Appendix 1. Principal Terms and Conditions of the Proposal

Transcription

1 CAHYA MATA SARAWAK BERHAD RM400 Million CMS Income Securities Appendix 1 Principal Terms and Conditions of the Proposal

2 Principal Terms and Conditions of the Proposal 1. BACKGROUND INFORMATION (a) Issuer (i) Name Cahya Mata Sarawak Berhad ( CMS ) Incorporated as Cement Manufacturers Sarawak Sendirian Berhad on 8 October Converted to a public company on 22 June 1988, to Cement Manufacturers Sarawak Berhad. The present name was changed in 13 June (ii) Address Registered Office: Level 6,Wisma Mahmud, Jalan Sungai Sarawak Kuching, Sarawak, Malaysia. (iii) Business Registration No. Company No: T (iv) Date / Place of Incorporation 8 October 1974 / Malaysia (v) Date of Listing (in case of a public listed company) Listed on Bursa Securities Malaysia Berhad on 22 February 1989 (vi) Status : Resident/Non-Resident Controlled Company Resident controlled company (RCC) : Bumiputera/Non-Bumiputera Controlled Company Bumiputera controlled company 1

3 (vii) Principal Activities CMS is principally an investment holding company, which also provides centralised treasury and administrative services to companies within the CMS Group. The Group is principally engaged in cement and steel manufacturing, construction and quarry operations, road maintenance, banking, stockbroking and related financial services, property development and trading. (viii) Board of Directors (as at 30 April 2005) Name of Directors Dato Sri Sulaiman Abdul Rahman Taib Tuan Haji Mahmud Abu Bekir Taib Datuk Wan Ali Tuanku Yubi Dato Sri Liang Kim Bang Datuk Haji Talib bin Zulpilip Datu Michael Ting Kuok Ngie Kevin How Kow Position Group Chairman, Non-Executive Director Group Deputy Chairman, Non-Executive Director Independent, Non-Executive Director Senior Independent, Non-Executive Director Non-Executive Director Independent, Non-Executive Director Independent, Non-Executive Director (ix) Structure of shareholdings and names of shareholders or, in the case of a public company, names of all substantial shareholders (as at 30 April 2005) Name of Substantial Nationality/ Direct Indirect % of Shareholders Shareholding Shareholding Issued Place of Capital Incorporation Majaharta Sdn Bhd Malaysia 44,925,102 Nil Lejla Taib Malaysian 37,000,000 Nil Dato Sri Sulaiman Abdul Rahman Taib Malaysian 29,465,085 44,925,102* Tuan Haji Mahmud Abu Bekir Taib Malaysian 29,400,085 44,925,102* Sarawak Economic Development Corporation Malaysia 26,965,360 Nil 8.19 * Deemed interest pursuant to S.6A of the Companies Act 1965 by virtue of his direct shareholdings of more than 15% in Majaharta Sdn Bhd (x) Authorised and paid-up capital (as at 30 April 2005) Share Capital Description Authorised ordinary share capital RM1,000,000, consisting of 1,000,000,000 ordinary shares of RM1.00 each Issued and fully paid-up share capital RM329,445, consisting of 329,445,840 ordinary shares of RM1.00 each 2

4 2. PRINCIPAL TERMS AND CONDITIONS (a) Names of parties involved in the proposed transaction (where applicable) (i) Principal Adviser(s)/Lead Arranger(s) Citibank Berhad ( Citibank ) (ii) Arranger(s) Southern Investment Bank Berhad Co-Arranger (iii) Valuers Not applicable (iv) Solicitors Messrs Adnan, Sundra & Low Principal Adviser s/lead Arranger s solicitors Messrs Zaid Ibrahim & Co Due Diligence solicitors (v) Financial Adviser Not applicable (vi) Technical Adviser Not applicable (vii) Guarantor Not applicable (viii) Trustee Mayban Trustees Berhad for Bond holders and CPOs holders (ix) Facility Agent Citibank (x) Primary Subscriber(s) and Amount Subscribed (where applicable) A financial institution licensed under Banking and Financial Institutions Act, 1989, ( Facilitator ) shall subscribe up to 100% of the proposed CMS Income Securities or RM400 million in nominal value 3

5 (xi) Underwriter(s) and Amount Underwritten Underwriting is not required by the Issuer (xii) Central Depository The Bonds shall be deposited with Bank Negara Malaysia ( BNM ) as depository There will be no central depository for the NCRPS. The NCRPS are issued in registered form and the certificates in respect of the same will be issued directly to the Facilitator (xiii) Paying Agent BNM for Bonds and CPOs Not applicable for the NCRPS. The Issuer will make all payments of the NCRPS directly to the registered holders of the NCRPS. (xiv) Reporting Accountant Ernst & Young (xv) Others (please specify) Ernst & Young Tax Consultants Sdn Bhd Tax Advisor Southern Bank Berhad Facilitator (b) Facility Description 1) CMS Income Securities. The CMS Income Securities consist of: (i) (ii) 400 fixed rate coupon-bearing serial bonds ( Bonds ) of RM999, each. The Bonds shall comprise a principal element ( Bond Principal ) and a coupon element ( Bond Coupon ); and 400 non-convertible redeemable preference shares ( NCRPS ) of RM1.00 each at an issue price of RM1, (being premium of RM999.00) for each NCRPS ( NCRPS Issue Price ). The NCRPS shall be effectively stapled to the Bonds in that the NCRPS and the Bonds ( CMS Income Securities ) are issued simultaneously to Facilitator. 2) The Repackaged CMS Income Securities The Repackaged CMS Income Securities consist of: (i) the Bond Principals; and (ii) the Conditional Payment Obligations ( CPOs ). 4

