(Collectively, the Proposed Par Value Reduction and Proposed ESOS are referred to as the Proposals )

Transcription

1 TANJUNG OFFSHORE BERHAD ( TANJUNG OR THE COMPANY ) (I) (II) PROPOSED PAR VALUE REDUCTION; AND PROPOSED ESOS (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of Tanjung ( Board ), RHB Investment Bank Berhad ( RHBIB ) wishes to announce that the Company proposes to undertake the following: (i) (ii) proposed reduction of its existing issued and paid-up share capital via the cancellation of RM0.40 of the par value of every existing ordinary share of RM0.50 each in Tanjung pursuant to Section 64 of the Companies Act, 1965 ( Proposed Par Value Reduction ); and proposed establishment of a new employees share option scheme ( Scheme ) of up to ten percent (10%) of the issued and paid-up share capital (excluding treasury shares) of the Company at any one time during the duration of the Scheme for the eligible executive directors and employees of Tanjung and its subsidiary companies ( Tanjung Group ) ( Proposed ESOS ). (Collectively, the Proposed Par Value Reduction and Proposed ESOS are referred to as the Proposals ) ( Act refers to the Companies Act 1965 and where the context so requires, any re-enactment thereof, in particular, the Companies Act 2016) ( Tanjung Share(s) may refer to the ordinary shares of RM0.50 each in Tanjung before the Proposed Par Value Reduction or as the context so requires, the ordinary shares of RM0.10 each in Tanjung after the completion of the Proposed Par Value Reduction) Further details of the Proposals are set out in the ensuing sections of this Announcement. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Par Value Reduction Details of the Proposed Par Value Reduction The Proposed Par Value Reduction entails the reduction of the par value of each existing Tanjung Share from RM0.50 to RM0.10 by way of cancellation of RM0.40 of the par value of every existing issued and fully paid-up ordinary share of RM0.50 pursuant to Section 64 of the Act. As at the LPD, the Company has an issued and paid-up share capital of RM190,772,893 comprising of 381,545,786 Tanjung Shares. The Proposed Par Value Reduction will give rise to a credit of approximately RM million which will be utilised to set off against the accumulated losses of Tanjung. The remaining credit, if any, shall be credited to the capital reserves of the Company, which may be utilised in such manner as the Board deems fit and as permitted by the relevant and applicable laws. The effective date for the Proposed Par Value Reduction will be the date of lodgement of the sealed court order of the High Court of Malaya for the Proposed Par Value Reduction with the Registrar of Companies. 1

2 For illustration purposes, the proforma effects of the Proposed Par Value Reduction on the accumulated losses of Tanjung, based on the latest audited financial statements as at 31 December 2015 and the latest unaudited financial statements as at 30 June 2016, are set out below: Audited as at 31 December 2015 (RM 000) Company Level Unaudited as at 30 June 2016 (RM 000) Accumulated losses (42,644) (55,462) Credit arising from the Proposed Par Value Reduction 152, ,618 Resultant Capital Reserve 109,974 97, Proposed ESOS For avoidance of doubt, the Proposed Par Value Reduction will not result in any adjustment to the share price of the Company or the number of Tanjung Shares held by the shareholders Details of the Proposed ESOS Tanjung proposes to establish and implement the Scheme which will involve the granting of options to subscribe for new Tanjung Shares at a pre-determined price ( ESOS Option(s) ), in accordance with the bylaws governing the Scheme ( Bylaws ). The ESOS Options shall be offered to all employees and executive directors of Tanjung Group who fulfils the conditions of eligibility stipulated in the Bylaws ( Eligible Director(s) ) ( Eligible Employee(s) ) as set out in Section 2.2.2(ii) of this Announcement. The Scheme will be administered by a committee comprising such persons as may be appointed and duly authorised by the Board, to administer the Scheme in accordance with the Bylaws ( ESOS Committee ). For avoidance of doubt, the Proposed ESOS is expected to be implemented after the completion of the Proposed Par Value Reduction Salient terms of the Bylaws (i) Maximum number of new Tanjung Shares available under the Scheme The maximum number of new Tanjung Shares which may be allotted pursuant to the exercise of ESOS Options under the Scheme shall not exceed in aggregate ten per centum (10%) of the total issued and paidup share capital (excluding treasury shares) of the Company at any point in time during the period of ten (10) years from the date the Scheme takes effect ( Duration of the Scheme ). 2

