1. Issuer Name : Sungei Wang Plaza Sdn Bhd ( SWPSB or the Company or the Issuer ).

Transcription

1 SUNGEI WANG PLAZA SDN BHD ( SWPSB ) RM213 MILLION NOMINAL VALUE REDEEMABLE SECURED SERIAL BONDS PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSED BONDS ISSUE 1. Issuer Name : Sungei Wang Plaza Sdn Bhd ( SWPSB or the Company or the Issuer ). Address : 7 th Floor, Building A, Peremba Square, Saujana Resort, Section U2, Shah Alam Business Registration No. : H Date/Place of incorporation : 16 May 1972 / Malaysia Date of Listing : Not applicable Status : Resident controlled company/ Non-Bumiputera controlled company Principal activities : The principal activities of SWPSB consist of letting of shoplots and the management of the Sungei Wang Plaza Complex. Board of Directors : Dato Mazidah binte Zakaria Dato Zulkifli bin Abdul Rahman Dato Che Mohd Annuar bin Che Mohd Senawi Mohamad Abdul Halim bin Ahmad Structure of shareholdings and names of shareholders or, in the case of public company, names of all major shareholders : Shareholder No of share % Landmarks Berhad 5,000, % Landmarks Hotel & Realty Sdn 4,800, % Bhd Authorised and paid-up share capital Authorised: Ordinary shares of RM1.00 each 15,000,000 Redeemable Preference shares of 10,000 RM1.00 each Issued and fully paid-up: Ordinary shares of RM1.00 each 9,800,000 Redeemable Preference shares of 1,000 RM1.00 each 2. Names of parties involved in the Proposed Bonds Issue i. Principal Adviser/Lead Arranger : United Overseas Bank (Malaysia) Bhd ( UOBM ) ii. Arrangers : Aseambankers Malaysia Berhad ( Aseambankers ) 1

2 Malaysian International Merchant Bankers Berhad ( MIMB ) iii. Valuers : W.M. Malik & Kamaruzaman iv. Solicitors : Lee Hishammuddin v. Financial Adviser : Not applicable vi. Technical Adviser : Not applicable vii. Guarantors : Not applicable viii. Trustee : Mayban Trustees Berhad (who will also carry out the role of Security Trustee) ix. Facility Agent : UOBM x. Primary Subscriber(s) and Amount subscribed : UOBM Aseambankers MIMB Total Nominal Amount RM171 million RM21 million RM21 million RM213 million xi. Underwriter(s) and amount underwritten : Not applicable xii. Syariah Adviser : Not applicable xiii. Central Depository : Bank Negara Malaysia xiv. Paying Agent : Bank Negara Malaysia xv. Reporting Accountant : KPMG xvi. Others None 3. Principle : Conventional 4. Facility Description : RM213 Million Nominal Value Redeemable Secured Serial Bonds. 5. Issue size Class AA2 Series 1 Series 2 Series 3 Series 4 Series 5 Sub-total Class A1 Series 1 RM14 million RM21 million RM21 million RM22 million RM74 million RM152 million RM41 million 2

3 Class A3 Series 1 Series 2 Sub-total 6. Issue price : Class AA2 Series 1 Series 2 Series 3 Series 4 Series 5 Sub-total Class A1 Series 1 Class A3 Series 1 Series 2 Sub-total RM7.5 million RM12.5 million RM20 million RM14 million RM21 million RM21 million RM22 million RM74 million RM152 million RM41 million RM7.5 million RM12.5 million RM20 million 7. Tenor of the facility/issue Series Tenure Class AA2 Series 1 3 years from the date of issue of the Bonds Series 2 4 years from the date of issue of the Bonds Series 3 5 years from the date of issue of the Bonds Series 4 6 years from the date of issue of the Bonds Series 5 7 years from the date of issue of the Bonds Class A1 Series 1 Class A3 Series 1 Series 2 7 years from the date of issue of the Bonds 2.0 years from the date of issue of the Bonds 2.5 years from the date of issue of the Bonds 8. Interest/Coupon/Profit or equivalent rate (%) Series Coupon % p.a. Class AA2 Series % Series % Series % Series % Series % Class A1 Series % Class A3 Series % Series % 9. Interest/Coupon/Profit Payment frequency : Semi-annually in arrears 3