6 (c) Issue Size (RM) RM400 million in nominal value in relation to the CMS Income Securities RM225 million in nominal value in relation to the CPO (see item 2 (x) under section 3.2 CPO) (d) Issue Price (RM) The CMS Income Securities shall be issued to the Primary Subscriber at premium to face value. The price payable for each CMS Income Securities purchased shall be calculated in accordance with the formula specified in the Rules on Fully Automated System for Issuing/Tendering ( FAST Rules ) or in the rules governing such issues and approved by BNM. The formula used to calculate the proceeds for CMS Income Securities pursuant to FAST Rules is illustrated as follows: Price (P) = RV + K=1 C/2 1 + r N 1+ T/E 1 + r N K - 1+ T/E where, FV = Face value RV = Redemption value (=FV, if redemption is at par) C = Full Coupon rate r = market yield for a similar maturity period N = Number of semi-annual interest payments between the value date and maturity date T = Number of days from the value date to the next interest payment date E = Number of days in the coupon period in which settlement takes place The Bond Principal shall be purchased by Citibank and the CPO shall be subscribed by Citibank (collectively known as the Repackaged CMS Income Securities ) at the issue price of the CMS Income Securities as determined above. 5

7 (e) Tenure of the Facility/Issue BONDS NCRPS Total (Nominal value of CMS Income Securities) Serial Tenor Tranche Amount Redeemable Amount Amount (in RM million) (years) (in RM million) after Year (in RM million) A A B B C C D D E E F F Total Total (f) Interest/Coupon (%) (please specify) (i) For Bonds (% p.a. of CMS Income Securities): Full Coupon rate (% p.a) - Year 1 - Year 2 - Year 3 - Year 4 - Year 5 - Year 6 - Year 7 Serial A B C D E F Nominal Coupon rate (% p.a) - Year 1 - Year 2 - Year 3 - Year 4 - Year 5 - Year 6 - Year 7 6

8 (ii) For CPO: - The rates payable under CPO, which are equivalent to Full Coupon Rate are as follows: - The rates payable under CPO (% p.a. of CMS Income Securities) Tranche A B C D E F Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year (g) Interest/Coupon Payment Frequency The interest on the Bond Coupon and the payments under the CPOs shall be payable semi-annually. (h) Interest/Coupon Payment Basis The interest payment on the Bond Coupon and the payment under the CPOs shall be on Actual/365 days basis. (i) Yield to Maturity (%) To be determined upon issuance (j) Security/Collateral (if any) (1) Debt Repayment Reserve Account Debt Repayment Reserve Account charged by CMS to the Trustee for the benefit of bondholders (2) Bond Coupons and NCRPS The Bond Coupon and the NCRPS shall be charged by the Facilitator as security for the CPOs (3) Special Account A Special Account in the name of the Faciliator shall be charged by the Facilitator as security for the CPOs (k) Details on Utilisation of Proceeds Up to RM415 million of the proceeds from the Proposed Issue shall be utilised to refinance CMS s and its subsidiaries existing bank borrowings and the remaining amount for working capital purposes. The expected timing of repayment of the bank borrowings are to be carried out between 3 to 12 months from the issuance of the CMSIS. The indicative total issuance proceeds is approximately RM460 million. (l) Sinking Fund (if any) 7

9 None (m) Rating The long-term rating assigned to both the Bond Principals and CPOs are as follow: - Credit Rating Assigned : Name of Rating Agency : A2 (Final) Rating Agency Malaysia Berhad (n) Form and Denomination Bonds The Bonds will be represented by global certificates (exchangeable for definitive certificates only in limited circumstances). The Bonds shall be issued in bearer form and in denominations of RM999,000 each or a multiple thereof. NCRPS The NCRPS shall be issued in registered form and in denominations of RM1 each or a multiple thereof. (o) Mode of Issue CMS Income Securities Bought-deal basis. The Bonds Principal being scripless shall be issued through RENTAS via FAST, whereas the NCRPS shall be issued outside the BNM systems Repackaged CMS Income Securities The CPOs shall be fully subscribed by Citibank and 100% of the Bond Principal shall be sold to Citibank by the Facilitator. The Bonds Principal shall be sold to Citibank through RENTAS and the CPOs shall be issued through RENTAS via FAST (p) Selling Restriction (1) CMS Income Securities The Bond Principals (under the CMS Income Securities) may not be offered or sold, directly or indirectly, nor may any document or other materials in connection therewith be distributed in Malaysia, other than to persons falling within any one of the categories of persons specified under Schedules 2, 3 and 5 of the Securities Commission Act, The Bond Coupon is not tradeable. In addition, if any offer or sale of the Bond Principals or any distribution of any document or other material in connection therewith is to be conducted in any jurisdiction other than Malaysia, the applicable laws and regulations of such jurisdiction will also have to be complied with prior to any such offer, sale or distribution. In any event, the selling restrictions set out above have to be complied. (2) Repackaged CMS Income Securities 8

