(COLLECTIVELY REFERRED TO AS THE PROPOSED REGULARISATION SCHEME )

Transcription

1 IDEAL SUN CITY HOLDINGS BERHAD (formerly known as Equator Life Science Berhad) ("IDEAL" OR "THE COMPANY") I. (A) PROPOSED SHARE PREMIUM CANCELLATION OF RM22,026,619 UNDER SECTION 64(1) OF THE COMPANIES ACT, 1965 ( PROPOSED SHARE PREMIUM CANCELLATION ); (B) PROPOSED SHARE CAPITAL REDUCTION INVOLVING THE REDUCTION OF THE PAR VALUE OF EACH EXISTING ORDINARY SHARE OF RM0.10 EACH ( IDEAL SHARE ) IN IDEAL TO ORDINARY SHARES OF RM0.01 EACH BY THE CANCELLATION OF RM0.09 FROM THE PAR VALUE ( PROPOSED PAR VALUE (C) REDUCTION ); PROPOSED CONSOLIDATION OF EVERY TEN (10) ORDINARY SHARES OF RM0.01 EACH IN IDEAL INTO ONE (1) IDEAL SHARE ( PROPOSED SHARE CONSOLIDATION ) (COLLECTIVELY BE REFERRED TO AS THE PROPOSED BALANCE SHEET RECONSTRUCTION ); II. III. IV. PROPOSED RENOUNCEABLE RIGHTS ISSUE OF 94,003,200 NEW IDEAL SHARES ( RIGHTS SHARES ) TOGETHER WITH 47,001,600 FREE DETACHABLE WARRANTS ( RIGHTS WARRANTS ) AT AN ISSUE PRICE OF RM0.10 PER RIGHTS SHARE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) IDEAL SHARE TOGETHER WITH ONE (1) RIGHTS WARRANT FOR EVERY TWO (2) RIGHTS SHARES SUBSCRIBED ON AN ENTITLEMENT DATE TO BE DETERMINED LATER AFTER THE PROPOSED BALANCE SHEET RECONSTRUCTION ( PROPOSED RIGHTS ISSUE WITH WARRANTS ); PROPOSED EXEMPTION TO IDEAL SUN CITY SDN BHD ( ISCSB ) AND THE PERSONS ACTING IN CONCERT WITH IT UNDER PARAGRAPGH 16.1 OF PRACTICE NOTE 9 OF THE MALAYSIAN CODE ON TAKE-OVERS AND MERGER, 2010 FROM THE OBLIGATION TO UNDERTAKE A MANDATORY OFFER FOR ALL THE REMAINING IDEAL SHARES NOT ALREADY HELD BY THEM WHICH MAY ARISE PURSUANT TO THE PROPOSED RIGHTS ISSUE WITH WARRANTS ( PROPOSED EXEMPTION ); AND PROPOSED ISSUANCE OF UP TO 24,000,000 NEW IDEAL SHARES ( PLACEMENT SHARES ) TOGETHER WITH UP TO 12,000,000 FREE DETACHABLE WARRANTS ( PLACEMENT WARRANTS ) AFTER THE COMPLETION OF THE PROPOSED RIGHTS ISSUE WITH WARRANTS ON THE BASIS OF ONE (1) PLACEMENT WARRANT FOR EVERY TWO (2) PLACEMENT SHARES SUBSCRIBED, TO INVESTORS TO BE IDENTIFIED, AT AN ISSUE PRICE OF RM0.10 PER PLACEMENT SHARE ( PROPOSED PLACEMENT WITH WARRANTS ) (COLLECTIVELY REFERRED TO AS THE PROPOSED REGULARISATION SCHEME ) 1. INTRODUCTION Reference is made to the Company s announcement dated 29 April 2011 whereby the Company announced that it is an affected listed issuer pursuant to Guidance Note 3 ( GN3 ) of the ACE Market Listing Requirements ( ACE LR ) of Bursa Malaysia Securities Berhad ( Bursa Securities ). The classification was the result of the Company having triggered the criteria prescribed under Rule 2.1(g) of GN3 whereby the external auditors have expressed a modified opinion with emphasis on IDEAL's going concern in IDEAL's audited financial statements for the financial year ended ( FYE ) 31 December 2010 and the shareholders' equity of IDEAL is 50% or less of the issued and paid-up capital in IDEAL's audited financial results for the year ended 31 December

