PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION ( M&A ) OF BHB ("PROPOSED AMENDMENTS")

BOUSTEAD HOLDINGS BERHAD ( BHB OR COMPANY ) I. PROPOSED RENOUNCEABLE RIGHTS ISSUE OF UP TO 413,671,221 NEW ORDINARY SHARES OF RM0.50 EACH IN BHB ( BHB SHARES ) ( RIGHTS SHARES ) ON THE BASIS OF 2 RIGHTS SHARES FOR EVERY 5 EXISTING BHB SHARES HELD ON AN ENTITLEMENT DATE TO BE DETERMINED AND ANNOUNCED LATER ( PROPOSED RIGHTS ISSUE ); II. III. IV. PROPOSED BONUS ISSUE OF NEW BHB SHARES ( BONUS SHARES ) TO BE CREDITED AS FULLY PAID-UP ON THE BASIS OF 2 BONUS SHARE FOR EVERY 5 BHB SHARES HELD AFTER THE PROPOSED RIGHTS ISSUE ( PROPOSED BONUS ISSUE ); PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL OF BHB FROM RM1,000,000,000 COMPRISING 2,000,000,000 BHB SHARES TO RM2,000,000,000 COMPRISING 4,000,000,000 BHB SHARES ("PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL"); AND PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION ( M&A ) OF BHB ("PROPOSED AMENDMENTS") (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On behalf of the Board of Directors of BHB ( Board ), Affin Hwang Investment Bank Berhad ( Affin Hwang IB ) wishes to announce that BHB proposes to implement the Proposals. 2. DETAILS OF THE PROPOSALS 2.1 Proposed Rights Issue 2.1.1 Details of the Proposed Rights Issue The Proposed Rights Issue entails an issuance of up to 413,671,221 Rights Shares on a renounceable basis of 2 Rights Share for 5 existing BHB Shares held by the entitled shareholders of BHB whose names appear in the Record of Depositors of the Company as at the close of business on an entitlement date to be determined and announced later ( Entitlement Date ). The actual number of the Rights Shares to be issued pursuant to the Proposed Rights Issue would depend on the issued and paid-up share capital of the Company as at the Entitlement Date. As at 31 December 2015, being the latest practicable date prior to the date of this announcement ("LPD"), the issued and paid-up share capital of BHB is RM517,089,027 comprising 1,034,178,053 BHB Shares. 2.1.2 Basis of determining the issue price of the Rights Shares The issue price of the Rights Shares shall be determined by the Board at a future date, after taking into consideration, amongst others, the following: (i) the minimum issue price allowable under the Companies Act, 1965 ( Act ), which is not less than the par value of the BHB Shares of RM0.50 each; (ii) the issued and paid-up share capital of BHB as at the Entitlement Date; and 1

