GENERAL ANNOUNCEMENT Company Name : BOUSTEAD HOLDINGS BERHAD Stock Name : BSTEAD Stock Code : 2771 Date Announced : 6 JULY 2011 Type Subject : Announcement : BOUSTEAD HOLDINGS BERHAD ( BHB ) 1. INTRODUCTION (I) PROPOSED DIVIDEND-IN-SPECIE OF ORDINARY SHARES OF RM1.00 EACH IN PHARMANIAGA BERHAD ( PHARMANIAGA ) ( PHARMANIAGA SHARES ) TO THE SHAREHOLDERS OF BHB ( PROPOSED DIVIDEND-IN- SPECIE ); (II) PROPOSED RESTRICTED OFFER FOR SALE BY BHB OF PHARMANIAGA SHARES TO THE SHAREHOLDERS OF BHB (EXCLUDING LEMBAGA TABUNG ANGKATAN TENTERA ( LTAT ) ( PROPOSED RESTRICTED OFFER FOR SALE ); (III) PROPOSED DIVESTMENT BY BHB OF PHARMANIAGA SHARES TO LTAT, BHB DIRECTORS AND EMPLOYEES AND OTHER INVESTORS TO BE IDENTIFIED ( PROPOSED DIVESTMENT ); AND (IV) PROPOSED BONUS ISSUE OF NEW ORDINARY SHARES OF RM0.50 EACH IN BHB ( BHB SHARES ) ( BONUS SHARE(S) ) ON THE BASIS OF 1 BONUS SHARE FOR EVERY 10 EXISTING BHB SHARES HELD ( PROPOSED BHB BONUS ISSUE ) (HEREINAFTER COLLECTIVELY REFERRED TO AS THE PROPOSALS ). Following the completion of the acquisition of 86.81% interest in Pharmaniaga by BHB from UEM Group Berhad on 25 March 2011, BHB had undertaken a mandatory take-over offer of Pharmaniaga in accordance with Part III of the Malaysian Code on Take-overs and Mergers 2010, which was in turn, completed on 28 April 2011. BHB had stated in the Offer Document dated 7 April 2011 that it intends to maintain the listing status of Pharmaniaga. As at 31 May 2011, BHB has a 97.81% shareholding in Pharmaniaga and Pharmaniaga s public shareholding spread stands at 2.19% which is not in compliance with Paragraph 8.02 of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad ( Bursa Securities ) ( MMLR ) which requires Pharmaniaga to ensure that at least 25% of its total listed shares are in the hands of public shareholders ( Public Spread Requirement ). On behalf of the Board of Directors ( Board ) of BHB, AFFIN Investment Bank Berhad ( AFFIN Investment ) wishes to announce that BHB and Pharmaniaga intend to jointly collaborate to rectify the shortfall in the Public Spread Requirement of Pharmaniaga by way of the Proposals to be undertaken by BHB and the Proposed Pharmaniaga Bonus Issue (as hereinafter defined) to be undertaken by Pharmaniaga. Additionally, BHB also proposes to undertake the Proposed BHB Bonus Issue to reward the shareholders of BHB for their past support of the BHB group. 1
2. DETAILS OF THE PROPOSALS 2.1 PROPOSED DIVIDEND-IN-SPECIE 2.1.1 Particulars The Proposed Dividend-In-Specie involves the distribution of up to 16,018,150 Pharmaniaga shares representing approximately 14.97% equity interest in Pharmaniaga to the shareholders of BHB whose names appear in the Record of Depositors ( ROD ) of BHB at an entitlement date to be determined and announced later upon the receipt of all relevant approvals for the Proposed Dividend-In-Specie. The Proposed Dividend-In-Specie will be paid out of BHB s retained earnings. The Proposed Dividend-In-Specie shall be undertaken on the basis of 1 Pharmaniaga Share for every 57.5 BHB Shares held. For administrative purposes and to avoid the incidence of odd lots of Pharmaniaga Shares, shareholders of BHB who hold 5,750 or more BHB Shares will receive their entitlement in the form of Pharmaniaga Shares. Shareholders of BHB who hold less than 5,750 BHB Shares will receive cash of RM5.75 per Pharmaniaga Share ( Cash Entitlement ) in lieu of their entitlement to Pharmaniaga Shares under the Proposed Dividend-In-Specie. 2.1.2 Basis of determining price for Cash Entitlement The Cash Entitlement value of RM5.75 was determined based on BHB s cost of investment per Pharmaniaga Share and shall be funded by internally generated funds. For illustration purposes, based on the shareholding structure of BHB as at 30 June 2011, 7,774 shareholders of BHB, holding in total 16,744,126 BHB Shares, hold less than 5,750 BHB Shares and would be entitled to less than 1 lot of 100 Pharmaniaga Shares. The Cash Entitlement payable to the said shareholders pursuant the Proposed Dividend-In-Specie would be approximately RM1.67 million. 