/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/020903.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Tuesday, September 03, 2002, Vol. 5, No. 174 Headlines A U S T R A L I A B DIGITAL: Supreme Court Supports Director's Conviction JOACHIM PREHN: ASIC Seeks Winding Up of Insurance Firm UECOMM LIMITED: Sells People Telecom Stake C H I N A & H O N G K O N G ALKA'S INDUSTRIAL: Winding Up Hearing Set for November ASIA GLOBAL: Parent Reports $145M Net Loss EASYWIN PROPERTY: Court Sets October Winding Up Hearing HONSON GARMENTS: Hearing of Winding Up Petition Set I-CHINA HOLDINGS: Lessens FY Net Loss to HK$222.307M NEW WIN ENGINEERING: Faces Winding Up Petition SAINT HERO COMPANY: Winding Up Petition Set for October J A P A N ALL NIPPON: JCR Downgrades Rating to A-, Affirms J-1 Rating ARAI-GUMI: Agrees to Join Efforts With Konoike DAIKYO INC.: Government Approves Rehabilitation Plan GOLDWIN INC.: Downgrades Rating to BB- HYAKUJUSHI BANK: Moody's Reviews Rating For Possible Downgrade JAPAN OIL: Widens Net Loss to JPY194.2B KYOWA PERFUMERY: Tokyo Court Declares Bankruptcy NIPPON MEAT: Borrows JPY40B to Survive 60% Sales Fall NIPPON TELEGRAPH: Moody's Assigns Aa2 Rating to JPY80B Bonds SATO RESTAURANT: JCR Cuts Rating to BB+ TAISEI FIRE: Creditors Okay Rehabilitation Plan K O R E A CHOHUNG BANK: Government Rejects 51% Stake Sale Reports CHOHUNG BANK: Government Selling Stake to Single Buyer HYNIX SEMICONDUCTOR: Creditors May Ask Samsung to Take Over KOREA THRUNET: Implementing Corporate Restructuring Plans KOREA THRUNET: Unveils New Shares Issuance M A L A Y S I A ACTACORP HOLDINGS: Amin Shah Buying PSC Asset Holdings From PSCI AUTOWAYS HOLDINGS: Selling Subsidiaries to Implement Debt Rehab BERJAYA GROUP: Gets Approval to Delay Submission of FY Report BERJAYA GROUP: Selling Hyundai-Berjaya Stake to Transwater BRIDGECON HOLDINGS: Enters Into Agreement With PVOB Vendors ESPRIT GROUP: Court Approves Stay of Execution ESPRIT GROUP: Seeks Two-month Extension to Submit Plan KELANAMAS INDUSTRIES: SBM Acquisition Canceled MYCOM BERHAD: Says E&Y Not Eligible as Restructuring Adviser NCK CORPORATION: Says Restructuring Scheme Proposal Unchanged REPCO HOLDINGS: Awaits Regularization Plan Approval From KLSE TAP RESOURCES: Shareholders Approve Debt Restructuring Plan WING TIEK: Outlines Debt Restructuring With Shareholders UCP RESOURCES: Executes PA With Investors UNITED CHEMICAL: Plans to Commence Restructuring Agreement P H I L I P P I N E S DMCI HOLDINGS: Appoints New Corporate Directors NATIONAL POWER: Mak-Ban Power Plant Rehab Set on February 2003 * Pres. Arroyo Promulgates Restructuring Program for EC's S I N G A P O R E ALEXANDRA HOLDINGS: Seeks Shareholder's Approval on Liquidation CHARTERED SEMICONDUCTOR: Unveils Rights Offering L&M GROUP: Debt Restructuring Scheme Update L&M GROUP: Proposes Capital Reduction LKN-PRIMEFIELD: Appoints KPMG as Financial Adviser NATSTEEL LTD: Posts Notice of Shareholder's Interest - - - - - - - - ================= A U S T R A L I A ================= B DIGITAL: Supreme Court Supports Director's Conviction ------------------------------------------------------- The Australian Securities and Investments Commission (ASIC) said that the Western Australia Supreme Court has dismissed an appeal by George Michael Gelavis of his conviction of having provided false information to the ASIC. B Digital Limited director Mr Gelavis was found guilty in the Joondalup Court of Petty Sessions of one charge of providing false information to ASIC in March this year. The charge arose out of an investigation by ASIC into the trading of shares in Intrepid Mining Corporation N.L. and Stanley Mining Services Pty Ltd in 1997. It was alleged that Mr Gelavis provided false information under oath, whilst ASIC was exercising its compulsory powers. This investigation also led to administrative action being taken by ASIC against two Perth securities advisers. The appeal was heard before Justice Pullin of the WA Supreme Court. As a consequence of Mr Gelavis losing his appeal, he is automatically disqualified from managing a corporation for five years, pursuant to section 206B(b)(ii) of the Corporations Act. JOACHIM PREHN: ASIC Seeks Winding Up of Insurance Firm ------------------------------------------------------ The Australian Securities and Investments Commission (ASIC) has successfully applied to the Federal Court of Australia for orders that Joachim Prehn Insurance Services Pty Ltd (JPIS) be wound up on the grounds of insolvency. Mr Richard George Shoobridge of Deloitte Touche Tohmatsu was appointed liquidator of JPIS. ASIC previously obtained Supreme Court orders appointing Mr Shoobridge as receiver to the property of JPIS and the personal assets of its director, Joachim Prehn. ASIC took this action following an investigation, in order to secure those assets for the benefit of investors and creditors of his company. In the recent conclusion of action arising from that investigation, Mr Prehn, a former Burnie-based insurance agent and financial adviser, was jailed on 12 August 2002 for six years after pleading guilty to 28 counts of fraud. Mr Prehn was convicted of fraud relating to the misappropriation of $1,714,229 from JPIS clients, many of who were retirees who depended upon their capital for day-to-day living. In sentencing Mr Prehn, His Honour Mr Justice Underwood categorized his conduct as 'sustained and deliberate. It was entered into and persisted with to satisfy [a] pathological urge to gamble. Each crime was a grave breach of trust committed against those who could ill afford to lose their money'. The insurance company Mr Prehn acted as an agent for has compensated the clients who lost money as a result of his actions. ASIC permanently banned Mr Prehn in February 2000 from acting as an investment adviser or as a representative of a securities dealer. UECOMM LIMITED: Sells People Telecom Stake ------------------------------------------ Uecomm Limited said yesterday it sold its holding in voice reseller People Telecom Limited. Uecomm will receive $1.45 million for the sale of its 15% position. Uecomm wrote down the value of its People Telecom holding to $1 million in December 2001. The services agreement with People Telecom which was announced at the time of the share acquisition will be replaced by the provision of services to People Telecom at no cost to Uecomm up to a maximum of $500,000 over two years. For further information, contact Michelle Wood, Uecomm Investor Relations, at ph (+613) 9941 4521, mobile 0404 837 649, or via e-mail at mwood@uecomm.com.au. ================================ C H I N A & H O N G K O N G ================================ ALKA'S INDUSTRIAL: Winding Up Hearing Set for November ------------------------------------------------------ The date for hearing of the petition to wind up Alka's Industrial Company Limited is scheduled for November 6, 2002 at 10:00 a.m. at the High Court of Hong Kong. Bank of China (Hong Kong) Limited of 14th Floor, Bank of China Tower, 1 Garden Road, Central, Hong Kong, filed the petition on August 14. ASIA GLOBAL: Parent Reports $145M Net Loss ------------------------------------------ Global Crossing today reported that its financial performance remains on-track, and that it continues to meet year-to-date targets outlined in its operating plan for service revenue, cash in bank accounts, operating expenses, third-party maintenance and service EBITDA (earnings before interest, taxes, depreciation, and amortization). The performance targets were established for Global Crossing (excluding Asia Global Crossing) in the operating plan presented to its creditors in March. Consolidated results for the month of July that include Asia Global Crossing and that are reported in the Monthly Operating Report (MOR) filed with the U.S. Bankruptcy Court in the Southern District of New York are summarized later in this press release. OPERATING RESULTS (excluding Asia Global Crossing) In July 2002, Global Crossing reported $231 million in service revenue, $6 million above the service revenue target set forth in the operating plan. Service EBITDA was reported at a loss of $12 million, a loss $6 million greater than the July 2002 operating plan target. Year-to-date Service EBITDA continues to exceed the target in the operating plan. "In July 2002, our team continued to work towards the goals we have outlined for ourselves and our creditors in the operating plan," said John Legere, CEO of Global Crossing. "Now that our future has been defined with our new investors, Hutchison Telecommunications and Singapore Technologies Telemedia, we can turn our complete attention to emerging from Chapter 11 as a strong, healthy competitor - one that attracts new customers in addition to retaining its current customer base." Total cash in bank accounts beat targets set forth in the operating plan, with $797 million as of July 31, 2002, compared to a plan of $676 million. Operating expenses were $63 million in July 2002, $3 million higher than the target in the operating plan, while third-party maintenance costs were reported at $12 million, beating the operating plan target by $3 million. OPERATING RESULTS (excluding Asia Global Crossing) THROUGH JULY 2002 METRIC YTD RESULT YTD OPERATING PLAN YTD IMPROVEMENT TARGET ON TARGETS Recurring Service Revenue $1,695 million $1,661 million $34 million Service EBITDA $(216) million $(219) million $3 million Cash in Bank $797 million $676 million $121 million Operating Expenses $597 million $599 million $2 million MOR RESULTS FOR JULY 2002 Global Crossing today filed a Monthly Operating Report (MOR) for the month of July with the U.S. Bankruptcy Court for the Southern District of New York, as required by its Chapter 11 reorganization process. These consolidated results in this MOR include Asia Global Crossing and revenue from sales of capacity in the form of IRUs (indefeasible rights of use) that occurred in prior periods, recognized ratably over the life of the relevant contracts. Results reported in the July MOR include: For continuing operations in July 2002, Global Crossing reported consolidated revenue of approximately $249 million. Consolidated operating expenses were $75 million, while access and maintenance costs were reported at $193 million in June 2002. In addition, Global Crossing reported a consolidated GAAP (Generally Accepted Accounting Principles) cash balance of approximately $1,125 million as of July 31, 2002, including $366 million of cash held by Asia Global Crossing. Global Crossing's $759 million GAAP cash balance (excluding Asia) is comprised of $376 million unrestricted cash, $333 million in restricted cash and $50 million of cash held by Global Marine. Global Crossing reported a consolidated net loss of $145 million for July 2002. Consolidated EBITDA was reported at a loss of $19 million. Definitions and Notes "Service Revenue" refers to revenue less (i) any revenue recognized immediately for circuit activations that qualified as sales-type leases and (ii) revenue recognized due to the amortization of IRUs sold in prior periods and not recognized as sales-type leases. "Service EBITDA" refers to EBITDA (earnings before interest, taxes, depreciation, and amortization) but excludes the contribution of (i) any revenue recognized immediately for circuit activations that qualified as sales-type leases and (ii) revenue recognized due to the amortization of IRUs sold in prior periods and not recognized as sales-type leases. The results for Global Crossing (excluding Asia Global Crossing) discussed in the "Operating Results (excluding Asia Global Crossing)" section of this release have been prepared on a basis consistent with targets presented to the creditors of Global Crossing in March 2002, and include the results previously reported in Monthly Operating Reports (MORs) prepared for the months of February through June. No such MOR was prepared for the month of January. These operating results exclude Global Marine (which is a discontinued operation), exclude any revenue contribution of sales of capacity in the form of IRUs (indefeasible rights of use), and reflect certain eliminations and adjustments not detailed in the MORs for the months of February through July. Cash balances reported in this section are bank balances, not reflecting the estimated impact of outstanding checks and other adjustments as required by GAAP. The information contained in this press release is qualified in its entirety by reference to the MORs for the months of February through July, including the footnotes to the financial statements contained therein, copies of which are available through the U.S. Bankruptcy Court for the Southern District of New York and on Global Crossing's Web site. The July MOR is available at http://www.globalcrossing.com/pdf/investors/inv_mor_july.pdf. These MORs have been prepared pursuant to the requirements of the Bankruptcy Code and the unaudited consolidated financial statements contained in these MORs do not include all footnotes and certain financial presentations normally required under GAAP. In addition, any revenues, expenses, realized gains and losses, and provisions resulting from the reorganization and restructuring of Global Crossing are reported separately as reorganization items in these MORs. As discussed more fully in these MORs, Global Crossing has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2001. Global Crossing has agreed with the Creditors' Committee in its Bankruptcy proceeding and with the United States Trustee to the appointment of an examiner in the Chapter 11 cases, whose role will consist of an examination of the financial statements of Global Crossing and companies within its control. The examination will include, (i) issuing an audit opinion on Global Crossing's financial statements for the year ended December 31, 2001, (ii) determining if any restatements or adjustments of previously filed financial statements are required (including those that may be required in light of the August 2, 2002 notification by the staff of the Office of the Chief Accountant of the SEC regarding accounting for exchanges of telecommunications capacity under APB Opinion No. 29, Accounting for Non Monetary Transactions) and (iii) issuing a report regarding its findings. Global Crossing's Board of Directors is currently seeking to retain a new independent public accounting firm to act as its new auditor, and it is expected that the new accounting firm would also act as the examiner in the Bankruptcy proceeding. In addition, certain matters relating to Global Crossing's accounting for, and disclosure of, concurrent transactions for the purchase and sale of telecommunications capacity between Global Crossing and its carrier customers are being investigated by the U.S. Securities and Exchange Commission (SEC), the U.S. Attorney's Office for the Central District of California, the House of Representatives Financial Services Committee and the House of Representatives Energy & Commerce Committee. Global Crossing is also cooperating with a similar inquiry being conducted by the Denver office of the SEC regarding another telecommunications company, and has provided documents in response to a subpoena it received from the New York Attorney General Office's relating to an investigation of Salomon Smith Barney. The U.S. Department of Labor is conducting an investigation into the administration of Global Crossing's benefit plans. These investigations are described more fully in the July MOR. As previously announced, Global Crossing's net loss for the three months ended December 31, 2001 is expected to reflect the write-off of the remaining goodwill and other intangible assets, which total approximately $8 billion. Furthermore, in light of the terms contained in the previously announced agreement with Hutchison Telecommunications and Singapore Technologies Telemedia, Global Crossing has determined that it will write down its tangible assets by at least $10 billion. The financial information included within this press release and the MORs reflect the write-off of all of the goodwill and other identifiable intangible assets of $8 billion, but does not reflect any write-down of tangible asset value. Global Crossing is currently in the process of evaluating its financial forecasts to determine the impairment of its long- lived assets. In addition, Global Crossing will write down Asia Global Crossing's interest in Hutchison Global Crossing by $450 million, representing the difference between the proceeds received and the carrying value of Asia Global Crossing's interest in Hutchison Global Crossing, which was sold on April 30, 2002. The write-off of the intangible assets, and the write-downs of tangible assets are described more fully in the July MOR. Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing. On January 28, 2002, Global Crossing and certain of its affiliates (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda. On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the U.S. Bankruptcy Court and the Supreme Court of Bermuda. On April 23, 2002, Global Crossing commenced a Chapter 11 case in the Bankruptcy Court for its affiliate, GT UK, Ltd. On August 4, 2002, Global Crossing commenced a Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York for its affiliate, SAC Peru Ltd. On August 30, 2002, Global Crossing commenced Chapter 11 cases in the Bankruptcy Court for an additional 23 of its affiliates (as specified in the July MOR) in order to coordinate the restructuring of those companies with its restructuring. Global Crossing expects to file coordinated insolvency proceedings in the Bermuda Court for those affiliates that are incorporated in Bermuda. These cases are expected to be consolidated with the existing cases commenced in Bankruptcy Court on January 28, 2002. Global Crossing does not expect that the plan of reorganization, which it expects to file with the Bankruptcy Court on or about September 16, 2002, would include a capital structure in which existing common or preferred equity would retain any value. Please visit www.globalcrossing.com or www.asiaglobalcrossing.com for more information about Global Crossing and Asia Global Crossing. For inquiries, contact Global Crossing: Press Contacts Tisha Kresler +1 973-410-8666 Tisha.Kresler@globalcrossing.com Kendra Langlie Latin America +1 305-808-5912 kendra.langlie@globalcrossing.com Mish Desmidt Europe +44 (0) 7771-668438 Mish.Desmidt@globalcrossing.com Analysts/Investors Contact Ken Simril +1 310-385-3838 investors@globalcrossing.com EASYWIN PROPERTY: Court Sets October Winding Up Hearing ------------------------------------------------------- Li Ying Ying of Room 1305, Tung Ma House, Fu Tung Estate, Tung Chung, New Territories, Hong Kong is seeking for the winding up of Easywin Property Agency Limited. The petition was filed on July 23, 2002 at the High Court of Hong Kong, and will be heard before the said court on October 16, 2002 at 9:30 a.m. HONSON GARMENTS: Hearing of Winding Up Petition Set --------------------------------------------------- The petition to wind up Honson Garments Limited is set for hearing before the High Court of Hong Kong on September 18, 2002 at 9:30 am. Bank of China (Hong Kong) Limited of 14th Floor, Bank of China Tower, 1 Garden Road, Central, Hong Kong, filed the petition with the said court on June 27, 2002. I-CHINA HOLDINGS: Lessens FY Net Loss to HK$222.307M ---------------------------------------------------- I-China Holdings Ltd reported a net loss of HK$222.307 million for the year to March, against a loss of HK$261.301 million in the previous year. The company also said operating loss stood at HK$119.976 million compared with a loss of HK$103.838 million in the year ago period. I-China Holdings only had sales of HK$3.437 million for the fiscal year. NEW WIN ENGINEERING: Faces Winding Up Petition ---------------------------------------------- Chan Sai Lun of Room 1158, Sand Martin House, Sha Kok Estate, Sha Tin, New Territories, Hong Kong, is seeking for the winding up of New Win Engineering Limited. The petition was filed on June 27, 2002, and will be heard before the High Court of Hong Kong on September 18, 2002 at 10:00 a.m. SAINT HERO COMPANY: Winding Up Petition Set for October ------------------------------------------------------- The date for hearing of the petition to wind up Saint Hero Company Limited is scheduled for October 2 at 9:30 a.m. at the High Court of Hong Kong. Bank of China (Hong Kong) Limited of 14th Floor, Bank of China Tower, 1 Garden Road, Central, Hong Kong filed the petition on July 8. ========= J A P A N ========= ALL NIPPON: JCR Downgrades Rating to A-, Affirms J-1 Rating ----------------------------------------------------------- Japan Credit Rating Agency (JCR) has downgraded All Nippon Airways Co., Ltd.'s rating on the bonds outstanding from A to A- while affirming the J-1 rating on the CP program. Issues: Amount(bn) / Issue Date / Due Date / Coupon convertible bonds no.5 Y100 / Jun. 17, 1996 / Mar. 31, 2005 / 0.40% bonds no.1 Y35 / Jun. 11, 1997 / Jun. 11, 2007 / 3.075% bonds no.2 Y20 / Sept.19, 1997 / Sept.18, 2009 / 2.75% bonds no.3 Y20 / Sept.19, 1997 / Sept.19, 2017 / 3.20% bonds no.4 Y20 / Mar. 25, 1998 / Mar. 25, 2008 / 2.90% bonds no.6 Y20 / Apr. 6, 1999 / Apr. 6, 2004 / 2.20% bonds no.7 Y10 / Apr. 6, 1999 / Apr. 6, 2007 / 3.00% bonds no.8 Y15 / July 29, 1999 / July 28, 2006 / 2.05% bonds no.10 Y10 / Dec. 16, 1999 / Dec. 16, 2011 / 3.00% bonds no.11 Y20 / Mar. 1, 2000 / Mar. 1, 2006 / 2.08% bonds no.12 Y10 / Mar. 1, 2000 / Mar. 1, 2010 / 3.00% bonds no.13 Y20 / Sept.21, 2001 / Sept.19, 2008 / 1.33% CP: Maximum: Y50 billion Backup Line: 0% All Nippon Airways (ANA) is Japan's major airline, having 50 percent shares in domestic lines. It has been expanding international lines since it joined Star Alliance in October 1999. The Japanese airline industry is beginning to get over the after effect of terrorist attacks on the U.S. occurred in September 2001. However, the attacks had significant impact on the industry, placing setback on its mid-term plan for improvement in the earnings and financial structures. JCR assigned A rating for ANA, assuming that it would carry out the mid-term management plan, keeping the direction for improvement in the cash flow generation capability and the financial structure. The business environment has changed drastically since September 2001. It will be difficult for ANA to achieve the targeted plan. JCR downgraded the rating for the Company from A to A-, accordingly. ANA has carried out restructuring of the hotel business, selling off and securitizing the offshore hotels, as well as overhauled the lines jointly with the group companies to improve the earnings. JCR will watch carefully the progress of the amended mid-term plan and improvement in the earnings power and financial structure to be reflected in the rating for the Company. ARAI-GUMI: Agrees to Join Efforts With Konoike ---------------------------------------------- Arai-Gumi Ltd has agreed with Konoike Construction Co to form a capital and operational alliance, as part of Arai-Gumi's restructuring scheme, Kyodo News reported Friday. The move was led by their main lender Sumitomo Mitsui Banking Corp (SMBC) to aid the struggling Arai-Gumi. Meanwhile, AFX Asia reported that Arai-Gumi is asking creditor banks, including Sumitomo Mitsui Banking Corp, for 64 billion yen debt forgiveness as part of its restructuring plan. The move will reduce the Company's capital to 300 million yen from the current 3 billion, and the integration of its shares on a two-for-one basis. The Company is planning to cut staff to 450 within the next three years from 997. DAIKYO INC.: Government Approves Rehabilitation Plan ---------------------------------------------------- The Land, Infrastructure and Transport Ministry have approved the filing of Daikyo Inc. to survive under the industrial revitalization law, Kyodo News reported Friday. Daikyo will receive lower registration taxes and an increase in its capital to facilitate implementation of its rehabilitation scheme. GOLDWIN INC.: Downgrades Rating to BB- -------------------------------------- Japan Credit Rating Agency (JCR) on Friday has downgraded the rating of Goldwin Inc. on these bonds from BB+ to BB-. Issue: Amount(bn) / Issue Date / Due Date / Coupon convertible bonds no.2 Y8 / July 28, 1994 / Sept. 30, 2003 / 1.00 percent Goldwin is a major vendor of sportswear and sporting goods such as Ellesse, The North Face and Championproducts. The Company plunged into a large operating loss for fiscal 1997 through March 31, 1998. It turned into profitable for fiscal 1999, supported by the restructuring measures that had been taken since then. The operating profit, however, began to drop again with the sales reduced in fiscal 2000. The weakening brand image of Ellesse and Championproducts caused the sales to drop. Goldwin will not be able to plot a scenario of increase in earnings as before, given the severe business environment where sportswear and casual wear are competing each other. In this circumstance increase in sales and cost reductions will be difficult. Although the interest-bearing debt has been declining, the debt level remains high against the cash flows. With the earnings lowering, the debt burden has actually increased. The owners' equity was impaired by the loss incurred. The equity capital was further impaired by the unrealized loss on real estate. It will take time for the Company to reduce the debt and increase the equity, given the expected earnings power. It can not be denied that the Company may have to extend additional support to the affiliated companies and subsidiaries. The financial support to them including problem of return of deposits for golf course membership should be aware of as an intermediate- to long-term risk. HYAKUJUSHI BANK: Moody's Reviews Rating For Possible Downgrade -------------------------------------------------------------- Moody's Investors Service has placed Hyakujushi Bank's Baa1 long-term deposit rating and D bank financial strength rating under review for possible downgrade. The review does not include the bank's Prime-2 short-term deposit rating. The review was prompted by deteriorations in both Hyakujushi's financial fundamentals and its operating environment as deflationary trends persist. Deflationary trends are reducing lending opportunities and pressuring the bank borrowers' financial conditions. Hyakujushi continues to report high credit costs relative to its pre-provision profits as the cash flow generation of the borrowers has been seriously weakened. Moody's review will focus on the bank's future asset quality trends, as well as its strategy and ability to enhance earnings in the current difficult environment and in light of the small local market in which it operates. Hyakujushi is a first-tier regional bank with large shares of both the markets for deposits and loans in Kagawa prefecture. The following ratings were placed under review for possible downgrade: Hyakujushi Bank Limited - the Baa1 long-term deposit rating and D bank financial strength rating. JAPAN OIL: Widens Net Loss to JPY194.2B --------------------------------------- Japan National Oil Corp (JNOC) incurred a net loss of 194.2 billion yen in 2001, up sharply from a loss of 69.6 billion yen a year ago, Kyodo News reported Saturday. The state oil firm, which is to be dissolved within three years, said the net loss ballooned as it put up more loss provisions against its loans and investments. KYOWA PERFUMERY: Tokyo Court Declares Bankruptcy ------------------------------------------------ The Tokyo District Court has declared Kyowa Perfumery & Chemical Co. bankrupt, Kyodo News reports. Kyodo Perfumery is a medium-ranking food flavoring agents maker hit by revelations that it had produced and sold products using unauthorized ingredients. The Company has liabilities worth 1.6 billion yen, and the amount could possibly increase after its finances are examined. According to Asahi Shimbun, investigators searched the Tokyo headquarters of Kyowa Perfumery and Chemical Co. in July over the use of banned substances in flavoring agents produced by the Company. The investigators searched the Company's plant in Ibaraki Prefecture, its laboratory in Zama, Kanagawa Prefecture, and the home of its President, Akio Hirase, in Machida, Tokyo. Ibaraki prefectural health officials said the Company used the banned substances in about 450 food-flavoring products. They were shipped to about 600 clients, including big-name food manufacturers, in 44 prefectures. Kyowa Perfumery and Chemical executives have admitted their Company used some of the banned substances for over 30 years. The chemicals are acetaldhyde, propionaldehyde, castor oil, dimethylbutylaldehyde and isopropanol. NIPPON MEAT: Borrows JPY40B to Survive 60% Sales Fall ----------------------------------------------------- Nippon Meat Packers Inc. borrowed a total of 40 billion yen from its four main banks to help survive the consequences of a recent beef-mislabeling scandal that has caused sales to dive, the Nihon Keizai Shimbun and AFX Asia reported Sunday. The Company has borrowed 10 billion yen from each of the four lenders namely including Norinchukin Bank, Sumitomo Mitsui Banking Corp and Hyakujushi Bank, it said. Nippon Meat Packers sales fall to less than 60 percent of year- earlier levels since the scandal broke. NIPPON TELEGRAPH: Moody's Assigns Aa2 Rating to JPY80B Bonds ------------------------------------------------------------ Moody's Investors Service has assigned a Aa2 rating to Nippon Telegraph and Telephone Corporation's (NTT) 80 billion yen, 1.26 percent bonds, due 2012. The rating reflects NTT's dominant position in Japan's growing telecommunications market. NTT plays a vital role in providing the infrastructure for Japan's transition to a more information, oriented economy, a role, which should ensure continued regulatory and government support. The rating also incorporates NTT's superior R&D ability. Despite intensified competition in Japan's telecommunication market, Moody's believes that NTT will keep its strong market position going forward. Nippon Telegraph and Telephone Corporation is the leading telecommunications services provider in Japan. SATO RESTAURANT: JCR Cuts Rating to BB+ --------------------------------------- Japan Credit Rating Agency (JCR) has downgraded the rating of Sato Restaurant Systems Co., Ltd. on the following bonds from BBB- to BB+. Issue: Amount (bn) / Issue Date / Due Date / Coupon convertible bonds no.1 Y5 / Oct. 30, 1995 / Mar. 31, 2003 / 1.00% Sato Restaurant Systems is a middle ranking restaurant chain operator, primarily operating Japanese restaurants in Kansai area. The pretax profit for fiscal 2001 through March 31, 2002 increased over the previous fiscal year, covering the rise in payroll and other fixed expenses with reductions in purchases. The room for cost reductions, however, is limited while the productivity has been lowering. The earnings structure is rigid with the