( GBGAQRS OR THE COMPANY ) PROPOSED BONUS ISSUE OF WARRANTS; PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND PROPOSED AMENDMENTS COLLECTIVELY REFERRED TO AS THE PROPOSALS 1.0 INTRODUCTION On behalf of the Board of Directors of GBGAQRS ( Board ), KAF Investment Bank Berhad ( KAF ) wishes to announce that the Company is proposing to undertake the following proposals:- (i) (ii) (iii) proposed bonus issue of 159,984,000 free warrants in GBGAQRS ( Warrants ) on the basis of nine (9) Warrants for every twenty (20) existing ordinary shares of RM0.25 each in GBGAQRS ( GBGAQRS Shares or Shares ) held on an entitlement date to be determined later ( Proposed Bonus Issue of Warrants ); proposed increase in the authorised share capital of GBGAQRS from RM100,000,000 comprising 400,000,000 GBGAQRS Shares to RM500,000,000 comprising 2,000,000,000 GBGAQRS Shares ( Proposed Increase in Authorised Share Capital ); and proposed amendments to the Memorandum and Articles of Association of GBGAQRS ( Proposed Amendments ). Further details on the Proposals are set out in the ensuing sections. 2.0 DETAILS OF THE PROPOSALS 2.1 Proposed Bonus Issue of Warrants The Proposed Bonus Issue of Warrants would entail the issuance of 159,984,000 Warrants on the basis of nine (9) Warrants for every twenty (20) existing GBGAQRS Shares held by shareholders whose names appear in the Record of Depositors of the Company on an entitlement date to be determined by the Board and announced later ( Entitlement Date ), after the approvals from the relevant authorities and shareholders of GBGAQRS have been obtained. Based on the issued and paid-up share capital of GBGAQRS as at 22 April 2013, being the latest practicable date prior to this announcement ( LPD ), of RM88,880,000 comprising 355,520,000 Shares, a total of 159,984,000 Warrants will be issued pursuant to the Proposed Bonus Issue of Warrants. In determining the shareholders entitlement to the Warrants, fractional entitlements, if any, will be disregarded and shall be dealt with in such manner as the Board shall in its absolute discretion deems fit and expedient in order to minimise the incidence of odd lots and in the interest of the Company. 2.1.1 Basis and justification of arriving at the issue price and exercise price of the Warrants The Warrants will be issued at no cost to the shareholders of GBGAQRS. The exercise price of the Warrants shall be determined and fixed by the Board after obtaining all relevant approvals but before the Entitlement Date, and shall not be lower than the par value of GBGAQRS Shares of RM0.25 each. For illustration purposes only, the indicative exercise price of the Warrants is assumed at RM0.92 each, which represents the five (5)-day volume weighted average market traded price of the GBGAQRS Shares up to and including the LPD. 1
The final exercise price of the Warrants shall be determined and fixed by the Board after taking into consideration, amongst others, the following:- (i) (ii) (iii) the historical price movement of GBGAQRS Shares; the potential future earnings of GBGAQRS s group of companies ( Group ); and the par value of GBGAQRS Shares of RM0.25 each. 2.1.2 Utilisation of proceeds The Proposed Bonus Issue of Warrants will not raise any immediate funds upon its issuance as the Warrants will be issued at no cost to the shareholders of GBGAQRS. Assuming a full exercise of the Warrants at the indicative exercise price of RM0.92 per Warrant, a total of 159,984,000 new GBGAQRS Shares would be issued and the Company would potentially raise a proceeds of up to RM147.19 million over the tenure of the Warrants. Such proceeds are earmarked by the Company for future working capital purposes, as and when the Warrants are exercised. The proceeds to be utilised for working capital purposes will be used to meet part of the Group s working capital requirements which includes, among others, the placement of fixed deposits with banks as collateral for performance bonds and payments for the purchase of raw materials, subcontractor fees, incidental salaries and other expenses required to undertake construction and property development projects. 2.1.3 Ranking of the new GBGAQRS Shares arising from the exercise of the Warrants All the new GBGAQRS Shares to be issued upon the exercise of the Warrants shall, upon allotment and issue, rank pari passu in all respects with the existing GBGAQRS Shares, save and except that the new GBGAQRS Shares shall not be entitled to any dividends, rights, allotments and/or any other forms of distribution which may be declared, made or paid before the date of allotment of such new GBGAQRS Shares. 