3 Notwithstanding the above, in the event the ESOS Options granted exceed the ten per centum (10%) limit as a result of the Company purchasing its own shares in accordance with the provision of the Act or the Company undertakes any other corporate proposal and thereby reducing its issued and paid-up capital, then all ESOS Options granted prior to the adjustment of the issued and paid-up share capital of the Company shall remain valid and exercisable in accordance with the terms of the Scheme. However, no further offer in writing by the ESOS Committee to any Eligible Employee ( Offer ) shall be made at any point after the said purchase of its own shares, unless the amount of ESOS Options which have been granted under the Scheme falls below ten per centum (10%) of the total issued and paid-up capital (excluding treasury shares) of the Company. The Company will, during the Duration of the Scheme, keep available a sufficient number of unissued shares in the authorised share capital of the Company to satisfy all outstanding ESOS Options which may be exercisable from time to time in accordance with the provisions of the Bylaws. (ii) Eligibility Only Eligible Employees who fulfill the following conditions as at the date on which an Offer (including any subsequent offers) is made by the ESOS Committee in writing to such Eligible Employees ( Date of Offer ) shall be eligible to participate in the Scheme: (a) (b) (c) (d) (e) they must be at least eighteen (18) years of age on the Date of Offer and is not an undischarged bankrupt; and they must have been employed on a full time basis on the payroll of a company within Tanjung Group and have been in the employment of Tanjung Group for a period of at least three (3) months of continuous service prior to and up to the Date of Offer, and their employment must have been confirmed in writing on or prior to the Date of Offer and in the case of directors, must hold a directorship on the payroll of any company in Tanjung Group; or if an Eligible Employee is employed by a company which is acquired by Tanjung Group during the Duration of the Scheme resulting in such company becoming a subsidiary of Tanjung upon such acquisition, the Eligible Employee must have completed a continuous period of employment of at least three (3) months in Tanjung Group following the date such company becomes or is deemed to be a subsidiary; or if an Eligible Employee is a contract worker on a full time basis serving under a contract of employment, the contract of employment should be for a duration of at least one (1) year, unless otherwise decided by the ESOS Committee in its absolute discretion; and they must fulfill any other criteria and/or fall within such category that the ESOS Committee may from time to time at its absolute discretion determine. 3

4 The eligibility and number of ESOS Options to be offered to an Eligible Employee under the Scheme shall be at the sole and absolute discretion of the ESOS Committee and the decision of the ESOS Committee shall be final and binding. Eligibility under the Scheme does not confer on an Eligible Employee a claim or right to participate in or any rights whatsoever under the Scheme and an Eligible Employee does not have any rights to acquire or have any rights over or in connection with the new Tanjung Shares to be allotted in connection with the Scheme unless an Offer has been made by the ESOS Committee to the Eligible Employee and the Eligible Employee has accepted the Offer in accordance with the terms of the Offer and the Scheme. (iii) Offer The ESOS Committee shall, within the Duration of the Scheme, make an Offer to any Eligible Employee selected by the ESOS Committee, whereby such selection shall be at the absolute discretion of the ESOS Committee. The actual number of new Tanjung Shares which may be offered to a selected Eligible Employee under an Offer shall be at the discretion of the ESOS Committee and shall not be less than one hundred (100) Tanjung Shares and shall always be in multiples of one hundred (100) Tanjung Shares. Nothing shall prevent the ESOS Committee from making more than one (1) Offer to each selected Eligible Employee provided always that the aggregate number of new Tanjung Shares to be so offered to each selected Eligible Employee shall not exceed the aggregate maximum number of new Tanjung Shares that may be offered and allotted to any one category/designation of Eligible Employees as indicated in Section 2.2.2(iv) of this Announcement ( Maximum Allowable Allotment ) of the selected Eligible Employee over the Duration of the Scheme. Notwithstanding Section 2.2.2(ii) of this Announcement, any allocation of ESOS Options under the Scheme to any person who is a director or major shareholder or chief executive officer or persons connected to such director, major shareholder or chief executive officer of Tanjung shall require the prior approval of the shareholders of Tanjung in a general meeting provided always that the director, major shareholder, chief executive officer of the Company, or a person connected with them, shall not be entitled to vote on the resolution approving their respective allocations. The Offer shall automatically lapse and be null and void in the event of the death of the selected Eligible Employee or the selected Eligible Employee ceasing to be employed by Tanjung Group for any reason whatsoever prior to the acceptance of the Offer by the selected Eligible Employee in the manner set out in the Bylaws. Each Offer shall be made in writing and is personal to the selected Eligible Employee and is non-assignable. 4