2.1.3 Ranking of the Pharmaniaga Shares to be distributed pursuant to the Proposed Dividend-In-Specie The Pharmaniaga Shares to be distributed pursuant to the Proposed Dividend-In- Specie, which are existing issued and paid-up shares in Pharmaniaga, will be offered to the entitled shareholders of BHB free from all encumbrances and will rank pari passu in all respects with the other existing Pharmaniaga Shares with all rights and entitlements attached including dividends, rights, allotments and/or other distribution. 2.2 PROPOSED RESTRICTED OFFER FOR SALE 2.2.1 Particulars The Proposed Restricted Offer For Sale involves a renounceable restricted offer for sale by BHB of up to 16,284,377 Pharmaniaga Shares ( Offer Share(s) ) representing approximately 15.22% equity interest in Pharmaniaga, to the shareholders of BHB, excluding LTAT, whose names appear in the ROD of BHB at an entitlement date to be determined and announced at a later date upon the receipt of all relevant approvals ( Entitled Shareholders ), on the basis of 1 Offer Share for every 24 BHB Shares held. In determining shareholders entitlements under the Proposed Restricted Offer For Sale, fractional entitlements (if any) that may arise from the Proposed Restricted Offer For Sale shall be dealt with in such manner as the Board shall in their absolute discretion think expedient and in the best interest of BHB. 2
2.2.2 Basis of determining the offer price The offer price was set at BHB s cost of investment in Pharmaniaga of RM5.75 per Offer Share ( Offer Price ) and is payable in full upon acceptance. For information purposes, the last price at which Pharmaniaga Shares were trading prior to suspension was RM5.90 on 9 June 2011. 2.2.3 Expected gain/loss from the Proposed Restricted Offer For Sale There is no gain/loss expected to be recorded by BHB and its subsidiaries ( BHB Group ) from the Proposed Restricted Offer For Sale as the Offer Shares are offered at BHB s cost of investment in Pharmaniaga. 2.2.4 Ranking of the Offer Shares The Offer Shares, which are existing issued and paid-up shares in Pharmaniaga, will be offered to Entitled Shareholders free from all encumbrances and will rank pari passu in all respects with the other existing Pharmaniaga Shares with all rights and entitlements attached including dividends, rights, allotments and/or other distribution. 2.2.5 Utilisation of proceeds from the Proposed Restricted Offer For Sale The Proposed Restricted Offer For Sale will raise gross proceeds of up to approximately RM93.6 million which is proposed to be utilised to pare down the borrowings of the BHB Group. The proceeds from the Proposed Restricted Offer For Sale is expected to be fully utilised by the end of the financial year ending 31 December ( FYE ) 2011. 2.2.6 Original cost and date of investment in Pharmaniaga The original dates and costs of investment in Pharmaniaga to BHB are set out below:- Date of investment No. of Pharmaniaga Shares Cost of investment per Pharmaniaga Share (RM) Cost of Investment (RM) 25 March 2011 92,868,619 5.75 533,994,559.25 7 April 2011 to 28 April 2011* 11,771,692 5.75 67,687,229.00 Total 104,640,311 5.75 601,681,788.25 Note:- * Being the period in which the mandatory take-over offer of Pharmaniaga by BHB is open for acceptances 3
2.3 PROPOSED DIVESTMENT Proposed Divestment 1, Proposed Divestment 2 and Proposed Divestment 3 (as hereinafter defined) shall collectively be referred to as the ( Proposed Divestment ). 