Agency Agreement, whereby the REIT Trustee (in the capacity of Service Agent ) will be responsible on behalf of the Issuer for the Ownership Expenses (as defined in Item (2)(z)(viii)) in respect of the Identified Hospitals, which also include the relevant Takaful obligations under the Ijarah Agreement. The amount payable by the Issuer to the REIT Trustee shall be termed Ownership Expenses, which will be paid by the Service Agent first on the Lessor s (Issuer s) behalf. The Service Agent will bear, defray and accumulate such Ownership Expenses paid and may only submit its claims for such expenses paid by the Service Agent upon the Ijarah Maturity Date (as defined in Appendix 1) or upon declaration of a Dissolution Event (i.e. Event of Default). The Ownership Expenses incurred during the lease tenor will be offset from the Termination Purchase Price. d. Issue Size (RM) Nominal value of up to RM300.0 million subject to the following sub-limits: 1. The aggregate nominal value of outstanding ICP shall not exceed RM15.0 million at any time; and 2. The aggregate nominal value of outstanding IMTN shall not exceed RM285.0 million at any Page 7 of 52

8 e. Issue Price (RM) ICP time and shall be serialized in the following Classes: a. Class A: RM165.0 million in nominal value; b. Class B: RM30.0 million in nominal value; and c. Class C: RM90.0 million in nominal value. Provided always that at any point in time, the aggregate outstanding amount of the nominal value of the ICP and IMTN issued under the Programme shall not exceed RM300.0 million. However prior to fulfilment of Special Conditions Precedent for Issuance(s) under Item (2)(v)(c), the Issuer may only issue up to RM288.0 million of the ICP/IMTN based on the following sub-limits; 1. The aggregate nominal value of outstanding ICP shall not exceed RM14.0 million at any time; and 2. The aggregate nominal value of outstanding IMTN shall not exceed RM274.0 million at any time and shall be serialized in the following Classes: a. Class A: RM155.0 million in nominal value; b. Class B: RM29.0 million in nominal value; and c. Class C: RM90.0 million in nominal value. The ICP shall be issued at a discount to nominal value and the issue price shall be calculated in accordance with the formula specified in Part III, Section 5 of the Rules on Fully Automated System For Issuing/ Tendering ( FAST ) issued by BNM, as amended and substituted from time to time ( FAST Rules ). IMTN The IMTN shall be issued at discount or par and the issue price shall be calculated in accordance with the formula specified under Part III, Section 5 of the FAST Rules and shall be governed by Page 8 of 52

9 guidelines pertaining thereto issued by BNM from time to time. F. Tenor of the facility/issue The Sukuk Ijarah Programme shall have a tenor of seven (7) years from the date of first issuance of the ICP/IMTN ( Programme Tenor ). However, the availability period for issuance of IMTN is the first four (4) years of the Programme Tenor, whilst the availability period for the ICP is seven (7) years. ICP The ICP shall be issued for maturities of one (1), two (2), three (3), six (6), nine (9) or twelve (12) months, at the option of the Issuer subject to the final maturity of the ICP not exceeding the Programme Tenor. IMTN The IMTNs shall have an Expected Maturity Date and Legal Maturity Date tabulated as follows: Sukuk Ijarah Programme Availability Period (from date of first issuance) Expected Maturity Date (years from date of Issuance) Legal Maturity Date (years from date of issuance) Initial issuance nd 6 th month 4.5 x < y < th 12 month 4.0 x < y < th 18 th month 3.5 x < y < th 24 th month 3.0 x < y < th 30 th month 2.5 x < y < st 36 th month 2.0 x < y < th 42 nd month 1.5 x < y < rd 48 th month 1.0 x < y < 3.5 x = Expected Maturity Date y = Legal Maturity Date The tenor of the IMTNs shall be as per the Legal Maturity Date. The Expected Maturity Date is the date earmarked for the Issuer to fully redeem the IMTN before the Legal Maturity Date. In the event the Issuer does not fully redeem the IMTN at the Expected Maturity Date, it will be a Trigger Event (as defined in Item (2)(z)(ii)). The Expected Maturity Date for all IMTNs issued subsequent to the first IMTN issued Page 9 of 52