change of the fixed expenses into variable expenses being slow. The interest-bearing debt is large while the earnings are low. Majority of the operating cash flows are used for capital spending for the outlets. The Company has failed to reduce the interest- bearing debt. It is unlikely that the Company's debt service capability will improve sharply in the future. The Company is beginning to take a strategy that differentiates itself from peers as specialized Japanese restaurants, strengthening the marketing. However, it will be difficult for the Company to secure good earnings, taking into account the weakness in its flexibility for changes in business environment such as intensification of competition, facing sluggish sales at the existing restaurants. The effects of the new strategy are uncertain while it will take time to change the earnings structure to be flexible. Improvement in the brand image through increase in the number of outlets will be more important for the Company because it can no longer diversify the business risk through different types of restaurants. The Company lacks sufficient fund raising capability for this purpose and will face difficulty in expanding the business in a fast manner. In general, Sato Restaurant Systems will have difficulty in responding to rapid changes in the business environment in the future. According to Wright Investor's Service, at the end of 2002, Sato Restaurant Systems Co., Ltd. had negative working capital, as current liabilities were 8.72 billion yen while total current assets were only 4.17 billion yen. TAISEI FIRE: Creditors Okay Rehabilitation Plan ----------------------------------------------- Creditors of Taisei Fire & Marine Insurance Co. have approved its rehabilitation plan at a creditors' meeting on Friday, Kyodo News reports. The Tokyo District Court is expected to approve the plan on Saturday. Sompo Japan Insurance Inc will sponsor to rebuild Taisei Fire, which is currently under the protection of a special rehabilitation law for insurers. ========= K O R E A ========= CHOHUNG BANK: Government Rejects 51% Stake Sale Reports ------------------------------------------------------- The government had rejected earlier reports of the Chosun Ilbo that it has not decided to sell a stake of more than 51 percent in Chohung Bank to a single investor. "The report is not true," the ministry said in a statement. The privatization plan does not necessarily mean that it will sell more than a 51% stake in Chohung Bank, according to the statement. (M&A REPORTER-ASIA PACIFIC, Vol. No.1, Issue No. 173, September 2, 2002) CHOHUNG BANK: Government Selling Stake to Single Buyer ------------------------------------------------------ An unnamed Finance and Economy Ministry official said the government, who currently holds an 80.01 percent stake in Chohung Bank, has decided to sell more than 51 percent of the bank to one investor, rather than distributing the stake to a number of investors, Chosun Ilbo daily reported. While seeking investors for Seoulbank, the government found many investors willing to take management control of local banks, the official was quoted as saying. TCR-AP reported that the Korean government has decided to postpone its plan to sell off its 15 percent stake in Chohung Bank to foreign investors later this year. The state-run Korea Deposit Insurance Corp. (KDIC) now owns 80 percent of Chohung Bank as the government injected 2.71 trillion won into the bank to normalize its operation amid the 1997-1998 financial crisis. HYNIX SEMICONDUCTOR: Creditors May Ask Samsung to Take Over ----------------------------------------------------------- Some creditors of Hynix Semiconductor may consider asking Samsung Electronics to temporarily acquire operations of the troubled chipmaker in a bid to avert a court receivership, the Korea Herald reports. The restructuring outlook for Hynix is still unclear and even if creditors agree on a unified choice, the road ahead will be difficult, given that the chip sector is unlikely to stage a dramatic turnaround any time soon. Given that Samsung has long been a chief rival for Hynix in the semiconductor sector, the "sleeping with the enemy" option is also fraught with problems. Reports said Samsung openly rejects the scheme. It does not want to get entangled in a web of problems plaguing Hynix. But backers of the plan for Samsung's temporary operations said that few alternative measures are available to prevent Hynix from falling into court receivership or liquidation. KOREA THRUNET: Implementing Corporate Restructuring Plans --------------------------------------------------------- Since the second half of 2001, Korea Thrunet has been successfully implementing a series of corporate restructuring plans. In 2001, in aiming to focus on its broadband Internet access and enterprise network business, the Company sold such assets as equity stakes in a number of system operators and real estate holdings. Starting in the second quarter of 2002, the Company entered a new phase of restructuring plans to focus on the broadband Internet access business in order to enhance Thrunet's operating efficiency and improve the Company's financial structure. As a part of the newly staged restructuring plans, the Company entered into an asset transfer agreement with SK Global, Co., Ltd. (SKG) on July 5, 2002 to transfer to SKG a portion of its assets relating to its domestic leased line business, including its local fiber optic network and related equipment. Through this asset transfer, the Company plans to raise KRW 355.6 billion. The contract is expected to close within the third quarter of 2002. The Company completed the sale of a portion of its own HFC network, including related equipment used with the HFC Network, to Powercomm Corporation (Powercomm) on August 6, 2002. The total sale price for the assets transferred to Powercomm was KRW 45 billion. Additionally, the Company sold its headquarter building in Seoul to Carlyle Asia Real Estate LLC at KRW 38 billion on August 16, 2002. In total, the Company plans to raise approximately KRW 438.6 billion, of which it has already raised KRW 83.0 billion to date through the sale of its HFC network and headquarter building. The leased line and broadband Internet access markets in Korea are highly competitive. In the leased line market, KT Corporation (KT) and Powercomm are the dominant players, with over 75 percent of the market share. Other players, including Korea Thrunet, each maintain less than 10 percent of the market share. With KT and Powercomm monopolizing the leased line market and, hence leaving insufficient growth potential for other players, the Company has decided to focus more greatly on its broadband Internet access business that has higher growth potential. Given this competitive market environment, the Company therefore has needed to optimize the utilization of its assets and improve its operating efficiency. The restructuring plan should also enable Thrunet to restore stability to its financial structure, especially in terms of the balance sheet, by lowering its debt level and enhancing its cash liquidity. Facilities-based telecommunications services companies typically require large investments in the initial stage of the business. Over the past couple of years, the Company had to rely heavily on debt financing for investment due to unfavorable conditions of the stock market. This has negatively impacted the balance sheet of the Company, even though the Company has been showing improvements in profitability by recording positive EBITDA in 4Q 2000 and positive operating income in 1Q 2002. Korea Thrunet plans to achieve the following two objectives with the successful completion of its assets sales. The first objective of the Company's restructuring plans is to improve its financial structure by lowering its debt level, which would lead to a decrease in the total liabilities-to-total equity ratio. The Company expects to meet its debt services and debt repayment obligations due this year with a majority of proceeds from assets sales. In addition, Thrunet is also talking to its major creditors who are owed an aggregate amount of at least KRW 10 billion to convert their debt into equity. Thrunet is additionally seeking to raise foreign capital in the form of a private placement by the first half of 2003. Secondly, Korea Thrunet's restructuring plan is designed to maximize its return on investment by focusing on its broadband Internet access business, which maintains a higher growth potential. In this regard, the Company plans to spend some portion of its proceeds from assets sales to further growth of its broadband Internet access business by strengthening sales and marketing and promotional efforts. Participation in Dacom-Led Consortium to Bid for Powercomm Stakes Korea Thrunet signed a Memorandum Of Understanding (MOU) on August 27, 2002 with Dacom Corporation (Dacom), a major Korean fixed line telecommunications carrier, to participate in a Dacom-led consortium that is bidding for shares of Powercomm. Korea Electric Power Corporation (KEPCO) is selling an initial 30 percent stake in Powercomm and the successful buyer will have an option to buy additional stakes, up to a total of 54 percent. Thrunet plans to invest up to KRW10 billion through the Dacom- led consortium. The consortium anticipates that the stake for which it is bidding would give it a significant presence in the management of Powercomm. Thrunet believes that the consortium led by Dacom, a major provider of long-distance and leased line telecommunications services, and supported by Thrunet, a major provider of broadband Internet services, is in a strong position to win the bid for Powercomm shares. According to Wright Investors Service, at the end of 2001, Korea Thrunet Co Ltd had negative working capital, as current liabilities were 673.81 billion Korean Won while total current assets were only 258.87 billion Korean Won. KOREA THRUNET: Unveils New Shares Issuance ------------------------------------------ Korea Thrunet Co., Ltd., a major provider of broadband Internet- access services and enterprise network services in Korea, today announced that the Company has issued new equity shares in the aggregate amount of KRW 88.8 billion to TriGem Computers, Inc. (Trigem) and Naray & Company, Inc. (Naray). Both Trigem and Naray have agreed to convert their bonds, in the amount of KRW 59.2 billion and KRW 29.6 billion, respectively, into equity shares. After the issuance of the new shares, Trigem and Naray's stakes in the Company have increased to 32 percent from 14 percent and to 17 percent from 9 percent, respectively. After getting approval from shareholders in an extraordinary shareholders meeting on August 2, 2002, the Company contacted its major creditors who maintained more than KRW 10 billion in bond holdings of Thrunet, asking their willingness to participate in a debt-to-equity conversion. Both Trigem and Naray elected to participate in the capital increase of the Company. The Company stressed that the recently announced asset sales program, which has aggregated approximately KRW 440 billion to date including the sale of its leased line assets to be completed within the third quarter of this year, has been successful so far, and has resulted in additional reduction of KRW 88.8 billion in its debt, which will greatly enhance the financial stability of the Company. Sang Woo Kim, Senior Vice President of the Company stated, "We are very pleased with the results of our recent restructuring plans, including the debt-to-equity conversion by our major shareholders. We have almost completed the first phase of our restructuring plan to sell assets, and this debt-to- equity conversion will further improve our balance sheet. Going forward, we will concentrate on raising foreign capital, which will conclude the final stage of our corporate restructuring efforts." Founded in July 1996, Korea Thrunet Co., Ltd. is a major provider of broadband Internet access services and enterprise network services in Korea. The first to offer broadband Internet services in Korea, with 1,305,779 paying end-users at the end of July 2002, Korea Thrunet's network currently passes over 8.3 million homes. Thrunet service features "always-on" Internet access at speeds up to 100 times faster than traditional dial-up Internet access. On the enterprise network side, Korea Thrunet provides dedicated leased line services, including IP-based value-added services, to more than 1,000 corporate customers, with major Korean telecommunications companies such as SK Telecom accounting for a substantial majority of enterprise network revenues. Korea Thrunet's principal offices are located at 1337-20, Seocho-2 dong, Seocho-ku, Seoul, Korea 137-751. For inquiries, contact Korea Thrunet at telephone 822-3488-8058 or fax 822-3488-8511, or visit the company's website at http://www.thrunet.com. =============== M A L A Y S I A =============== ACTACORP HOLDINGS: Amin Shah Buying PSC Asset Holdings From PSCI ---------------------------------------------------------------- PM Securities Sdn Bhd, on behalf of the Board of Directors of Actacorp Holdings Berhad wishes to announce that the Company on 29 August 2002 received a letter of offer dated 29 August 2002 from Amin Shah Holdings Sdn Bhd (ASH) offering to assign to the Company its rights to purchase the entire equity interest of PSC Asset Holdings Sdn Bhd (PSCA) from PSC Industries Berhad (PSCI) under a conditional share sale agreement dated 13 December 2001 (SSA) for a purchase consideration of up to RM70 million. The Proposed Assignment forms an integral part of the efforts by the Company and one of its major shareholders of the Company, namely Y. Bhg. Tan Sri Dato' Amin Shah bin Haji Omar Shah (TSAS) to restructure and regularize the financial conditions of the Company and its subsidiaries as required under Practice Note No. 4 of the Listing Requirements of the Kuala Lumpur Stock Exchange (KLSE). The Board had on 29 August 2002 decided to accept the letter of offer from ASH, subject to certain conditions precedent as mentioned in Section 1 (c) below. Concurrently, the Board has also adopted a new proposed restructuring scheme of the Company, which would, amongst others, involve the proposed acquisition of PSCA. Details of the Proposed Restructuring Scheme are set out in Section 2. 1. PROPOSED ASSIGNMENT (a) Details of the Proposed Assignment On 13 December 2001, ASH had entered into the said conditional SSA with PSCI and Penang Shipbuilding & Construction Sdn Bhd ("PSC") to acquire the entire equity interest in PSCA from PSCI for a purchase consideration of up to RM70 million. Under the Proposed Assignment, ASH shall assign its rights of acquiring the entire equity interest in PSCA from PSCI for a purchase consideration of up to RM70 million to Actacorp, subject to the provisions of Section 132e of the Companies Act, 1965 and Paragraph 10.08 of the Listing Requirements of the KLSE. (b) Rationale of the Proposed Assignment The rationale of the Proposed Assignment is to facilitate the Proposed Acquisition of PSCA which will provide the Company with a new source of income generating business with the objective to regularize the financial condition of the Company. PSCA is principally involved in property investment, commercial letting of apartment buildings, building management and provision of property management services. Presently, PSCA is the owner and property manager of a commercial building known as "Menara PSCI" erected on a freehold land located at Lot Nos. 1199, 1197 and 1198, Section 13, North East District of Penang, Penang. (c) Conditions for the Proposed Assignment The Proposed Assignment shall be subject to, inter-alia, the following conditions: (i) the agreement by PSCI and PSC for the Proposed Acquisition of PSCA; (ii) the agreement by OCBC Bank (Malaysia) Berhad ("OCBC"), being the secured financial institutional creditor which is holding Menara PSCI as collateral for the loan facilities granted to PSCA and PSC; (iii) the appointment of an independent adviser pursuant to provisions under paragraph 10.08 of the Listing Requirements of the KLSE for the Proposed Acquisition of PSCA; and (iv) the approvals of the directors and shareholders of PSCI and Actacorp. 