10 The Repackaged CMS Income Securities may not be offered or sold, directly or indirectly, nor may any document or other materials in connection therewith be distributed in Malaysia, other than to persons falling within any one of the categories of persons specified under Schedules 2, 3 and 5 of the Securities Commission Act In addition, if any offer or sale of Repackaged CMS Income Securities or any distribution of any document or other material in connection therewith is to be conducted in any jurisdiction other than Malaysia, the applicable laws and regulations of such jurisdiction will also have to be complied with prior to any such offer, sale or distribution. In any event, the selling restrictions set out above would also have to be complied. (q) Listing Status Neither NCRPS nor the Bonds will be listed on any exchange. (r) Minimum Level of Subscription (RM or %) The minimum level of subscription for the CMS Income Securities and the Repackaged CMS Income Securities is 30%. (s) Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained (please specify) On 22 April 2005, Citibank sought SC s waiver for Citibank to assume the role of principal adviser to CMS in submitting the relevant application to the SC for approval to issue the NCRPS (as part of the Proposed Issue), pursuant to the Policies and Guidelines on the Issue/Offer of Securities (the Issues Guidelines ), without having to appoint a licensed merchant bank to undertake the same; and in view of the nature/characteristics of the NCRPS to be issued, a waiver of some of the requirements of the Issues Guidelines. This approval was obtained on 8 June The Facilitator is required to seek BNM approval for investment of the NCRPS under section 66(1)(a) of the Banking and Financial Institutions Act BNM approval on issuance of the CPO by the Facilitator is not required, since the CPO is merely a contingent payment obligation of the Facilitator. (t) Conditions Precedent Conditions precedent typical of such issues, including but not limited to the following: (a) Approval(s) of the SC in writing for the Proposed Issue and the shareholders of the Issuer at an extraordinary general meeting for the proposed issue of NCRPS in conjunction with the Proposed Issue; (b) Approvals or resolutions from the Issuer s Board of Directors authorising the CMS Income Securities and the execution of all relevant documents thereto; (c) Satisfactory completion of the Issue Documents, duly executed and stamped or endorsed as exempted under Stamp Duty Exemption (No. 23) Order 2000; (d) Closing legal opinions from the Legal Advisor as to the validity and enforceability of all legal documentation and confirmation that all conditions precedent have been fulfilled; 9

11 (e) Satisfactory review by the Legal Advisor of the Issuer s Certificate of Incorporation and Memorandum and Articles of Association; (f) Winding-up searches conducted on the Issuer wherein the Official Receiver confirms that the Issuer is not wound up; (g) Consent from CMS s existing lenders for the CMS Income Securities, where applicable; (h) No event of default has occurred and is continuing or will occur as a result of the issuance of the CMS Income Securities; (i) Any other conditions precedent as may be stipulated by the Lead Arranger and/or the Legal Advisor. (u) Representations and Warranties Including but not be limited to the following: (a) The Issuer is a limited liability company duly incorporated and validly existing in accordance with and is governed by the laws of Malaysia; (b) The Issuer has the authority to enter into the relevant Issue Documents (as defined in item 2(x) below); (c) The Issue Documents are in full force and effect and constitute the valid, binding and enforceable obligations of the Issuer; (d) No event of default has occurred and there is no encumbrance on the assets of the Issuer except as permitted under the Issue Documents; (e) There is no litigation or arbitration that will materially and adversely affect the ability of the Issuer to perform its obligations under the Issue Documents to which it is a party save as disclosed; (f) The financial statements and other information supplied are true and accurate in all material respects and not misleading except that, where the warranted information is a forecast, the warranty will be to the effect that the forecast has been made on the basis of assumptions which were reasonable at the time when they were made and after due inquiry; (g) Neither the Issuer nor any of its assets are entitled to immunity from process, execution, attachment or legal process; (h) The Issuer is in compliance and will comply with any applicable laws and regulations in all material respects; (i) All necessary actions, authorizations and consents have been taken, fulfilled and obtained and remain in full force and effect; (j) The Issuer s entry into, exercise of its rights under and performance of the Issue Documents do not and will not violate any existing law or agreement to which it is party; and (k) Such other representations and warranties as may be advised by the legal counsel of the Lead Arranger. 10