2.3.1 Proposed Divestment 1 The Proposed Divestment 1 entails the divestment by BHB of 5.5 million of its Pharmaniaga Shares at a sale consideration of RM5.75 per Pharmaniaga Share being BHB s cost of investment in Pharmaniaga ( Divestment Price ) to LTAT. LTAT was established on 1 August 1972 in Malaysia by Act of Parliament (Act 101, 1973). The principal activities of LTAT are the provision of superannuation and other benefits to the members of the other ranks in the Armed Forces and to enable officers in the service to participate in a savings scheme and also to promote socio-economic development and to provide welfare and other benefits for the retiring and retired personnel of the Armed Forces of Malaysia. LTAT is not listed on any stock exchange. LTAT is an indirect 57.98% substantial shareholder of Pharmaniaga via its controlling shareholding of 59.28% in BHB and does not qualify as public as defined in paragraph 1.01 of the MMLR and hence is not to be included as a public shareholder of Pharmaniaga. LTAT has therefore agreed to be excluded from the Proposed Restricted Offer For Sale. However, BHB shall divest 1.5 million of its Pharmaniaga Shares to LTAT at the Divestment Price under the Proposed Divestment. 2.3.2 Proposed Divestment 2 The Proposed Divestment 2 entails the divestment by BHB of up to 4.0 million Pharmaniaga Shares to BHB directors and employees to be identified, including Tan Sri Dato Lodin Wok Kamaruddin ( TSLWK ) ( BHB Executives ). TSLWK is the Deputy Chairman/Group Managing Director of BHB with a shareholding of 26,011,599 BHB Shares representing 2.77% equity interest in BHB as at 30 June 2011. TSLWK is also the Chief Executive of LTAT and Non-Independent Non-Executive Chairman of Pharmaniaga. The identities of the remaining BHB Executives to be entitled pursuant to the Proposed Divestment and the respective entitlements of Pharmaniaga Shares for the BHB Executives have yet to be determined. Information on the aforesaid parties and their entitlements shall be duly announced once determined. 2.3.3 Proposed Divestment 3 The Proposed Divestment 3 entails the divestment by BHB of 8.0 million of its Pharmaniaga Shares at the Divestment Price to other investors who have yet to be identified ( Other Investors ). 2.3.4 Basis of determining the Divestment Price The Divestment Price was set at BHB s cost of investment in Pharmaniaga of RM5.75 per Pharmaniaga Share. 4
2.3.5 Expected gain/loss from the Proposed Divestment There is no gain/loss expected to be recorded by the BHB Group from the Proposed Divestment as the Divestment Price is fixed at BHB s cost of investment in Pharmaniaga. 2.3.6 Utilisation of proceeds from the Proposed Divestment The Proposed Divestment will raise gross proceeds of up to approximately RM77.625 million which is proposed to be utilised to pare down the borrowings of the BHB Group and is expected to be fully utilised by the end of FYE 2011. 2.3.7 Ranking of the Offer Shares The Pharmaniaga Shares to be offered for sale pursuant to the Proposed Divestment, which are existing issued and paid-up shares in Pharmaniaga, will be offered to entitled shareholders free from all encumbrances and will rank pari passu in all respects with the other existing Pharmaniaga Shares with all rights and entitlements attached including dividends, rights, allotments and/or other distribution. 2.3.8 Original cost and date of investment in Pharmaniaga The original dates and costs of investment in Pharmaniaga to BHB are as set out in section 2.2.6 of this announcement. 2.4 PROPOSED BONUS ISSUE BY PHARMANIAGA As part of the collaborative effort with BHB to address the Public Spread Requirement of Pharmaniaga, Pharmaniaga proposes to undertake a proposed bonus issue of Pharmaniaga Shares ( Proposed Pharmaniaga Bonus Issue ). The Proposed Pharmaniaga Bonus Issue involves the issuance of up to 10,697,779 bonus Pharmaniaga Shares to be credited as fully paid-up, on the basis of 1 bonus Pharmaniaga Share for every 10 existing Pharmaniaga Shares held by the shareholders of Pharmaniaga whose names appear in the ROD of Pharmaniaga at an entitlement date to be determined and announced at a later date upon the receipt of all relevant approvals for the Proposed Pharmaniaga Bonus Issue. The Proposed Pharmaniaga Bonus Issue is to be implemented after the completion of the Proposed Restricted Offer For Sale and Proposed Divestment whereby the books closing date for the Proposed