10 shall co-terminus with the Expected Maturity Date of the first IMTN issued (i.e. 6 February 2013). The Legal Maturity Date is the final maturity date of which the IMTN must be fully redeemed. Otherwise, it will be a Dissolution Event (Event of Default). The Legal Maturity Date for all IMTNs issued subsequent to the first IMTN issued shall co-terminus with the Legal Maturity Date of the first IMTN issued (i.e. 6 February 2015). The Legal Maturity Date shall not exceed the Programme Tenor and the Expected Maturity Date shall not exceed the 5 th year of the Programme Tenor. g. Coupon/Profit or equivalent rate (%) (please specify) The applicable rate for the ICP/IMTN shall be referred to as the Return Rate which shall be used to compute the return payment ( Return Payment ). ICP The Return Rate or its equivalent will only be known on the proposed issue day / tender day when the Issuer confirms the acceptance of the allocated tender / private placement bids or the ICP Underwritten Rate (as defined herein) if the ICP are to be underwritten. IMTN The Return Rate or its equivalent rate of the IMTN will only be known on the proposed issue day / tender day when the Issuer confirms acceptance of the allocated tender / private placements bids. h. Coupon Payment/ Profit Payment frequency and basis 1) Frequency ICP The periodic distribution is dependent on the frequency of issuance of the ICP by the Issuer for maturities of one (1), two (2), three (3), six (6), nine (9) or twelve (12) months at a discounted basis, which shall be payable in arrears on the respective maturity dates of the ICP. IMTN The periodic distribution for the IMTN shall be semi-annually in arrears with the last Return Payment to be made on the last respective maturity dates of the IMTN. Page 10 of 52

11 2) Periodic Distribution basis ICP Actual number of days elapsed on a 365 days basis. IMTN Profit will be calculated on actual/actual basis. i. Yield to Maturity (%) j. Security / Collateral (if any) The yield to maturity ( YTM ) of the ICP/IMTN will only be known on the proposed issue day/tender day when the Issuer confirms the acceptance of the allocated tender/private placement bids or the ICP Underwritten Rate (as defined herein) if the ICP are underwritten. In addition to the Trust Declaration on the Trust Assets, the Issuer will grant and/or cause to be granted in favour of the Security Trustee the following security: 1. A first legal charge over the land & building of the Identified Hospitals and the five new hospital land and buildings to be acquired by Al- Aqar KPJ REIT (i.e. Perdana Specialist Hospital land & building ( PdSH ), Kuantan Specialist Hospital land & building ( KSH ), KPJ Kajang Specialist Hospital land & building ( KPJK ), Sentosa Medical Centre land & building ( SMC ) and Kedah Medical Centre land & building ( KMC )). These five new hospitals will be collectively referred to as Additional Hospitals hereinafter. The charge shall be perfected: i. in relation to the Identified Hospitals, within three (3) months after the date of the first issuance of the ICP/IMTN or such other period as determined by the Security Trustee; ii. in relation to the Additional Hospitals, subject to there being no rescission on the relevant Sale and Purchase Agreement(s), within three (3) months after the perfection of transfer of titles of the relevant land of the Additional Hospitals from the vendors to the REIT Trustee (acting on behalf of Al- Aqar KPJ REIT) or such other period as determined by the Security Trustee; 2. An Irrevocable Power of Attorney ( Power of Page 11 of 52

12 Attorney ) to be granted by the REIT Trustee in favour of the Security Trustee to dispose land and building of the hospitals being charged on individual or collective basis; 3. In respect of PdSH, subject to approval from the relevant authorities, an option to purchase with a right to nominate another person to purchase is to be granted by the REIT Trustee to the Security Trustee or any person so nominated by the Security Trustee whereupon, such option shall be granted within three (3) months after the perfection of transfer of titles of the relevant land relating to PdSH from the vendors to the REIT Trustee (acting on behalf of Al- Aqar KPJ REIT) or such other period as determined by the Security Trustee; 4. An irrevocable undertaking by the REIT Manager and/or REIT Trustee to the Security Trustee to sell PdSH to such person as nominated by the Security Trustee upon such instructions from the Security Trustee, and to assign in favour of the Security Trustee, the proceeds of the sale, upon occurrence of a Trigger Event(s); 5. An undertaking from the REIT Manager/REIT Trustee on behalf of Al- Aqar KPJ REIT: i. To deposit all rental cash flows generated from the eleven (11) Identified Hospitals and Additional Hospitals into the Collection Account; ii. To deposit all proceeds from the disposal of hospitals by the Security Trustee following the execution of the irrevocable Power of Attorney into the Finance Service Account; iii. To deposit all proceeds from the disposal of PdSH following the execution of an option to purchase or instruction of the Security Trustee, into the Finance Service Account; iv. That it shall not declare any distributions to Al- Aqar KPJ REIT s unitholders if a Dissolution Event or Trigger Event has occurred under the Transaction Documents, is continuing and has not been waived; Page 12 of 52