12 (v) Events of Default Events of default typical of such issues, including but not limited to the following: 1. Material adverse change in the business, condition (financial or otherwise), operations or prospects of the Issuer and its subsidiaries; 2. Representation or warranty being untrue or incorrect in any material respect when made or repeated; 3. Breach of any term or condition under the relevant Issue Documents, including financial covenants and negative pledge; 4. Any material licence or other material agreement is suspended, revoked or terminated or amended in a materially adverse way; 5. Cross default to other material indebtedness by the Issuer and its subsidiaries; 6. Failure to pay final judgment or court order; 7. Failure to pay Bond Coupon or face amount of the Bonds when due and payable; 8. Reorganisation, liquidation, voluntary or involuntary bankruptcy or insolvency proceedings of the Issuer and/or its subsidiaries, including a winding-up order made against the Issuer and/or its subsidiaries, a resolution to wind up the Issuer and/or its subsidiaries and a scheme of arrangement under section 176 of the Companies Act 1965 instituted against the Issuer and/or its subsidiaries, except as permitted in the Issue Documents; 9. Appointment of a receiver over the whole or a substantial part of the assets of the Issuer and/or its subsidiaries; and 10. Revocation, withholding or modification of any licence, authorisation or approval that impairs or prejudices the Issuer s ability to comply with the terms and conditions of the relevant Issue Documents, subject to the detail terms to be agreed on the Issue Documents. Upon the occurrence of an Event of Default, the Trustee may or shall (if directed to do so by a special resolution of the Bondholders) declare that the Bonds together with all accrued interest are immediately due and payable. Thereafter, the Trustee may take proceedings against the Issuer as it may think fit to enforce immediate repayment of the Bonds. Further, upon an acceleration of the Bonds, the Facilitator will immediately transfer the Bond Coupons and the NCRPS to the holders of the CPO. The Issuer will thereafter no longer have the option of paying dividends together with nominal coupon and instead will have to pay full coupon. Thereafter, the holders of the CPO (who are now effectively the holders of the Bond Coupon and the NCRPS) will have recourse to the Issuer (in their capacity as holders of the Bond Coupon) and shall be entitled to share in the redemption proceeds, in accordance with the formula as set out under Event of Default in section 3.2 CPO of item 2(x) below. (w) Principal terms and conditions for warrants (where applicable) Not applicable 11

13 (x) Other principal terms and conditions for the issue 1.0 CMS Income Securities Issuer : Cahya Mata Sarawak Berhad ( CMS or the Company ) Type of Facility and Amount : Fixed income securities issue of up to an amount of RM400 million ( Facility ) consisting of:- (a) 400 fixed rate coupon-bearing serial bonds ( Bonds ) of RM999,000 each. The Bonds shall comprise a principal element ( Bond Principal ) and a coupon element ( Bond Coupon ). (b) 400 non-convertible redeemable preference shares ( NCRPS ) of RM1.00 each at an issue price of RM1,000 for each NCRPS ( NCRPS Issue Price ). The NCRPS shall be effectively stapled to the Bonds in that the NCRPS and the Bonds are issued simultaneously to the same party and the coupon payment obligations under the Bonds are dependent on the payments made under the NCRPS ( CMS Income Securities or Proposed Issue ). Issue Date : The CMS Income Securities shall be issued within 6 months from the date of the Securities Commission s approval of the Facility. The tentative issue date is January Purpose : Up to RM415 million of the proceeds from the Facility shall be utilised to refinance CMS s and its subsidiaries existing bank borrowings and the remaining amount for working capital purposes. Primary Subscriber : Facilitator Facilitator : A banking institution licensed under BAFIA, 1989 Issue Documents : All legal documentation in relation to the CMS Income Securities including but not limited to the Trust Deed; Subscription Agreement; Depository and Paying Agency Agreement; Security Documents Negative Pledge : A negative pledge from each of the Issuer and certain identified subsidiaries (including CMS Cement Sdn Bhd, PPES Works (Sarawak) Sdn Bhd, CMS Steel Sdn Bhd and 12

14 CMS Road Sdn Bhd) in respect of all their present and future assets, subject to certain exceptions specified in the Issue Documents. Payment Date : A date falling on the maturity of each 6 month period from the date of issue of the Bonds or NCRPS, as the case may be. Covenants : Including but not limited to the following: 1. Upon request and reasonable notice from the Trustee, (a) make available for the inspection of the Trustee or its auditors the whole of the accounting or other records of the Issuer as the Trustee may reasonably require; (b) give to the Trustee such information as the Trustee or its auditors may reasonably require with respect to the Issuer s affairs to the extent permitted by law to enable the Trustee to discharge its duties and obligations as trustee under the Trust Deed or imposed on the Trustee by the operation of law; and (c) procure the auditors to furnish to the Trustee promptly such certificates or other information as the Trustee may from time to time reasonably request in connection with any matter arising under the Issue Documents; 2. Exercise reasonable diligence in carrying out and operating its business and in a proper and efficient manner in accordance with sound business and financial practices including ensuring that all necessary material approvals or licences relevant to its business are obtained and are kept in full force and effect; 3. Ensure that transactions conducted with any of its affiliates are on an arms length basis; 4. To maintain a Paying Agent in Malaysia at all times; 5. Keep proper and complete books and accounts for the carrying on of its business and maintain and keep up to date records in accordance with the law and generally accepted and approved accounting principles in Malaysia and ensure that the financial statements of the Issuer give a true and fair view of the results of the operating and financial condition of the Issuer; and 6. The Issuer shall undertake to set aside 60% share of all future cash proceeds arising from the sale and/or listing of equity interests in the following companies: (i) CMS Cement Sdn Bhd, (ii) PPES Works (Sarawak) Sdn Bhd, (iii) CMS Steel Sdn Bhd and (iv) CMS Road Sdn Bhd. Such proceeds shall be 13