(iii) the 5-day volume-weighted average market price ( VWAMP ) per BHB Share up to and including the date immediately prior to the price fixing date. For illustrative purposes, the indicative issue price of the Rights Shares would be RM2.55 per Rights Share. The theoretical ex-rights price ( TERP ) of BHB Shares, computed based on the 5-day VWAMP of RM4.09 per BHB Share up to and including the LPD, is RM3.65. The indicative issue price of RM2.55 per Rights Share represents a discount of approximately RM1.10 or 30.14% from the TERP of BHB Shares. 2.1.3 Ranking of the Rights Shares The Rights Shares shall, upon allotment and issuance, rank pari passu in all respects with the then existing BHB Shares, except that the Rights Shares will not be entitled to any dividends, rights, allotments and/or other distributions, in respect of which the entitlement date is before the allotment date of the Rights Shares. 2.1.4 Listing of and quotation for the Rights Shares The Rights Shares will be listed on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Securities ). An application will be made to Bursa Securities for the listing of and quotation for the Rights Shares on the Main Market of Bursa Securities. 2.1.5 Renunciation of the Proposed Rights Issue The Rights Shares will be provisionally allotted to the Entitled Shareholders. The Proposed Rights Issue is renounceable in full or in part. Accordingly, Entitled Shareholders can subscribe for and/or renounce their entitlement to the Rights Shares in full or in part. Any fractional entitlements of the Rights Shares under the Proposed Rights Issue will be disregarded and shall be dealt with in such manner as the Board shall in their absolute discretion deem fit and in the best interest of BHB. The Rights Shares which are not taken up or validly taken up by the Entitled Shareholders shall be made available for excess applications by the Entitled Shareholders and/or their renouncee(s). It is the intention of the Board to allocate the excess Rights Shares on a pro-rata basis to the Entitled Shareholders and/or their renouncee(s) who have applied for the excess Rights Shares, based on their respective shareholdings in BHB on the entitlement date to be announced later. 2.1.6 Subscription basis and major shareholder s undertaking The Proposed Rights Issue is intended to be undertaken on a full subscription basis. In this respect, BHB intends to seek from Lembaga Tabung Angkatan Tentera ( LTAT ), the major shareholder of BHB, and Tan Sri Dato Seri Lodin bin Wok Kamaruddin ( TSLWK ), the Deputy Chairman/Group Managing Director and shareholder of BHB, undertakings to subscribe for and/or procure the subscription in full of their entitlements under the Proposed Rights Issue ( Undertakings ). 2

For illustration purposes, based on the shareholdings of LTAT and TSLWK as at the LPD, their full entitlements and the corresponding amounts for the Rights Shares under the Proposed Rights Issue are as follows: Shareholder Shareholdings as at the LPD Shares Entitlements to the Right Shares Indicative issue price Amount 000 000 RM RM 000 LTAT 607,603 58.75 243,041 2.55 619,755 TSLWK 28,193 2.73 11,277 2.55 28,756 The remaining portion of the Rights Shares for which no undertaking will be sought from LTAT and TSLWK will be fully underwritten. Such underwriting arrangements will be in place prior to the implementation of the Proposed Rights Issue. 2.1.7 Proposed utilisation of proceeds arising from the Proposed Rights Issue For illustrative purposes, based on the full subscription level and the indicative issue price of RM2.55, the Proposed Rights Issue is expected to raise gross proceeds of up to approximately RM1.05 billion. The proceeds are proposed to be utilised in the following manner: Utilisation of proceeds RM million Expected timeframe for utilisation of proceeds Repayment of bank borrowings 486.0 (1) 12 months Property development activities 507.0 (2) 24 months Working capital for BHB and its subsidiaries ( BHB Group ) 55.9 (3) 12 months Estimated expenses arising from the 6.0 (4) 6 months Proposals Total 1,054.9 Notes: (1) The proceeds of up to approximately RM486.0 million will be utilised for the partial repayment of the BHB Group s bank borrowings. The estimated annual interest savings arising from the repayment of the Group s bank borrowings, based on the average interest rate of approximately 5.29% per annum, is up to approximately RM25.7 million per annum. As at 30 September 2015, the total unaudited outstanding bank borrowings of the BHB Group are approximately RM7,955.1 million, which would be reduced to approximately RM7,469.1 million upon the completion of the Proposed Rights Issue and the repayment of bank borrowings of RM486.0 million. [The rest of this page is intentionally left blank] 3