13 v. it will present for charge of the Identified and Additional Hospitals in favour of the Security Trustee within three (3) months following discharge of existing charges on the Identified Hospitals by existing lenders and the transfer of titles of the land of the Additional Hospitals from the vendors to Al- Aqar KPJ REIT (subject to there being no rescission on the relevant Sale and Purchase Agreement(s)), or such other period as determined by the Security Trustee; vi. it will operate the Collection Account as elaborated in Item (2)(z)(x)(1); vii. it will not file a petition for or institute, join any other persons in instituting proceedings for the liquidation or winding up of the Issuer or other similar proceedings under any applicable laws; and viii. it will deposit any monies returned by the vendors of the relevant hospital buildings(s) or other buildings (in the case of future acquisitions/ investments) into the Disbursement Account (as defined in Item (2)(z)(x)(1)) should there be a rescission of any of the relevant Sale and Purchase Agreement(s). 6. Class C IMTN will be secured by a Kafalah (bank guarantee); 7. Assignment of the lease agreements between Al- Aqar KPJ REIT and the hospital operators; 8. Assignment of the share capital of the Issuer; 9. Assignment of the rights and benefits under the Takaful policies for the Identified and Additional Hospitals; 10. Charge over the Designated Accounts and monies standing in the accounts and Permitted Investments; 11. Debenture over all existing and future assets of the Issuer; and 12. Such other security as may be advised by the Solicitors. Page 13 of 52

14 On the occurrence of a Trigger Event (as defined in Item (2)(z)(ii)), the Power of Attorney will be enforceable and the Security Trustee shall step-in to collect the lease payments directly from the hospital operators under the assignment of the lease agreements between Al- Aqar KPJ REIT and the hospital operators and deposit them directly into the Finance Service Account (as defined in Item (2)(z)(x)(3). k. Details on utilisation of proceeds The proceeds from the ICP/IMTN shall be utilised to finance the acquisition of the beneficial interest of one or more of the Identified Hospitals listed in Item (2)(t) below. Description RM To finance the acquisitions of the beneficial interest of one or more of the Identified Hospitals by the Issuer from the REIT Trustee. Up to 300,000 The REIT Trustee (acting on behalf of Al- Aqar KPJ REIT) will utilise the monies received from the Issuer for the following purposes:- Description RM To refinance existing borrowings of Al- Aqar KPJ REIT 2. To part-finance the acquisition of PdSH s land & building situated on leasehold Malay Reserved land held under title no. HS(D) 917, PT. 616 Seksyen 14, Mukim Bandar Kota Bharu, District of Kota Bharu in the State of Kelantan 3. To part-finance the acquisition of KSH s land & building situated on pieces of land held under Up to 134,000 Up to 20,000 Up to 3,000 Page 14 of 52

15 (a) GM 2823, Lot No. 5890; (b) GM 2827, Lot 5889; (c) GM 3441, Lot 5885; (d) GM 3442, Lot 5886; (e) GM 3443, Lot 5891; (f) GM 3466, Lot 5888; (g) GM 1575, Lot 10747; and (h) GM 6875, Lot 10748, all in Mukim of Kuala Kuantan, District of Kuantan in the State of Pahang 4. To part-finance the acquisition of KPJK s land & building situated on freehold land under title no. GM 2494, Lot Seksyen 9, Mukim Bandar Kajang, District of Hulu Langat in the State of Selangor 5. To finance the acquisition of KMC s land & building situated on freehold land held under title no. HSM 10923, PT 1280, Mukim Bandar Alor Setar District of Kota Setar in the State of Kedah ( KMC Land 1 ) 6. To finance the acquisition of the remaining land & building of KMC situated on land held under titles: Up to 16,000 Up to 45,654 Up to 1,197 (a) HS(M) 1/1997, PT No. 1350; (b) GM 1436, Lot 336; and (c) GM 1437, Lot 337, all in Mukim of Alor Merah, District of Kota Setar in the State of Kedah ( KMC Land 2 ) 7. Fees and expenses relating to the acquisition of the five new hospitals and the arrangement of the Sukuk Ijarah Programme Up to 5,149 Page 15 of 52

16 8. To deposit two Return Payments into the Finance Service Reserve Account 9. Syariah-compliant working capital Up to 15,000 Up to 15, Future asset acquisitions/ Syariah-compliant investments/ reimbursement of costs incurred for work done for expansion of Al- Aqar KPJ REIT s existing assets Up to 45,000 TOTAL 300,000 Proceeds from the Islamic Securities shall be utilised for Syariah-compliant purposes only. In the event that there are unutilized amount(s) after effecting items (2) to (9), Al- Aqar KPJ REIT may utilise such unutilised amount (if any) for purposes set in item (10). In the event the monies to be used for items (2) to (6) are returned to Al- Aqar KPJ REIT following rescission of any of the relevant Sale and Purchase Agreement(s), Al- Aqar KPJ REIT may utilise such returned monies for the purpose set in item (10). Such utilization under item (10) shall be guided by considerations which would support assigned credit ratings under Item (2)(m) below. l. Sinking fund (if any) None m. Rating Credit Rating Assigned The Sukuk Ijarah Programme has been assigned the following preliminary ratings: Rating Class A IMTN : AAA Class B IMTN : AA2 Class C IMTN : AAA(bg) ICP : P1 Name of Rating Agency RAM Rating Services Berhad ( T) ( RAM ) Page 16 of 52