Pharmaniaga Bonus Issue will be determined after the completion of the Proposed Restricted Offer for Sale and the Proposed Divestment. Accordingly, the shareholders of BHB who participate in the Proposed Restricted Offer for Sale and parties who participate in the Proposed Divestment will be eligible to receive the Pharmaniaga shares under the Proposed Pharmaniaga Bonus Issue. The existing shareholders of Pharmaniaga will also be rewarded for their past support of the Pharmaniaga group through the Proposed Pharmaniaga Bonus Issue. Please refer to Pharmaniaga s announcement dated 6 July 2011 for more details on the Proposed Pharmaniaga Bonus Issue. 5
2.5 PROPOSED BHB BONUS ISSUE 2.5.1 Particulars The Proposed BHB Bonus Issue shall entail the issuance of up to 94,016,250 Bonus Shares to be credited as fully paid-up, on the basis of 1 Bonus Share for every 10 existing BHB Shares held by shareholders of BHB whose names appear in the ROD of BHB on an entitlement date to be determined and announced at a later date upon the receipt of all relevant approvals for the Proposed BHB Bonus Issue. In determining shareholders entitlements under the Proposed BHB Bonus Issue, fractional entitlements (if any) that may arise from the Proposed BHB Bonus Issue shall be dealt with in such manner as the Board shall in their absolute discretion think expedient and in the best interest of BHB. The Proposed BHB Bonus Issue is not intended to be implemented in stages over a period of time. 2.5.2 Capitalisation of reserves The Proposed BHB Bonus Issue shall be wholly capitalised from BHB s share premium account. The proforma effect of the Proposed BHB Bonus Issue on the share premium account of BHB is as follows:- Company level Share premium RM million Audited as at 31 December 2010 1,212.1 Less: Amount to be capitalised pursuant to the Proposed BHB Bonus Issue (47.0) Balance available after the Proposed BHB Bonus Issue 1,165.1 According to Paragraph 6.30(1) of the MMLR, a listed issuer intending to undertake a bonus issue must ensure that the necessary reserves required for capitalisation of the bonus issue must not be impaired by losses on a consolidated basis, based on the listed issuer s latest audited financial statements as well as its latest quarterly report. The Board of BHB confirms that, based on BHB s latest audited financial statements for the financial year ended 31 December 2010, the share premium reserves required for the capitalisation of the Proposed BHB Bonus Issue is unimpaired by losses on a consolidated basis in accordance with Paragraph 6.30(1) of the MMLR. 2.5.3 Ranking of the Bonus Shares The Bonus Shares shall, upon allotment and issue, rank pari passu in all respects with the then existing BHB Shares except that they should not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid to shareholders, the entitlement date of which is prior to the date of allotment of the Bonus Shares. 2.5.4 Listing and Quotation of the Bonus Shares 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. 6
2.6 INFORMATION ON PHARMANIAGA Pharmaniaga was incorporated in Malaysia as a private limited company under the Companies Act, 1965 ( Act ) under the name of Gema Muhibbah Sdn Bhd on 21 August 1998. It changed its name to Pharmaniaga Sdn Bhd on 5 October 1998 and Pharmaniaga Berhad on 10 October 1998. It was listed on the Second Board of Bursa Securities on 12 November 1999 and was subsequently transferred to the Main Board of Bursa Securities on 13 March 2003. The authorised share capital of Pharmaniaga is RM300,000,000, comprising 300,000,000 ordinary shares of RM1.00 each, of which 106,977,788 ordinary shares of RM1.00 each have been issued and fully paid-up. Pharmaniaga is an investment holding company. Through its wholly-owned subsidiary, Pharmaniaga Logistics Sdn Bhd, Pharmaniaga initially held the concession for the distribution of medical products to government owned hospitals for 11 years since 1998. The concession had been extended for a further 10 years