15 deposited in a Debt Payment Reserve Account no later than seven (7) days from day of receipt and only be applied towards the debt servicing of the CMS Income Securities. Clear Market : No other Ringgit fund raising exercise or announcements thereof by the Issuer without the prior approval of the Lead Arranger from the award of the mandate to the ninety (90) days after the date of signing of legal documentation relating to the proposed fund raising. Market Flex : The Issuer agrees that, the Lead Arranger has the right at any time to change any or all of the terms, structure, tenure, pricing and amount of the CMS Income Securities if such changes are advisable in the judgment of the Lead Arranger to ensure a successful arrangement of the CMS Income Securities. If the Lead Arranger determines such changes are necessary, the Lead Arranger will consult with the Issuer for a period of up to 5 business days about such changes. If the Issuer does not accept such changes after such period, the Lead Arranger shall be entitled to terminate its commitment and agreement. Market Out : Should there occur a material adverse change in the opinion of the Lead Arranger in the financial and business condition of the Issuer or in the economic, social and political situation in Malaysia, prior to the launch of the CMS Income Securities, the Lead Arranger reserves the right to cancel and/or restructure the CMS Income Securities. Financial Close : The date of signing of all Issue Documents which is expected to occur in December Governing Law and Jurisdiction : The laws of Malaysia and the non-exclusive jurisdiction of the Courts of Malaysia. 14

16 1.1 Bonds Amount and Tenor : The Serial Bonds shall be for tenor ranging from 2 to 7 years from the date of issue. Nominal Amount (RM million) Tenor (Years) Serial A Serial B Serial C Serial D Serial E Serial F Total Issue Price : The Bonds, stapled together with the NCRPS shall be issued at premium at a price to be agreed between the Issuer and Primary Subscriber Redemption : Unless previously redeemed or purchased and cancelled, the Bond Principal shall be redeemed by CMS at par on maturity. In addition, the CPO (as described in section 3.0 below) investors and the Bond Principal investors shall enter into an agreement upfront that the final payment of RM0.4 million (whether being redemption monies of the NCRPS or otherwise) shall be distributed to Bond Principal investors such that on maturity of the Bond Principal, including the redemption proceeds of the Bond Principal, the investors will receive a total of RM400 million Upon an event of default, each series of the Bonds will be redeemed at the value (over and above par value), calculated based on the following formula: - N K=1 RV + C/2 N K 1 + CR 1 + CR where, RV C CR N = Redemption value of the respective series of CMS Income Securities = The aggregate amount payable under CPO on the respective series for that particular year = Yield to maturity to be determined upon issuance = Number of semi-annual payments between the value date and maturity date Upon a redemption of the Bonds pursuant to an event of default, the trustee for the bondholders shall distribute the redemption proceeds received from the Issuer to the holders of the Bond Principal and the holders of the CPOs respectively, in accordance with the following formula for 15

17 the Bond Principal (please refer to the formula as set out in Section 3.2 for the CPOs): - For the Bond Principal: - RV 1 + CR N 200 where, RV CR N = Redemption value of the respective series of CMS Income Securities = Yield to maturity to be determined upon issuance = Number of semi-annual payments between the Value date and maturity date Interest on Bonds : Interest on the Bonds i.e. the Bond Coupon shall be payable on each Payment Date as follows ( Full Coupon Rate ):- (i) if no Dividend Payment Event has occurred, the Bond Coupon shall be payable in the manner stipulated as follows: (a) Year 1 to respective maturity of each series of CMS Income Securities (Except Final Payment) At the relevant Full Coupon Rate to be determined multiplied by the total nominal value of the CMS Income Securities. (b) The respective maturity of each series (Final Payment) At the relevant Full Coupon Rate to be determined multiplied by the total nominal value of the CMS Income Securities plus 0.10% of the nominal value of each series of CMS Income Securities. However, if a NCRPS Redemption Event occurs, the final payment shall be equal to (i) (a) above. (ii) if a Dividend Payment Event has occurred, the Bond Coupon shall be reduced to a nominal amount payable on the Payment Date in the manner as follows ( Nominal Coupon Rate ): (a) Year 1 to the respective maturity of each series (Except Final Payment) At 0.01% per annum multiplied by the total nominal value of the CMS Income Securities. (b) Maturity of the respective series (Final Payment) At 0.01% per annum multiplied by the total nominal value of the CMS Income Securities plus 0.10% of the nominal value of the respective series of CMS Income Securities matured. 16

18 However, if a NCRPS Redemption Event occurs, the final payment shall be equal to (ii) (a) above. Coupon Rate : The Full Coupon and Nominal Coupon rates for the Bonds are as follows: Serial A B C D E F Full Coupon Rate (% p.a) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year Nominal Coupon Rate (% p.a) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Form and Denomination : The Bonds will be represented by global certificates (exchangeable for definitive certificates only in limited circumstances). The Bonds shall be issued in bearer form and in denominations of RM999,000 each or a multiple thereof. Selling Restrictions : The Bond Principals may not be offered or sold, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling within any one of the categories of persons specified under Schedules 2, 3 and 5 of the Securities Commission Act The Bond Coupon is not tradeable. In addition, if any offer or sale of the Bond Principals or any distribution of any document or other material in connection therewith is to be conducted in any jurisdiction other than Malaysia, the applicable laws and regulations of such jurisdiction will also have to be complied with prior to any such offer, sale or distribution. In any event, the selling restrictions set out above have to be complied. Rating : The Bonds under the CMS Income Securities shall have a minimum long-term rating of A2 by Rating Agency Malaysia Berhad ( RAM ) at the date of issue. 17