5 (iv) Basis of allotment and maximum allowable allotment The Maximum Allowable Allotment of new ESOS Options that may be allotted to an Eligible Employee shall be determined by the ESOS Committee at its sole and absolute discretion, after taking into consideration, amongst other factors, the Eligible Employee's performance, grade and such other factors that the ESOS Committee may deem relevant subject to the following: (a) (b) (c) (d) (e) the total number of Tanjung Shares to be made available under the Scheme shall not exceed the amount stipulated in Section 2.2.2(i) of this Announcement; not more than 50% of the total number of Tanjung Shares to be issued pursuant to the Scheme would be allocated, in aggregate, to the Eligible Directors and senior management who are Eligible Employees; not more than ten per centum (10%) of the new Tanjung Shares available under the Scheme are allocated to any Eligible Employee who, either singly or collectively through persons connected with the Eligible Employee, holds twenty per centum (20%) or more of the issued and paid-up share capital of the Company; Eligible Directors, senior management and members of the ESOS Committee who are Eligible Employees shall not be entitled to participate in the deliberation, discussion or otherwise decision-making in relation to their respective allocation; and the Scheme shall be in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) ( Listing Requirements ), or any prevailing guideline issued by Bursa Securities or any other relevant authority, which is in force for the time being and as amended from time to time. (v) Subscription Price The price at which an Eligible Employee is entitled to subscribe for new Tanjung Shares pursuant to the exercise of an ESOS Option ( Subscription Price ), is to be determined by the Board upon recommendation of the ESOS Committee, and which shall be the higher of the following: (a) at a discount of not more than ten per centum (10%) of the 5- day weighted average market price of the shares, as quoted on Bursa Securities immediately preceding the Date of Offer, or such lower or higher limit in accordance with any prevailing guideline issued by Bursa Securities or any other relevant authority as amended from time to time; or (b) the par value (if any) of the Tanjung Shares, subject to such adjustments as stipulated under the Bylaws or as may be amended by the relevant authorities from time to time. 5

6 (vi) Exercise of ESOS Options An ESOS Option can be exercised by the Eligible Employee who has accepted the Offer or any part thereof of an ESOS Option ( Grantee(s) ) by notice in writing to the Company: (a) (b) during his employment with Tanjung Group; and within the period commencing from the Date of Offer and expiring at the end of ten (10) calendar years from the date the Scheme takes effect, being the date on which the last of the approvals and/or conditions referred to in Bylaws have been obtained and/or complied with or in the event of a termination of the Scheme, the date of termination of the Scheme ( Option Period ), during the normal business hours of the Company on the last market day of every calendar week, or such other period of time as the ESOS Committee may in its discretion allow, provided that no ESOS Option shall be exercised beyond the last day of the Duration of the Scheme as defined in Bylaws. The notice of exercise (which shall state the Grantee's Central Depository System account number) in such form as the ESOS Committee may prescribe or approve shall be accompanied by a remittance in Ringgit Malaysia made out in favour of the Company, in the form of bankers draft or cashiers' order, for the full amount of the subscription monies for the new Tanjung Shares in respect of which the notice of exercise is given. The procedure for the exercise of ESOS Options to be complied with by a Grantee shall be determined by the ESOS Committee from time to time. (vii) Listing of and quotation for new Tanjung Shares If at the time of allotment of the new Tanjung Shares pursuant to the exercise of an ESOS Option, the existing issued ordinary shares of the Company are quoted on Bursa Securities, the Company shall make an application to Bursa Securities for the listing of and quotation for the new Tanjung Shares so allotted. The new Tanjung Shares to be allotted to a Grantee will not be listed or quoted on Bursa Securities until the ESOS Option is exercised in accordance with the provisions of the Bylaws whereupon the Company shall, subject to the provisions of the memorandum and articles of association of the Company, the Securities Industry (Central Depositories) Act, 1991 and the rules of Bursa Malaysia Depository Sdn Bhd: (a) (b) issue and/or allot the Tanjung Shares; despatch a notice of allotment for the relevant number of Tanjung Shares to the Grantee; and 6