17 n. Form and Denomination The ICP/IMTN shall be represented by Global Certificates in bearer form and issued in denomination of RM1,000,000 or any other integral multiples thereof. They shall be deposited with the Central Depository and are exchangeable for Definitive Certificates only in certain limited circumstances. No physical delivery of the Global Certificates will be made. o. Mode of Issue ICP Tender without prospectus with the TPM and/or private placement via Fully Automated System for Issuing/Tendering ( FAST ) by BNM. IMTN Tender and/or private placement through FAST and/or on bought deal basis and issued under the Real Time Electronic Transfer of Funds and Securities ( RENTAS ) system. p. Selling Restriction The ICP/IMTN may not be issued, offered for subscription or purchase, nor any invitation to subscribe for or purchase the ICP/ IMTN may be made to persons other than those falling within any of the categories of persons specified in Section 4(6) of the Companies Act, 1965 of Malaysia, as amended from time to time. q. Listing Status The ICP/IMTN will not be listed on the Bursa Malaysia Securities Berhad or any other exchanges. r. Minimum Level of Subscription (RM or %) ICP As the ICP is fully underwritten, the minimum level of subscription is not applicable. IMTN 100% of each issuance of the IMTN. s. Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained (please specify) Not applicable Page 17 of 52

18 t. Identified Assets The Identified Assets to be utilised for the Ijarah transactions will be the following hospitals ( Identified Hospitals ) or a portion thereof held in trust by the REIT Trustee for Al- Aqar KPJ REIT: No. Type of Assets 1. Investment properties 2. Investment properties 3. Investment properties 4. Investment properties 5. Investment properties 6. Investment properties Description Ampang Puteri Specialist Building Damansara Specialist Building Johor Specialist Hospital Building Ipoh Specialist Hospital Building Puteri Specialist Hospital Building Selangor Medical Centre Building Net Book Value 2006^ (RM 000) 128, ,500 75,300 69,000 39,000 61,400 Total 481,000 ^ The above relates to the net book value of the Investment Properties as at 31 December 2006 per Al- Aqar KPJ REIT s audited financial statements for the financial year ended 31 December Consent from the chargee(s) of the Identified Hospitals shall have been obtained (if required) to use the Identified Hospitals for the sale and leaseback transactions under the Sukuk Ijarah Programme. The Identified Assets may be substituted with one or more of the Additional Hospitals which shall then form the Identified Assets to be made available for the purposes of the Islamic Securities, subject to the approval of the Syariah Adviser, the Trustee and the Lead Arranger, of these Identified Assets. For each issuance of the ICP/IMTN, the value of the Identified Assets shall be in accordance with the Securities Commission s Shariah Advisory Council Pricing Guidelines issued on 31 December 2003 and 30 April 2004 respectively, as may be amended, supplemented or replaced from time to time ( SAC s Pricing Guidelines ). Page 18 of 52

19 u. Purchase and selling price/rental (where applicable) Purchase Price The purchase price shall be determined from time to time prior to the purchase of the Identified Assets from the REIT Trustee and the issuance of the ICP/IMTN. The Purchase Price will be determined and shall be in compliance with the SAC s Pricing Guidelines Ijarah Payments The Ijarah Payments are lease payments which the Lessee is obliged to pay to the Lessor pursuant to the Ijarah Agreement(s). In relation to the ICP/IMTN, the Ijarah Payments can only be calculated once the Return Rate and tenor of the ICP/IMTN to be issued are determined. These rates shall be determined prior to issuance of the ICP/IMTN. During the tenure of the ICP/IMTN, the Issuer will distribute the Ijarah Payments due from the Lessee, to the Investors, as periodic distribution payments in proportion to their sukukholdings (i.e. the Return Payments under the Sukuk Ijarah). In respect of IMTN issuance, all payments shall consist of the Return Payments save and except for the last payment of each tranche of the Sukuk Ijarah which shall consist of the Return Payments and full nominal value of the respective tranche of the IMTN, which shall be made on the respective maturity dates (either Legal or Expected Maturity Dates). The distribution of Return Payments to the sukukholders shall be in proportion to their Sukukholdings. v. Conditions Precedent a. Conditions Precedent for Initial Issuance Unless the Special Conditions Precedent as detailed hereafter is complied with, the initial issuance shall not result in a cumulative outstanding ICP/IMTN amount of more than RM288.0 million, and is subject to standard conditions precedent including but not limited to the following:- 1. Execution, stamping (where applicable) or endorsement as exempted from stamp duty under the Stamp Duty (Exemption No. 23) Order, 2000 and registration (where applicable) of the Transaction Documents (save and except for the Transaction Documents relating to the charges to the said Identified Hospitals and Additional Page 19 of 52