2.1.4 Capitalisation of reserves There will not be any capitalisation of reserves arising from the issuance of the Warrants pursuant to the Proposed Bonus Issue of Warrants. Therefore, the requirement to ensure that the necessary reserves required for capitalisation of bonus issue is unimpaired by losses of a company on a consolidated basis pursuant to Paragraph 6.30 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) is not relevant with regards to the Proposed Bonus Issue of Warrants. 2.1.5 Listing of and quotation for the Warrants and the new GBGAQRS Shares arising from the exercise of the Warrants An application will be made to Bursa Securities for the following:- (i) (ii) admission of the Warrants to the Official List of Bursa Securities; and the listing of and quotation for the Warrants and any new GBGAQRS Shares to be issued arising from the exercise of the Warrants on the Main Market of Bursa Securities. 2
2.1.6 Indicative principal terms of the Warrants Form and denomination : The Warrants will be issued in registered form and constituted by a deed poll to be executed by the Company ( Deed Poll ). Number of Warrants Exercise Price : 159,984,000 Warrants to be issued pursuant to the Proposed Bonus Issue of Warrants. : The exercise price of the Warrants shall be determined and fixed by the Board at a later date after obtaining the relevant approvals but before the Entitlement Date. Exercise Period : Five (5) years commencing from and inclusive of the date of first issue of the Warrants. Any Warrants which are not exercised during the Exercise Period shall thereafter lapse and cease to be valid for any purpose. Expiry Date : The date immediately preceding the fifth (5 th ) anniversary date of first issue of the Warrants, and if such date is not a day on which the stock market of Bursa Securities is open for trading in securities ( Market Day ), then on the immediate preceding Market Day. Exercise Rights : Each Warrant entitles its holder to subscribe for one new GBGAQRS Share at the Exercise Price at any time during the Exercise Period subject to the provisions in the Deed Poll. Board lot : The Warrants are tradable upon listing on Bursa Securities in board lots of 100 Warrants. Status of new GBGAQRS Shares to be issued pursuant to the exercise of the Warrants Adjustment in the Exercise Price and/or the number of Warrants held by holders of Warrants in the event of alteration to the share capital : All new GBGAQRS Shares to be issued upon the exercise of the Warrants (in accordance with the provisions of the Deed Poll) shall, on allotment and issue, rank pari passu in all respects with the existing GBGAQRS Shares, save and except that the new GBGAQRS Shares shall not be entitled to any dividends, rights, allotments and/or any other forms of distribution which may be declared, made or paid before the date of allotment of such new GBGAQRS Shares. : Subject to the provisions of the Deed Poll, the Exercise Price and/or the number of Warrants held by each holder of Warrants shall be adjusted by the Board in consultation with an investment bank in Malaysia appointed by the Company for the purposes of the Deed Poll in the event of alteration to the share capital of the Company in accordance with the provisions as set out in the Deed Poll. Rights of Warrants : The Warrants do not entitle the registered holders thereof to any voting rights in any general meeting of the Company or to participate in any distribution and/or offer of further securities in the Company unless the Warrant holder becomes a shareholder by exercising his/her Warrants. 3