2. PROPOSED RESTRUCTURING SCHEME (a) Details of the Proposed Restructuring Scheme The Proposed Restructuring Scheme is envisaged to comprise the following steps: (i) Proposed Incorporation of NewCo A newly incorporated company (NewCo) shall be identified as the vehicle to implement the Proposed Restructuring Scheme and eventually take over the listing status of Actacorp on the Main Board of the KLSE. (ii) Proposed Share Swap NewCo shall offer to all the existing shareholders of the Company to acquire all the existing ordinary shares of RM1.00 each in the Company ("Actacorp Shares") and in consideration to issue to the existing shareholders of the Company new ordinary shares of RM0.50 each in NewCo ("NewCo Shares") on the basis of one (1) NewCo Share of RM0.50 each for every ten (10) existing Actacorp shares. (iii) Proposed Disposal of Actacorp NewCo shall dispose of the entire issued and paid-up share capital of Actacorp for a nominal consideration of RM1.00. (iv) Proposed Settlement of Debts and Creditors' Scheme NewCo shall undertake to settle part of the outstanding debts owing to the creditors of Actacorp amounting up to RM25 million in the following manner: (aa) cash payment of up to RM15 million from the proceeds arising from the Proposed Rights Issue and Proposed Special Issue (as defined below); and (bb) settlement of up to RM10 million in the form of issuance of up to 20 million NewCo shares of RM0.50 each. (v) Proposed Acquisition of PSCA NewCo shall acquire the entire issued and paid-up share capital of PSCA from PSCI for an indicative purchase consideration of up to RM70 million to be satisfied by way of issuance of up to 140 million NewCo Shares and/or redeemable convertible secured preference shares of RM0.10 each ("RCSPS") (collectively referred to as the "Consideration Shares") to PSCI or person(s) nominated by PSCI. It is envisaged that TSAS shall enter into certain arrangements for him or parties to be nominated to acquire a portion of the Consideration Shares in order to maintain his major shareholdings in the restructured NewCo Group. (vi) Proposed Rights Issue NewCo shall undertake a rights issue of new NewCo Shares (Rights Shares) to the existing shareholders of Actacorp after the Share Swap exercise on the basis of two (2) Rights Shares with two (2) detachable warrants ("Warrants") for every one (1) NewCo Share held by the existing shareholders of Actacorp after the Share Swap exercise at an indicative issue price of RM0.50 per Rights Share. (vii) Proposed Special Issue NewCo shall undertake a special issue of up to 28 million new NewCo Shares ("Special Shares") with 14 million Warrants to TSAS at an indicative issue price of RM0.50 per Special Share. (viii) Proposed Transfer of Listing Status of Actacorp to NewCo NewCo shall apply for the transfer of the listing status of Actacorp on the Main Board of the KLSE to NewCo. The abovementioned proposed transactions shall be inter- conditional upon completion of all such transactions. (b) Rationale of the Proposed Restructuring Scheme Since the Company was first classified as an "affected listed issuer" under PN4, it has proposed and undergone several restructuring schemes with the intention to regularise the financial conditions of the Group. However, the previous restructuring exercises had unfortunately fell through due to unforeseen circumstances. In view of the limited time period for affected companies classified under PN4 to restructure and regularise their financial conditions, the Board is of the view that the Proposed Restructuring Scheme will provide the Company a sole opportunity to set itself on a better financial footing to undertake new business ventures via NewCo and at the same time maximise the recovery to the creditors of the Company in the event of liquidation of the Group. (c) Conditions Precedent The Proposed Restructuring Scheme shall be subject to, inter alia, the following conditions precedent: (i) the execution of the formal definitive agreements in respect of the Proposed Restructuring Scheme; (ii) the agreement by OCBC for the Proposed Acquisition of PSCA; (iii) approval of the Securities Commission; (iv) approval of the Foreign Investment Committee; (v) approval of the KLSE; (vi) approval of the directors and shareholders of Actacorp and PSCI; (vii) approval of the creditors of Actacorp and the sanction of the High Court of Malaya for the creditors' schemes of arrangement pursuant to Section 176 of the Companies Act, 1965; (viii) satisfactory due diligence audit on PSCA and Menara PSCI; and (ix) approvals of any other relevant authorities and/or parties. 3. FINANCIAL EFFECTS The financial effects of the Proposed Restructuring Scheme shall be announced at a later date upon finalization of the terms and conditions of the same. 4. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS TSAS who is the Chairman and a major shareholder of Actacorp is also a director of and a major shareholder of PSCI, PSCA and ASH. As such, TSAS is deemed interested in the Proposed Assignment and thus the Proposed Acquisition of PSCA. Further, TSAS is expected to subscribe for the Special Shares under the Proposed Special Issue exercise by NewCo as mentioned in Section 3(a)(vii) above and enter into certain arrangement to acquire a portion of the Consideration Shares after the Proposed Acquisition of PSCA as mentioned in Section 3(a)(v) above. As such, TSAS will also be deemed to be interested in the Proposed Special Issue exercise and thus, the Proposed Restructuring Scheme as all the exercises within the Proposed Restructuring Scheme are inter-conditional. Accordingly, he has abstained and will continue to abstain from any board deliberations and voting on the Proposed Assignment and Proposed Restructuring Scheme. En. Azlan Shah bin Haji Omar Shah, who is the brother of TSAS and a director of Actacorp is also a director of PSCI, PSCA and ASH. En. Idris bin Zakaria, a director of Actacorp is also sitting on the board of directors of PSCI. As such, TSAS, En. Azlan Shah bin Haji Omar Shah and En. Idris bin Zakaria are deemed interested in the Proposed Assignment and thus the Proposed Acquisition of PSCA. Accordingly, they have abstained and will continue to abstain from any board deliberations and voting on the Proposed Assignment and Proposed Acquisition of PSCA. Save as disclosed above, none of the other directors of Actacorp has any interest in the Proposed Assignment and the Proposed Restructuring Scheme. 5. ADVISER PM Securities, an approved Universal Broker, has been appointed by the Board as Adviser of Actacorp for the Proposed Restructuring Scheme. 6. ANNOUNCEMENT UPON EXECUTION OF DEFINITIVE AGREEMENTS A detailed announcement on the Proposed Restructuring Scheme will be made upon finalization and execution of the definitive agreements at a later date. AUTOWAYS HOLDINGS: Selling Subsidiaries to Implement Debt Rehab --------------------------------------------------------------- The economic crisis in 1997/1998 had adversely affected Autoways Holdings Berhad's principal business activities and as a result, the income from existing activities has substantially reduced and hence the Group registered an accumulated loss of RM477 million as at 31 December 2001. The Group intended to salvage its deteriorating financial position compounded by increasing pressure from its creditors, to prevent its further impairment to its operating activities. However, AHB and Autoways Construction Sdn Bhd (ACSB) were served with a winding up petition on 11 June 2001 and subsequently the High Court of Kuala Lumpur gave an order on 8 May 2002 to wind up AHB and ACSB (Order). AHB and ACSB have subsequently filed an application that the Order be given a stay pending the appeal by AHB and ACSB. On 23 August 2002, AHB announced the Judge of the High Court ordered that the hearing for the application for stay of execution be adjourned to 10 September 2002 to enable the parties to negotiate an amicable settlement. In the interim, the Company has sought the consent of the Official Assignee (OA) for a proposed restructuring scheme. The OA decisions are pending as at to-date. In view of the above, the Group proposes a restructuring scheme to address the concerns of its creditors and shareholders. AHB had on 1 March 2002 entered into a memorandum of understanding with Kumpulan Liziz Sdn Bhd (KLSB) and Green Leaf Resources Sdn Bhd (GLRSB) to undertake the Proposed Restructuring Scheme. AmMerchant Bank Berhad (formerly known as Arab-Malaysian Merchant Bank Berhad), on behalf of AHB wishes to announce that the Company, having agreed the proposed terms of acquisition of the Proposed Subsidiaries and the Proposed Restructuring Scheme with the Vendors, will enter into the relevant conditional sales and purchase agreements (CSPA) with the vendors of the Proposed Subsidiaries and restructuring scheme agreement (RSA) to undertake the implementation of the Proposed Restructuring Scheme. THE PROPOSED RESTRUCTURING SCHEME In summary, the Proposed Restructuring Scheme to be undertaken by AHB is comprised of: a) Proposed Capital Reduction and Consolidation whereby the existing issued and paid up share capital of AHB of RM25,470,840 comprising of 25,470,840 Shares will be reduced to RM2,547,084 comprising 25,470,840 ordinary shares of RM0.10 each and subsequently consolidate ten (10) such ordinary shares of RM0.10 each to one (1) ordinary share of RM1.00 in AHB; b) Proposed Set-off in the Share Premium amounting to RM27,205,735 against Accumulated Loss of AHB; c) Proposed Incorporation of Newco for the purpose of the Debt Restructuring Scheme; d) Proposed Scheme of Arrangement; e) Proposed Settlement; f) Proposed Disposal/ Liquidation of AHB Group other than ACSB; g) Proposed acquisition of the Proposed Subsidiaries by Newco for a purchase consideration of RM60 million to be settled via issuance of 60,000,000 new ordinary shares in Newco at an issue price of RM1.00 per share (Share); h) Proposed Special Issue of 10,000,000 new NewCo Shares at an issue price of RM1.00 per new Share to one or more bumiputera investor(s) approved by the Ministry of International Trade and Industries; i) Proposed Waiver from the Mandatory Take-over Offer Requirement; and j) Proposed Transfer of Listing Status. PROPOSED CAPITAL REDUCTION AND CONSOLIDATION PROPOSED SET-OFF OF SHARE PREMIUM AGAINST ACCUMULATED LOSS Proposed Capital Reduction and Consolidation As part of the Proposed Restructuring Scheme, AHB is proposing a capital reduction of its issued and paid share capital from RM25,470,840 comprising 25,470,840 ordinary shares of RM1.00 each to RM2,547,084 comprising 2,547,084 ordinary shares of RM1.00 each. Such reduction shall be effected by the cancellation of the paid-up capital to the extent of 90 sen of each of the existing ordinary shares of RM1.00 each. Forthwith upon the reduction of paid-up capital taking effect, the issued and paid-up share capital of AHB shall be consolidated in such manner that every ten (10) ordinary shares of RM0.10 each shall constitute one (1) ordinary share of RM1.00 each upon which the sum of RM1.00 each shall be credited as having been fully paid-up, thereby consolidating the 25,470,840 ordinary shares of RM0.10 each into 2,547,084 ordinary shares of RM1.00 each (Consolidated Share). 3.2 Proposed Set-off of Share Premium Against Accumulated Loss Based on the latest audited accounts of AHB for the financial year ended 31 December 2001, AHB's share premium account stood at RM27,205,735. The share premium account represents the cumulative premium from issuance of new ordinary shares above par. AHB, pursuant to Section 64(1)(b) of the Companies Act proposes to apply its entire share premium account to set-off its accumulated losses. The Proposed Set-off of Share Premium against Accumulated Loss is subject to Court approval. PROPOSED INCORPORATION OF NEWCO It is proposed that a Newco with an issued and paid up share capital of RM2.00 will be incorporated to undertake the Proposed Restructuring Scheme. PROPOSED SCHEME OF ARRANGEMENT Upon completion of the Proposed Capital Reduction and Consolidation, Proposed Set-Off of Share Premium against Accumulated Loss and Proposed Acquisition of the Proposed Subsidiaries, it is proposed that the Consolidated Shares be exchanged with the new Shares in Newco on the basis of one (1) new Shares in Newco for every one (1) Consolidated Share held in AHB (Share Swap). Upon completion of the proposed Share Swap, AHB shall become the wholly owned subsidiary company of Newco. PROPOSED SETTLEMENT The Proposed Settlement will involve AHB, ACSB and Autoways Development Sdn Bhd (ADSB) in respect of amounts due to creditors at a cut off date on 31 May 1998 (Cut-off Date). The Cut-off Date was considered as the operations in AHB, ACSB and ADSB had substantially reduced and in addition, there were no significant increase in new creditors from the Cut-off Date to the current date. The increase in the creditor balances from the Cut-off Date to 31 December 2001 was mainly due to interest accruals and provision for liabilities arising from existing creditors. As at the Cut-off Date, the total debts owing to the creditors amounted to RM222 million and has been fully assumed in the computation of the settlement arrangement in this Proposed Settlement. The Proposed Scheme of Arrangement and Compromise Repayment shall involve the following: Scheme A : Scheme of Arrangement between AHB and its Unsecured Creditors. Scheme B : Scheme of Arrangement between ACSB and its Partially Secured Creditors. Scheme C : Scheme of Arrangement between ACSB and its Unsecured Creditors. Settlement Arrangement Scheme A - Scheme of Arrangement between AHB and its Unsecured Creditors As at the Cut-Off Date that, the total outstanding debt owing to AHB's Unsecured Creditors amounted to approximately RM146.8 million. Scheme B - Scheme of Arrangement between ACSB and its Partially Secured Creditors As at the Cut-Off Date that, the total outstanding debt owing to ACSB partially secured creditors amounted to approximately RM11.1 million. Scheme C - Scheme of Arrangement between ACSB and its Unsecured Creditors As at the Cut-Off Date that, the total outstanding debt owing to ACSB's unsecured creditors amounted to approximately RM63.6 million. All interest accrued, including any penalty charges, after the Cut-Off Date, where relevant, shall be completely waived. The settlement arrangement with creditors of Scheme A, Scheme B and Scheme C will be: * 30% of total outstanding debts will be settled via the issuance of Irredeemable Convertible Preference Shares (ICPS) of Newco upon the novation of AHB and ACSB debts to Newco. Newco will subsequently issue ICPS at an issue price of RM1.00 per ICPS with a par value of RM0.50 each on a basis of one (1) ICPS for