commencing 1 December 2009 via the concession agreement dated 16 March 2011. The principal activities of Pharmaniaga s other subsidiaries include the manufacture, sale and marketing of pharmaceutical products, the research and development of pharmaceutical products, the supply, trading and installation of medical and hospital equipment and the distribution and trading of pharmaceutical products, food supplements and diagnostic products in Indonesia. The principal activities of Pharmaniaga s associated companies are the provision of information technology solutions and systems support services. The directors of Pharmaniaga as at 30 June 2011 are as follows:- (i) TSLWK (Non-Independent Non-Executive Chairman); (ii) Dato Farshila binti Emran (Managing Director); (iii) Daniel Ebinesan (Non-Independent Non-Executive Director); (iv) Mohd Suffian bin Hj. Haron (Senior Independent Non-Executive Director); and (v) Izzat bin Othman (Independent Non-Executive Director). The sole substantial shareholder of Pharmaniaga since 25 March 2011 is BHB. The financial information of Pharmaniaga based on the audited consolidated financial statements of the Pharmaniaga and its subsidiaries ( Pharmaniaga Group ) for the past 3 FYE 31 December 2008 to 2010 and unaudited consolidated result for the period ended 31 March 2011 is as follows:- 31 December 2008 Audited FYE 31 December 2009 31 December 2010 Unaudited 3-month period ended 31 March 2011 Revenue (RM 000) 1,305,646 1,300,796 1,378,348 385,328 Profit before tax and zakat (RM 000) 90,599 81,436 45,462 21,792 Profit after taxation (RM 000) 61,409 61,727 30,310 15,599 Basic earnings per share (sen) 56.12 56.26 28.40 14.47 Net assets per share (RM) 3.63 4.03 3.94 4.09 7
3. RATIONALE FOR THE PROPOSALS 3.1 Proposed Dividend-In-Specie The Proposed Dividend-In-Specie is intended to reward the shareholders of BHB for their continuous support for the BHB Group and to provide them with an opportunity to invest directly in Pharmaniaga at zero subscription cost. In addition, the Proposed Dividend-In-Specie is undertaken as part of BHB s efforts to rectify the shortfall in the Public Spread Requirement of Pharmaniaga. 3.2 Proposed Restricted Offer For Sale and Proposed Divestment The Proposed Restricted Offer For Sale and Proposed Divestment 2 are undertaken as part of BHB s efforts to rectify the shortfall in the Public Spread Requirement of Pharmaniaga. Further, the Proposed Restricted Offer For Sale and Proposed Divestment will allow the shareholders of BHB who have participated in the Proposed Restricted Offer For Sale and the BHB Executives and the Other Investors the opportunity to directly hold Pharmaniaga Shares which will be marketable shares upon upliftment of the trading suspension on Pharmaniaga Shares and to also have a direct participation in the future prospects of Pharmaniaga. 3.3 Proposed BHB Bonus Issue The Proposed BHB Bonus Issue is to reward shareholders of BHB for their continuing support by enabling them to have greater participation in the equity of BHB in terms of the increased number of BHB Shares held as well as to enhance the marketability and liquidity of BHB Shares. 4. EFFECTS OF THE PROPOSALS 4.1 Share capital The Proposed Dividend-In-Specie, Proposed Restricted Offer For Sale and Proposed Divestment will not have any effect on the issued and paid-up share capital of BHB. The proforma effect of the Proposed BHB Bonus Issue on the paid-up share capital of BHB is set out in the table below:- No. of BHB Shares Issued and paid-up share capital as at 30 June 2011 940,162,499 470,081,249.50 To be issued pursuant to the Proposed BHB Bonus Issue RM 94,016,250 47,008,125.00 Enlarged issued and paid-up share capital 1,034,178,749 517,089,374.50 4.2 Substantial shareholders shareholdings The Proposed Dividend-In-Specie, Proposed Restricted Offer For Sale and Proposed Divestment will not have any effect on the substantial shareholders percentage shareholdings in BHB. The Proposed BHB Bonus Issue will not have any effect on the substantial shareholders percentage shareholdings in BHB, as the Bonus Shares will be allotted on a pro-rata basis to all the shareholders of BHB. The number of BHB shares held by the substantial shareholders will increase proportionately pursuant to the Proposed BHB Bonus Issue. 8