7 (c) apply for the quotation of such Tanjung Shares, within eight (8) Market Days or such period as Bursa Securities may prescribe, after the receipt of a valid notice in such form and manner as the ESOS Committee may prescribe or approve by the Grantee to notify the Company of his intention to exercise an Option ( Notice of Exercise ) and remittance from the Grantee for the full amount of the subscription monies in relation to the number of Tanjung Shares set out in the Notice of Exercise given by the Grantee. The new Tanjung Shares to be issued pursuant to the exercise of ESOS Options will be credited directly into the central depository system account and no physical share certificates will be delivered to the Grantee. (viii) Rights attaching to new Tanjung Shares The new Tanjung Shares to be allotted and issued upon any exercise of the ESOS Option will upon such allotment and issuance, rank pari passu in all respects with the then existing issued and fully paid-up share capital of the Company, save and except that the new Tanjung Shares so issued will not be entitled to any right, dividend, allotment and/or other forms of distribution, the entitlement date of which precedes the relevant date of allotment of such new Tanjung Shares. The ESOS Option shall not carry any right to vote at any general meeting of the Company and the Grantee shall not be entitled to any dividends, rights and/or other distributions on his/her unexercised ESOS Options. The new Tanjung Shares will be subject to all the provisions of the Articles of Association of the Company or the provisions of the Act relating to voting, transfer, transmission and/or otherwise of the Tanjung Shares. In the event of any inconsistency between the Articles of Association of the Company and the Act, the Articles of Association of the Company shall prevail. (ix) Alteration of capital and adjustments In the event of any alteration in the capital structure of the Company within the Option Period, whether by way of rights issue, bonus issues or other capitalisation issues, consolidation of Tanjung Shares, sub-division of Tanjung Shares or reduction of capital or any other variation of capital, the Company shall cause such adjustments to be made to: (a) (b) the number of Tanjung Shares which a Grantee shall be entitled to subscribe for upon the exercise of each ESOS Option; and/or Subscription Price, in the manner as set out in Bylaws. The above shall not be applicable where an alteration in the capital structure of the Company arises from any of the following: (a) (b) (c) (d) an issue of Tanjung Shares pursuant to the exercise of ESOS Options under the Scheme; or an issue of Tanjung Shares arising from the conversion of warrants and/ or other convertibles; or an issue of securities as consideration for an acquisition; or an issue of securities as a private placement; or 7

8 (e) (f) an issue of securities as a special issue approved by the relevant governmental authorities; or a purchase by the Company of its own shares and cancellation of all or a portion of such shares purchased pursuant to Section 67A of the Act or any equivalent provision in the replacement thereof. In this event, the following provisions shall apply: (i) (ii) if the number of ESOS Options granted by the Company as at the date of cancellation of Tanjung Shares so purchased is greater than ten percent (10%) of the issued and paid-up capital of the Company after such cancellation, the ESOS Committee shall not make any further Offers; and if the number of ESOS Options granted by the Company as at the date of cancellation of Tanjung Shares so purchased is less than ten percent (10%) of the issued and paid-up capital of the Company after such cancellation, the ESOS Committee may make further Offers only until the total number of ESOS Options granted by the Company is equivalent to ten percent (10%) of the issued and paid-up capital of the Company after such cancellation. For avoidance of doubt, the number of ESOS Options will not be affected by the Proposed Par Value Reduction. (x) Retention period Unless otherwise mentioned in the Bylaws or as the ESOS Committee shall be entitled to prescribe or impose, the new Tanjung Shares to be issued to the Grantee will not be subjected to any retention period. (xi) Amendment and/or modification to the Scheme Subject to the compliance with the Listing Requirements and/or any other relevant regulatory authority in relation to an employee share option scheme and the approvals of any other authorities (if required), the ESOS Committee may at any time and from time to time recommend to the Board any addition, amendment and/or modification to and/or deletion of these Bylaws as it shall in its discretion think fit and the Board shall at any time and from time to time have the power by resolution to add to, amend, modify and/or delete all or any part of these Bylaws upon such recommendation provided that no such amendment and/or modification shall be made which would adversely affect the rights attaching to rights then accrued to any Grantees except with the approval of a majority in number of the Grantees, whether by a show of hands by those present and voting and/or by poll, at meetings called for this purpose. The quorum for such meetings of Grantees shall be attended by any two (2) directors of the Company. 8

9 The approval of the shareholders of the Company in general meeting shall not be required in respect of addition, amendment and/or modification to or deletion of the Bylaws save and except if such addition, amendment, modification and/or deletion would: (a) (b) (c) increase the number of Tanjung Shares available under the Scheme beyond the maximum ten percent (10%) of the total issued and paid-up share capital of the Company at any one time during the Duration of the Scheme; or provide an advantage to any Grantee or group of Grantees or all Grantees particularly in relation to the maximum number of shares available under the scheme, eligibility, basis of allotment and maximum allowable allotment, acceptance of offer, subscription price, exercise of options, rights attaching to the new shares, alteration of capital and adjustments, retention period and duration of the scheme; or prejudice any rights of the shareholders of the Company. The Company is to submit to Bursa Securities, each time a modification/change is made, a confirmation letter that the modification/change does not contravene any provisions of the guidelines on employee share option scheme as stipulated under the Listing Requirements. (xii) Termination of the Option In the event of the liquidation of the Company where a provisional liquidator has been appointed, all unexercised or partially exercised ESOS Options shall lapse. All outstanding ESOS Options shall be automatically terminated and be of no further force and effect in the event that a resolution is passed or a court order is made for the winding up of the Company commencing from the date of such resolution or the date of the court order. In the event a petition is presented in court for the winding-up or liquidation of the Company, all rights to exercise the ESOS Options shall automatically be suspended from the date of the presentation of the petition. Conversely, if the petition for winding-up is dismissed by the court, the right to exercise the ESOS Options shall accordingly be reinstated. (xiii) Duration of the Scheme The Scheme shall take effect on the date on which the last of the following approvals and/or conditions have been obtained and/or complied with and shall in force for a period of ten (10) years from the date the Scheme takes effect: (a) (b) (c) submission of the final copy of the Bylaws of the Scheme to Bursa Securities in accordance with Paragraph 6.42(2) of the Listing Requirements; receipt of approval in-principle from Bursa Securities for the listing of the new Shares to be issued pursuant to the exercise of ESOS Options granted under the Scheme; procurement of shareholders' approval for the Scheme; 9