every RM1.00 of debt noveted. The ICPS issued to the respective creditors will be listed and the ICPS shall be convertible into ordinary shares of Newco on the basis of one new ordinary share for every two (2) ICPS held on the fifth anniversary date of the issue of the ICPS. Therefore upon full conversion of the ICPS on the fifth (5) anniversary date of the issue of the ICPS, the total number of new ordinary shares of RM1.00 each in Newco to be issued would be approximately RM33 million. Proposed Settlement Please refer to http://bankrupt.com/misc/autoways_settlement.pdf for further details. * Concurrent with the issuance of ICPS, AHB Group (excluding ACSB) will be liquidated or disposed of. Summary of Proposed Scheme of Arrangement (Scheme A, Scheme B, Scheme C) The Proposed Scheme of Arrangement and Compromise Repayment for AHB Group is summarized below. Creditors Creditors No. of ICPS No. of shares RM'000 RM'000 upon conversion of the ICPS ('000) AHB Unsecured Creditors 146,793 44,038 22,019 ACSB Partially Secured 11,069 3,321 1,661 Creditors ACSB Unsecured Creditors 63,644 19,093 9,546 Total 221,506 66,452 32,226 Salient features of the ICPS Please refer to http://bankrupt.com/misc/icps.pdffor details. Proof of Debts and Cut-Off Date The confirmation of Scheme A, Scheme B and Scheme C creditors' balances are subject to a proof of debt exercise and confirmation of their status as creditors of the AHB Group. PROPOSED DISPOSAL/ LIQUIDATION OF AHB GROUP OTHER THAN ACSB Upon completion of the Proposed Listing Transfer, Newco proposes to liquidate or dispose of AHB Group except ACSB, which will be retained in the Newco Group. PROPOSED ACQUISITION OF PROPOSED SUBSIDIARIES Newco will enter into a CSPA with the vendors of the Proposed Subsidiaries to acquire the entire issued and paid up share capital of each of the companies comprising the Proposed Subsidiaries for a total consideration of RM60,000,000 to be satisfied by the issuance of 60,000,000 new Shares in Newco at an issue price of RM1.00 per new Share. Please refer to http://bankrupt.com/misc/klsb.pdffor the NTA position of KLSB and GLRSB based on the latest audited accounts. Information on KLSB KLSB was incorporated on 26 June 1981. Its principal activities are building construction, general and specialized civil engineering works, which include dredging, land reclamation and infrastructure works. The present authorized share capital of KLSB is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each, of which 10,000,000 ordinary shares of RM1.00 each have been issued and are fully paid-up. The Directors of KLSB are Ghazali bin Abdul Halim and Liew Ah Kau. The shareholders of KLSB are Ghazali bin Abdul Halim, Liew Ah Kau and Liew Ah Yong, each holding 70%, 20% and 10% equity interest in KLSB respectively. For the financial period ended 30 September 2001, KLSB has recorded a profit after tax of RM3.22 million. A summary of the historical results of KLSB is set out in http://bankrupt.com/misc/klsb.pdf. Information on GLRSB GLRSB was incorporated in Malaysia under the Companies Act, 1965 as a private limited company on 1 March 1996. GLRSB's principal activity is project management and consultancy for construction companies. The present authorized share capital of GLRSB is RM500,000 comprising 500,000 ordinary shares of RM1.00 each of which 300,000 have been issued and fully paid up. The Directors of GLRSB are Ahmad Najib bin Ariffin and Fadzil bin Ahmad who are also the shareholders of GLRSB, each holding 50.0% equity interest in GLRSB respectively. For the financial period ended 30 June 2001, GLRSB has recorded a profit after tax of RM0.557 million. A summary of the historical results of KLSB is set out in http://bankrupt.com/misc/klsb.pdf. Basis for the Purchase Consideration The purchase consideration was arrived at on a "willing-buyer and willing-seller" basis with due consideration to the guaranteed profit after taxation of RM12,000,000 (Guaranteed PAT) given collectively by the vendors of KLSB and GLRSB for each of the two (2) financial years ending 30 September 2003 and 2004. Based on the Guaranteed PAT of RM12,000,000 the purchase consideration represents a Price earning multiple of 5 times. Salient Terms of the CSPA The Company and the Vendors are in the process of finalizing the final terms of the CSPA. However, the Vendors expressly acknowledge that 50% of the Consideration Shares to be issued pursuant to the Proposed Acquisition of the Proposed Subsidiaries shall be subject to moratorium for such periods not exceeding three years (provided always that after the first year of the three (3) years moratorium, the Vendors are allowed to sell up to one-third per annum on a straight line basis) and upon such terms as the SC may require or stipulate. PROPOSED SPECIAL ISSUE Newco is proposing a special issue of 10,000,000 new ordinary shares of RM1.00 each in Newco at an issue price of RM1.00 per share to Bumiputra investors. The Proposed Special Issue will bring in proceeds amounting to RM10 million, which will be utilized as working capital for the Newco Group (Newco and its subsidiaries after the Proposals). PROPOSED WAIVER FROM THE MANDATORY TAKE-OVER OFFER REQUIREMENTS After the Proposed Acquisition, the Vendors will own 60,000,000 Newco Shares representing 82.7% of the issued and paid-up share capital of Newco. By virtue of 6.1(a), Part II of the Malaysian Code on Takeovers and Mergers 1998, the Vendors will be required to make a mandatory take-over offer for all the remaining shares in Newco not already owned by the Vendors (MGO). The CSPAs will be conditional upon the SC granting a waiver to the Vendors and parties acting in concert from having to undertake the MGO. The Vendors will be seeking a waiver from the requirements of the Code. PROPOSED TRANSFER OF LISTING STATUS Upon completion of the abovementioned proposals, Newco will be the new holding company of AHB and the Proposed Subsidiaries. The principal activity of Newco will be that of an investment holding company. The Proposed Transfer of Listing Status shall involve the transfer of AHB's listing status to Newco whereby AHB Shares be de-listed from the Official List of the Second Board of the Kuala Lumpur Stock Exchange (KLSE) (Official List) and that Newco Shares be admitted to the Official List. Newco will be converted to a public company pursuant to receiving the relevant approvals to facilitate the completion of the Proposals. Upon completion of the aforementioned proposals, it is proposed that the entire issued and paid up share capital of Newco and all the ICPS be listed on the Second Board of the KLSE. STATUS OF NEW NEWCO SHARES All new Shares of Newco to be issued pursuant to the Proposed Acquisitions and the Proposed Special Issue and upon conversion of the ICPS shall rank pari passu in all respects with the then existing ordinary shares in issue of Newco, except that they shall not be entitled to any rights, dividends, allotment and/or other distributions, the entitlement date of which precedes the date of issue of the ordinary shares. RATIONALE FOR THE PROPOSED RESTRUCTURING SCHEME This Proposed Restructuring Scheme is necessary to ensure that the Group would be able to successfully turnaround with the aim to: (a) Enable AHB's creditors to recover amounts higher than those possible in the event of a liquidation. (b) Allow the existing shareholders, particularly the minority public investors to recover some of their investment in AHB. SEVERABILITY AND INTER-CONDITIONALITY The Proposed Settlement between AHB and the AHB Scheme Creditors are NOT CONDITIONAL upon the effectiveness of each Proposed Settlement between ACSB and ACSB Scheme Creditors. The Proposed Settlement between ACSB and ACSB Scheme Creditors are however, CONDITIONAL upon the effectiveness of each Proposed Settlement between AHB and AHB Scheme Creditors. The Proposed Settlement as well as the Proposed Capital Reduction and Consolidation, Proposed Acquisition of Proposed Subsidiaries and the Proposed Special Issue have been made conditional upon one another. EFFECTS OF THE PROPOSED RESTRUCTURING SCHEME Share Capital of AHB No of shares (`000) Existing share capital of 25,471 AHB as at 31 December 2001 Proposed Capital Reduction (22,924) and Consolidation After Capital Reduction and 2,547 Consolidation Share Capital of NEWCO No of shares (`000) Existing issued and paid-up share capital - * To be issued to AHB's shareholders 2,547 pursuant to the Proposed Share Swap and Consolidation To be issued pursuant to the Proposed 60,000 Acquisition of Proposed Subsidiaries Proposed Special Issue 10,000 --------- 72,547 Upon Conversion of ICPS 33,226 ========= 105,773 * Existing issued and paid-up share capital of RM2 only NTA Please refer to http://bankrupt.com/misc/nta.pdf. Earnings The Proposals are not expected to have any significant effect on the earnings of Newco for the financial year ending 31 December 2002 as the Proposals are expected to be completed in the first half of calendar year 2003. Baring any unforeseen circumstances, the Proposed Subsidiaries are expected to contribute positively to Newco's earnings on completion of the Proposed Restructuring Scheme. Gearing The gearing of the Newco Group is expected to improve pursuant to the Proposed Restructuring Scheme as the existing debts of the AHB Group would be settled and/or written off under the Proposed Settlement. The table in http://bankrupt.com/misc/nta.pdfillustrates the effect of the level Newco's total debt upon completion of the Proposed Restructuring Scheme. Shareholding Structure The effect on the shareholding structure is illustrated in http://bankrupt.com/misc/shareholding_structure.pdf. Group Structure The effect of the Proposed Restructuring Scheme on the group structure of AHB is depicted in http://announcements.klse.com.my/EDMS/edmsweb.nsf/ba387758ae3741 2b482568a300466fb6/482568bb00440ef448256c2500440c19/$FILE/Figure %201.doc. CONDITIONS OF THE PROPOSED RESTRUCTURING SCHEME The Proposed Restructuring Scheme are subject to the approvals of the following: (a) The shareholders of AHB Group at an EGM to be convened; (b) The FIC; (c) The SC; (d) Creditors of AHB and ACSB; (e) The High Court pursuant to section 64 and 176 of the Companies Act, 1965; (f) The KLSE; and (g) Any other relevant authorities. The Proposed Restructuring Scheme shall become effective upon the lodgment of an office copy of the High Court Order issued pursuant to paragraph (e) above with the Companies Commission of Malaysia. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS' INTERESTS None of the Directors and/or substantial shareholders of AHB and/or any persons connected to them have any interest, direct or indirect in the Proposed Restructuring Scheme. STATEMENT BY THE DIRECTORS The Directors of AHB are of the view that the successful implementation of the Proposed Restructuring Scheme is imperative for the shareholders and creditors of the AHB Group. The Directors of AHB consider that the terms of the Proposed Restructuring Scheme best serve the needs of the AHB Group and are reasonable and fair to the shareholders of AHB and creditors of AHB and ACSB. SUBMISSION TO THE SECURITIES COMMISSION Submission to the Securities Commission will be made by the end of September 2002. BERJAYA GROUP: Gets Approval to Delay Submission of FY Report ------------------------------------------------------------- The Board of Directors of Berjaya Group Berhad said Friday that it has permission from the Kuala Lumpur Stock Exchange for an extension to 30 September 2002 to release its audited financial statements for the financial year ended 30 April 2002. The Company's inability to finalize its audited financial statements within the stipulated time frame was mainly due to the involuntary Chapter 11 petition filed against Roadhouse Grill, Inc, a 62.2% subsidiary company listed on NASDAQ, USA. These proceedings has delayed the finalization of the accounts of Roadhouse Grill, Inc which in turn affected the finalization of the Group's financial statements. Roadhouse Grill, Inc has on 21 August 2002 obtained confirmation from the U.S. court on its reorganization plan and is now in the midst of finalizing its financial statements. BERJAYA GROUP: Selling Hyundai-Berjaya Stake to Transwater ---------------------------------------------------------- The Board of Directors of Berjaya Group Berhad wishes to announce that BGroup has entered into a conditional share sale agreement with Transwater Corporation Berhad for the proposed disposal of its 51% equity interest in Hyundai-Berjaya Sdn Bhd.Tranwater will pay RM51.00 million, to be satisfied by an issue of 51.00 million new Transwater ordinary shares of RM1.00 each at par. BRIEF INFORMATION ON HYUNDAI-BERJAYA Hyundai-Berjaya was incorporated in Malaysia on 3 August 1991. Hyundai-Berjaya has an authorized share capital of RM50,000,000 comprising 50,000,000 Shares, of which 22,500,000 Shares were issued and fully paid-up. Hyundai-Berjaya is involved in the management of sales, distribution and retailing of passenger and commercial vehicles, provision of back-up services, selling and distribution of spare parts for its products range. Since May 2000, Hyundai-Berjaya is involved in the management of sales, distribution and retailing of vehicles for sale in Malaysia. It also plans to deal with Hyundai related spare parts and provide workshop services. Currently Hyundai-Berjaya has 78 dealers throughout Malaysia. Hyundai-Berjaya does not have any subsidiary. INFORMATION ON TRANSWATER Transwater was incorporated on 19 February 1981 in Malaysia under the Companies Act, 1965 and was listed on the Second Board of the Kuala Lumpur Stock Exchange (KLSE) on 28 September 1993. Transwater has an authorized share capital of RM100.00 million comprising 100.00 million Shares of which 13.00 million Shares were issued and fully paid-up. The Transwater Group is specialist engineers for the water and wastewater works, pumping and cooling systems, industrial automation, process and instrumentation, provision of metal and machinery fabrication and investment holding. Transwater is classified as Affected Listed Issuer (defined in Practice Note 4/2001 under the revamped KLSE Listing Requirements) and its Shares are suspended from trading on the KLSE since 19 April 2002. The last traded price was 83 sen per Transwater Share. The directors of Transwater are Tan Sri Datuk Rahim Abdul Rahim bin Haji Din, Datuk Wan Lokman bin Dato' Wan Ibrahim, Mr Kong Keng Ling, Mr Freddie Pang Hock Cheng and Mr Low Ah Ha. As at 31 July 2002, Transwater owes Juara Sejati Sdn Bhd, a wholly-owned subsidiary company of BGroup, and Prime Credit Leasing Sdn Bhd, an indirect subsidiary company of BGroup, about RM15.69 million and RM11.98 million respectively. DETAILS OF THE PROPOSED DISPOSAL To facilitate the Proposed Disposal, BGroup has entered into a separate share sale agreement with its wholly-owned subsidiary, Berjaya Systems Integrators Sdn Bhd (BSI) to transfer its 51% stake in Hyundai-Berjaya to BSI for a consideration of RM51.00 million (Indebtedness). BSI was incorporated in Malaysia on 22 August 1992 and has an authorized share capital of RM250,000 comprising 250,000 Shares, of which 2 Shares were issued and fully paid-up. BSI is presently dormant. On 30 August 2002, BGroup then entered into the Agreement with Transwater for the proposed disposal of its 100% equity interest in BSI together with an undertaking from Transwater to repay the Indebtedness of RM51.00 million in full for a cash consideration