2 On 15 March 2012, the shareholders of IDEAL had approved the diversification of the Company s business into project management for property development. M&A Securities Sdn Bhd ( M&A Securities ) is pleased to announce on behalf of the Board of Directors of IDEAL ( Board ) that the Company proposes to undertake the Proposed Regularisation Scheme (as defined herein) to regularise the financial position of the Company which comprises the following: (a) (b) (c) (d) Proposed share premium cancellation of RM22,026,619 under Section 64(1) of the Companies Act, 1965 ( Act ) to reduce the accumulated losses of IDEAL ( Proposed Share Premium Cancellation ), the proposed cancellation of RM0.09 from each and every existing ordinary share of RM0.10 each in IDEAL ( IDEAL Shares ) ( Proposed Par Value Reduction ) and thereafter, the consolidation of the resultant issued and paid-up share capital of IDEAL, such that every ten (10) ordinary shares of RM0.01 each shall be consolidated back into one (1) IDEAL Share ( Proposed Share Consolidation ) (the Proposed Share Premium Cancellation, Proposed Par Value Reduction and Proposed Share Consolidation shall collectively be referred to as the Proposed Balance Sheet Reconstruction ); Proposed renounceable rights issue of 94,003,200 new IDEAL Shares ( Rights Shares ) together with 47,001,600 free detachable warrants ( Rights ) at an issue price of RM0.10 per Rights Share on the basis of four (4) Rights Shares for every one (1) IDEAL Share held together with one (1) Rights Warrant for every two (2) Rights Shares subscribed after the Proposed Balance Sheet Reconstruction ( Proposed Rights Issue with ); Proposed exemption pursuant to Practice Note 9 of the Malaysian Code On Take- Overs And Mergers 2010 ( Code ) to Ideal Sun City Sdn Bhd and persons acting in concert with it ( PACs ), namely Dato Ooi Kee Liang and Datin Phor Li Wei, from the obligation to undertake a mandatory take-over offer for all the remaining IDEAL Shares not already held by them upon completion of the Proposed Rights Issue with ( Proposed Exemption ); and Proposed issuance of up to 24,000,000 new IDEAL Shares ( Placement Shares ) together with up to 12,000,000 free detachable warrants ( Placement ) after the completion of the Proposed Rights Issue with on the basis of one (1) Placement Warrant for every two (2) Placement Shares subscribed, to investors to be identified, at an issue price of RM0.10 per Placement Share ( Proposed Placement with ); (collectively, the Proposed Regularisation Scheme ) 2. DETAILS OF THE PROPOSED REGULARISATION SCHEME 2.1 Proposed Balance Sheet Reconstruction The Board proposes to cancel its share premium account pursuant to Section 64 of the Act, amounting to RM22,026,619 based on the audited financial statements of IDEAL for the FYE 31 December 2011 and that the credit of RM22,026,619 arising therefrom shall be utilised towards setting-off against the accumulated losses of the Company

3 Concurrently, the Board also proposes to reduce its existing issued and paid-up share capital of RM23,500,800 comprising 235,008,000 ordinary shares of RM0.10 each in IDEAL as fully paid-up via the cancellation of RM0.09 from the par value of every existing IDEAL Share to RM2,350,080 comprising 235,008,000 ordinary shares of RM0.01 each in IDEAL. The Proposed Par Value Reduction will give rise to a credit amount of RM21,150,720, which will be utilised to further set-off against the accumulated losses of IDEAL. Thereafter, IDEAL proposes to consolidate the resultant issued and paid-up share capital of IDEAL such that every ten (10) ordinary shares of RM0.01 each in IDEAL shall be consolidated back into one (1) ordinary share of RM0.10 each. The issued and paid-up share capital of the Company after the consolidation will be RM2,350,080 comprising 23,500,800 IDEAL Shares. The Proposed Par Value Reduction shall be effected pursuant to Section 64(1) of the Act. In determining the shareholders entitlement to the Proposed Par Value Reduction, fractional shares arising from the Proposed Par Value Reduction if any, will be dealt with in such manner as the Board in its absolute discretion deems fit and in the best interest of the Company. 2.2 Proposed Rights Issue with IDEAL proposes to undertake a renounceable rights issue of 94,003,200 Rights Shares together with 47,001,600 Rights at an issue price of RM0.10 per Rights Share on the basis of four (4) Rights Shares for every one (1) IDEAL Share held together with one (1) Rights Warrant for every two (2) Rights Shares subscribed after the completion of the Proposed Balance Sheet Reconstruction. The issue size of 94,003,200 Rights Shares was based on the existing issued and paid-up share capital of IDEAL of RM2,350,080 comprising 23,500,800 IDEAL Shares (assuming completion of the Proposed Balance Sheet Reconstruction). The 5-day volume weighted average market price ( WAMP ) of IDEAL Shares up to 26 April 2012 is RM0.061 per share (before adjusting for the Proposed Balance Sheet Reconstruction). The Rights Shares will be offered to the shareholders of IDEAL whose names appear in the Record of Depositors of the Company as at the close of business on an entitlement date to be determined later ( Entitlement Date ) but shall be prior to the completion of the Proposed Placement of Shares ( Entitled Shareholders ) after obtaining the approvals from all relevant authorities and the shareholders of the Company. For avoidance of doubt, the Placement Shares shall not be entitled to participate in the Proposed Rights Issue with. The Rights will be issued free to each Entitled Shareholder of IDEAL based on the respective Entitled Shareholders entitlements to the Proposed Rights Issue with and on the acceptance of his/her rights entitlements. The Rights and Placement are of the same class and shall, upon issue and allotment, rank pari passu in all respects with each other The salient terms of the Rights are as follows: Terms Number of Rights Details : 47,001,600 Rights are to be issued for free to the Entitled Shareholders pursuant to the Proposed Rights Issue with. Detachability : The Rights are immediately detached upon issue and allotment of the Rights Shares. The Rights will be traded separately