4 10. Interest/Coupon/Profit Payment basis : Actual/ Security/Collateral : The Issuer will grant in favour of the Trustee the following security with the Class A1 to be subordinated to the Class AA2 Bonds and the Class A3 Bonds to be subordinated to the Class AA2 and Class A1 Bonds: a. A first legal charge over a piece of land registered in the name of SWPSB i.e. Geran 11043, Lot 1197 Seksyen 67 in the Town & District of KL ( Land ), upon which Sungei Wang Plaza Shopping complex ("Sungei Wang Plaza") is situated except the Trustee will disclaim all its rights to the Land save for the properties described in paragraph b(i) and b(ii), and the Trustee will when requested issue letters of disclaimers to the relevant persons disclaiming their interest, b. A legal assignment over the cashflows:- (i) generated by the Company s operations over approximately 450,000 square feet in net lettable area which is rented out ( Security Properties ); and (ii) derived from approximately 1,300 car park bays in Sungei Wang Plaza. However, approximately 500 car park bays of the 1,300 car park bays which are on floors 4 and 5 of Sungei Wang Plaza have been allocated to BB Plaza in exchange for approximately 300 car park bays in the basement of BB Plaza ( Car Park ); after deducting permitted and agreed operational expenses. This entails an assignment of the Designated Accounts. Security Properties and Car Park are collectively referred to as the Property. SWPSB will be entitled to transfer certain lots to be identified from the Security Properties to whollyowned subsidiaries provided the following are met:- (i) the lots taken collectively shall constitute less than 5% of the net lettable area under the Security Properties; (ii) the lots shall not be prime lots. Prime lots are defined as lots in the Concourse, Lower Ground, Ground and First floors of Sungei Wang Plaza; (iii) each and every one of the subsidiary shall execute a charge over the lots in favour of the Trustee; (iv) each and every one of the subsidiary shall assign all the cashflows from the rental of the lots in favour of the Trustee; and (v) the transfer shall only happen in the event the strata title is issued. c. A legal assignment of the Tenancy Agreements entered into in relation to the Security Properties. 4

5 (The legal assignment shall only require notification to the tenants.). d. A legal assignment over all SWPSB s insurance policies in respect of Sungei Wang Plaza which is in excess of RM1.0million on the following conditions:- (i) In respect of fire insurance, it will only be assigned to the Trustee for as long as SWPSB takes out such insurances i.e. until the formation of a management corporation for Sungei Wang Plaza. (ii) If any insurances assigned to the Trustee, other than fire insurance, is taken out by the management corporation ( MC ) and the new insurance accords to SWPSB substantially the same cover as the assigned insurance, that assigned insurance will be excluded from the assignment. (iii) In the event that any amount is payable under any insurance assigned to the Trustee, other than consequential loss insurance, the Trustee must utilise the proceeds received by it to rebuild and reinstate Sungei Wang Plaza, or any part thereof. e. A debenture consisting of a fixed and floating charge over all the assets of the Issuer, excluding the common property (together with all the equipment, fixtures and fittings thereon) and the units owned by the Issuer that do not form part of the properties described in paragraph b(i) and b(ii) above. f. Third party first legal charge over the entire issued and paid-up capital of the Issuer consisting of all its ordinary and preference shares. As part of the Condition Precedent, a Power of Attorney will be executed in favour of the Trustee to sell the Property. The existing securities over the Property will be discharged from the proceeds of the Bonds pursuant to the undertakings referred to in paragraph (d) of the Conditions Precedent hereunder Details on utilisation of : RM million proceeds Part repayment of Transferable Loan Facility (1) Estimated expenses (2) Note:- (1) The amount outstanding under the Transferable Loan Facility as at 19 May 2003 is RM220 million. SWPSB will utilise its internally generated funds to settle the remaining RM10 million. 5