4.3 Convertible securities As at 30 June 2011, there are no options, warrants or convertible securities issued by BHB. 4.4 Net assets ( NA ) gearing, earnings and earnings per share ( EPS ) The effects of the Proposals on the NA and gearing of the BHB Group are as follows:- Audited FYE 31 December 2010 I II III IV After I and After II and Proposed Proposed Restricted Divestment Offer For Sale After Proposed Dividend-In- Specie (1) After III and Proposed BHB Bonus Issue RM'million RM'million RM'million RM'million RM'million Share capital 470.1 470.1 470.1 470.1 517.1 Share premium 1,212.1 1,212.1 1,212.1 1,212.1 1,165.1 Revaluation & fair 184.6 184.6 184.6 184.6 184.6 value reserves Statutory reserve 196.9 196.9 196.9 196.9 196.9 Other reserves 114.8 114.8 114.8 114.8 114.8 (2) Retained earnings 2,049.4 1,955.4 1,955.4 1,955.4 1,953.9 Shareholders equity / NA 4,227.9 4,133.9 4,133.9 4,133.9 4,132.4 No. of BHB Shares (million) NA per BHB Share (RM) 940.2 940.2 940.2 940.2 1,034.2 4.50 4.40 4.40 4.40 4.00 Borrowings 3,163.2 3,163.2 (4) 3,069.6 (5) 2,992.0 2,992.0 Gearings (times) (3) 0.75 0.77 0.74 0.72 0.72 Profit attributable to the shareholders of BHB EPS (sen) 537.5 537.5 537.5 537.5 (2) 536.0 (6) 57.50 57.50 57.50 57.50 51.83 Notes:- (1) Assuming the minimum cash payable for the Cash Entitlement pursuant to the Proposed Dividend- In-Specie of approximately RM1.67 million is funded from internally generated funds (2) Includes estimated expenses of RM1.5 million for the Proposals (3) Gearing is calculated based on borrowings over the shareholders funds. (4) Assuming proceeds received from the Proposed Restricted Offer For Sale of approximately RM93.6 million is utilised to pare down borrowings (5) Assuming proceeds received from the Proposed Divestment of approximately RM77.6 million is utilised to pare down borrowings (6) Calculated by dividing the consolidated profit for the year attributable to the shareholders of BHB by the weighted average number of ordinary shares in issue during the FYE 31 December 2010 of 935.0 million 9
5. APPROVALS REQUIRED The Proposed Divestment 1 and 3 are not subject to the approval of the shareholders of BHB and/or any authorities. The Proposed Dividend-In-Specie, Proposed Restricted Offer For Sale and Proposed BHB Bonus Issue are subject to the following approvals being obtained:- (i) the Securities Commission Malaysia ( SC ) for the Proposed Dividend-In-Specie; (ii) Bursa Securities, for the listing of and quotation for the new Bonus Shares on the Main Market of Bursa Securities; (iii) the shareholders of BHB for the Proposed BHB Bonus Issue and Proposed Divestment 2 at the forthcoming EGM; and (iv) any other relevant authorities/parties. The Proposals are not interconditional upon each other or upon any other corporate proposals of BHB. 6. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND CONNECTED PERSONS Save as disclosed below, none of the other directors and/or major shareholders of BHB or any persons connected to them have any interest, direct and/or indirect, in the Proposals, save for their respective entitlements as shareholders of BHB pursuant to the Proposed Dividend-In- Specie, Proposed Restricted Offer For Sale and Proposed BHB Bonus Issue. 