4 Terms Details Exercise Price : The exercise price of the Rights of RM0.10 each was determined using market based pricing principles (i.e. the theoretical ex-all pricing model) after taking into consideration the prevailing market price of IDEAL Shares, future business prospects of the IDEAL group of companies ( IDEAL Group ), and the par value of the IDEAL Shares. The exercise price and the number of outstanding Rights during the Exercise Period shall however be subject to the adjustments under certain circumstances in accordance with the terms and provisions of the Deed Poll to be executed by the Company. Exercise Period : The Rights may be exercised at any time during the tenure of the Rights of five (5) years including and commencing from the issue date of the Rights. Rights not exercised during the Exercise Period will thereafter lapse and cease to be valid. Exercise Rights : Each Rights Warrant entitles the registered holder to subscribe for one (1) new IDEAL Share at the Exercise Price at any time during the Exercise Period and shall be subject to adjustments in accordance with the provisions of the Deed Poll. Deed Poll : The Rights will be constituted by a Deed Poll to be executed by IDEAL. Board Lot : The Rights are tradeable upon listing in board lots of 100 units carrying rights to subscribe for 100 new IDEAL Shares at any time during the Exercise Period or such other number of units as may be prescribed by Bursa Securities. Status of New IDEAL Shares to be issued pursuant to the exercise of the Rights : All the new IDEAL Shares to be issued pursuant to the exercise of the Rights shall, upon issue and allotment, rank pari passu in all respects with the then existing IDEAL Shares except that they will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, the entitlement date of which is prior to the date of allotment and issue of the said new IDEAL Shares. Listing : An application will be made for the listing of and quotation for the Rights and new IDEAL Shares to be issued pursuant to the exercise of the Rights on the ACE Market of Bursa Securities. Governing Law : Laws of Malaysia Basis of determining the issue price of the Rights Shares and exercise price of the Rights The issue price for the Rights Shares of RM0.10 each and exercise price of the Rights of RM0.10 each was determined using market based pricing principles (i.e. the theoretical ex-all pricing model calculated in the ensuing paragraph below) after taking into consideration the prevailing market price of IDEAL Shares, future business prospects of the IDEAL Group, the Proposed Regularisation Scheme as well as the par value of the IDEAL Shares. Due consideration was also given to the fact that the Rights shall be issued for free to the subscribers of the Rights Shares

5 The theoretical ex-all price based on an issue price of RM0.10 per Rights Share and of IDEAL Shares after adjusting for the Proposed Balance Sheet Reconstruction is RM0.20 per share, computed based on the five (5)-day WAMP up to and inclusive of 26 April 2012 of RM0.061 per share. The issue price of the Rights Shares of RM0.10 each and exercise price of the Rights of RM0.10 each (without taking into consideration the value of the Rights ) represents a discount of 50.47% to the said theoretical ex-all price Entitlements to the Rights Shares The Rights Shares will be provisionally allotted to the Entitled Shareholders. Fractional entitlements pursuant to the Proposed Rights Issue with if any, will be dealt with in such manner as the Board in its absolute discretion deems fit and in the best interest of the Company. The Proposed Rights Issue with is renounceable in full or in part. Accordingly, the Entitled Shareholders can subscribe for and/or renounce their entitlements to the Rights Shares in full or in part. The Rights Shares which are not taken up or validly taken up shall be made available for excess applications by the Entitled Shareholders and/or their renouncee(s). However, if the Entitled Shareholders decide to accept only part of their Rights Shares entitlement, they shall be entitled to the Rights in the proportion of their acceptance of their Rights Shares entitlement. It is the intention of the Board to allocate the excess Rights Shares in a fair and equitable manner on a basis to be determined by the Board and announced later by the Company Ranking of the Rights Shares and the new IDEAL Shares arising from the exercise of the Rights The Rights Shares shall, upon issue and allotment, rank pari passu in all respects with the then existing IDEAL Shares except that they will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid, for which the entitlement date of which is prior to the date of allotment and issue of the Rights Shares. An application will be made to Bursa Securities for the listing of and quotation for the Rights Shares and Rights to be issued pursuant to the Proposed Rights Issue with and the new IDEAL Shares to be issued arising from the exercise of the Rights on the ACE Market of Bursa Securities Undertaking from major shareholder and underwriting arrangement The Proposed Rights Issue with will be undertaken on a full subscription level basis. The Company had on 27 April 2012, procured an irrevocable undertaking in writing from Ideal Sun City Sdn Bhd ( ISCSB ), a major shareholder of the Company, to subscribe in full for its entitlement to the Rights Shares ( Undertaking ) as well as an irrevocable undertaking to fully subscribe the renounced entitlements of the Rights Shares (if any) not subscribed by the other Entitled Shareholders and/or their renounces ( Additional Undertaking ) for up to the aggregate of 94,003,200 Rights Shares. As ISCSB has provided the Undertaking and Additional Undertaking, no underwriting arrangement will be taken. Number of IDEAL Shares held by ISCSB as at 12 April 2012 (adjusted for the effects of the Proposed Balance Sheet Reconstruction) Entitlement of Right Shares to be subscribed by ISCSB pursuant to the Undertaking 7,520,260 30,081,

6 Maximum entitlement of Right Shares to be subscribed by ISCSB pursuant to the Additional Undertaking 63,922, ,523,460 The percentage is calculated based on the existing issued and paid-up share capital of the Company (assuming completion of the Proposed Balance Sheet Reconstruction). The subscription for RM9,400,320 pursuant to the Proposed Rights Issue with was determined based on the level of funds needed by the IDEAL Group after taking into consideration factors such as the working capital for the next twelve (12) months, gearing position of the IDEAL Group, net asset level of the IDEAL Group post-regularisation, and the estimated expenses arising from the Proposed Regularisation Scheme. 2.3 Proposed Exemption As at 12 April 2012, ISCSB and its PACs hold, directly and indirectly 32.0% in the issued and paid-up share capital of IDEAL. Assuming that none of the Entitled Shareholders of IDEAL subscribe for their entitlements pursuant to the Proposed Rights Issue with and ISCSB subscribes for its entire entitlements pursuant to the Undertaking and Additional Undertaking, the resultant collective shareholdings of ISCSB and its PACs in IDEAL may increase from 32.0% to 86.4% of the enlarged issued and paid-up share capital of IDEAL after the Proposed Rights Issue with. In any event, ISCSB and its PACs eventual collective shareholdings will be dependent upon the Rights Shares to be subscribed by the other Entitled Shareholders and/or their renounces. Depending on the subscription rate of the Proposed Rights Issue with, the undertakings may result in ISCSB and the PACs having to undertake a mandatory take-over offer to acquire all the remaining IDEAL Shares not already owned by them upon the completion of the Proposed Rights Issue with and upon the exercise of the Rights. In view of the above and subject to the approval of the shareholders of the Company, ISCSB and its PACs intend to seek an exemption from the Securities Commission Malaysia ( SC ) from having to undertake a mandatory take-over offer for all the IDEAL Shares not already owned by them pursuant to Practice Note 9, Paragraph 16.1 of the Code. 2.4 Proposed Placement with IDEAL proposes to undertake an issuance of up to 24,000,000 Placement Shares together with up to 12,000,000 Placement after the completion of the Proposed Rights Issue with on the basis of one (1) Placement Warrant for every two (2) Placement Shares to investors to be identified at an issue price of RM0.10 per Placement Share to meet the public shareholding spread requirements. Based on an issue price of RM0.10 per Placement Share, the Proposed Placement with is expected to raise gross proceeds of up to RM2,400,000. The utilisation of proceeds derived from the Proposed Placement with is illustrated in Section 2.5 below