6 (2) Estimated expenses includes part of the prepayment penalty payable pursuant to the Transferable Loan Facility, professional fees, rating fees, trustee fees and miscellaneous expenses in connection thereto. 14. Sinking fund : Not applicable. The Transferable Loan Facility Agreement provides that a prepayment penalty interest of 2% flat is payable to the Lenders, Pengurusan Danaharta Nasional Berhad ( Danaharta ) and the Employee Provident Fund Board ( EPF ) if prepayment were to occur on the second anniversary of the facility. However, Danaharta had also entered into a separate agreement with Landmarks Berhad, the holding company of SWPSB to waive its right to the prepayment penalty interest. Following therefrom, the prepayment penalty is only payable on EPF s portion of the loan. SWPSB is currently in discussion with EPF, to appeal for EPF to waive a certain portion of the prepayment penalty of RM2.2 million. Should EPF grant SWPSB this waiver, the prepayment penalty payable would be less than RM2.2 million. Any saving from the prepayment penalty will be first utilised to pay the profession fees which are in excess of RM600,000 and any remainder will be utilised to repay the total outstanding amount of the Transferable Loan Facility of RM220.0 million. 15. Rating Credit rating assigned AA2, A1 and A3 (indicative) Name of rating agency Rating Agency Malaysia Berhad 16. Form and Denomination : The Bonds will be represented by Global Certificate(s) to be deposited with Bank Negara Malaysia ("BNM") and shall be issued under the Fully Automated System for Tendering ("FAST") and Real Time Electronic Transfer of Funds and Securities ("RENTAS") and will be prescribed in bearer form under the Scripless Securities Trading System maintained by BNM. Each Bond will be denominated in RM1, Mode of Issue : The Bonds is intended to be subscribed on a bought deal basis by the primary investors who will then offer for sale the Bonds to persons who are within the categories set out in Section 4(6) of the Companies Act (as amended) subject to any law, order, regulation or official directive of either the Securities Commission, Bank Negara Malaysia or any other regulatory authority from time to time. 18. Selling Restriction : The Bonds may not be offered, sold, or dispose of, directly or indirectly, nor may any documents or other material in connection therewith be distributed in 6

7 Malaysia or anywhere else, other than to persons who are within the categories set out in Section 4(6) of the Companies Act (as amended) subject to any law, order, regulation or official directive of either the Securities Commission, Bank Negara Malaysia or any other regulatory authority from time to time. 19. Listing Status : The Bonds will not be listed on any exchange 20. Minimum Level of Subscription (RM or %) 21. Other Regulatory Approvals Required in relation to the Issue, Offer or Invitation and whether or not obtained 22. Additional information for Islamic PDS : RM213 million : None : Not applicable 23. Conditions Precedent : The issuance of the Bonds shall be subject to the following conditions which is including but not limited to: a. Receipt of valuation report on the Property. b. Receipt of technical report on the Property. c. Approval of the Securities Commission and/or other relevant authorities in Malaysia and the Issuer s compliance with all conditions of such approvals. d. Receipt of undertaking letter from holders/lenders of the Security to discharge their securities upon receipt of a specific settlement sum. e. All other prescribed security shall be in full force and effect except for the discharge of the existing securities over the assets of SWPSB. f. All required licenses and permits have been obtained. g. Confirmation from RAM of a minimum rating for the following Bonds: Class Class AA2 Class A1 Class A3 Minimum rating AA2 A1 A3 h. The Legal Counsel s review of and satisfaction with (i) the Issuer s certificate of incorporation and memorandum and articles of association and (ii) board resolutions of the Issuer authorising the issuance of the Bonds and appointment of authorised signatories to execute the relevant documents thereto. i. Receipt of legal opinion from the Legal Counsel that all conditions precedent to the issuance have been complied. j. Receipt of specimen signatures of those officers of 7

8 the Issuer who will sign all financing and security documents relating to the Bonds ( the Financing Agreements ) and will thereafter be giving notices or otherwise formally communicating with the Investors in relation to the Bonds. k. Receipt of certificate from the Issuer confirming that there are no litigation or arbitration proceedings against the Issuer which would likely have a material adverse effect on its ability to perform its obligations under the licenses and agreements to which it is a party. l. Certification by the Legal Counsel that the documentation for the Bonds issuance has been satisfactorily executed including the establishment of the Designated Accounts and that all necessary corporate and other required approvals and authorisation and consents have been secured with respect to all documents relating to the Bonds. m. Receipt of bank statements confirming the balances in the Designated Accounts should be at least RM17 million prior to the issuance of the Bonds. n. Execution of a Power of Attorney in favour of the Trustee to grant the Trustee powers including but not limited to the disposal of the Property. o. Any other condition deemed necessary by the Legal Counsel. 24. Representations and Warranties : The representations and warranties typical and customary for similar financings at the recommendation of the Arranger or Legal Counsel, which shall include events of default arising from the following: a. The Issuer is a company duly established and existing under Malaysian law and its has the power and authority to enter into the business in which it is engaged. b. The Issuer has the power to enter into, exercise its rights under and perform its obligations under the Financing Agreements. c. All necessary actions, authorisations and consents required under the Financing Agreements have been taken, fulfilled and obtained and remain in full force and effect. d. The Issuer s entry into, exercise of its rights under and performance of the Financing Agreements do not and will not violate any existing law or any agreements to which it is a party. e. The Financing Agreements create valid and binding obligations which are enforceable on and against the Issuer. f. The Issuer s assets are free of all security interests save as provided under the Financing Agreements. g. The Issuer s audited accounts are prepared in accordance with generally accepted accounting principles and standards and fairly represent the financial position. 8