of RM2.00 and an issue of 51.00 million new Transwater Shares at par respectively. The cash consideration of RM2 is based on the par values of the BSI Shares. The Securities Commission ("SC") may impose a moratorium on part of the 51.00 million new Transwater Shares to be issued to BGroup pursuant to the Proposed Disposal. The issue price of the new Transwater Shares for the Proposed Disposal is at par of RM1.00. Based on the suspended price of Transwater Shares, the issue price of RM1.00 each represents a premium of 17 sen or 20.48% per Transwater Share over its last traded price. The salient terms of the Agreement includes the following: (a) all of the relevant approvals being obtained by Transwater and BGroup and not withdrawn or revoked; (b) the carrying out and completion by Transwater of the Due Diligence to its reasonable satisfaction; and (c) the implementation of a proposed rights issue with warrants by Transwater. The RM51.00 million purchase consideration for the 51% stake in Hyundai-Berjaya was based on the latest adjusted unaudited net tangible assets as at 30 April 2002, estimated market value and future earnings potential of Hyundai-Berjaya. This basis places an enterprise value of RM100.00 million on Hyundai-Berjaya. Pursuant to the Proposed Disposal, BGroup will provide its 51% share of profit guarantee of RM15 million net profit after taxation per annum for each of the 2 financial years ending 30 April 2004 and 2005. The new Transwater Shares to be allotted and issued for the Proposed Disposal shall rank pari passu in all respects with the existing Transwater Shares except that they will not rank for any dividend or other distributions declared or to be declared in respect of the financial period prior to the financial period in which the new Shares are issued or any interim dividend or distribution, the declaration date of which is on or before the issue date. All the BSI Shares will be acquired free from all liens, charges, equities and encumbrances whatsoever and with all rights attaching thereto as from the date of completion of the Proposed Disposal. The BGroup's cost of investment in BSI and Hyundai-Berjaya is RM2.00 (since 1997) and RM10.20 million (since 2000) respectively. As at 31 July 2002, the Berjaya group of companies have a total 12.73% stake in Transwater. Immediately upon the completion of the proposed disposal of the 51% stake in Hyundai-Berjaya, the total Berjaya group of companies' stake in Transwater will increase to 82.27%. Pursuant to the Malaysian Code on Take-Overs and Mergers 1998 ("Code"), BGroup and parties acting in concert with it are obliged to extend a mandatory general offer on the remaining Transwater Shares not held by them. BGroup proposes to seek an exemption under the Code from the SC from having to undertake the said mandatory general offer. As a consequence of the Proposed Disposal and pursuant to the Code, Transwater is also obliged to undertake a mandatory general offer to acquire the remaining 49% equity interest in Hyundai-Berjaya ("Proposed HB-GO") not held by BSI/Transwater and Transwater proposes to issue up to 49.00 million new Transwater Shares at par as payment for the remaining 49% stake under the Proposed HB-GO. The Proposed Disposal forms part of the proposed restructuring plan of Transwater as announced on even date. After the completion of the Proposed Transwater Plan, the Berjaya group of companies' total equity interest in Transwater will be reduced to about 46.60%. Presently, BGroup intend to retain the new Transwater Shares to be issued pursuant to the Proposed Disposal. RATIONALE FOR THE PROPOSED DISPOSAL The Proposed Disposal will allow BGroup to securitize its investment in Hyundai-Berjaya as well as allow the latter direct access to the capital market to tap funds for its expansion. In addition, Berjaya group of companies will be able to recover RM27.87 million cash as settlement for the long overdue amounts owing to them. Presently, Berjaya group of companies have a total of 12.73% stake in Transwater. Since 1 March 2002, the Transwater Shares were classified under PN4/2001 Companies which were subjected to trading restrictions and subsequently the Transwater Shares were suspended from trading as it failed to finalize its regularization plan. Once the Proposed Transwater Plan is implemented, the trading suspension on the Transwater Shares on the KLSE will be lifted. EFFECTS OF THE PROPOSED DISPOSAL The Proposed Disposal will not have any effect on the issued and paid-up share capital and the shareholdings of the substantial shareholders of BGroup. The Proposed Disposal will also not have any material effect on the consolidated earnings and net tangible assets of BGroup. Transwater, being an associated company of BGroup after the Proposed Transwater Plan, is expected to contribute positively to the consolidated earnings of BGroup in the future. CONDITIONS OF THE PROPOSED DISPOSAL The Proposed Disposal is subject to approvals being obtained from the following parties:- (a) SC for: (i) the Proposed Disposal; and (ii) waiver for BGroup and parties acting in concert with them from the obligation of extending a general offer pursuant to the Code on the remaining Shares in Hyundai-Berjaya; (b) Foreign Investment Committee; (c) KLSE; (d) Shareholders of Transwater at an EGM to be convened; and (e) any other relevant authorities. The Proposed Disposal is conditional upon the proposed rights issue to be carried out by Transwater. SUBSTANTIAL SHAREHOLDERS' AND DIRECTORS' INTERESTS Tan Sri Datuk Abdul Rahim bin Haji Din and Mr Freddie Pang Hock Cheng sit on the boards of both BGroup and Transwater. Accordingly, both Tan Sri Datuk Abdul Rahim bin Haji Din and Mr Freddie Pang Hock Cheng will abstain from deliberations on the Proposed Disposal and will continue to abstain from all board deliberations on the Proposal Disposal. Save as disclosed, BGroup has not been notified by any other Directors or substantial shareholders or persons connected to them having interests, direct or indirect, in the Proposed Disposal. DIRECTORS' STATEMENT The Board of Directors is of the opinion that the Proposed Disposal is in the best interests of BGroup. ESTIMATED TIME FRAME FOR COMPLETION OF THE PROPOSED DISPOSAL The Proposed Disposal is subject to the Proposed Transwater Plan being approved by the relevant authorities. The Practice Note 4/2001 of the KLSE requires applications to be made to the relevant authorities within 2 months from the date of the requisite announcement. The Board of BGroup has been informed that Transwater will submit its application to the SC in September 2002 and the Proposed Transwater Plan are expected to be completed in the first half of the year 2003. DEPARTURE FROM THE SC'S POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES Submission shall be made by Transwater to seek waivers from the SC for the departures from the SC Guidelines in undertaking its Proposed Transwater Plan, including the Proposed Disposal. BRIDGECON HOLDINGS: Enters Into Agreement With PVOB Vendors ----------------------------------------------------------- Public Merchant Merchant Bank Berhad (PMBB), on behalf of Bridgecon Holdings Berhad wishes to announce that the Company, had on 29 August 2002 came to an agreement (Supplemental Agreement) with certain vendors of Premium Vegetable Oils Berhad (PVOB) (Principal Vendors) and Premium Nutrients Berhad (PNB) which is supplemental to and shall form part of the restructuring agreement entered into between BHB and National Land Finance Co-operative Society Limited (NLFCS) on 27 June 2002 (Restructuring Agreement). Further details of the Supplemental Agreement are set out in section 1 of this announcement. In relation to the announcement made of 15 August 2002, the structure of the proposed offer for sale by certain of the vendors of PVOB (Proposed Offer For Sale) has been finalized, the details of which are set out in section 2 of this announcement. 1. Revised terms of the Restructuring Agreement The Supplemental Agreement essentially sets out the revised terms of the restructuring scheme (Restructuring Scheme) of BHB, taking into consideration the terms of the share sale agreement (SSA) entered into between PNB and the vendors of PVOB and their nominees on 13 August 2002. In addition, pursuant to the Supplemental Agreement, the Principal Vendors, and PNB, who were not parties to the Restructuring Agreement (save for NLFCS), have agreed to be bound by and to give effect to the Restructuring Agreement as if they were parties of the Restructuring Agreement subject to such amendments, modifications and/or fvariations to the same as provided in the Supplemental Agreement. Pursuant to Supplemental Agreement, the terms of the Restructuring Scheme as contained in the Restructuring Agreement shall be revised to reflect inter-alia, the following: (i) the proposed share exchange between the existing shareholders of BHB and PNB on the basis of one (1) new ordinary share of RM0.50 in PNB (PNB Share) for every 9.975 existing ordinary shares of RM1.00 each in BHB; (ii) the proposed acquisition of the entire issued and paid-up share capital of PVOB by PNB; (iii) the proposed settlement of debts due from BHB to its creditors ("Creditors") pursuant to the proposed corporate and debt restructuring exercise prepared by the SA pursuant to Section 44 of the Pengurusan Danaharta Nasional Berhad (Danaharta) Act, 1998 as amended by Danaharta (Amendment) Act 2000 (Workout Proposal) upon the terms and conditions as the SA may at their sole discretion deem fit by way of an issuance of 62,000,000 PNB Shares to the Creditors; (iv) the proposed application for the admission of the PNB to the Official List of the Kuala Lumpur Stock Exchange (KLSE), the application of which shall be made by the PNB to the KLSE and subject to the approvals from the relevant authorities including the KLSE and the SC (Proposed Application for Listing); (v) the proposed liquidation of BHB together with all its subsidiary companies (Proposed Liquidation); (vi) as part consideration for the Proposed Application for Listing, PNB shall issue the 62,000,000 new PNB Shares to BHB to be held by the creditors' agent for and on behalf of the Creditors, of which: (1) 62,000,000 PNB Shares (Option Shares) shall be subject to a put and call option arrangement between the Option Vendors and the creditors' agent and subject to the terms and conditions of a put and call option agreement to be entered into by the relevant parties. Pursuant to the put and call option arrangement: The Option Vendors shall grant a put option to the creditors' agent and the creditors' agent shall grant a call option to the Option Vendors; The call option shall be exercisable by the Option Vendors at any time within the period of twenty-four (24) months commencing from the date of issuance and allotment of the Option Shares (Call Option Period). The put option shall be exercisable by the creditors' agent on behalf of the creditors at any time within the following periods: (a) period of three (3) months commencing on the day immediately after the first ninth (9th) months of the Call Option Period in respect of up to 20,000,000 of the Option Shares (First Put Option Period); (b) a period of three (3) months commencing on the day immediately after the First Put Option Period in respect of up to 20,000,000 or in the event that item (a) shall not occur, 40,000,000 of the Option Shares (Second Put Option Period); and (c) a period commencing on the day immediately after the Second Put Option Period until the last day of the Call Option Period in respect of up to 22,000,000 or in the event that items (a) and (b) shall not occur, the entire Option Shares; The call option and the put option shall be inter-conditional on each other and shall be exercisable at an exercise price of RM0.565 per Option Share. (2) The put and call options shall be secured by 40,000,000 PNB Shares (Security Shares), which shall be held in trust by the creditors' agent for and on behalf of the Creditors. In the event that Option Vendors shall fail to purchase the Option Shares or any part thereof upon exercise of the put option by the creditors' agent, the creditors' agent shall be entitled to dispose of the Security Shares or any part thereof to raise a sum equivalent to any shortfall arising from the Option Vendors' default in complying with their obligations under the put option arrangement. The balance of the Security Shares, if any, after the enforcement of the security by the creditors' agent, shall be released to the Option Vendors, upon the expiry of the Put Option Period; and (vii) For the purpose of the Proposed Application for Listing, at the request of the Substantial Vendors, (which request is evidenced by the Substantial Vendors agreeing to the terms and conditions of the Supplemental Agreement), BHB agrees to facilitate the admission of the PNB to the Official List of KLSE and the listing of its shares on the KLSE subject to the terms and conditions of the Supplemental Agreement. 2. The Proposed Offer For Sale The Proposed Offer For Sale shall involve an offer for sale by certain vendors of PVOB of 43,208,000 shares in PNB, to the following parties: (i) 5,000,000 ordinary shares of RM0.50 each available for application by the directors, employees, suppliers, customers and agents of the proposed PNB Group; (ii) 3,000,000 ordinary shares of RM0.50 each in PNB available for application by the shareholders of BHB; (iii) 5,000,000 ordinary shares of RM0.50 each in PNB available for application by Bumiputera investors approved by the MITI; (iv) 20,000,000 ordinary shares of RM0.50 each in PNB by way of private placement to public investors to be identified; and (v) 10,208,000 ordinary shares of RM0.50 each in PNB available for application by the Malaysian public. ESPRIT GROUP: Court Approves Stay of Execution ---------------------------------------------- Further to our announcement dated 29 August 2002, Esprit Group Berhad wish to inform that the Court of Appeal has granted a stay of execution of the winding-up order made by the Shah Alam High Court on 10 May 2002 pending the disposal of the Company's appeal to the Court of Appeal. ESPRIT GROUP: Seeks Two-month Extension to Submit Plan ------------------------------------------------------ Esprit Group Berhad refers to the extension given by the Exchange to the Company to make a submission of its regularization plan to the authorities for approval which expires on 31 August 2002. The Company wishes to inform the Exchange that it is unable to make the submission to the authorities as per the deadline stipulated as we had to sort out the Company's legal affairs. We had filed an application in the Court of Appeal for a stay of execution of the winding-up order dated 10 May 2002 pending the disposal of EGB's appeal to the Court of Appeal. The said application came up for hearing on 29 August 2002 and we are pleased to inform that the Court of Appeal has granted a stay of execution of the winding-up order pending the disposal of our appeal to the Court of Appeal. In view of the above, we have written to the Exchange on 30 August 2002 to seek their kind consideration and approval to grant the Company two months extension until 31 October 2002 in order for us to submit our regularization plan to the relevant authorities. KELANAMAS INDUSTRIES: SBM Acquisition Canceled ---------------------------------------------- With reference to the announcement on 1 August 2002, AmMerchant Bank Berhad (formerly known as Arab-Malaysian Merchant Bank Berhad), on behalf of the Board of Directors of Kelanamas Industries Berhad is pleased to announce that MPTR and the vendors of the New Business, Hock and Plastronic had on 29 August 2002 entered into a Supplemental Agreement. The Proposed Acquisition of SBM as referred to in the agreement dated 28 February 2002 had been revoked and canceled. Further, the period for the fulfillment of the conditions precedent and the approvals of relevant authorities being obtained had been extended till 31 December 2002. Also, the Supplemental Agreement also clarified that pursuant to the NTA guaranteed by the vendors in the original agreement, any surplus of adjusted NTA over the guaranteed NTA of any of the companies shall be able to set off any shortfall from any other companies. Further, the Board of KIB would also like to announce that the submission for the Proposed Restructuring Scheme has been made to the Securities Commission. MYCOM BERHAD: Says E&Y Not Eligible as Restructuring Adviser ------------------------------------------------------------ The Board of Directors of Mycom wishes to announce that the Kuala Lumpur Stock Exchange (KLSE) has vide its letter dated 30 August 2002 advised that Messrs Ernst & Young is not eligible to act as the Independent Adviser in relation to Mycom's Proposed Restructuring Scheme. The Company had, on 13 April 2000 obtained approval from the KLSE to appoint EY as the Independent Adviser to advise the independent directors and minority shareholders of Mycom as to whether the Proposed Debt Novation and Proposed Acquisitions under the Scheme are fair and reasonable and not to the detriment of minority shareholders. Alliance Merchant Bank Berhad, on behalf of the Company had, on 12 August 2002 sought the KLSE's approval for the appointment of EY as the independent adviser in relation to a proposed development project to be undertaken following the Proposed Kenny Heights Acquisition under the Scheme. Together with this application, EY had also sought reconfirmation on their eligibility as an Independent Adviser in view of the recent merger on 1 July 2002 between Messrs Hanafiah Raslan Mohamed, which is the national firm of Messrs Arthur Andersen & Co. (AA) and EY and the fact that AA is the Statutory Auditor and Reporting Accountant of Mycom. Notwithstanding the above, Mycom intends to make an appeal and/or to consider other contingency plans. NCK CORPORATION: Says Restructuring Scheme Proposal Unchanged ------------------------------------------------------------- NCK Corporation Berhad said yesterday that there has been no change in the status of the Proposed Restructuring Scheme, as announced by Alliance Merchant Bank Berhad on 15 August 2002, to regularize its financial condition. The Company is presently awaiting decisions from the relevant authorities on its Proposed Restructuring Scheme. REPCO HOLDINGS: Awaits Regularization Plan Approval From KLSE ------------------------------------------------------------- In compliance with Practice Note 4/2001 in relation to Paragraph 8.14 of the Listing Requirements of the Kuala Lumpur Stock Exchange, Repco Holdings Berhad wishes to announce that it is still awaiting the necessary approvals of the relevant regulatory bodies in order to implement its plans to regularize its financial condition. The Company also wishes to announce that its application to the Exchange for an extension of time until 31 December 2002 to comply with Chapter 7 of the Listing Requirements has not been approved. However, the Company has been granted an extension of time until 31 December 2002 to amend its Articles to incorporate Chapter 7 of the Listing Requirements. TAP RESOURCES: Shareholders Approve Debt Restructuring Plan ----------------------------------------------------------- Further to the announcement dated 7 August 2002, Malaysian International Merchant Bankers Berhad revealed on behalf of TAP Resources Berhad that the proposed debt restructuring, proposed profit guarantee waiver, proposed rights issue and proposed increase in the authorized share capital have been approved by the shareholders of TAP at an Extraordinary General Meeting held on 30 August 2002. The proposals are now subject to these approvals: (i) the Securities Commission for the Proposed Debt Restructuring, Proposed Profit Guarantee Waiver and Proposed Rights Issue; (ii) the Foreign Investment Committee for the Proposed Debt Restructuring; and (iii) the Kuala Lumpur Stock Exchange (KLSE) for the following: (a) admission of the irredeemable convertible unsecured loan stocks (ICULS) to the Official List of the KLSE; and (b) listing of and quotation for the ICULS, the new shares to be issued pursuant to the Proposed Rights Issue and the new shares to be issued pursuant to the conversion of the redeemable convertible secured loan stocks and ICULS. WING TIEK: Outlines Debt Restructuring With Shareholders -------------------------------------------------------- The Board of Directors of Wing Tiek Holdings Berhad (WTHB) said Friday that the company has on 29 August 2002 entered into a definitive agreement with Dato' Hj Jamian bin Mohamad, Ang Ken Seng and Ang Lam Poah to outline a proposed corporate and debt restructuring scheme which will, inter-alia, involve the following: (i) A proposed scheme of arrangement between WTHB, its shareholders and JAKS Resources Sdn Bhd (which will later be converted to a public company) under Section 176 of the Companies Act, 1965 whereby the entire issued and paid-up share capital of WTHB will be exchanged with a total of approximately 8.5 million new ordinary shares of RM1.00 each in JAKS Resources on the basis of 1 new JAKS Resources Share for every 8 ordinary shares of RM1.00 each in WTHB held on a date to be determined; (ii) JAKS Resources to carry out the following proposed acquisitions: (a) The proposed acquisition by JAKS Resources from WTHB of 9 pieces of freehold land (WTHB Land) for a total purchase consideration of RM75.0 million to be satisfied by the issuance of 40.0 million new JAKS Resources Shares at par and RM35.0 million nominal value of Redeemable Convertible Secured Loan Stocks-B 2003/2010 (RCSLS-B) at 100% of its nominal value (Proposed WTHB Land Acquisition); (b) The proposed acquisition by JAKS Resources from Dato' Hj Jamian bin Mohamad, Ang Ken Seng and Ang Lam Poah (collectively referred to as the JAKS Vendors) of 2,000,000 ordinary shares of RM1.00 each in JAKS Sdn Bhd (JAKS Shares) representing the entire equity interest in JAKS, for a purchase consideration of approximately RM208.0 million to be satisfied by the issuance of approximately 208.0 million new JAKS Resources Shares at par (Proposed JAKS Acquisition); (c) The proposed acquisition by JAKS Resources from Ang Ken Seng and Ang Lam Poah (collectively referred to as the PTS Vendors) of 700,000 ordinary shares of RM1.00 each in Pipe Technology System Sdn Bhd (PTS) (PTS Shares) representing 70.00% equity interest in PTS, for a purchase consideration of approximately RM12.0 million to be satisfied by the issuance of approximately 12.0 million new JAKS Resources Shares issued at par (Proposed PTS Acquisition); (d) The proposed acquisition by JAKS Resources from WTHB of 45,912,738 ordinary shares of RM1.00 each in Wing Tiek Steel Pipe Sdn Bhd (WTSP) (WTSP Shares) representing approximately 98.05% equity interest in WTSP for a cash consideration of RM1.00 (Proposed WTSP Acquisition); (Collectively, the Proposed WTHB Land Acquisition, the Proposed JAKS Acquisition, the Proposed PTS Acquisition and the Proposed WTSP Acquisition shall hereafter be referred to as the Proposed Acquisitions) (iii) The proposed settlement and compromise repayment of the debts owing by WTHB and its subsidiary companies namely, Wing Tiek Metal Industries Sdn Bhd (WTMI), Wing Tiek Ductile Iron Pipe Sdn Bhd (WTDIP), Wing Bee Hardware Sdn Bhd (WBH) and Victory Skyline Sdn Bhd (VS) and WTSP to certain creditors (Scheme Creditors) with the following: (a) the RM60.0 million nominal value of Redeemable Convertible Secured Loan Stocks-A 2003/2010 ("RCSLS-A") to be issued at 100% its nominal value by JAKS Resources; (b) the 40.0 million new JAKS Resources Shares to be received by WTHB pursuant to the Proposed WTHB Land Acquisition; (c) the RM35.0 million nominal value of Redeemable Convertible Secured Loan Stocks-B 2003/2010 (RCSLS-B) to be received by WTHB pursuant to the Proposed WTHB Land Acquisition; and (d) a further 35.0 million new JAKS Resources Shares to be issued by JAKS Resources to WTHB at par. (Collectively referred to as the "Proposed Debt Restructuring Scheme"); and (iv) The proposed transfer of WTHB's listing status on the Main Board of the Kuala Lumpur Stock Exchange (KLSE) to JAKS Resources (Proposed Transfer of Listing Status). Further, it was stated in the announcement by WTHB dated 16 August, 2002 that the Company would seek Scheme Creditors' approvals-in-principle for the Proposed CDRS prior to the Company entering into the said definitive agreement. Discussions have been held with several of the Scheme Creditors over the past two weeks to obtain their feedback on the Proposed CDRS but their respective approvals-in-principle could not be obtained in time before the Company entered into the said definitive agreement due to the very short timeframe available. Accordingly, the Scheme Creditors' approvals will be sought in due course. Details of the Proposed CDRS Proposed Share Exchange To facilitate the implementation of the Proposed CDRS, a new investment holding company, JAKS Resources, has been incorporated with an initial issued and paid-up share capital of RM2 comprising 2 JAKS Resources Shares. Pursuant to Section 176 of the Act, the existing shareholders of WTHB shall exchange all their respective existing WTHB Shares with new JAKS Resources Shares on the basis of 1 new JAKS Resources Share for every 8 existing WTHB Shares held on a date to be determined. Based on the issued and paid-up share capital of WTHB as at 31 July 2002, existing shareholders of WTHB will exchange 68,081,700 existing WTHB Shares for approximately 8.5 million new JAKS Resources Shares. Following the Proposed Share Exchange, the existing shareholders of WTHB will become shareholders of JAKS Resources whilst WTHB will become a wholly owned subsidiary company of JAKS Resources. The new JAKS Resources Shares to be issued pursuant to the Proposed Share Exchange shall rank pari passu in all respects with each other and with the existing issued and paid-up share capital of JAKS Resources except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new JAKS Resources Shares. Information on WTHB WTHB was incorporated in Malaysia under the Act on 30 June 1975 under the name of Wing Tiek Hardware Sdn Bhd. It changed its name to Wing Tiek Holdings Sdn Bhd on 21 December 1988. The Company was converted into a public company and assumed its current name on 20 February 1989. On 18 January 1990, WTHB was listed on the Main Board of the KLSE. WTHB is principally involved in investment holding, hardware dealer, general merchants and civil contractor. As at 31 July 2002, the authorized share capital of WTHB is RM100,000,000 comprising 100,000,000 WTHB Shares of which 68,081,700 WTHB Shares have been issued and fully paid-up. The Directors of WTHB as at 31 July 2002 comprise Datuk Nordin Bin Salleh, Mohamed Bin Musa, Poh Liong Ban and Dr Ramanathan A/L Kulanthaivelan, none of whom holds any direct or indirect interest in WTHB. Based on the Register of Substantial Shareholders of WTHB as at 31 July 2002, Lembaga Tabung Haji is the only substantial shareholder of WTHB holding 11,302,000 WTHB Shares representing 16.60% equity interest. Details of the subsidiary and associated companies of WTHB as at 31 July 2002 are set out in Table 1 of this announcement. A summary of the audited financial statements of WTHB for the past 5 financial years ended 31 July 2001 is set out in Table 2 of this announcement. Information on JAKS Resources JAKS Resources was incorporated in Malaysia under the Act on 9 July 2002 under its present name. JAKS Resources is currently dormant. As at 31 July 2002, the authorized share capital of JAKS Resources is RM100,000 comprising 100,000 JAKS Resources Shares of which 2 JAKS Resources Shares have been issued and fully paid-up. The Directors of JAKS Resources as at 31 July 2002 comprise Noor Shelena binti Muhidin and Yap Su Hing, each of whom holds 1 JAKS Resources Share. As at 31 July 2002, JAKS Resources has neither subsidiary nor associated companies. JAKS Resources does not have any audited accounts as it was only recently incorporated. Proposed Acquisitions Proposed WTHB Land Acquisition WTHB and JAKS Resources propose to enter into a sale and purchase agreement for the acquisition by JAKS Resources from WTHB of 9 pieces of freehold land located in the District of Petaling and Klang for a total purchase consideration of RM75.0 million. In consideration for the Proposed WTHB Land Acquisition, JAKS Resources shall allot and issue the following: (i) 40.0 million new JAKS Resources Shares, each credited as fully paid-up and issued at par; and (ii) RM35.0 million RCSLS-B at 100% of its nominal amount. The 40.0 million new JAKS Resources Shares and the RM35.0 million RCSLS-B shall, as agreed and directed by WTHB, be distributed to the Scheme Creditors of WTHB as part settlement and compromise repayment of outstanding debts pursuant to the Proposed CDRS. The WTHB Land is to be acquired by JAKS Resources free and clear of any claim, charge, mortgage, lien or encumbrance of any kind but with all rights, titles and interests attached thereto. For the salient terms of the RCSLS-B, please refer to http://bankrupt.com/misc/rcsls.pdf. Basis for the Purchase Consideration The purchase price of RM75.0 million was arrived at on a willing-buyer willing-seller basis and after taking into consideration the open market value of the WTHB Land as independently valued by Messrs. Khong & Jaafar Sdn Bhd in June 2002 using the cost and comparison methods of valuation. Rights attached to JAKS Resources Shares The new JAKS Resources Shares to be issued pursuant to the Proposed WTHB Land Acquisition shall rank pari passu in all respects with each other and with the existing issued and paid- up share capital of JAKS Resources except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new JAKS Resources Shares. Information on the WTHB Land For further details of the WTHB Land, please refer to http://bankrupt.com/misc/wthb_land.pdf. Original Cost of Investment to WTHB The WTHB Land was purchased over the years by WTHB. Based on the audited accounts of WTHB for the financial year ended 31 July 2001, WTHB's carrying cost of investment in the WTHB Land is set out in Table 5 of this announcement. Proposed JAKS Acquisition JAKS Resources shall to enter into a share sale agreement with the JAKS Vendors for the acquisition by JAKS Resources of 2,000,000 JAKS Shares representing the entire equity interest of JAKS for a purchase consideration of approximately RM208.0 million to be satisfied by the allotment and issuance to JAKS Vendors of approximately 208.0 million new JAKS Resources Shares credited as fully paid, issued at par. The entire issued and paid-up share capital of JAKS to be acquired by JAKS Resources shall be free from all charges, liens, pledges, trust and other encumbrances and with all rights, benefits and entitlements now and thereafter attaching thereto, including without limitation all bonuses, rights, dividends