20 Hospitals) including the Irrevocable Power of Attorney to the Security Trustee to dispose the assets upon occurrence of a Trigger Event and compliance of the conditions contained therein; 2. Receipt of undertaking from the REIT Manager/REIT Trustee on behalf of Al- Aqar KPJ REIT that it shall: i. deposit all rental cash flows generated from the Identified hospitals and Additional Hospitals into the Collection Account; ii. iii. iv. deposit all proceeds from the disposal of hospitals by the Security Trustee following the execution of the irrevocable Power of Attorney into the Finance Service Account; deposit all proceeds from the disposal of PdSH following the execution of an option to purchase or instruction of the Security Trustee into the Finance Service Account; not declare any distributions to Al- Aqar KPJ REIT s unitholders if a Dissolution Event (Event of Default) or Trigger Event has occurred under the Transaction Documents, is continuing and has not been waived; v. it will present for charge of the Identified and Additional Hospitals in favour of the Security Trustee within three (3) months following the discharge of existing charges on the Identified Hospitals by existing lenders and the transfer of titles of the land of the Additional Hospitals from the vendors to Al- Aqar KPJ REIT (subject to there being no rescission on the relevant Sale and Purchase Agreement(s)) or such other period as determined by the Security Trustee; vi. vii. it will operate the Collection Account as elaborated in Item (2)(z)(x)(2); it will not file a petition to file the Issuer into bankruptcy; and viii. it will deposit any monies returned by Page 20 of 52

21 the vendors of the relevant hospital buildings(s) or other buildings (in the case of future acquisitions/ investments) into the Disbursement Account (as defined in Item (2)(z)(x)(1)) should there be a rescission of any of the relevant Sale and Purchase Agreement(s). 3. SC s approval for the Sukuk Ijarah Programme have been obtained; 4. The Lead Arranger shall have received a copy of the Board of Directors Resolution of the Issuer: i. authorising the acceptance of the Sukuk Ijarah Programme; ii. the appointment of authorised signatories to accept and operate the Sukuk Ijarah Programme; iii. iv. to execute the relevant documents relating to the Sukuk Ijarah Programme; and to enter into Ijarah Agreements with the REIT Trustee. 5. The Issuer shall have furnished the Lead Arranger with a certified true copy of its Memorandum and Articles of Association together with Forms 24, 44, 49 and Annual Return; 6. The Lead Arranger shall have received specimen signatures of the authorised signatories, duly certified by the Company Secretary or in his/her absence, a Director of the Issuer; 7. Winding up search conducted on the Issuer with the Department of Insolvency confirming the Issuer has not been wound up (or a statutory declaration to that effect from the Directors of the Issuer); 8. Company searches conducted on the Issuer with the Companies Commission of Malaysia ( CCM ) confirming that there are no charges that have been registered in the CCM against the Issuer; Page 21 of 52

22 9. Documentary evidence or a written confirmation that the Issuer and/or Al- Aqar KPJ REIT, as the case may be, have opened and maintained the respective Designated Accounts based on the Syariah principles for the purposes stated in the Transaction Documents; 10. The required ratings for the Sukuk Ijarah Programme are accorded by RAM; 11. The Sukuk Ijarah Programme shall have received the approval/endorsement of the Syariah Adviser; 12. Legal opinion from the Solicitors confirming the legality, validity and enforceability of the Transaction Documents (save and except for the Transaction Documents relating to the charges to the said Identified Hospitals and Additional Hospitals, the Power of Attorney to dispose PdSH, the relevant document(s) set out under Item (2)(j)(3) and the assignment of the lease agreements between Al- Aqar KPJ REIT and the hospital operators of the Additional Hospitals); 13. Written confirmation from the Solicitors to the Lead Arranger that all the conditions precedent have been complied with or waived, as the case may be; 14. All necessary and satisfactory due diligence on the Issuer, the hospitals and limited due diligence on Al- Aqar KPJ REIT have been conducted and completed and confirmed by the Solicitors; 15. Receipt of redemption statement and undertaking from existing lenders that any (i) existing charges will be discharged immediately once all outstanding amounts have been paid; and (ii) consenting to the sale of the Identified Hospitals and undertaking to release the Identified Hospitals free of their security interests upon receipt of the redemption sum; 16. Receipt of valuation report(s) on the Identified Hospitals in form and substance acceptable to the Lead Arranger; 17. Relevant consents and approvals and Page 22 of 52