9 h. No litigation or arbitration is current or, to the best of the Issuer s knowledge, is threatened, which if adversely determined would have a material adverse effect on its ability to perform its obligations under the Financing Agreements. 25. Events of Default : The events of default typical and customary for similar financings at the recommendation of the Arranger or Legal Counsel, which shall include the following: (i) Failure to pay timely interest, or timely principal at the respective Maturity Date. (ii) Other payment default in respect of obligations to financial institutions i.e. when other indebtedness due or capable of being declared due before its stated maturity or is not discharged at maturity or when called. (iii) Any authorisations, licence, approval, permit or consent which is required for the Issuer to carry on its business is withdrawn, revoked or terminated or has expired and not renewed and the result of the foregoing could reasonably be expected to have a material adverse effect on the ability of the Issuer to perform its obligations. (iv) An event of total loss occurs in the opinion of the Trustee (e.g. earthquake, fire, war etc.). (v) Bankruptcy, dissolution, reorganisation, intervention, arrangement or liquidation proceedings are instituted against the Issuer and is not withdrawn or discharged within 45 days thereof. (vi) The Issuer becomes or is declared insolvent or consents to the appointment of a trustee, custodian or receiver for it or for a substantial part of its property, or any such trustee, custodian or receiver is appointed, or bankruptcy, dissolution, reorganisation, intervention, arrangement or liquidation proceedings are instituted by the Issuer. (vii) Nationalization event shall have occurred. (viii) Other conditions typical and customary for similar financings at the recommendation of the Arrangers, legal counsel or independent consultants to the Arrangers. Upon the occurrence of an Event of Default, the Trustee may, and if so requested in writing by more than 68% of the Bondholders collectively or via the passing of a Special Resolution by Bondholders collectively (i.e. a resolution carried by a majority of not less than 75% of Class AA2, Class A1 and Class A3 collectively present and voting), declare that the Bonds immediately due and payable. 9

10 26. Principal terms and conditions for warrants : Not applicable 27. Other principal terms and conditions for the issue : Trigger Events The occurrence of any of the following:- (i) Failure to meet the DSRA requirement. (ii) Failure to maintain DSCR of 1.5 times. (iii) Any representation or warranty by the Issuer under the facility documents that proves to have been untrue in any material respect. (iv) Failure to obtain irrevocable undertaking from acceptable licensed financial institutions (having a minimum short term rating of at least P1 as determined by RAM or its equivalent) confirming that the Bonds has been refinanced by the end of Year 6. (v) If - (a) bankruptcy, dissolution, reorganisation, intervention, arrangement or liquidation proceedings are instituted against any company within the Landmarks Group (i.e. Landmarks Berhad and its subsidiaries) and is not withdrawn or discharged within 45 days thereof; or (b) any company within the Landmarks Group, becomes or is declared insolvent or consents to the appointment of a trustee, custodian or receiver for it or for a substantial part of its property, or any such trustee, custodian or receiver is appointed, or dissolution, reorganisation, arrangement or liquidation proceedings are instituted by any company within the Landmarks Group in respect of itself, and the occurrence of any such event has a material impact on Landmarks Berhad's financial position, the Trustee may, and if so requested in writing by more than 68% of the Bondholders collectively or via the passing of a Special Resolution by Bondholders collectively (i.e. a resolution carried by a majority of not less than 75% of Class AA2, Class A1 and Class A3 collectively present and voting) declare such an event as a Trigger Event. For avoidance of doubt, only events (i) to (iv) constitute automatic Trigger Events. Upon the occurrence of a Trigger Event, the Trustee shall proceed with the disposal of the Property. The disposal process shall be managed by the Trustee. The Trustee may sell part of the Property only if the proceeds are sufficient to repay the Bonds in full. 10