Modification of rights of Warrant holder Rights of Warrant holders on winding-up, compromise or arrangement of the Company : Save as otherwise provided in the Deed Poll, a special resolution of the Warrant holders is required to sanction any modification, alteration or abrogation in respect of the rights of the Warrant holders. : Where a resolution has been passed for a members voluntary winding-up of the Company, or where there is a compromise or arrangement, whether or not for the purpose of or in connection with a scheme for the reconstruction of the Company or the amalgamation of the Company with one or more companies, then every Warrant holder shall be entitled, upon and subject to the provisions of the Deed Poll, at any time within six (6) weeks after the passing of such resolution for a members voluntary winding-up of the Company, or within six (6) weeks after (whichever is later) the court order or the last approval being granted for the compromise or arrangement, to be treated as if he had immediately prior to the commencement of such windingup, compromise or arrangement (as the case may be) exercised the Exercise Rights represented by the Warrants and had on such date been the holder of the new GBGAQRS Shares arising from the exercise of the Warrants. Upon the expiry of the above six (6) weeks, all exercise rights of the Warrants shall lapse and cease to be valid for any purpose. Governing Law : Laws and regulations of Malaysia. 2.2 Proposed Increase in Authorised Share Capital As at LPD, the authorised share capital of GBGAQRS is RM100,000,000 comprising 400,000,000 GBGAQRS Shares, of which RM88,880,000 comprising 355,520,000 GBGAQRS Shares have been issued and fully paid-up. In order to accommodate any future issuance of new GBGAQRS Shares, including those arising from the exercise of the Warrants, GBGAQRS proposes to increase its authorised share capital to RM500,000,000 comprising 2,000,000,000 GBGAQRS Shares. 2.3 Proposed Amendments The Company proposes to amend its Memorandum and Articles of Association to effect the Proposed Increase in Authorised Share Capital. [The rest of this page is intentionally left blank] 4
3.0 RATIONALE FOR THE PROPOSALS 3.1 Proposed Bonus Issue of Warrants The Proposed Bonus Issue of Warrants aims to reward the existing shareholders of the Company for their continuing support by enabling them to participate in an equity derivative of the Company without incurring any cost and at the same time, enabling the Company to strengthen its capital base as and when the Warrants are exercised. The Warrants provide the existing shareholders of the Company with a five (5)- year option to increase their equity participation in the Company at a pre-determined exercise price during the tenure of the Warrants. 3.2 Proposed Increase in Authorised Share Capital The Proposed Increase in Authorised Share Capital is intended to increase the Company s existing authorised share capital to facilitate any increase in the share capital of the Company in the future, including those arising from the exercise of the Warrants. 3.3 Proposed Amendments The Proposed Amendments are intended to facilitate the Proposed Increase in Authorised Share Capital. 4.0 EFFECTS OF THE PROPOSALS The Proposed Increase in Authorised Share Capital and the Proposed Amendments will not have any impact on the issued and paid-up share capital of GBGAQRS, substantial shareholders' shareholdings in GBGAQRS, consolidated net assets ("NA") per Share, consolidated gearing, consolidated earnings and earnings per Share ("EPS") of the Company. 4.1 Share capital The proforma effects of the Proposed Bonus Issue of Warrants on the issued and paid-up share capital of GBGAQRS are as follows:- No. of GBGAQRS Shares ( 000) RM 000 As at the LPD 355,520 88,880 After the Proposed Bonus Issue of Warrants - - 355,520 88,880 To be issued upon full exercise of the Warrants 159,984 39,996 515,504 128,876 4.2 Earnings and EPS The Proposed Bonus Issue of Warrants is not expected to have any material effects on the consolidated earnings of GBGAQRS for the financial year ending 31 December 2013. However, as and when the Warrants are exercised into new GBGAQRS Shares, it will result in a corresponding dilution in the EPS of the Group due to the increase in the number of GBGAQRS Shares in issue. 5
4.3 NA and gearing The proforma effects of the Proposed Bonus Issue of Warrants on the consolidated NA per Share and consolidated gearing of the Company based on the audited consolidated financial statements of GBGAQRS for the financial year ended 31 December 2011 are as follows:- Audited as at 31 December 2011 Adjusted as at 31 December 2011 (I) (II) (III) After (I) and the Proposed Bonus Issue of Warrants (3) After (II) and upon full exercise of the Warrants RM'000 RM'000 RM'000 RM'000 Share capital 73,380 88,880 88,880 128,876 Share premium - 55,885 55,885 163,074 Retained earnings 48,877 44,952 44,802 44,802 Shareholders equity/ NA 122,257 189,717 189,567 336,752 (2) No. of ordinary shares ( 000) 293,520 355,520 355,520 515,504 NA per ordinary share (RM) 0.42 0.53 0.53 0.65 Borrowings (RM 000) 67,748 67,748 67,748 67,748 Gearing (times) 0.55 0.36 0.36 0.20 Notes:- Upon completion of GBGAQRS initial public offering and the utilisation of proceeds raised. (2) After deducting estimated expenses of RM0.15 million in relation to the Proposals. (3) Based on the assumption that the exercise price of the Warrants is RM0.92 per Warrant. [The rest of this page is intentionally left blank] 6