7 The issue price for the Placement Shares and exercise price of the Placement of RM0.10 each was determined using market based pricing principles (i.e. the theoretical exrights pricing model calculated in the ensuing paragraph below) after taking into consideration the prevailing market price of IDEAL Shares, future business prospects of the IDEAL Group, the Proposed Regularisation Scheme, as well as the par value of the IDEAL Shares. Due consideration was also given to the fact that the Placement shall be issued for free to the investors to be identified for the Placement Shares. The theoretical ex-rights price based on an issue price of RM0.10 per Placement Share is RM0.18 per share, computed based on the five (5)-day WAMP up to and inclusive of 26 April 2012 of RM0.06 per share and after the Proposed Rights Issue with. The issue price of the Placement Shares and exercise price of the Placement of RM0.10 (without taking into consideration the value of the Placement ) represents a discount of 45.84% to the said theoretical ex-rights price. The salient terms of the Placement are as follows: Terms Number of Rights Details : Up to 12,000,000 Placement are to be issued for free to investors to be identified pursuant to the Proposed Placement with. Detachability : The Placement are immediately detached upon issue and allotment of the Placement Shares. The Placement will be traded separately. Exercise Price : The exercise price of the Rights of RM0.10 each was determined using market based pricing principles (i.e. the theoretical ex-all pricing model) after taking into consideration the prevailing market price of IDEAL Shares, future business prospects of the IDEAL Group, and the par value of the IDEAL Shares. The exercise price and the number of outstanding Placement during the Exercise Period shall however be subject to the adjustments under certain circumstances in accordance with the terms and provisions of the Deed Poll to be executed by the Company. Exercise Period : The Placement may be exercised at any time during the tenure of the Placement of five (5) years including and commencing from the issue date of the Placement. Placement not exercised during the Exercise Period will thereafter lapse and cease to be valid. Exercise Rights : Each Placement Warrant entitles the registered holder to subscribe for one (1) new IDEAL Share at the Exercise Price at any time during the Exercise Period and shall be subject to adjustments in accordance with the provisions of the Deed Poll. Deed Poll : The Placement will be constituted by a Deed Poll to be executed by IDEAL. Board Lot : The Placement are tradeable upon listing in board lots of 100 units carrying rights to subscribe for 100 new IDEAL Shares at any time during the Exercise Period or such other number of units as may be prescribed by Bursa Securities

8 Terms Status of New IDEAL Shares to be issued pursuant to the exercise of the Placement Details : All the new IDEAL Shares to be issued pursuant to the exercise of the Placement shall, upon issue and allotment, rank pari passu in all respects with the then existing IDEAL Shares except that they will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, the entitlement date of which is prior to the date of allotment and issue of the said new IDEAL Shares. Listing : An application will be made for the listing of and quotation for the Placement and new IDEAL Shares to be issued pursuant to the exercise of the Placement on the ACE Market of Bursa Securities. Governing Law : Laws of Malaysia. The Rights and Placement are of the same class and shall, upon issue and allotment, rank pari passu in all respects with each other. The Board is of the opinion that the pricing of the IDEAL Shares is fair after taking into account the Proposed Regularisation Scheme, which is a regularisation plan for the Company. The Proposed Placement with will not require any prospectus to be issued should the issuance of IDEAL Shares falls under the relevant categories prescribed under Schedule 7 of the Capital Market Services Act which includes inter-alia, the issuance where the purchase consideration is not less than RM250,000 and the issuance is made to high net worth individuals whose personal net worth exceed RM3,000,000 or corporations with net assets ( NA ) exceeding RM10,000,000. The Placement Shares will not be placed to the directors, major shareholders, chief executive or persons connected to them. The Board is of the opinion that the Proposed Placement Shares with will further strengthen the capital base of IDEAL and put the enlarged IDEAL Group onto a stronger financial footing to expand its business whilst enabling the enlarged IDEAL Group to raise funds for its working capital requirements. The Proposed Placement Shares with will not be underwritten. Notwithstanding that there will be no underwriting arrangement, the Company has appointed M&A Securities as the placement agent to place out sufficient number of new IDEAL Shares under the Proposed Placement Shares with in order to allow IDEAL to meet the public spread requirements. The IDEAL Shares shall, upon allotment and issue, rank pari passu in all respects with the then existing IDEAL Shares, save and except that they shall not be entitled to any rights, dividends, allotment and/or other distributions, which may be declared prior to the date of allotment and issue of the IDEAL Shares. An application will be made to Bursa Securities for the listing of and quotation for the Placement to be issued pursuant to the Proposed Placement with and the new IDEAL Shares to be issued arising from the exercise of the Placement on the ACE Market of Bursa Securities. 2.5 Utilisation of proceeds Based on an issue price of RM0.10 per Rights Share and Placement Share, the Proposed Rights Issue with and Proposed Placement with is expected to raise aggregate gross proceeds of RM11,800,