11 As part of the Condition Precedent, a Power of Attorney will be executed in favour of the Trustee to sell the Property. The sale proceeds shall be applied towards the redemption of the Bonds outstanding. The set off of any of the Trigger Event will not constitute an Event of Default. Redemption at the Option of the Issuer The Issuer may at any time prior to the Final Maturity Date, purchase the Bonds by tender or private treaty for cancellation. All Bonds purchased and cancelled shall not be available to the Issuer for re-issue. The Placement Agent shall endeavour to provide the Issuer with a one-time call option at end Year 5 (after redemption of Class AA2 (Series 3) Bonds) based on a predetermined premium payable (to be calculated in accordance to the formulae set out below) at the time the redemption is made. The Issuer will be entitled to redeem all or any of the following: (i) All of the outstanding Bonds in respect of Class AA2 (Series 4). (ii) All of the outstanding Bonds in respect of Class AA2 (Series 5). (iii) All of the outstanding Bonds in respect of Class A1 (Series 1). Subject always that the AA2 shall be redeemed first and subject to the following: The Issuer has cash balances in the Designated Accounts in excess of the audited Base Cashflow projections. The Debt Service Cover Ratio ( DSCR ) is more than 1.75 times after such payments. No event of default has occurred. The closing balance in the Designated Accounts after such payment, is at least equivalent to the balance as contained in the audited Base Cashflow Projections (after adjusting for the redemption of the principal amount as a result of the call option at end of Year 5). The redemption amount is at a minimum amount of RM30 million. In the event that the Issuer elects to redeem only a part of the outstanding Bonds in respect of Class AA2 (Series 4), Class AA2 (Series 5) or Class A1 (Series 1), a ballot may be required. The premium on redemption will be calculated in accordance with the following formula: 11

12 Premium (%) = PMT [1/i 1/(i(1+i) n ] Premium for Class AA2 (Series 5) PMT = [Series Cpn % 2 yr MGS(%), rate on date falling 3 months before the date of redemption 2.00%] x 100/2 Where: i = (2 yrs MGS(%), rate at point of redemption %) x ½ n = no. of half years up to maturity of series if Premium > 0 then premium payable = redemption amount x Premium% if Premium <= 0 then premium payable = zero Premium for Class A1 (Series 1) PMT = [Series Cpn % 2 yr MGS(%), rate on date falling 3 months before the date of redemption 3.50%] x 100/2 Where: i = (2 yrs MGS(%), rate at point of redemption %) x ½ n = no. of half years up to maturity of series if Premium > 0 then premium payable = redemption amount x Premium% if Premium <= 0 then premium payable = zero Premium for Class AA2 (Series 4) PMT = [Series Cpn % 1 year MGS(%), rate on date falling 3 months before the date of redemption 1.95%] x 100/2 Where: i = (1 yr MGS(%), rate at point of redemption %) x ½ n = no. of half years up to maturity of series if Premium > 0 then premium payable = redemption amount x Premium% if Premium <= 0 then premium payable = zero Designated Accounts The Issuer shall be required to open and maintain the following accounts with a Bank to be determined by the Trustee: i. Revenue Account. ii. Operations Account. iii. Debt Service Reserve Account ( DSRA ). The Revenue Account, Operations Account and DSRA collectively shall be referred to as Designated Accounts. The cash in the Designated Accounts can be substituted by an irrevocable bank guarantee for an equivalent amount (the bank must be rated P1 or its equivalent) and which is callable at any point in time. 12