19 Trading and Settlement Mechanism : The Bond Principals (and the CPOs which together constitute the Repackaged CMS Income Securities) shall be tradeable and transferable under the Real Time Electronic Transfer of Funds and Securities (RENTAS) System maintained by Bank Negara Malaysia ( BNM ). Security for Bondholders : Debt Payment Reserve Account charged to the Trustee. Debt Payment Reserve Account : CMS will establish and maintain a Debt Payment Reserve Account ( DPRA ) upon Financial Close, and to the extent permitted by law, pledge the account to the Trustee for the benefit of the investors. The DPRA will be operated by CMS. The Issuer shall be permitted to utilise the funds held in the DPRA to invest in Permitted Investment pending utilisation of funds and utilise any income earned therein to service debt payment due under the CMS Income Securities. Notwithstanding anything to the contrary, upon the occurrence of a Potential Event of Default and until the resolution of the same, any withdrawal from the DPRA shall be subject to the joint signatures of the Trustee and CMS. Potential Event of Default shall mean any Event of Default or any condition which with the lapse of time (or the giving of any notice or the making of any determination) would constitute an Event of Default. Permitted Investment : Investment products including but not limited to the following: (i) Deposits with licensed financial institutions; (ii) Banker acceptances, bills and other money market instruments issued by financial institutions; (iii) Treasury bills, money market instruments and other debt instrument issued by the Government of Malaysia; (iv) Debt instruments issued by quasi Government or Government with a minimum rating of P1 and A1 rated by RAM or debt instrument guaranteed by the Government; and/or (v) Private debt securities with a minimum rating of P1 and A1 rated by RAM. Financial Covenants : 1. Maximum Debt to Shareholders Funds ratio of 1.50 to 1 Debt is defined as the aggregate of all secured and 18

20 unsecured indebtedness for borrowed monies (external borrowings). Shareholders funds is defined as the aggregate of paid-up capital (equity and preference), shareholders loans and advances which are subordinated, retained earnings, reserves and minority interests. 2. Minimum EBITDA/Interest Expense of at least 1.50 times EBITDA is defined as the net operating income before taxes, interest and/or profit (where Islamic financing is concerned), depreciation and amortisation, which shall be calculated on the Issuer s financial year end duly certified by the Issuer s Chief Financial Officer or its equivalent.. Interest Expense is defined as the aggregate amount of the accrued interest, commission, fees, discounts, or premiums and other finance payments in respect of the indebtedness whether paid, payable or capitalised by the Issuer. Events of Default : Events of default typical of such issues, as stipulated in item 2(v) above. Other Terms and Conditions Issue of the Bonds shall be in accordance with the Code of Conduct and Market Practices for the Malaysian Corporate Bond Market prepared by Institut Peniaga Bon Malaysia and approved by BNM. 1.2 NCRPS Tenor : The NCRPS shall not have a fixed tenor, however redeemable at any time within the last 1 year of the tenor of the respective Series of Bonds to which the NCRPS is linked. Serial Amount (RM million) Redeemable after Year A B C D E F Total NCRPS Issue Price : The NCRPS shall be issued at an issue price of RM1,000 per share (being a premium of RM999 per share). 19

21 Redemption : The NCRPS shall be redeemable by CMS at any time within the last one (1) year of the tenor of the respective Series of Bonds to which the NCRPS is linked at the NCRPS Issue Price. The share premium created under the NCRPS issue shall be maintained for purposes of redemption of the NCRPS. Dividend on NCRPS : Non-cumulative dividend on the NCRPS ( Dividend ) may be payable on each Payment Date at a rate to be determined multiplied by the total value of the CMS Income Securities. For the purposes of the Income Tax Act 1967 and subject to the Companies Act 1965, the Dividend shall be payable in cash and with the relevant required amount of Section 108 tax credits attached. Dividend Rate : The indicative Dividend rate (net of tax) for the NCRPS, subject to the finalisation of Issue Documents are as follows: - Indicative Dividend (net of tax) (% p.a.) Tranche A B C D E F Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year Dividend Payment Event : CMS declares and pays the Dividend on or before the relevant Payment Date. NCRPS Redemption Event Terms and Conditions of the NCRPS : CMS redeems the NCRPS at the NCRPS Issue Price. : The terms and conditions of the NCRPS shall include but not be limited to the following:- (a) As regards income Each NCRPS shall confer on the holder thereof the right to be paid on each Payment Date, out of the profits of the Company available for distribution in respect of each financial year or other accounting period of the Company and in priority to any payment in respect of any other class of shares in the capital of the Company, a preferential dividend as set out in Dividend on NCRPS above. (b) As regards capital The NCRPS shall not confer on the holder thereof any right to participate on a return in excess of capital on liquidation, winding-up or otherwise of the Company, 20