10 (d) (e) receipt of approval of any other relevant authority, where applicable; and fulfillment of all conditions attached to the above approvals, if any. Unless otherwise terminated in accordance with Bylaws and subject to the compliance of the terms therein contained, the Scheme shall be in force for a period of ten (10) years commencing from the date of the confirmation letter from the principal adviser to the Bursa Securities. (xiv) Termination of the Scheme Notwithstanding Section 2.2.2(xiii) above, the Company may terminate the Scheme at any time during its term (including in the mid-stream or any extension thereof), provided that: (a) (b) the approval of the relevant authorities have been obtained; and the written consent of all Grantees who have yet to exercise their ESOS Options, either in part or in whole have been obtained, and in such an event, no further Offers shall be made by the ESOS Committee from the date of such resolution and any Offers outstanding but not accepted by the selected Eligible Employee and any unexercised ESOS Options or partially exercised ESOS Options shall be deemed to be terminated and be null and void at the date of such resolution Utilisation of Proceeds The actual proceeds to be raised from the Proposed ESOS will depend on the number of ESOS Options granted and exercised at the relevant point in time and the Subscription Price payable upon the exercise of the ESOS Options. As such, the exact amount of proceeds to be received and timeframe for the utilisation of proceeds are not determinable at this juncture. The proceeds to be received by the Company from the exercise of the ESOS Options are intended to be utilised for Tanjung Group s working capital requirements. The estimated expenses for the Proposals amounts to approximately RM230,000, which would be funded vide internally generated funds of Tanjung Group. 3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Par Value Reduction The rationale for the Proposed Par Value Reduction is as follows: (i) to rationalise the statement of financial position of Tanjung by eliminating the accumulated losses of the Company via cancellation of the issued and paidup share capital that is not represented by available assets of the Company; 10

11 (ii) (iii) the current market price of Tanjung Shares have been trading below its existing par value of RM0.50 on Bursa Securities, which is not conducive for Tanjung to embark on any fund raising exercise and/or corporate exercise involving new issuance of shares. Consequent to the Proposed Par Value Reduction, the par value of RM0.10 per Tanjung Share will facilitate any other fund raising exercises to be undertaken by the Company in the future which may entail the issuance of new shares at a price which is at a discount or close to its market price but not below its par value; and the resulting reduction in the accumulated losses from Tanjung s statement of financial position would not only enhance its credibility with the bankers, suppliers, investors and other stakeholders, but would also revitalise and provide the financial platform for Tanjung Group s future grow. 3.2 Proposed ESOS The Proposed ESOS serves to align the interests of the Eligible Employees and Eligible Directors ( Eligible Persons ) to the corporate goals of Tanjung Group. The Proposed ESOS will provide the Eligible Persons an opportunity to have equity participation in the Company and help achieve the positive objectives as set out below: (i) (ii) (iii) (iv) (v) to recognise the contributions and/or services of the Eligible Persons which are valued and considered vital to the operations and continued growth of Tanjung Group; to motivate the Eligible Persons towards better performance through greater productivity and loyalty; to stimulate a greater sense of belonging and dedication since Eligible Persons are given the opportunity to participate directly in the equity stake of the Company; to encourage employees to remain with Tanjung Group, thus ensuring that the loss of key personnel is kept to a minimum; and to reward Eligible Persons by allowing them to participate in the Company s profitability and eventually realise capital gains arising from any appreciation on the value of the new Tanjung Shares. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 11