4.4 Substantial shareholders shareholdings The proforma effects of the Proposed Bonus Issue of Warrants on the shareholdings of the substantial shareholders of the Company are as follows:- (I) Existing as at the LPD After the Proposed Bonus Issue of Warrants Direct Indirect Direct Indirect No. of Shares % No. of Shares % No. of Shares % No. of Shares % Ng Chun Kooi 35,406,592 9.96 64,778,900 18.22 35,406,592 9.96 64,778,900 18.22 Ng Kit Heng 15,576,000 4.38 - - 15,576,000 4.38 - - Ow Chee Cheoon 15,576,000 4.38 - - 15,576,000 4.38 - - Shahrum Niza Bin Yahya 47,035,800 13.23 - - 47,035,800 13.23 - - Meriah Binti Nasibi 35,506,600 9.99 - - 35,506,600 9.99 - - Ng Chun Seong 64,778,900 18.22 35,406,592 9.96 64,778,900 18.22 35,406,592 9.96 Lim Ann Kok 33,737,100 9.49 - - 33,737,100 9.49 - - Bernard Lim Soon Chiang 18,473,000 5.20 - - 18,473,000 5.20 - - (II) After (I) and full exercise of the Warrants (2) Direct Indirect No. of Shares % No. of Shares % Ng Chun Kooi 51,339,558 9.96 93,929,405 18.22 Ng Kit Heng 22,585,200 4.38 - - Ow Chee Cheoon 22,585,200 4.38 - - Shahrum Niza Bin Yahya 68,201,910 13.23 - - Meriah Binti Nasibi 51,484,570 9.99 - - Ng Chun Seong 93,929,405 18.22 51,339,558 9.96 Lim Ann Kok 48,918,795 9.49 - - Bernard Lim Soon Chiang 26,785,850 5.20 - - Notes:- Deemed interested by virtue of the shareholdings held by his brother in the Company. (2) On the assumption that the entitled shareholders will retain their respective entitlements under the Proposed Bonus Issue of Warrants and exercise the same into new Shares. 7
4.5 Convertible securities GBGAQRS does not have any convertible securities in issue as at the date of this announcement. 5.0 APPROVALS REQUIRED AND CONDITIONALITY The Proposals are subject to the following approvals being obtained:- (a) Bursa Securities for the following:- (i) (ii) the admission of the Warrants to the Official List of Bursa Securities; and the listing of and quotation for the Warrants and the new GBGAQRS Shares to be issued upon exercise of the Warrants on the Main Market of Bursa Securities; (b) (c) (d) the approval of Bank Negara Malaysia for the issuance of the Warrants to non-residents pursuant to the Proposed Bonus Issue of Warrants; the shareholders of the Company at an extraordinary general meeting to be convened; and any other relevant authorities (if applicable). The Proposed Bonus Issue of Warrants is conditional upon the Proposed Increase in Authorised Share Capital and Proposed Amendments. The Proposed Increase in Authorised Share Capital and Proposed Amendments are inter-conditional upon one another but are not conditional upon the Proposed Bonus Issue of Warrants. Save for the above, the Proposals are not conditional upon any other corporate proposals undertaken or to be undertaken by GBGAQRS. 6.0 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors, major shareholders and/or persons connected to the Directors and/or major shareholders of GBGAQRS would have any interest, direct or indirect, in the Proposals save for their respective entitlements, if any, as shareholders of GBGAQRS under the Proposed Bonus Issue of Warrants, the rights of which are also available to all other shareholders of the Company as at the Entitlement Date. 7.0 DIRECTORS STATEMENT AND RECOMMENDATION The Board, having considered all aspects of the Proposals, including but not limited to the rationale and financial effects of the Proposals, is of the opinion that the Proposals are in the best interest of the Company. 8.0 ADVISER The Board has appointed KAF as the Adviser for the Proposals. 8
9.0 APPLICATIONS TO THE RELEVANT AUTHORITIES The applications to the relevant authorities are expected to be made within two (2) months from the date of this announcement. 10.0 ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposals are expected to be completed by the third (3 rd ) quarter of 2013. This announcement is dated 23 April 2013. 9