9 RM Proceeds from the Proposed Rights Issue with 9,400,320 Proceeds from the Proposed Placement with 2,400,000 Total proceeds 11,800,320 Notes RM Proposed Utilisation Working capital (i) 5,454,620 Repayment of bank borrowings (ii) 4,528,700 Repayment of hire purchase (iii) 817,000 Expenses for the Proposed Regularisation Scheme ^ 1,000,000 Total utilisation 11,800,320 Notes: (i) The working capital is estimated to be mainly utilised for the Group s operations in its landscaping business such as payment of trade and other payables and to finance the Group s project management business for property development such as the payment of salaries and other operating expenses. The Company has estimated the following breakdown of proceeds to be utilised for working capital as follows: Working Capital - Payment of trade and other payables - Payment of salaries - Other general operating expenses - Renovation and rental of office in Kuala Lumpur RM 3,000, , ,620 1,000,000 5,454,620 (ii) (iii) ^ Repayment of bank borrowings is expected to result in an annual interest savings of approximately RM457,399 (which includes penalty interest of RM101,896). Refers to the hire purchase for machineries pursuant to the Group s previous horticulture business, for which the amount is currently under dispute and the matter is currently under litigation. Although the High Court has ruled in favour of the IDEAL Group, an appeal has been filed by the plaintiffs. The amount for the repayment of hire purchase is based on the amount in the books of the IDEAL Group. In the event the actual expenses for the Proposed Regularisation Scheme differ from the estimated amount, the difference will accordingly be allocated to or subtracted from working capital under general operating expenses as the Board deems fit. The above breakdown is merely indicative at this juncture and may be subject to changes depending on the operating requirements of the IDEAL Group at the time of utilisation of proceeds. Pending utilisation of proceeds from the Proposed Rights Issue with and the Proposed Placement with, for the above purposes, the proceeds will be deposited with financial institutions or short-term money market instruments. The quantum of proceeds arising from the Rights and Placement is dependent upon the actual number of Rights and Placement exercised. The proceeds, if any, shall be utilised for the working capital of the IDEAL Group. 3. RATIONALE FOR THE PROPOSED REGULARISATION SCHEME IDEAL had on 29 April 2011 announced that it has been classified as an affected listed issuer pursuant to GN3 of the ACE LR. As such, IDEAL is required to submit to Bursa Securities a regularisation plan and obtain Bursa Securities approval to implement the plan to regularise the financial condition of the Company

10 As such, the main objective of the Proposed Regularisation Scheme, which includes a fund raising exercise, is to revitalise the existing business operations of the IDEAL Group based on a new platform to return the IDEAL Group back to profitability and to improve its financial performance. 3.1 Proposed Balance Sheet Reconstruction The Board is of the view that as part of the ongoing efforts to rebuild the Company, it is imperative that the accumulated losses be significantly reduced. The resulting reduction of the accumulated losses via the Proposed Balance Sheet Reconstruction will allow the Company to partially meet its objective to attain a stronger financial position moving forward. The cancellation of the share premium and reduction in the capital which is no longer represented by available assets would result in the nominal amount of the ordinary shares of the Company reflecting more closely the value of its underlying assets and consequently the financial position of the Company prior to the undertaking of a fund raising exercise via the Proposed Rights Issue with. The reduction of the accumulated losses from IDEAL s balance sheet would not only enhance its credibility with the bankers, suppliers, investors and other stakeholders, but also it would provide the financial platform for the Company s future growth and facilitate the declaration of dividends in the future. 3.2 Proposed Rights Issue with The Proposed Rights Issue with is undertaken primarily to enable IDEAL to raise funds for the repayment of bank borrowings and working capital requirements, which is expected to contribute positively to the earnings potential of the IDEAL Group in the future and to defray estimated expenses for the Proposed Regularisation Scheme. The Proposed Rights Issue with will allow IDEAL to strengthen its balance sheets. The issuance of the Rights to Entitled Shareholders for free will act as a sweetener to the Entitled Shareholders as it is a five (5)-year option to further increase their participation in the equity of the Company at an attractive predetermined price. After due consideration of the various methods of fund-raising, the Board is of the opinion that the Proposed Rights Issue with is currently the most appropriate means of raising funds. The decision was arrived at after considering several major factors including the following: (a) (b) (c) the Proposed Rights Issue with will provide an opportunity for the existing shareholders to further participate in the equity of the Company and the future prospects and growth of the IDEAL Group. the Proposed Rights Issue with will enable the IDEAL Group to raise the funds required to meet its working capital requirements and to repay its bank borrowings without incurring interest costs as compared to other means of financing such as through bank borrowings or the issuance of debt instruments; allow IDEAL to recapitalise its shareholders equity base from a deficit of RM3.04 million in view of the accumulated losses of the IDEAL Group as at 31 December 2011, before the Proposed Rights Issue with to RM6.36 million after the Proposed Rights Issue with, representing a shareholders equity to share capital of -12.9% and 54.1% respectively;