12 4. EFFECTS OF THE PROPOSALS The proforma effects of the Proposals on the issued and paid-up share capital, net assets ( NA ), gearing, earnings, earnings per share ( EPS ) and substantial shareholders shareholdings are set out below based on the following assumptions: Minimum Scenario: Maximum Scenario: Assuming that none of the outstanding treasury shares are resold in the open market. Assuming that all of the outstanding treasury shares are resold in the open market. 4.1 Issued and paid-up share capital For illustration purposes, the proforma effects of the Proposals on the issued and paid-up share capital of Tanjung as at 28 September 2016, being the latest practicable date prior to this Announcement ( LPD ), are set out below: Issued and paid-up share capital as at the LPD (including treasury shares) After the Proposed Par Value Reduction Less: Treasury shares (at par) Adjusted issued and paid-up share capital To be issued pursuant to the full exercise of the ESOS Options to be granted under the Proposed ESOS (1) Enlarged issued and paid-up share capital Par Value (RM) Minimum Scenario No. of Tanjung shares RM Maximum Scenario No. of Tanjung shares RM ,545, ,772, ,545, ,772, ,545,786 38,154, ,545,786 38,154, (2,477,500) (247,750) ,068,286 37,906, ,545,786 38,154, ,906,828 3,790,683 38,154,578 3,815, ,975,114 41,697, ,700,364 41,970,036 Note: (1) Assuming that the aggregate new Tanjung Shares to be issued pursuant to the exercise of the ESOS Options amount to ten percent (10%) of the issued and paid-up share capital of the Company then. The Proposed ESOS will not have an immediate effect on the existing issued and paid-up ordinary share capital of the Company. The issued and paid-up share capital of the Company will increase progressively depending on the quantum of ESOS Options granted and exercised and the number of Tanjung Shares issued pursuant thereto. 12

13 4.2 NA per share and gearing Proposed Par Value Reduction Based on the latest audited consolidated financial statements of Tanjung as at 31 December 2015, the proforma effects of the Proposed Par Value Reduction on the NA per Tanjung Share and gearing of Tanjung Group are set out below: Proforma I Proforma II Minimum Scenario Audited as at 31 December 2015 Subsequent Events After Proforma I and the Proposed Par Value Reduction RM 000 RM 000 RM 000 Share capital 190,768 (1) 190,773 38,155 Share premium 68,739 68,739 68,739 Treasury shares (4,397) (4,397) (4,397) Capital reserve (19,579) (19,579) (2) 90,395 Other reserves 5,058 5,058 5,058 Accumulated losses/ Retained earnings (118,171) (118,171) (3)(4) (75,757) Shareholders fund/ NA 122, , ,193 Par value No. of shares (excluding treasury shares) ( 000) 379,058 (1) 379, ,068 NA per share (RM) Total borrowings (RM) 3,533 3,533 3,533 Gearing (times) Notes: (1) Adjusted for the exercise of 10,000 Warrants 2000/2016 ( Warrants ) into 10,000 new Tanjung Shares, at an exercise price of RM0.50 per Warrant. (2) Represents the balance after the credit arising from the Proposed Par Value Reduction less the accumulated losses at the Company level. (3) Represents the Group s consolidated retained earnings after the credit arising from the Proposed Par Value Reduction less the accumulated losses at the Company level. (4) After deducting estimated expenses for the Proposals of approximately RM230,

14 Proforma I Proforma II Proforma III Maximum Scenario Audited as at 31 December 2015 Subsequent Events After Proforma I and sale of treasury shares After Proforma II and the Proposed Par Value Reduction RM 000 RM 000 RM 000 RM 000 Share capital 190,768 (1) 190, ,773 38,155 Share premium 68,739 68,739 68,739 68,739 Treasury shares (4,397) (4,397) (2) - - Capital reserve (19,579) (19,579) (19,579) (2) 90,395 Other reserves 5,058 5,058 5,058 5,058 Accumulated losses/ Retained earnings (118,171) (118,171) (118,171) (3)(4) (75,757) Shareholders fund/ NA 122, , , ,590 Par value No. of shares (excluding treasury shares) ( 000) 379,058 (1) 379,068 (2) 381, ,546 NA per share (RM) Total borrowings (RM) 3,533 3,533 3,533 3,533 Gearing (times) Notes: (1) Adjusted for the exercise of 10,000 Warrants into 10,000 new Tanjung Shares, at an exercise price of RM0.50 per Warrant. (2) Assuming all the treasury shares are resold in the open market with no gain or loss. (3) Represents the balance after the credit arising from the Proposed Par Value Reduction less the accumulated losses at the Company level. (4) Represents the Group s consolidated retained earnings after the credit arising from the Proposed Par Value Reduction less the accumulated losses at the Company level. (5) After deducting estimated expenses for the Proposals of approximately RM230, Proposed ESOS The Proposed ESOS will not have any immediate effect on the consolidated NA per Tanjung Share and the gearing of Tanjung until such a time when the ESOS Options granted under the Proposed ESOS are exercised. The proforma effects will depend on, amongst others, the number of new Tanjung Shares to be issued upon the exercise of the ESOS Options and the Subscription Price. The consolidated NA per Tanjung Share following the exercise of the ESOS Options will increase if the Subscription Price exceeds the consolidated NA per Tanjung Share at the point of exercise of the ESOS Options and conversely will decrease if the Subscription Price is below the consolidated NA per Tanjung Share at the point of the exercise of the ESOS Options. 14