22 other than on redemption up to the NCRPS Issue Price. (c) As regards voting The NCRPS shall not confer on the holder thereof any rights to receive notice of or to attend or vote at any general meeting of the Company, other than on a resolution to amend or vary the rights of holders of NCRPS in respect of its class. (d) As regards ranking The NCRPS shall rank pari passu among themselves, within its respective class. (e) As regards redemption The NCRPS may be redeemed by the Company at any time within the last 1 year of the tenor of the respective Series of Bonds to which the NCRPS is linked or on a liquidation or winding-up of the Company, whichever is earlier. (f) As regards transfer The NCRPS holders shall have the right to transfer in whole or in part their interests in the NCRPS subject to the Company s consent, which consent shall not be unreasonably withheld. (g) As regards further participation Save as expressly provided in the terms of the NCRPS, the NCRPS shall not confer on the holder thereof any entitlement to participate in the profits or assets of the Company. Form and Denomination : The NCRPS shall be issued in registered form and in denominations of RM1 each or a multiple thereof. 2.0 Repackaging of CMS Income Securities Method of Implementation : 1) A financial institution, licensed under the Banking and Financial Institutions Act, 1989 and operating in Malaysia ( Facilitator ) shall subscribe for the CMS Income Securities for a consideration based on the yield to maturity. 2) The Facilitator shall destaple the CMS Income Securities into its individual components i.e. Bond Principal, Bond Coupon and NCRPS. The Facilitator shall hold the Bond Coupon and NCRPS until maturity and redemption thereof respectively. 21

23 3) The Facilitator shall undertake conditional payment obligations ( CPOs ), which represents an obligation on the part of the Facilitator, subject to the satisfaction of certain conditions, to make payment to the investors of amounts equivalent to the Full Coupon Rate, (in place of the detached Bond Coupon). The CPOs shall be payable on each Payment Date, including an additional payment of 0.10% of the nominal value of each series of CMS Income Securities together with the final CPO payments. Payment of the CPOs shall be conditional upon the Facilitator receiving either (a) the Dividend and Nominal Coupon Rate, or (b) Full Coupon Rate payments from CMS, and, in relation to the final CPO payment, if an NCRPS Redemption Event has occurred, (c) NCRPS redemption proceeds. 4) The Bond Principal and the CPOs ( Repackaged CMS Income Securities ) shall be sold to Citibank Bhd for a consideration based on yield to maturity. 5) The Bond Coupon and NCRPS shall be charged by the Facilitator as security for the CPOs. 6) The Facilitator shall issue an irrevocable and unconditional payment instruction to CMS directing CMS to make all payments under the NCRPS and Bond Coupon to an account in the name of the Facilitator ( Special Account ), which shall be charged by the Facilitator as security for the CPOs. All amounts in the Special Account (which shall include any top-up payment, if necessary, from the Facilitator) shall only be withdrawn for purposes of meeting the CPOs payments. The top-up payment from the Facilitator shall be the difference, if any, between the proceeds received in full from CMS and the CPOs amount (which is equivalent to the Full Coupon Rate) in relation to each interest period. 7) CMS and the Facilitator shall enter into an agreement under which:- (a) CMS shall give notice to the Facilitator no later than T minus 4 ( T being the Payment Date) of its intention to declare and pay the Dividend and Nominal Coupon Rate amount into the Special Account on T minus 1; (b) The Facilitator undertakes that upon receipt of the notice referred to in (a) above, and in advance of actual payment by CMS, it will pay the top-up amount into the Special Account on T minus 2; (c) CMS covenants that in the event the Facilitator defaults in paying the top-up amount into the Special Account on T minus 2, CMS shall pay the Full Coupon Rate amount (instead of the Dividend and Nominal Coupon Rate amount) into the Special Account on T minus 1; 22

24 (d) The Facilitator indemnifies CMS for all actual losses suffered by CMS arising from default by the Facilitator in paying the top-up amount into the Special Account on T minus 2,; and (e) CMS undertakes that in the event the Facilitator pays the top-up amount into the Special Account on T minus 2, CMS will declare and pay the Dividend and Nominal Coupon Rate amount into the Special Account on T minus 1, failing which CMS will pay the Full Coupon Rate into the Special Account and indemnifies the Facilitator in full for any and all losses suffered by the Facilitator. 3.0 Repackaged CMS Income Securities Type of Instruments : The Repackaged CMS Income Securities consist of: (i) The Bond Principals; and (ii) the Conditional Payment Obligations ( CPOs ) Central Depository and : BNM Paying Agent Trustee : Mayban Trustees Berhad Legal Advisor : Messrs. Adnan Sundra and Low Issue Documents : All legal documentation in relation to the Repackaged Income Securities including but not limited to the Trust Deed; Depository and Paying Agency Agreement; Security Documents Rating : The Bond Principals and the CPOs under the Repackaged CMS Income Securities shall have a minimum long-term rating of A2 by RAM at the date of issue. Selling Restrictions : The Repackaged CMS Income Securities may not be offered or sold, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling within any one of the categories of persons specified under Schedules 2, 3 and 5 of the Securities Commission Act In addition, if any offer or sale of Repackaged CMS Income Securities or any distribution of any document or 23