11 (d) (e) (f) the free Rights to be issued pursuant to the Proposed Rights Issue with will provide the shareholders of IDEAL with an incentive to subscribe for the Rights Shares. It will also enable the Entitled Shareholders to participate in the future growth of the Company, particularly in the growth of the project management for the property development business, upon exercising the Rights. The Rights will provide the Entitled Shareholders the flexibility to participate in the equity of the Company and allow the Entitled Shareholders to increase their equity participation in the Company at a predetermined price over the tenure of the Rights ; in the event that the Rights is exercised into new IDEAL Shares, that will enable the Company to generate future cash flows arising from the exercise of the Rights ; and the Proposed Rights Issue with involves the issuance of new IDEAL Shares without diluting the existing shareholders equity interest (assuming all Entitled Shareholders fully subscribe for their respective entitlements). Further details of the future prospects of the IDEAL Group are set out in Section 4 below. 3.3 Proposed Exemption The Proposed Exemption is a corresponding proposal to facilitate the successful implementation of the Proposed Rights Issue with without ISCSB and the PACs having to incur the obligation to undertake a mandatory take-over offer pursuant to the Code as it is not the intention of ISCSB and the PACs to undertake a mandatory take-over offer under the Code as a result of the Proposed Rights Issue with and the exercise of all their Rights. The Proposed Exemption will enable ISCSB and the PACs to extend their continued support to the IDEAL Group vis-à-vis the Proposed Rights Issue with without incurring the additional financial burden of having to acquire the remaining IDEAL Shares not held by them pursuant to a mandatory take-over offer under Part III of the Code, arising from the Undertaking and Additional Undertaking. Overall, the Proposed Regularisation Scheme is in tandem with the new business direction already embarked on by the IDEAL Group to improve profitability for long-term sustainability, which will benefit all stakeholders of the Group. 3.4 Proposed Placement with The Proposed Placement with is undertaken to allow IDEAL to meet the public spread requirements upon listing on the ACE Market of Bursa Securities. In addition, the Proposed Placement with will strengthen the capital base of IDEAL and put the enlarged IDEAL Group onto a stronger financial footing whilst enabling the enlarged IDEAL Group to raise funds for its working capital requirements. The issuance of the Placement to investors to be identified for free will act as a sweetener to the said investors to be identified, as it is a five (5)-year option to further increase their participation in the equity of the Company at an attractive predetermined price

12 4. INDUSTRY OUTLOOK AND PROSPECTS OF IDEAL GROUP On 15 March 2012, the shareholders of IDEAL had approved the diversification of the Company s business into project management for property development. The project management business for which the IDEAL Group is venturing into is related to the property market in Malaysia. The IDEAL Group s project management business essentially includes a comprehensive offering of project management, design and construction management services. As such, the outlook and prospects of the project management business would be reflected by assessing the outlook and prospects of the construction industry and property market in Malaysia. 4.1 Prospects of the Construction Industry in Malaysia The outlook for the construction industry is positive for the immediate term, and steady growth is projected throughout the forecast period of 2012 to In 2011, the construction industry in Malaysia was estimated to be worth approximately RM18.9 billion and it is expected to grow at a CAGR of 4.1 percent over the forecast period of 2011 to Protégé Associates projects the size of the construction industry in Malaysia to reach RM23.1 billion in The year 2011 would be the first year under the Tenth Malaysia Plan ( 10MP ) and it is an attempt to revamp the economy via the Economic Transformation Programme ( ETP ) to put Malaysia back onto its desired growth trajectory, which it to become a developed, high income nation by Under the 10MP, the private sector will be re-energise and a more conducive environment will be nurtured to encourage private spending, business activities and investments. To this end, the government has allocated RM20 billion to provide financing that will serve as a tipping point to make infrastructure projects feasible and bankable without burdening the people. Among some of the public-private partnership ( PPP ) projects projects identified under the 10MP include, among others, seven toll highways, five Universiti Teknologi Mara branch campuses, the Integrated Transport Terminal in Gombak, privatisation of Penang Port, and redevelopment of Angkasapuri Complex, Kuala Lumpur as Media City. On top of the 10MP, the construction industry is also set to benefit directly from the rollout of the ETP. Under the ETP, a number of major property development projects planned within the Greater KL along with infrastructure projects would support the growth of the construction industry. The industry as a whole is expected to benefit from the mammoth Klang Valley MRT project the single largest contract in Malaysian history given its sheer size and also the RM12 billion high-speed rail projects from KL to Singapore and Penang. Going forward, expansion in the construction industry will be driven by factors such as the government led initiatives and spending, a stronger economy boosting spending and investment in properties, accommodative financing, steady population growth and increasing interests from foreigners in Malaysia s properties. Much of the construction industry s growth prospects hinges upon the speed and effective implementation of the various projects identified under the 10MP and ETP, along with the continued execution of various PPP projects. Additionally, the country s on-going economic expansion and improving consumer sentiment coupled with attractive financing packages and affordable interest rates would continue to underpin demand for properties and accordingly, boost construction activities. (Source: Independent Market Research ( IMR ) Report by Protégé Associates Sdn Bhd)