23 resolution empowering the REIT Trustee has been obtained and remain valid, where necessary (save and except for such consent or approvals from the relevant authorities in respect of the conditions and/or restriction-in-interest affecting the respective lands in relation to the Identified Hospitals and Additional Hospitals): i. to provide the security package (including the Power of Attorney, the option to purchase PdSH and/or undertaking to dispose of PdSH) and the declaration of trust over the Trust Assets owned by the REIT Trustee under the Sukuk Ijarah Programme; ii. iii. iv. to enter into and execute all the relevant agreements on behalf of Al- Aqar KPJ REIT; to sell the beneficial interests of the Identified Hospitals to the Issuer for the Ijarah transaction(s); to provide the Purchase Undertaking; 18. Receipt of consent to assign the lease agreements and acknowledgement of such assignment from the lessees of the lease agreements between Al- Aqar KPJ REIT and the hospital operators for the Identified Hospitals; and 19. Such other conditions precedent as advised by the Lead Arranger s Solicitors and Syariah Advisor to be incorporated in the Transaction Documents. b. Additional Conditions Precedent for Issuance(s) to Finance/Part-Finance the Acquisitions of PdSH, KSJ, KPJK, KMC and Future Acquisitions/Investments Unless the Special Conditions Precedent as detailed hereafter is complied with, issuance(s) after the initial shall also not result in a cumulative outstanding ICP/IMTN amount of more than RM288.0 million. For issuance of Sukuk Ijarah for the purposes of part financing the acquisition of PdSH, KSJ, KPJK, KMC or/and future acquisitions/investments, the Issuer shall procure from Al- Aqar KPJ REIT the following and present them to the Facility Agent (where relevant): Page 23 of 52

24 1. Receipt of certified true copies of the executed Sales & Purchase Agreement(s) for the relevant acquisition(s); 2. Receipt of confirmation from the Solicitors of the relevant Sale & Purchase Agreement(s) in a form acceptable to the Facility Agent/Lead Arranger that the Sale and Purchase Agreement(s) on the respective hospital land & buildings or other properties (in the case of future acquisitions/investments) is completed (i.e. all conditions precedent except for being free from encumbrances (if any) for the transfer of title on the hospital(s) or other properties have been satisfied or have been waived by the relevant party and all documents of title to the hospital(s) or other properties); However drawdown for KMC Land 2 (as defined in Item (2)(k)), shall only be subject to confirmation from the Solicitors of the Sale and Purchase Agreement that the Sale and Purchase Agreement for KMC Land 1 is completed and not following completion of the Sale and Purchase Agreement for KMC Land 2; 3. Receipt of redemption statement and undertaking from existing lenders that any existing charges will be discharged immediately once all outstanding amounts have been paid (if applicable); 4. Receipt of consent to assign the lease agreements to be executed between Al- Aqar KPJ REIT and the hospital operators of the Additional Hospitals; 5. SC s approval for the acquisition of the relevant hospital buildings(s) or other buildings (in the case of future acquisitions/ investments) have been obtained (if required); 6. Receipt of valuation report(s) on the relevant hospital buildings(s) or other properties (in the case of future acquisitions/ investments) in form and substance acceptable to the Lead Arranger; and/or Page 24 of 52

25 7. Such other conditions precedent as advised by the Lead Arranger s Solicitors and Syariah Advisor to be incorporated in the Transaction Documents. b.(1) Additional Conditions Precedent for Issuance(s) to finance reimbursement of costs incurred for work done for expansion of Al- Aqar KPJ REIT s existing assets Unless the Special Conditions Precedent as detailed hereafter is complied with, issuance(s) after the initial issuance shall also not result in a cumulative outstanding ICP/IMTN amount of more than RM288.0 million. The Issuer shall procure from Al- Aqar KPJ REIT the following and present them to the Facility Agent : 1. Receipt of written consent from the REIT Manager and the REIT Trustee for the expansion works carried out by the respective hospital operators on Al- Aqar KPJ REIT s existing assets; 2. Receipt of recommendation by the REIT Manager on the costs incurred by the hospital operators according to work done and to be supported by confirmation in writing from an independent quantity surveyor; and 3. Receipt of Certificate of Fitness for the expansion work done. c. Special Conditions Precedent for Issuance(s) leading up to a cumulative outstanding ICP/IMTN amount of more than RM288.0 million Issuance(s) leading up to a cumulative outstanding ICP/IMTN amount of more than RM288.0 million may be effected if: 1. The form(s) of security offered in favour of the Security Trustee for PdSH under Item (2)(j)(2) and/or Item (2)(j)(3) are/is achieved prior to such issuance(s), and are/is legal, valid and enforceable; or 2. The Issuer substitutes and/or causes to be Page 25 of 52