15 4.3 Earnings and EPS Whilst the granting of the ESOS Options under the Proposed ESOS is expected to result in recognition of a charge in the statement of comprehensive income of Tanjung Group pursuant to the Malaysian Financial Reporting Standards no. 2 Share Based Payments ( MFRS 2 ), the recognition of such MFRS 2 charge would not have any impact on the NA of Tanjung Group as the corresponding amount will be classified as an equity compensation reserve which forms part of the shareholders' equity. In the event none of the granted ESOS Options are exercised within the duration of the Proposed ESOS, the amount outstanding in the said equity reserve would be transferred into the Company's retained earnings. On the other hand, if the granted ESOS Options are exercised, the amount outstanding in the said equity reserve would be transferred into the share premium account of the Company. The Proposed Par Value Reduction will not have any effect on the consolidated earnings and EPS of the Group. The Proposed ESOS is not expected to have any immediate effect on the earnings of Tanjung Group for the financial year ending 31 December 2016, save for the possible impact of MFRS 2. However, any potential effect on the EPS of Tanjung Group in the future would depend on the impact of MFRS 2, the number of ESOS Options exercised as well as utilisation of the proceeds raised from the ESOS Options exercised. Under MFRS 2, the potential cost arising from the issuance of the ESOS Options, which is measured by the fair value of the ESOS Options after taking into account, inter-alia, the number of ESOS Options granted and vested and the Subscription Price payable upon the exercise of the ESOS Options, will need to be measured on the date the ESOS Options are granted and to be recognised as an expense over the vesting period (if any), and therefore may affect the future earnings of Tanjung Group, the quantum of which can be determined only at the grant date. However, the Company has taken note of the potential impact of MFRS 2 on Tanjung Group's future earnings and shall take into consideration such impact in the allocation and granting of ESOS Options to the Eligible Persons. It should be noted that the estimated cost does not represent a cash outflow by Tanjung as it is merely an accounting treatment. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 15

16 4.4 Substantial shareholders shareholdings The Proposed ESOS is not expected to have any immediate effect on the substantial shareholders' shareholdings in the Company. Any effect on the shareholdings of the substantial shareholders of the Company arising from the Proposed ESOS will depend on the number of new Tanjung Shares to be issued pursuant to the exercise of the ESOS Options at the relevant point in time. For illustrative purposes, assuming that Rahmanudin bin Md. Shamsudin ( RRMS ) and Tan Sri Datuk Tan Kean Soon ( TKS ) who are substantial shareholders and also Eligible Persons has not been granted any ESOS Options, the proforma effects of the Proposals on the shareholdings of the substantial shareholders of Tanjung are as follows: Minimum Scenario As at the LPD Proforma I After the Proposed Par Value Reduction Proforma II After Proforma I and the full exercise of the ESOS Options Direct Indirect Direct Indirect Direct Indirect Shareholders RRMS 37,183, ,183, ,183, TKS 28,220, ,220, ,220, Lembaga Tabung Haji 30,739, ,739, ,739, Augerah Bakti Supplies Sdn. Bhd. 19,301, ,301, ,301, Abyssina Sdn. Bhd. Resources 19,594, ,594, ,594,

17 Maximum Scenario Proforma I Proforma II As at the LPD After Proforma I and sale of treasury shares After the Proposed Par Value Reduction Direct Indirect Direct Indirect Direct Indirect Shareholders RRMS 37,183, ,183, ,183, TKS 28,220, ,220, ,220, Lembaga Tabung Haji 30,739, ,739, ,739, Augerah Bakti Supplies Sdn. Bhd. 19,301, ,301, ,301, Abyssina Sdn. Bhd. Resources 19,594, ,594, ,594, Proforma III After Proforma II and the full exercise of the ESOS Options Shareholders Direct Indirect RRMS 37,183, TKS 28,220, Lembaga Tabung Haji 30,739, Augerah Bakti Supplies Sdn. Bhd. 19,301, Abyssina Sdn. Bhd. Resources 19,594,