(2) The proceeds of up to approximately RM507 million will be utilised to part finance the property development activities of the BHB Group, which include the following: Property development activities RM million Acquisition of land for future development 300.0 Construction of the Group s Royale Chulan Cherating Pahang resort Infrastructure works for the Group s property development projects 127.0 50.0 Development works for the Boustead Cruise Centre at Port 30.0 Klang, Malaysia Total 507.0 (3) The proceeds of up to approximately RM55.9 million will be utilised for the working capital requirements of various companies within the Group, which include the operational expenses to be incurred by the BHB Group within the ordinary course of business. The proposed utilisation of the proceeds allocated for such operational expenses would be adequate as any shortfall between the actual operational expenses incurred and the proceeds allocated for the operational expenses would be funded via the BHB Group s internally-generated funds and/or bank borrowings. (4) The estimated expenses for the Proposals of approximately RM6.0 million include the estimated professional fees, underwriting commission, fees payable to the relevant authorities and other miscellaneous expenses. Any surplus or shortfall of funds for the payment of expenses for the Proposals will be adjusted accordingly from or to the working capital, as the case may be. Any variation to the amount of proceeds to be raised, which is dependent upon the actual number of Rights Shares to be issued, will be adjusted against the working capital. Pending the utilisation of proceeds by BHB, the proceeds may be placed in interest-bearing deposit accounts or as investment in money markets as the Board may deem fit. 2.2 Proposed Bonus Issue 2.2.1 Basis and quantum The Proposed Bonus Issue entails the issuance of Bonus Shares to be credited as fully paid-up, on the basis of 2 Bonus Share for every 5 BHB Shares held by the shareholders of BHB after the completion of the Proposed Rights Issue on an entitlement date to be announced later. The actual number of Bonus Shares to be issued can only be determined after the completion of the Proposed Rights Issue, based on the then issued and paid-up ordinary share capital of BHB. For the avoidance of doubt, Entitled Shareholders who do not subscribe for the Rights Shares will still be entitled to the Bonus Shares. Please refer to Section 4.2 for an illustration of the Bonus Shares to be issued under the Proposed Bonus Issue. Any fractional entitlements under the Proposed Bonus Issue will be disregarded and shall be dealt with in such manner as the Board shall in their absolute discretion deem fit and in the best interest of BHB. The Proposed Bonus Issue will be implemented after the completion of the Proposed Rights Issue in a single issuance. 4

2.2.2 Capitalisation of reserves The Proposed Bonus Issue shall be capitalised wholly from the share premium of BHB. Based on BHB's latest unaudited consolidated quarterly financial results as at 30 September 2015, the share premium of BHB is approximately RM1,165.1 million. BHB s share premium will be in excess of the amount required for capitalisation for the Proposed Bonus Issue. Please refer to Section 4.2 for an illustration of the capitalisation of share premium required for the Proposed Bonus Issue. The Board confirms that based on BHB's latest audited consolidated financial statements for the financial year ended 31 December 2014 and its latest unaudited consolidated quarterly financial results as at 30 September 2015, BHB will have adequate share premium to cover the capitalisation required for the Proposed Bonus Issue, and that BHB s reserves are unimpaired by losses on a consolidated basis in accordance with Paragraph 6.30(1) of the Main Market Listing Requirements of Bursa Securities. 2.2.3 Ranking of the Bonus Shares The Bonus Shares shall, upon allotment and issuance, rank pari passu in all respects with the then existing BHB Shares, except that the Bonus Shares will not be entitled to any dividends, rights, allotments and/or other distributions, in respect of which the entitlement date is before the allotment date of the Bonus Shares. 2.2.4 Listing of and quotation for the Bonus Shares The Bonus Shares will be listed on the Main Market of Bursa Securities. An application will be made to Bursa Securities for the listing of and quotation for the Bonus Shares on the Main Market of Bursa Securities. 2.3 Proposed Increase in Authorised Share Capital BHB proposes to increase its authorised share capital from RM1,000,000,000 comprising 2,000,000,000 BHB Shares to RM2,000,000,000 comprising 4,000,000,000 BHB Shares to facilitate the implementation of the Proposed Rights Issue and Proposed Bonus Issue as well as any future issuance of equity capital, including any other future corporate exercises. 2.4 Proposed Amendments The Proposed Amendments entails the corresponding amendments to be made to the M&A of BHB as a consequence of the Proposed Increase in Authorised Share Capital. [The rest of this page is intentionally left blank] 5