26 substituted in favour of the Security Trustee, all forms of security in relation to PdSH with other hospital(s)/building(s) based on terms of reference which are at minimum, identical to those under Items (2)(j)(1), (2)(j)(2), (2)(j)(5) as applicable, (2)(j)(7), (2)(j)(9) and (2)(j)(12). Such substitution shall be subject to RAM s approval and guided by considerations which would support the assigned credit ratings set out under Item (2)(m). w. Representations and Warranties Representation and warranties normal for a Programme of this nature as advised by the Lead Arranger s Solicitors, the Syariah Advisor and/or the Rating Agency, including but not limited to the following: 1. Status: The Issuer is a company duly established and existing under Malaysian law and it has the power and authority to enter into the business in which it is or proposes to be engaged; 2. Powers: The Issuer, REIT Trustee and REIT Manager (where applicable) have the power to enter into, exercise its rights under and perform its obligations under any of the Transaction Documents; 3. Authorisations: All necessary actions, authorisations and consents required by that date under the respective documents relating to the ICP/IMTN Programme have been taken, fulfilled and obtained and remain in full force and effect; 4. Non-violation: The Issuer entry into, exercise of their rights under, and performance of any of the Transaction Documents, to which they are a party, do not and will not violate any existing law; 5. Binding Obligation: The Transaction Documents relating to the Financing Facilities create valid and binding obligations which are enforceable on and against the Issuer and the relevant security parties; 6. Litigation: No litigation or arbitration is current or, to the Issuer s knowledge, is threatened, which if adversely determined Page 26 of 52

27 would have a material adverse effect on the ability of the Issuer or any of the security parties to comply with the Transaction Documents; 7. Tax: No tax liabilities of any kind are outstanding in payments and all computations and payments should be or should have been made to the Department of Inland Revenue or other relevant authorities have been made within the requisite periods and are up-to-date, correct and made on a proper basis without any disputes with the Department of Inland Revenue and other relevant authorities. x. Dissolution Events (Events of Default) Standard Dissolution Events (Events of Default) clauses shall apply, including but not limited to the following: 1. Non-Payment: The Issuer fails to service the periodic distribution of the IMTN to Sukukholders, redeem the nominal value of the ICP on the maturity date, redeem any nominal value of the IMTN on the Legal Maturity Date or pay any fees and other charges amount due on the due dates under the Sukuk Ijarah Programme Transaction Documents; 2. Misrepresentation: any representation, warranty or statement which is made or given by the Issuer under the Transaction Documents or which is contained in any specific certificate, document or statement furnished at any time pursuant to the terms of the Transaction Documents proves to be incorrect or misleading in any material respect on or as of the date made or given or deemed made or given, and in the case of a failure which in the opinion of the Facility Agent/ Trustee is capable of being remedied, the Issuer does not remedy the failure within a period of fourteen (14) Business Days after the Issuer has become aware or has been notified by the Facility Agent/ Trustee of the failure; 3. Breach of Obligation: Breach of covenants or other obligations on the part of the Issuer under any of the documents relating to the Sukuk Ijarah Programme that remains in Page 27 of 52

28 breach after the remedy period; 4. Invalidity: any provision of the Transaction Documents becomes, for any reason, invalid, illegal, void or unenforceable which would prevent the Issuer from performing any of its obligations thereunder; 5. Insolvency: The Issuer becomes unable to pay its debts within the meaning of Section 218(2) of the Companies Act, 1965 or becomes unable to pay its debts as they fall due or suspends or threatens to suspend making payments (whether interest or principal) with respect to all or any class of its debts; 6. Section 176: A scheme of arrangement under Section 176 of the Companies Act, 1965 has been instituted against the Issuer; 7. Receiver: A receiver has been appointed over the whole or a substantial part of the assets of the Issuer; 8. Composition of Winding Up: The Issuer convenes the meeting of its creditors or proposes or makes any arrangement or composition with, or any assignment for the benefit of, its creditors or a petition is presented or a meeting is convened for the purpose of considering a resolution or other steps are taken for making an administration order against or for winding up, dissolution or liquidation of the Issuer or a petition for winding up is presented against the Issuer; 9. Licence, authorisation or approval: There is a revocation, withholding or modification of a licence, authorisation or approval that impairs or prejudices the Issuer s ability to comply with the terms and conditions of the ICP/IMTN Programme or the provisions of the Trust Deed or any other Transaction Document in relation to the issue; and 10. Such other events of default as advised by the Lead Arranger s Solicitors and incorporated in the Documents. Should a Dissolution Event (Event of Default) occur, the Trustee, on behalf of the ICP/IMTN Page 28 of 52