6.1 Interest of Directors of BHB (a) Proposed Divestment 1 TSLWK is the Deputy Chairman/Group Managing Director of BHB and the Non- Independent Non-Executive Chairman of Pharmaniaga. TSLWK is also the Chief Executive of LTAT. He is also a shareholder of BHB with a shareholding of 26,011,599 BHB Shares representing 2.77% equity interest in BHB as at 30 June 2011. Dato Ghazali Mohd Ali is a non-independent executive director of BHB. He does not hold any shares in BHB. Both TSLWK and Dato Ghazali Mohd Ali are nominee directors of LTAT. In view of the foregoing, TSLWK and Dato Ghazali Mohd Ali are deemed interested Directors of BHB for the Proposed Divestment 1. Accordingly, TSLWK and Dato Ghazali Mohd Ali have and will continue to abstain from all Board deliberations and voting on the resolution pertaining to the Proposed Divestment 1. (b) Proposed Divestment 2 All BHB directors are deemed interested Directors of BHB for the Proposed Divestment 2. Notwithstanding the above, the directors of BHB having considered the relevant aspects of the Proposed Divestment 2, have resolved to present the Proposed Divestment 2 and the allocation of Pharmaniaga Shares under the Proposed Divestment 2 to the shareholders of BHB at an EGM to be convened for the consideration and approval of the non-interested shareholders of BHB. 10
6.2 Interest of Major Shareholder of BHB As at 30 June 2011, LTAT is the controlling shareholder of BHB. LTAT is an indirect 57.98% substantial shareholder of Pharmaniaga via its controlling shareholding of 59.28% in BHB. In view of the foregoing, LTAT is deemed interested in the Proposed Divestment. The shareholdings of LTAT, direct and indirect, in BHB and Pharmaniaga as at 30 June 2011 is as set out below:- Direct Indirect No. of Shares % No. of Shares % BHB 557,321,390 59.28 - - Pharmaniaga - - * 104,640,311 97.81 Note:- * Deemed interested by virtue of its shareholding in BHB 7. DIRECTORS RECOMMENDATION The Board (save for TSLWK and any other director of BHB who are deemed interested in the Proposed Divestment who have and will continue to abstain from all Board deliberations and voting on the resolutions pertaining to the Proposed Divestment), having considered all aspects of the Proposals including the terms, rationale and benefits of the Proposals and after careful deliberation, is of the opinion that the Proposals are in the best interest of BHB. 8. AUDIT COMMITTEE S STATEMENT The Audit Committee, having considered all aspects of the Proposed Divestment 1 and Proposed Divestment 2 and after careful deliberation, is of the opinion that the Proposed Divestment 1 and Proposed Divestment 2 are:- (i) in the best interest of BHB; (ii) fair, reasonable and on normal commercial terms; and (iii) not detrimental to the interest of the minority shareholders of BHB. The Audit Committee is also of the opinion that the Proposed Divestment 1 and Proposed Divestment 2 are fair, reasonable and on normal commercial terms as the Divestment Price is at BHB s cost of investment in Pharmaniaga of RM5.75 per Pharmaniaga Share and it is not on a more favourable term. In addition, the Audit Committee is also of the opinion that the transaction is in the best interest of BHB and not detrimental to the interest of the minority shareholders of BHB as the value of the Proposed Divestment 1 and Proposed Divestment 2 is immaterial as compared against the net assets attributable to the shareholders of BHB. 9. APPLICATIONS TO THE AUTHORITIES The application to the SC for the Proposed Dividend-In-Specie is expected to be submitted within three (3) months from the date of this announcement. 10. ESTIMATED TIME FRAME FOR COMPLETION Barring unforeseen circumstances and subject to the receipt of all the approvals of the relevant authorities/ conditions being met, the Proposals are expected to be completed by the end of 2011. 11
11. ADVISER AFFIN Investment has been appointed as the Adviser to BHB for the Proposals. 12. PERCENTAGE RATIOS OF THE PROPOSED RESTRICTED OFFER FOR SALE AND PROPOSED DIVESTMENT The highest percentage ratios applicable to the Proposed Restricted Offer For Sale and Proposed Divestment as determined under paragraph 10.02(g) of the MMLR are as follows:- (i) Proposed Restricted Offer For Sale, 2.21%; and (ii) Proposed Divestment, 1.84%. Pursuant to Paragraph 10.12 of the MMLR, the percentage ratio calculated based on the aggregate value of proposed divestments to LTAT and BHB Executives is 0.75%. 12