25 other material in connection therewith is to be conducted in any jurisdiction other than Malaysia, the applicable laws and regulations of such jurisdiction will also have to be complied with prior to any such offer, sale or distribution. In any event, the selling restrictions set out above have to be complied. Trading and Settlement Mechanism : The Bond Principals and the CPOs which together constitute the Repackaged CMS Income Securities shall both be tradeable and transferable as separate instruments under the Real Time Electronic Transfer of Funds and Securities (RENTAS) System maintained by Bank Negara Malaysia ( BNM ). 3.1 Bond Principal The Principal Terms and Conditions of the Bonds in section 1.1 above shall apply to the Bond Principal except for the following: - Issue Price : The Bond Principals will be sold at a discount to the nominal value based on the prevailing market yield Interest on Bonds and Coupon Rate : Not applicable as the Bond Coupons have been detached and retained by the Facilitator 3.2 CPO Issuer : Facilitator Issue size : RM225 million in nominal value Payments under CPO The rates payable under CPO, which are equivalent to Full Coupon Rate are as follows: - The rates payable under CPO (% p.a. of CMS Income Securities) Tranche A B C D E F Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year

26 The amount payable under CPO (or nominal value of CPO) are as follows: - Amount payable under CPO (in RM million) Tranche A B C D E F Total Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year Total Nature : The CPOs represent obligations on the part of the Facilitator, subject to the satisfaction of certain conditions, to make payment to the investors of amounts equivalent to the Full Coupon Rate, (in place of the detached Bond Coupon). The CPOs shall be payable on each Payment Date, including an additional payment of 0.10% of the nominal value of each series of CMS Income Securities together with the final CPOs payment. Payment of the CPOs shall be conditional upon the Facilitator receiving either (a) the Dividend and Nominal Coupon Rate, or (b) Full Coupon Rate payments from CMS, and, in relation to the final CPO payment, if an NCRPS Redemption Event has occurred, (c) NCRPS redemption proceeds. The holder of CPO shall have no recourse to the Facilitator, save and except to the extent of the monies standing to the credit of the Special Account. Issue Date : The CPOs shall be issued by the Facilitator immediately after the subscription of the CMS Income Securities by the Facilitator. Mode of Issue : Bought-deal basis Primary Subscriber : Citibank Berhad Issue Price : The CPOs will be issued at discount to amount payable under each of the CPO based on the prevailing market yield 25

27 Payment Date : A date falling on the maturity of each 6 month period from the date of issue of the CPOs. Governing Law and Jurisdiction : The laws of Malaysia and the non-exclusive jurisdiction of the Courts of Malaysia. Security : The Bond Coupon, NCRPS and the Special Account shall be charged by the Facilitator as security for the CPOs Event of Default : Upon an event of default of the Bonds, each series of the Bonds will be redeemed at the value (over and above par value), calculated based on the following formula: - N K=1 RV + C/2 N K 1 + CR 1 + CR where, RV C CR N = Redemption value of the respective series of CMS Income Securities = The aggregate amount payable under CPO on the respective series for that particular year = Yield to maturity to be determined upon issuance = Number of semi-annual payments between the value date and maturity date Upon a redemption of the Bonds pursuant to an event of default, the trustee for the bondholders shall distribute the redemption proceeds received from the Issuer to the holders of the Bond Principal and the holders of the CPOs respectively, in accordance with the following formula for the CPOs (please refer to the formula as set out in Section 1.1 for the Bond Principal): - For the CPOs: - N K=1 C/2 1 + CR 200 K where, C CR N = The aggregate amount payable under CPO on the respective series for that particular year = Yield to maturity to be determined upon issuance = Number of semi-annual payments between the value date and maturity date Further, upon the declaration that the Facilitator is in default as a result of the following events, including but not limited to:- (a) the Facilitator fails to pay any money owing in respect 26

28 of the CPO when the same shall become due and payable; (b) a distress or execution or other process is levied or enforced upon or brought against any part of the chattels or property of the Facilitator pursuant to a judgement obtained against it, and is not paid out, withdrawn, discharged or stayed within thirty (30) days of such distress or execution; (c) an encumbrancer takes possession or a receiver, liquidator or similar officer is appointed over the whole or a substantial part of the assets or undertaking of the Facilitator (d) any indebtedness of the Facilitator becomes capable, in accordance with the relevant terms thereof, of being declared due prematurely by reason of a default by the Facilitator in its obligations in respect of the same, or the Facilitator fails to make any payment in respect thereof on the due date for such payment or if due on demand when demanded or the security for any such indebtedness becomes enforceable; (e) any step or action is taken for the bankruptcy, winding up, dissolution or liquidation of the Facilitator (including, without limitation, the presentation of a petition for the bankruptcy of or winding up against the Facilitator or the making of any order or the passing of any resolution for the winding up, dissolution or liquidation of the Facilitator), the Facilitator will immediately transfer the Bond Coupons and the NCRPS to the holders of the CPO and such transfer shall effectively discharge the Facilitator s obligations under the CPO. Upon such an event, the Issuer will no longer have the option of paying dividends together with a nominal coupon but instead will have to pay the full coupon. Thereafter, the holders of the CPO (who are now effectively the holders of the Bond Coupon and the NCRPS) will have recourse to the Issuer (in their capacity as holders of the Bond Coupon) and shall be entitled to share in the redemption proceeds, in accordance with the formula above. The holders of the CPO and the Bond Principal holders will also agree that the holders of the CPO will have the ability to participate in any voting or decision making process involving the Bonds. Any decision pertaining to the Bonds (i.e. acceleration, enforcement, etc) will be made only if agreed to by the requisite majority of the Bond Principal holders and holders of the CPO taken in aggregate 27