29 Programme, shall have recourse to the Security / Collateral (as defined herein) or any other remedies available under the Trust Deed and/or the other Transaction Documents. The decision to declare a Dissolution Event should rest with the majority of the most senior outstanding Sukukholders. Under a Dissolution Event, the Termination Purchase Price (as defined in Item (2)(z)(v) will become immediately due and payable under the ICP/IMTN. y. Principal terms and conditions for warrants (where applicable) Not applicable z. Other principal terms and conditions for the issue z(i) Trust Assets The Issuer shall declare a trust for the benefit of the investors over the following Trust Assets: 1. Beneficial rights to the Identified Hospitals; 2. Rights under the Ijarah Agreement(s) and to the Ijarah Payments; 3. Purchase Undertaking by the REIT Trustee; and 4. Any additional items as advised by the Lead Arranger s Solicitors and/or Syariah Adviser. z(ii) Trigger Events Any occurrence of the following events: 1. The Lessee is unable to meet its obligations to pay the Ijarah Payments; or 2. Non-compliance of the terms under the Ijarah Agreement(s) by the Lessee, which if capable of remedy, has not been remedied within thirty (30) days of written notice from the Trustee to do so; or 3. The Issuer fails to redeem the IMTN on the Expected Maturity Date; or 4. The occurrence of an Event of Default under the Ijarah Agreement(s); or 5. Non-compliance with the Finance Service Reserve Account requirement as defined in Item (2)(z)(x)(4); or 6. An event of total loss in relation to any of the 11 hospitals which in the opinion of the Page 29 of 52

30 Trustee would significantly impair the ability of the Issuer to continue to collect Ijarah Payments from the Lessee in order to meet its obligations under the Sukuk Ijarah Programme; or 7. A distress, execution, attachment or other legal process is levied, enforced or sued out against any of the 11 hospitals, and is not discharged or stayed within thirty (30) days which in the opinion of the Trustee would significantly impair the ability of the Issuer to continue to collect Ijarah Payments from the Lessee in order to meet its obligations under the Sukuk Ijarah Programme; or 8. Termination of lease agreement between any of the 11 hospital operators and the REIT Trustee, which in the opinion of the Trustee would significantly impair the ability of the Issuer to continue to collect Ijarah Payments from the Lessee in order to meet its obligations under the Sukuk Ijarah Programme; or 9. Default on the lease agreements by any of the 11 hospital operators, which in the opinion of the Trustee would significantly impair the ability of the Issuer to continue to collect Ijarah Payments from the Lessee in order to meet its obligations under the Sukuk Ijarah Programme. Upon the occurrence of any of the above events and if after the Purchase Undertaking has been exercised, the Lessee is unable to pay the Termination Purchase Price (within the thirty (30) days time frame), the Security Trustee shall proceed with the disposal of the hospitals under Trust and those being charged individually by exercising the Irrevocable Power of Attorney granted to it by the REIT Trustee. The proceeds from the disposal shall be deposited into the Finance Service Account to redeem the outstanding ICP/IMTN based on the order of priority of sukukholders. Any excess monies after all outstanding ICP/IMTN amount have been paid will be returned to Al- Aqar KPJ REIT. All costs relating to the disposal shall be borne by Al- Aqar KPJ REIT. For avoidance of doubt, the occurrence of any Trigger Event will not constitute a Dissolution Page 30 of 52

31 z(iii) Purchase Undertaking Event (Event of Default) under the Transaction. The REIT Trustee (as Obligor for Al- Aqar KPJ REIT ) shall grant a Purchase Undertaking to the Issuer requiring the REIT Trustee to purchase the Identified Hospitals on the Ijarah Maturity Date or upon an occurrence of a Trigger Event or a Dissolution Event at the Termination Purchase Price (as defined below). z(iv) Sale Undertaking The Issuer shall grant a Sale Undertaking to the Obligor whereby the Issuer shall undertake to sell the Identified Hospitals to the REIT Trustee on the Ijarah Maturity Date, at a nominal value of RM1.00 (provided that all the ICP/IMTN shall have been paid in full). z(v) z(vi) Termination Purchase Price Redemption Value upon Trigger Event or a Dissolution Event(s) Upon the exercise by the Trustee (for investors) of its rights under the Purchase Undertaking granted by the REIT Trustee, the Termination Purchase Price payable shall be: At the Ijarah Maturity Date Equivalent to the aggregate outstanding nominal value of the ICP/IMTN payable and the Ownership Expenses (as defined herein) Upon Declaration of a Trigger Event(s) or a Dissolution Event(s) Equivalent to the aggregate of the Redemption Value (as defined in the phrase below) and the Ownership Expenses Upon the declaration of a Trigger Event or an Event of Default, the outstanding ICP/IMTN shall be redeemed based on the following formula: RV = FV [1 + {(r + p) x (n / 365)}] where: RV : Redemption Value FV : Face Value of the IMTN and ICP r : Benchmark Yield-to-Maturity/Return Rate (% per annum) p : Compensation shall be in compliance with the Compensation on Late and Default Payment(s) ( Ta Widh ) clause Page 31 of 52