13 Revenue Account The Issuer shall open a Revenue Account for the purpose of depositing all income from the Property, including the income receivable from Permitted Investments. In the event that any amounts not required to be deposited into the Revenue Account are deposited, the Trustee is authorised to release such monies to the Issuer upon the Issuer s request. Amounts not required to be deposited by the Issuer into the Revenue Account may include, amongst others, service charges, security charges, electricity, water, which are payable to SWPSB as the developer pending the formation of a MC. For avoidance of doubt, there should not be any refund of rental deposits from the Designated Accounts. The Revenue Account shall be operated by the Trustee as the joint signatory of the account. The funds in this account will be applied to meet the following permitted expenditure per the audited Base Cashflow Projections: i. Contributions to the Operations Account. Contributions equivalent to the next six (6) months of the projected expenditure per the audited Base Cashflow Projections for permitted operating expenditure items set out in the section below will be made from the Revenue Account to the Operations Account at the start of each six monthly period. Any surplus in the Operations Account at the end of each financial year will be remitted back to the Revenue Account. ii. Contributions to the Operations Account as a result of shortfall in the Operations Account, subject to the conditions set out under the Operations Account. iii. Issuing and paying agent fee. iv. Trustee fee. v. Agency Fee. vi. Rating Review Fee. vii. Valuation Fee (only on occurrence of Trigger Event or on disposal of Property or in accordance with the relevant requirements of the accounting standards). viii. Transfer to DSRA. ix. Financing costs including redemption of Bonds in the order of (1) Class AA2 debt (2) Class A1 debt (3) Class A3 debt. x. Dividends as allowed when Surplus Cash Payment Conditions met. xi. Inter-company balance (e.g. management fees, incentive fees, shareholders loans and advances but excluding dividends) subject to Surplus Cash Payment Conditions. The priority of payment set out above will only be applicable up to the time before the occurrence of an 13

14 Event of Default or Trigger Event. Upon the occurrence of an Event of Default or Trigger Event, payment will be made in the following order: i. Taxes and any statutory obligations. ii. Trustees and payment for any professional services. iii. Interest and to be followed by Principal on the Bonds in the order of (1) Class AA2 debt (2) Class A1 debt (3) Class A3 debt. iv. Any other payment including payment to other creditors. v. Remainder to the Issuer. Operations Account The Issuer shall open an Operating Account for the purpose of managing its operating expenditure. The Operations Account shall be solely operated by the Issuer. The funds in this account will be applied to meet the following permitted operating expenditure set out in the audited Base Cashflow Projections: i. Variable Expenditure a. Taxes. b. Assessment and quit rent for the shoplots and car park. c. Electricity and Water. d. Service tax. e. Other taxes. f. License fee for the car park and car park signboard. g. Employers contribution to EPF & Socso. ii. Other Expenditure h. Salaries, bonus, casual wages, allowance, laundry allowance, overtime allowance, staff incentive allowance, staff welfare, uniform, retirement benefit/gratuity, recruitment expenses, medical fees, staff training, transport & subsistence, travelling and accommodation. i. Upkeep of building/premise. j. Advertising and promotion expenses. k. Audit fee. l. Maintenance and general repairs. m. Insurance i.e. consequential loss & general liability. n. Cleaning expenses for the car park. o. Printing and stationery required for the car park and marketing department. p. Service charges (only in relation to car park lots where tenancy agreement stipulates that service charges are to be borne by the landlord and for untenanted lots). 14

15 q. Upkeep of operating equipment for the car park and marketing department. r. Market survey fees. s. Security charges for the car park. t. Directors fees, board fees and meeting allowance. u. Staff welfare i.e. annual dinner, annual passage, conference and seminar. v. Donation. w. Entertainment. x. Legal and professional fees. y. ISO 9002 programme fees. z. Direction sign and graphic. aa. Fire protection system. bb. Maintenance of pager and pager license fees. cc. Magnetic card and token coin expenses. dd. Messing, newspaper and periodicals, subscriptions, newsletter and brochures. ee. Office rental and office expenses (including potted plants and landscape). ff. Printing and stationery and stamp and postage. gg. Rental storage payable. hh. Sundry expenses. ii. Telephone and fax charges. jj. Workshop for tenants. The Issuer shall set aside the funds to meet the Variable Expenditure which shall be monitored by the Issuer separately from the funds to meet the Other Expenditure. The funds relating to the Variable Expenditure cannot be utilised to pay for Other Expenditure. Payments from the Operations Account shall be subject to the following: A. Variable Expenditure Any increase in the outflow due to an increase in any applicable rates, tariffs, taxes or statutory charges where such increase is imposed by law or by any regulatory authority shall be automatically disbursed. Any shortfall in the Operations Account arising hereto shall be automatically topped-up from the Revenue Account. B. Other Expenditure Any increase in the aggregate outflow by more than 5% of the estimate in the audited Base Cashflow Projections requires the prior written consent of the Trustee. New or any unforeseen expenditure not specifically addressed in the audited Base Cashflow Projections will also be taken into account in computing the margin of 5% in relation to the outflow. In order to ascertain whether the cash outflow has 15