13 4.2 Prospects of the Property Market in Malaysia The Malaysian property market continued to strengthen in 2011 as a total of 430,403 transactions worth an estimated RM billion were recorded against 376,583 transactions worth RM billion in This represents an impressive double-digit growth in volume and value of 14.3 and 28.3 percent respectively. In 2011, growth was seen across all subsectors. Residential properties continued to dominate market activity, accounting for 62.7 percent of total transaction activities, followed by agricultural (19.7 percent), commercial (10.2 percent), development (5 percent) and industrial (2.4 percent). Residential property is a leading sub-sector in the local property market in terms of transactions volume and value. In 2011, residential properties accounted for 62.7 percent of total transactions and 44.9 percent of transaction value. During the same year, there were 269,789 residential property transactions valued at around RM61.8 billion as compared to 226,874 transactions valued at RM50.7 billion in The stronger economic performance of the country coupled with attractive loan packages offered by financial institutions helped boosted property sales and transactions. The overall performance of the residential subsector is expected to be sustained going forward. The shop sub-sector remained a major contributor to the commercial sub-sector, recording 24,997 transactions worth RM13.76 billion in the same year. The shopping complex subsector recorded mixed performance in 2011 as the retail market continued to record substantial take-up at 356,921 square metres however there is a marginal decline in national occupancy rate to 79.5 percent (2010:80.6 percent). Meanwhile, the performance of purposebuilt office sub-sector moderated as more new spaces came on stream which led to lower national occupancy rate at 82.9 percent (2010: 84.3 percent). The outlook for the property market remains positive in tandem with the expanding Malaysian economy. Malaysia s real GDP is expected to grow by 5.0 to 5.5 percent in 2011 and between 4.0 to 5.0 percent in During good economic periods, the general population can expect better access to more job opportunities and salary growth, and this will accordingly provide them with greater propensity to purchase, upgrade or invest in properties. This will see an increase in uptake of properties. Taking into consideration the various government led initiatives, coupled with the country s continued economic expansion and increasing consumer and business sentiment the property market is projected to register sustained growth moving forward. (Source: IMR Report by Protégé Associates Sdn Bhd) 4.3 Future prospects of the IDEAL Group The crux of the Proposed Regularisation Scheme is the fund raising exercise of the Proposed Rights Issue with, which is intended to fund IDEAL s working capital requirements and repay bank borrowings. The Proposed Regularisation Scheme will provide the opportunity for IDEAL to strengthen its financial standing and profitability through the undertaking of a new business namely, the provision of project management services. Moving forward, the management of the IDEAL Group is confident that the demand for the IDEAL Group s business is expected to grow in tandem with the prospects of the construction industry and property market in Malaysia. 5. FINANCIAL EFFECTS OF THE PROPOSED REGULARISATION SCHEME The proforma effects of the Proposed Regularisation Scheme on IDEAL s issued and paid-up share capital, consolidated NA, NA per share and gearing, earnings, earnings per share ( EPS ), substantial shareholders shareholdings, dividends and convertible securities (if any) are set out below

14 5.1 Issued and Paid-up Share capital The proforma effects of the Proposed Regularisation Scheme on the issued and paid-up share capital of IDEAL are as follows: No. of shares RM Existing issued and paid-up share capital 235,008,000 23,500,800 After the Proposed Balance Sheet Reconstruction 23,500,800 2,350,080 To be issued pursuant to the Proposed Rights Issue with 94,003,200 9,400,320 After the Proposed Rights Issue with 117,504,000 11,750,400 To be issued pursuant to the Proposed Placement with 24,000,000 2,400,000 After the Proposed Placement with 141,504,000 14,150,400 To be issued pursuant to the full exercise of the Rights 59,001,600 5,900,160 Enlarged share capital 200,505,600 20,050, Earnings and EPS The Proposed Regularisation Scheme is not expected to have any material effect on the earnings of IDEAL for the FYE 31 December 2012 as the Proposed Regularisation Scheme is only expected to be completed by the end of Nonetheless, the Proposed Rights Issue with and Proposed Placement with are expected to be earnings accretive as the utilisation of proceeds from the Proposed Rights Issue with is expected to contribute positively to the long term future earnings of the IDEAL Group and consequently its EPS. However, the EPS of the Company for the FYE 31 December 2012 is expected to be diluted as a result of the increase in the number of IDEAL Shares in issue upon the completion of the Proposed Rights Issue with and Proposed Placement with, and as and when the Rights and Placement are exercised into new IDEAL Shares. In future, any increase in the number of IDEAL Shares in issue following the exercise of the Rights and Placement will dilute the EPS of IDEAL in the event that the earnings and EPS of the IDEAL Group does not increase in tandem with the increase in the number of IDEAL Shares in issue. The remainder of this page is intentionally left blank

15 5.3 NA and Gearing Based on the audited consolidated statement of financial position of IDEAL as at 31 December 2011, the proforma effects of the Proposed Regularisation Scheme on the NA and gearing of the Group are set out as follows: Audited as at After the Proposed Share Premium Cancellation After the Proposed Par Value Reduction and Proposed Share Consolidation After the Proposed Rights Issue with After the Proposed Placement with After exercise of the Rights and Placement RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Share capital 23,501 23,501 2,350 11,750 14,150 20,050 Share premium 22, Accumulated Losses (48,568) (26,541) (5,390) (5,390) (6,390)* (6,390) Shareholders' funds / NA (3,040) (3,040) (3,040) 6,360 7,760 13,660 Total no. of IDEAL 235, ,008 23, , , ,506 Shares NA / share (RM) (0.013) (0.013) (0.129) Borrowings^ 5,346 5,346 5,346 -# - - Gearing (times) n/a n/a n/a Notes: * After deducting estimated expenses for the exercise of RM1,000,000. ^ Refers to bank borrowings and hire purchase. # After repayment of bank borrowings and hire purchase from the proceeds from the Proposed Rights Issue with and Proposed Placement with. 5.4 Substantial shareholders shareholdings The proforma effects of the Proposed Regularisation Scheme on the shareholdings of the substantial shareholders of IDEAL are set out in Table 1 of the Appendix of this announcement. 5.5 Dividends No dividend has been paid or declared by IDEAL for the FYE 31 December The Proposed Regularisation Scheme is not expected to affect the dividend policy of the Company as future dividend payable by the Company would be dependent on inter-alia, the future profitability and cashflow position of the IDEAL Group. 5.6 Convertible Securities IDEAL does not have any existing convertible securities. 6. APPROVALS REQUIRED The Proposed Regularisation Scheme is conditional upon the following being obtained:- (a) approval of Bursa Securities for the Proposed Regularisation Scheme and the following:

16 (i) (ii) listing of and quotation for new IDEAL Shares to be issued pursuant to the Proposed Rights Issue with, Proposed Placement with, and new IDEAL Shares to be issued arising from the exercise of the Rights and Placement ; and admission to the Official List and the listing of and quotation for the Rights and Placement to be issued pursuant to the Proposed Rights Issue with and Proposed Placement with respectively, on the ACE Market of Bursa Securities; (b) (c) (d) (e) (f) approval of the Take-Overs and Mergers Department of the SC, for the Proposed Exemption; approval of the shareholders of IDEAL for the Proposed Regularisation Scheme at an extraordinary general meeting ( EGM ) to be convened; confirmation of the High Court of Malaya for the Proposed Balance Sheet Reconstruction; approval of Bank Negara Malaysia for the issuance of the Rights and/or Placement to non-residents; and approval, waiver and/or consent of any other relevant authorities and/or persons, if required. 7. INTER-CONDITIONALITY OF THE PROPOSED REGULARISATION SCHEME The Proposed Balance Sheet Reconstruction, Proposed Rights Issue with, the Proposed Placement with and the Proposed Exemption, are inter-conditional upon each other. 8. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the other directors and major shareholders of the Company as well as persons connected with them have any interest, direct and/or indirect, in the Proposed Regularisation Scheme other than their respective entitlements as shareholders of the Company under the Proposed Rights Issue with for which all shareholders of IDEAL are entitled to including the right to apply for the Rights Shares. 9. DIRECTORS RECOMMENDATION After having considered all aspects of the Proposed Regularisation Scheme, including the rationale, the future prospects and funding requirements of the Company, the capital structure and financial position of the Company, the Board, is of the opinion that the Proposed Regularisation Scheme is in the best interest of the IDEAL Group. 10. ADVISER AND INDEPENDENT ADVISER M&A Securities has been appointed as the Principal Adviser to IDEAL for the Proposed Regularisation Scheme. An independent adviser for the Proposed Exemption will be appointed in due course pursuant to the requirements of Practice Note 9 of the Code

17 11. ESTIMATED TIMEFRAME FOR COMPLETION The tentative timetable for the implementation of the Proposed Regularisation Scheme is as follows:- Month End November 2012 End December 2012 End December 2012 Event EGM to approve the Proposed Regularisation Scheme Obtain confirmation of the High Court of Malaya for the Proposed Par Value Reduction Obtain Bursa Securities approval-in-principal for the: listing of and quotation for new IDEAL Shares to be issued pursuant to the Proposed Rights Issue with, Proposed Placement with and new IDEAL Shares to be issued arising from the exercise of the Rights and Placement ; and admission to the Official List and the listing of and quotation for the Rights and Placement to be issued pursuant to the Proposed Rights Issue with and Proposed Placement with respectively Mid January 2013 Listing of and quotation for the Rights Shares, Placement Shares, Rights and Placement on the ACE Market of Bursa Securities 12. CORPORATE PROPOSALS ANNOUNCED BUT NOT YET COMPLETED Save for the Proposed Regularisation Scheme, the Board confirms that there are no other outstanding corporate proposals announced by the Company, but not yet completed as at the date of this announcement. The Board also wishes to confirm that the Proposed Regularisation Scheme is not conditional upon any other corporate exercise/scheme undertaken or to be undertaken by IDEAL. 13. APPLICATIONS TO THE RELEVANT AUTHORITIES Barring unforeseen circumstances, applications to the relevant authorities in respect of the Proposed Regularisation Scheme are expected to be submitted by 30 August An application has been made to Bursa Securities for an extension of time up to 30 August 2012 to submit the Company s regularisation plan. This announcement is dated 27 April

18 TABLE 1: EFFECTS ON THE SHAREHOLDINGS OF THE SUBSTANTIAL SHAREHOLDERS OF IDEAL Scenario 1: Assuming all the Entitled Shareholders subscribe for their respective entitlements Existing as at 12 April 2012 After Proposed Balance Sheet Reconstruction < Direct > < Indirect > < Direct > < Indirect > ISCSB 75,202, ,520, Dato Ooi Kee Liang 1,000 ~ 75,202,600 (1) ~ 7,520,260 (1) Datin Phor Li Wei 1,000 ~ 75,202,600 (1) ~ 7,520,260 (1) Placees Minority shareholders 159,803, ,980, After the Proposed Rights Issue with After the Proposed Placement with < Direct > < Indirect > < Direct > < Indirect > ISCSB 37,601, ,601, Dato Ooi Kee Liang 500 ~ 37,601,300 (1) ~ 37,601,300 (1) Datin Phor Li Wei 500 ~ 37,601,300 (1) ~ 37,601,300 (1) Placees* ,000, Minority shareholders 79,901, ,901, After the full exercise of the Rights and Placement < Direct > < Indirect > ISCSB 52,641, Dato Ooi Kee Liang 700 ~ 52,641,820 (1) Datin Phor Li Wei 700 ~ 52,641,820 (1) Placees* 36,000, Minority shareholders 111,862, Notes: (1) Deemed interest by virtue of his/her substantial interest in ISCSB. ~ Negligible. * Assuming the Placement Shares will be placed with persons holding not more than five percent (5%) of the issued and paid-up share capital