3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Rights Issue After due consideration of the various methods of fund raising as well as the capital structure of BHB, the Board is of the view that the Proposed Rights Issue is the most appropriate avenue for raising funds for the purposes stated in Section 2.1.7 of this announcement premised on the following reasons: (i) (ii) the Proposed Rights Issue will enable BHB to raise funds via equity capital to finance the business operations of the BHB Group, which is a more cost efficient alternative as compared to incurring additional bank borrowings. The Proposed Rights Issue will enable BHB to raise funds for the working capital requirements for its property development and property investment activities, which are expected to contribute positively to the future profitability of BHB; the Proposed Rights Issue is expected to improve the liquidity and financial flexibility as well as to optimise BHB s capital structure by strengthening its financial position. The Proposed Rights Issue will result in the following: a. a reduction of the BHB Group s existing bank borrowings; and b. an increase in the BHB Group s shareholders funds, which would improve the BHB Group s gearing level, while enabling a better reflection of the scale of BHB Group s operations. (iii) (iv) the Proposed Rights Issue will provide BHB s shareholders an opportunity to participate in an equity offering on a pro-rata basis and acquire new BHB Shares at a discount to prevailing market prices without diluting the existing shareholders interest, assuming that all the entitled shareholders of BHB fully subscribe for their respective entitlements pursuant to the Proposed Rights Issue; and the Proposed Rights Issue will enable BHB to increase its issued and paid-up share capital to a level which would be more reflective of its current scale of operations and assets employed. 3.2 Proposed Bonus Issue The Proposed Bonus Issue is undertaken for the following purposes: (i) (ii) (iii) to reward the shareholders of BHB for their continuous support and loyalty towards BHB by enabling them to have greater participation in the equity of the Company in terms of the number of ordinary shares held. The trading liquidity and marketability of BHB Shares on the Main Market of Bursa Securities are also expected to improve further with a larger share base; to increase the quantum of BHB Shares held by BHB s shareholders whilst maintaining their percentage of equity interest in BHB; and to enhance the trading liquidity and marketability of BHB Shares on Bursa Securities through a larger capital base. 6

4. EFFECTS OF THE PROPOSALS 4.1 Issued and paid-up share capital The effects of the Proposed Rights Issue and the Proposed Bonus Issue on the issued and paid-up share capital of BHB as at the LPD are as follows: Shares Amount million RM million Issued and paid-up capital as at the LPD 1,034.2 517.1 To be issued pursuant to the Proposed Rights Issue 413.7 206.8 1,447.9 723.9 To be issued pursuant to the Proposed Bonus Issue 579.1 289.6 Enlarged issued and paid-up share capital 2,027.0 1,013.5 4.2 Net assets ( NA ) per share and gearing Based on BHB s latest audited consolidated balance sheet as at 31 December 2014, the pro forma effects of the Proposed Rights Issue and the Proposed Bonus Issue on BHB s consolidated NA per share and gearing are set out below: Audited as at 31 December 2014 (I) After the Proposed Rights Issue (II) After (I) and the Proposed Bonus Issue RM million RM million RM million Share capital 517.1 (a) 723.9 1,013.5 Perpetual Sukuk 1,140.7 1,140.7 1,140.7 Share Premium 1,165.1 (a) 2,013.2 (c) 1,723.6 Other non-distributable reserves 825.4 825.4 825.4 Retained earnings 2,231.5 (b) 2,225.5 2,225.5 Shareholders equity/na 5,879.8 6,928.7 6,928.7 Non-controlling interests 1,693.5 1,693.5 1,693.5 Total equity 7,573.3 8,622.2 8,622.2 Number of BHB Shares in issue 1,034.2 1,447.9 2,027.0 (million) NA per BHB Share (RM) 5.69 4.79 3.42 Total borrowings 7,080.7 6,594.7 6,594.7 Gearing (times) 1.20 0.95 0.95 Notes: (a) (b) (c) Based on 413,671,221 Rights Shares issued at an indicative issue price of the Rights Shares of approximately RM2.55 per Right Share, which results in an increase in share premium account of approximately RM848.1 million. After deducting the estimated expenses arising from the Proposals of approximately RM6.0 million. After capitalisation of approximately RM289.6 million for the Proposed Bonus Issue. 7