18 4.5 Existing Convertible Securities As at the LPD, Tanjung does not have any outstanding convertible securities. For information purposes, the Warrants has expired on 7 April INTER-CONDITIONALITY The conditionality of the Proposals is set out below: (i) (ii) the Proposed Par Value Reduction is not conditional upon the Proposed ESOS, and vice versa; and the Proposals are not conditional upon any other corporate exercise undertaken by Tanjung. 6. APPROVALS REQUIRED The Proposals are conditional upon approvals being obtained from the following: (i) (ii) (iii) (iv) the approval and sanction of the High Court of Malaya for the Proposed Par Value; Bursa Securities, for the listing of and quotation for the new Tanjung Shares to be issued pursuant to the exercise of the ESOS Options granted under the Proposed ESOS on the Main Market of Bursa Securities; the shareholders of Tanjung at an extraordinary general meeting ( EGM ) of the Company to be convened; and any other relevant authorities and/or parties, if required. 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM 7.1 Proposed Par Value Reduction None of the directors and/or major shareholders of Tanjung and/or persons connected with them have any interest, direct or indirect, in the Proposed Par Value Reduction. 7.2 Proposed ESOS The executive directors of Tanjung, by virtue of their eligibility to participate in the Proposed ESOS, are deemed interested to the extent of their respective allocations under the Proposed ESOS, if any ( Interested Directors ), as well as allocations to persons connected with them. Notwithstanding this, all directors have deliberated on the Proposed ESOS, and have agreed to present the Proposed ESOS to the shareholders of the Company for their consideration and approval. In respect of any specific allocation of ESOS Options to the Interested Directors and persons connected with them, the Interested Directors have abstained and shall abstain from all board deliberation and voting. In addition, the Interested Directors shall also abstain and undertake to ensure that the persons connected with them will abstain from voting in respect of their direct and/or indirect shareholdings, if any, on the resolutions pertaining to their respective proposed allocation as well as the allocations to persons connected with them under the Proposed ESOS to be tabled at the forthcoming EGM. 18

19 The direct and/or indirect shareholdings of the directors and major shareholders, and persons connected with them at the LPD are as follows: Directors Direct No of Tanjung Indirect No of Tanjung RRMS 37,183, TKS 28,220, Datuk Dr. Nik Norzrul bin N. Hassan Thani 1,000, (1) 3,819, (2) 19,594, Tan Sam Eng Datuk Syed Hussian Syed Junid 70, Datuk Suraj Singh Gill Major shareholders RRMS 37,183, TKS 28,220, Abyssina Resources Sdn. Bhd. 19,594, Persons connected with the directors and/or major shareholders who are Eligible Persons Puan Sri Shirley Law Siong 1,180, Hiong (3) Tan Kay Vin (4) 1,204, Amiruddin Rahmanudin (5) Tan Kean Seng (6) 200, Notes: (1) Deemed interest by virtue of his spouse and children s interest pursuant to Section 134(12) of the Act. (2) Deemed interest by virtue of his/her interests in Abyssina Resources Sdn. Bhd. pursuant to Section 6A of the Act. (3) Puan Sri Shirley Law Siong Hiong, spouse of TKS. (4) Tan Kay Vin, son of TKS. (5) Amiruddin Rahmanudin, son of RRMS. (6) Tan Kean Seng, brother of TKS. Save as disclosed above, none of the directors, major shareholders of the Company and/or persons connected with them has any interest, directly or indirectly, in the Proposed ESOS. 8. DIRECTORS RECOMMENDATION 8.1 Proposed Par Value Reduction The Board, after having considered all aspects of the Proposed Par Value Reduction, and after careful deliberation, is of the opinion that the Proposed Par Value Reduction is in the best interest of the Company. As such, the Board recommends that you vote in favour of the resolution pertaining to the Proposed Par Value Reduction to be tabled at the forthcoming EGM. 19

20 8.2 Proposed ESOS The Board (save for the Interested Directors who have abstained from expressing any opinion in relation to their respective allocations and/or the allocations to persons connected with them under the Proposed ESOS), after having considered all aspects of the Proposed ESOS and after careful deliberation, is of the opinion that the Proposed ESOS is in the best interest of the Company. As such, the Board (save for the Interested Directors who have abstained from expressing any opinion in relation to their respective allocations and/or the allocations to persons connected with them under the Proposed ESOS) recommends that you vote in favour of the resolutions pertaining to the Proposed ESOS to be tabled at the forthcoming EGM. 9. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposals are expected to be completed by the first (1 st ) quarter of APPLICATION TO THE AUTHORITIES The application to the relevant authorities for the Proposals shall be made within one (1) month from the date of this Announcement. 11. ADVISER RHBIB has been appointed as the Adviser for the Proposals. This announcement is dated 29 September