16 exceeded or will exceed the permitted 5% deviation, the Trustee will act on a year-to-date basis. Any shortfall in the Operations Account shall be topped-up from the Revenue Account within 14 days after obtaining consent of the Trustee (if so required under B above). Debt Service Reserve Account The Issuer shall open and maintain a DSRA. This account shall be for the setting aside such amounts to meet the next projected debt service obligations twelve (12) months ahead of the next projected debt service obligation. These amounts shall be set aside fully on the issuance of the Bonds. Thereafter, the Issuer shall maintain the minimum DSRA balance at all times. Withdrawal from the DSRA can be made in either of the following circumstances: (i) For the purpose of meeting debt service obligations. (ii) In the event the balance held in the DSRA is less than/exceeds the required projected debt service obligations, the shortfall/excess shall be topped up from/released to the Revenue Account, as the case may be, except at the Final Maturity Date. At end Year 6, the balance in the DSRA need to only be equivalent to the projected interest obligation and supported by an irrevocable banking line (in lieu of principal redemption reserve) of an amount equivalent to the outstanding principal on the Bonds and net of balances in the Designated Account (after setting aside amount to meet operating expenditure for Year 7). The DSRA shall be operated solely by the Trustee. Surplus Cash Payment Conditions At each year end, in the event that: i. the Issuer has cash balances in the Designated Accounts in excess of the audited Base Cashflow projections (after adjusting for the redemption of the principal amount as a result of the call option at end of Year 5); ii. the Issuer s obligations under the Bonds are fully serviced; iii. the Debt Service Cover Ratio ( DSCR ) is more than 1.75 times after such payments; iv. no event of default has occurred; and v. the closing balance in the Designated Accounts after such payment, is at least equivalent to the balance as contained in the audited Base Cashflow Projections (after adjusting for the 16

17 redemption of the principal amount as a result of the call option at end of Year 5); (collectively Surplus Cash Payment Conditions ), the Issuer may utilise such surplus balances to pay any of the following: a. Inter-company balance (e.g. mangement fees, incentive fees, shareholders and related parties loans and advances but excluding dividends) which are subordinated to the Bonds in respect of all claims on the Issuer. Notwithstanding this, no inter-company balance shall be payable in Year 1 and Year 2. b. Dividends. Notwithstanding this, no cumulative dividend shall be payable in Year 1 and Year 2. Notwithstanding the above, the Issuer may opt to draw on the surplus at each anniversary of the Bonds rather than at each year end. However, in that situation, the audited Base Cashflow projections shall be taken to mean the audited Base Cashflow projection and deducting from the cashflow such period of unearned income and unpaid expenses (the unearned income and unpaid expenses shall be computed from the month end most immediate to the relevant anniversary date of the Bonds to the audited Base Cashflow projection). For avoidance of doubt, the Issuer can declare dividend on condition that there are retained profits and sufficient S108 tax credits. Only the cash payment of dividend is subject to the Surplus Cash Payment Conditions. All payments payable but unpaid under any dividend declared or subordinated instrument shall be accounted in the books of the Issuer as amounts payable and will continue to be subordinated and subjected to the Surplus Cash Payment Conditions. (audited Base Cashflow Projections refers to the audited cashflow projections provided to RAM and is the base upon which RAM formulated the rating and to be included in the Trust Deed) Other conditions Specifically, the following shall be included:! By end Yr 6, the Issuer shall provide irrevocable undertaking from acceptable licensed financial institutions (having a minimum short term rating of at least P1 as determined by RAM or its equivalent) to the Trustee toward refinancing the outstanding 17

18 balance of the Bonds (net of amounts in the Designated Accounts but setting aside amount to meet operating expenditure for Year 7). In the event that by end Yr 6, the Trustee have not received irrevocable undertaking from acceptable licensed financial institutions confirming that the Bonds has been refinanced, the Trustee shall proceed with the disposal of the Property. The disposal process shall be managed by the Trustee using its Power of Attorney. The sale proceeds shall be applied towards the redemption of the Bonds outstanding and payments in the order of priority outlined above. 18