4.3 Earnings and earnings per share ( EPS ) The Proposed Rights Issue and the Proposed Bonus Issue are not expected to have any material effect on the consolidated earnings of BHB for the financial year ending 31 December 2015 as they are only expected to be completed by the 3 quarter of 2016. Moving forward, the Proposed Rights Issue is expected to contribute positively to the consolidated earnings of BHB for the ensuing financial years, when the benefits of the proposed utilisation of proceeds are realised. The Proposed Rights Issue and the Proposed Bonus Issue will dilute BHB s consolidated EPS as a result of the increase in the number of BHB Shares in issue upon completion of the Proposed Rights Issue and the Proposed Bonus Issue. Notwithstanding the above, the proceeds from the Proposed Rights Issue are expected to contribute positively to the earnings of the BHB Group for the ensuing financial years, when the benefits of the utilisation of proceeds are realised. The benefits include the interest savings as illustrated in Section 2.1.7 of this announcement. [The rest of this page is intentionally left blank] 8

4.4 Substantial shareholders shareholdings In the event that all the entitled shareholders of BHB subscribe in full for their entitlements under the Proposed Rights Issue, there will be no effect on the shareholdings of the substantial shareholders of BHB save for the proportionate increase in the total number of BHB Shares held by each of the substantial shareholders following the Proposed Rights Issue. The pro forma effects of the Proposed Rights Issue and the Proposed Bonus Issue on the shareholdings of the substantial shareholders of BHB are as follows: Substantial shareholder As at the LPD (I) After the Proposed Rights Issue (II) After (I) and the Proposed Bonus Issue Direct Indirect Direct Indirect Direct Indirect 000 000 000 000 000 000 LTAT 607,603 58.75 - - 850,644 58.75 - - 1,190,902 58.75 - - [The rest of this page is intentionally left blank] 9

4.5 Convertible securities BHB does not have any convertible securities as at the date of this announcement. 5. APPROVALS REQUIRED The Proposals are subject to the following approvals being obtained: (a) Bursa Securities for the following: (i) (ii) listing of and quotation for the new BHB Shares to be issued pursuant to the Proposed Rights Issue; and listing of and quotation for the Bonus Shares to be issued pursuant to the Proposed Bonus Issue. (b) (c) shareholders of BHB at an extraordinary general meeting to be convened; and any other relevant authorities and/or parties, where required. The Proposed Bonus Issue is conditional upon the completion of the Proposed Rights Issue. The Proposed Rights Issue and Proposed Bonus Issue are conditional upon the Proposed Increase in Authorised Share Capital and the Proposed Amendment and vice-versa. Save as stated above, the Proposals are not conditional upon any other corporate exercise/scheme of BHB. Barring any unforeseen circumstances, the applications to the relevant regulatory authorities in relation to the Proposals will be made within 1 month from the date of this announcement. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED TO THEM None of the Directors and major shareholders of BHB and/or persons connected to them have any interest, direct or indirect, in the Proposals, other than their respective entitlements under the Proposed Rights Issue and the Proposed Bonus Issue and their right to apply for excess Rights Shares as shareholders of BHB (where applicable), which shall also be made available to all other shareholders of BHB. 7. DIRECTORS STATEMENT The Board, having considered the current and prospective financial position of BHB and all aspects of the Proposals including the rationale and effects of the Proposals, is of the opinion that the Proposals are in the best interest of BHB and its shareholders. 8. ADVISER Affin Hwang IB has been appointed by BHB as the Principal Adviser for the Proposals. 9. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to all relevant approvals being obtained, the Proposals are expected to complete by the 3 quarter of 2016. This announcement is dated 18 January 2016. 10