and other distributions declared, paid or made on or after the completion date of the share sale agreement to be executed. There are no liabilities to be assumed by JAKS Resources pursuant to the Proposed JAKS Acquisition. Basis for Purchase Consideration The purchase price of approximately RM208.0 million was determined after taking into consideration the audited net tangible assets of the JAKS Group as at 31 July 2002 of RM21.38 million and the prospects and earnings potential of the JAKS Group. Rights attached to JAKS Resources Shares The new JAKS Resources Shares to be issued pursuant to the Proposed JAKS Acquisition shall rank pari passu in all respects with each other and with the existing issued and paid-up share capital of JAKS Resources except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new JAKS Resources Shares. Information on JAKS JAKS was incorporated in Malaysia under the Act on 4 March 1987 as a private limited company under the name of Ang Ken Seng & Sons Sdn. Bhd. It assumed its present name on 14 August 1998. JAKS is principally involved in construction works for water supply projects such as reservoir, water reticulation works and pipe laying. In addition, JAKS is involved in the designing and construction of sewerage treatment plants as well as civil and building projects. JAKS has nearly 15 years' experience in its related fields and possess a Class "A" licence from the Contractor Services Centre, Ministry of Entrepreneurial Development. It also has a G7 Grade certification issued by the Construction Industry Development Board. The licence and certification allows JAKS to carry on its business and is qualified to tender or participate in contracts with unlimited value. In the past, JAKS has successfully completed various projects. Details of the current and completed major projects of JAKS are set out in http://bankrupt.com/misc/jaks.pdf. As at 31 July 2002, the authorized share capital of JAKS is RM5,000,000 comprising 5,000,000 JAKS Shares of which 2,000,000 JAKS Shares have been issued and fully paid-up. The details of the Directors of JAKS and their shareholdings in JAKS based on the Register of Directors of JAKS as at 31 July 2002 are set out in http://bankrupt.com/misc/jaks_directors.pdf. The details of the substantial shareholders of JAKS based on the Register of Substantial Shareholders of JAKS as at 31 July 2002 are set out in the table below. Direct Name of Substantial Shareholder No. of JAKS Shares % Dato' Hj. Jamian b. Mohamad 1,200,000 60.00 Ang Ken Seng 600,000 30.00 Ang Lam Poah 200,000 10.00 Details of the subsidiary and associated companies of JAKS as at 31 July 2002 are set out in the table below. Name of Date and Place Issued and Effective Principal Subsidiary of paid-up Equity Activities Company Incorporation capital (RM) interest (%) JAKS-KDEB 25 August 2001 1,000,000 70.00 Investment Consortium Malaysia holding and supply of water related products Pipe 14 May 1997 10,000 51.00 Dealer in Technology Malaysia building Marketing materials Sdn Bhd and contracting Subsidiary of JAKS-KDEB Consortium IPI 18 March 2002 2 70.00 Dormant Malaysia JAKS-KDEB Consortium Sdn Bhd, a 70% subsidiary of JAKS is a joint venture company where the other 30% equity interest is held by Kumpulan Darul Ehsan Bhd (KDEB), an investment arm of the State Government of Selangor. This joint venture has on 25 October 2001 secured a 10 years supply contract with the State Government of Selangor to undertake the design, testing, manufacturing and supply of all pipes and fittings such as tees, bends, tapers, collars, mechanical joints required by the State Government of Selangor (Pipe Supply Contract). The Pipe Supply Contract also provides for JAKS-KDEB Consortium the right to design, test, manufacture and supply any form of pipes and fittings that it deems capable of doing so with any other third parties. To partly cater for the demand of pipes as required by the State Government of Selangor, JAKS-KDEB Consortium, through its wholly owned subsidiary company IPI, is in the midst of constructing a manufacturing plant. The manufacturing plant is to be located in Pulau Indah, Selangor. With the setting up of its own manufacturing plant, JAKS-KDEB Consortium would have the added benefit of ensuring timely delivery and quality of pipes to be manufactured and supplied under the Pipe Supply Contract. A summary of the audited financial statements of JAKS and its subsidiary companies (JAKS Group) for the past five financial years ended 31 December 2001 and the 7 month period ended 31 July 2002 is set out in http://bankrupt.com/misc/jaks_financials.pdf. The pipe manufacturing activities and supply business of the JAKS Group is expected to contribute more than 65% of the JAKS Group's future turnover. Original Cost of Investment to JAKS Vendors The original cost of investment of the JAKS Vendors in JAKS is set out in http://bankrupt.com/misc/jaks_vendors. Proposed PTS Acquisition JAKS Resources proposes to enter into a share sale agreement with the PTS Vendors for the acquisition of 700,000 PTS Shares representing 70.00% equity interest in PTS for a purchase consideration of approximately RM12.0 million to be satisfied by the allotment and issuance to PTS Vendors of approximately 12.0 million new JAKS Resources Shares credited as fully paid and issued at par. The 700,000 PTS Shares representing 70.00% equity interest in PTS will be acquired by JAKS Resources free from all charges, liens, pledges, trust and other encumbrances and with all rights, benefits and entitlements now and thereafter attaching thereto, including without limitation all bonuses, rights, dividends and other distributions declared, paid or made on or after the completion date of the share sale agreement to be executed. There are no liabilities to be assumed by JAKS Resources pursuant to the Proposed PTS Acquisition. Basis for Purchase Consideration The purchase price of approximately RM12.0 million was determined after taking into consideration the adjusted net tangible assets of PTS as at 31 July 2002 of RM4.80 million and the prospects and earnings potential of PTS. Rights attached to JAKS Resources Shares The new JAKS Resources Shares to be issued pursuant to the Proposed PTS Acquisition shall rank pari passu in all respects with each other and with the existing issued and paid-up share capital of JAKS Resources except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new JAKS Resources Shares. Information on PTS PTS was incorporated in Malaysia under the Act on 8 June 1992 as a private limited company under its present name. PTS is principally involved as a manufacturer of mild steel pipes and mild steel specials such as bends, tees and joining materials mostly for the water supply industry. The PTS plant is located in Bentong Industrial Area, Pahang. Presently, PTS is manufacturing pipes mainly for JAKS-KDEB Consortium. Therefore, the Proposed PTS Acquisition will complement the business of the JAKS Group. As at 31 July 2002, the authorized share capital of PTS is RM5,000,000 comprising 5,000,000 PTS Shares of which 1,000,000 PTS Shares have been issued and fully paid-up. The details of the Directors of PTS and their shareholdings in PTS based on the Register of Directors of PTS as at 31 July 2002 are set out below. Direct Name of Substantial Shareholder No. of PTS Shares % Ang Ken Seng 350,000 35.00 Ang Lam Poah 350,000 35.00 Tan Sri Dato' Dr Haji Abdul Majid Ismail 100,000 10.00 The details of the substantial shareholders of PTS based on the Register of Substantial Shareholders of PTS as at 31 July 2002 are set out in the table below. Direct Name of Substantial Shareholder No. of PTS Shares % Ang Ken Seng 350,000 35.00 Ang Lam Poah 350,000 35.00 Tan Sri Dato' Dr Haji Abdul Majid Ismail 100,000 10.00 DYMM Sultan Haji Ahmad Shah Al-Musta'in 100,000 10.00 Bilah Ibni Almarhum Sultan Abu Bakar Riaya Tuddin Almu'azam Shah Roslin @ Roseleena Kassim 100,000 10.00 As at 31 July 2002, PTS has neither subsidiary nor associated companies. A summary of the audited financial statements of PTS for the past 5 financial years ended 31 December 2001 is set out in http://bankrupt.com/misc/pts_financials.pdf. Original Cost of Investment to PTS Vendors The original cost of investment of the PTS Vendors in PTS is set out in the table below. Name of PTS Vendors Date of Investment Cost of Investment (RM) Ang Ken Seng 08.06.1993 1 25.09.1993 349,999 350,000 Ang Lam Poah 08.06.1993 1 25.09.1993 349,999 350,000 Proposed WTSP Acquisition JAKS Resources proposes to enter into a share sale agreement with WTHB for the acquisition of 45,912,738 WTSP Shares representing approximately 98.05% equity interest in WTSP for a cash consideration of RM1. The 45,912,738 WTSP Shares representing approximately 98.05% equity interest in WTSP will be acquired by JAKS Resources free from all charges, liens, pledges, trust and other encumbrances and with all rights, benefits and entitlements now and thereafter attaching thereto, including without limitation all bonuses, rights, dividends and other distributions declared, paid or made on or after the date of the share sale agreement to be executed. In relation to the Proposed Debt Restructuring Scheme, amounts due to the Scheme Creditors of WTSP, will be settled through the issuance of RCSLS-A. As such, other than JAKS Resources' obligations to repay and discharge the RCSLS-A, there are no other liabilities to be assumed by JAKS Resources pursuant to the Proposed WTSP Acquisition. Basis for Purchase Consideration The purchase price of RM1 was determined after taking into consideration the RM37.86 million deficit in shareholders' funds of WTSP of based on the audited accounts of WTSP as at 30 April 2002. Rights attached to JAKS Resources Shares The new JAKS Resources Shares to be issued pursuant to the Proposed WTSP Acquisition shall rank pari passu in all respects with each other and with the existing issued and paid-up share capital of JAKS Resources except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new JAKS Resources Shares. Information on WTSP WTSP was incorporated in Malaysia under the Act on 11 October 1984 as a private limited company. WTSP is principally involved in manufacturing of steel pipes and hollow sections and trading of other steel products. WTHB owns approximately 98.05% equity interest in WTSP. As at 31 July 2002, the authorized share capital of WTSP is RM50,000,000 comprising 50,000,000 WTSP Shares of which 46,827,738 WTSP Shares have been issued and fully paid-up. Details of the Directors of WTSP and their shareholdings in WTSP as at 31 July 2002 are set out in the table below. Direct Indirect Name of Substantial No. of WTSP Shares % No. of WTSP Shares % Shareholder Datuk Nordin Bin Salleh - - - - Mohamed Bin Musa - - - - Poh Liong Ban - - - - Dr Ramanathan A/L Kulanthaivelan - - - - Che Johan Bin Che Pa - - - - The details of the substantial shareholders of WTSP based on the Register of Substantial Shareholders of WTSP as at 31 July 2002 are set out in the table below. Direct Indirect Name of Substantial No. of WTSP % No. of WTSP % Shareholder Shares Shares WTHB 45,912,738 98.05 15,0001 0.031 Lembaga Tabung Haji - - 45,927,7382 8.082 Note: 1 Deemed interest by virtue of their shareholding in Wing Bee Hardware Sdn Bhd 2 Deemed interest by virtue of their substantial shareholding in WTHB As at 31 July 2002, WTSP has neither subsidiary nor associated companies. A summary of the audited financial statements of WTSP for the past five financial years ended 31 July 2001 is set out in http://bankrupt.com/misc/wtsp_financials.pdf. WTSP had on 25 September 2001 implemented a scheme of arrangement with its financial institution creditors. However, the Boards of WTHB and WTSP are of the view that WTSP would encounter difficulties in meeting its debt obligations under the present existing scheme due to current depressed conditions of its businesses. Original Cost of Investment to WTHB The original cost of investment of WTHB in WTSP is set out in http://bankrupt.com/misc/wthb_coi.pdf. Proposed Debt Restructuring Scheme Pursuant to Section 176 of the Act, WTHB, WTMI, WTDIP, WBH, VS and WTSP shall enter into composite schemes of arrangement with their respective Scheme Creditors for the settlement and compromise repayment of the debts owing by them to their respective Scheme Creditors. The Scheme Creditors comprise mainly Scheme Creditors who are financial institutions lenders (Financial Institution Creditors) to WTHB, Millenium Westmont Pte Ltd (formerly a trade creditor) (MWPL) and the Financial Institution Creditors of WTHB's subsidiaries namely, WTMI, WTDIP, WBH, VS and WTSP to whom WTHB had earlier provided corporate guarantees. Save for MWPL, the Scheme Creditors excludes trade and other creditors of the WTHB Group as well as the amounts due to companies within the WTHB Group. Based on unaudited management accounts of WTHB and each of the following respective companies as at 30 April 2002, the total debts owing to the Scheme Creditors amounted to approximately RM683.66 million and may be broken down as follows: (i) RM469.03 million debt in WTHB's books; (ii) RM37.08 million debt in WTMI's books; (iii) RM16.85 million debt in WTDIP's books, (iv) RM8.30 million debt in WBH's books; (v) RM38.70 million debt in VS' books; and (vi) RM113.70 million debt in WTSP's books. The amount of debts as stated in this announcement is based on unaudited management accounts as at 30 April 2002 and would not represent the actual value of debt to be settled. It is proposed that the claims of the Scheme Creditors shall be subject to a proof of debt exercise as at a cut-off date to be agreed with Scheme Creditors. At present, the cut-off date proposed is 30 September 2002 (Cut-off Date). Following the said proof of debt exercise, the principal and interest accrued up to the Cut-off Date shall be used to determine the debt settlement with the Scheme Creditors under the Proposed CDRS. All interest accrued including penalties (if any) and other charges after the Cut-off Date is proposed to be waived. Therefore, all interest accrued up to the Cut-off Date will be capitalized as principal. The debts owing to Scheme Creditors on the principal sum and proposed interest to be capitalized as at the Cut-Off Date are herein referred to as Principal Debts. The proposed terms of settlement and compromise repayment for the respective Principal Debts in WTMI, WTDIP, WBH and VS are essentially as follows: (i) partial settlement of the Principal Debt by cash in proportion to the amount owing to the respective Scheme Creditors in WTMI, WTDIP, WBH and VS. The proposed settlement will be financed by the proceeds (net of expenses) from the subsequent liquidation of WTMI, WTDIP, WBH and VS; (ii) there will not be any guarantee given by JAKS Resources to the Scheme Creditors on the amount of cash to be received from the subsequent liquidation of the respective companies. Any excess cash arising from the completion of the aforesaid liquidation process shall be shared proportionately amongst the said creditors; and (iii) the balance of the respective Principal Debts in WTMI, WTDIP, WBH and VS shall then be eligible for the proposed settlement and compromise repayment at WTHB's level pursuant to the corporate guarantees previously issued by the Company to the respective Scheme Creditors. At WTSP, the proposed terms of settlement and compromise repayment for the Principal Debt in WTSP are essentially as follows: (i) part settlement of the Principal Debt in WTSP by the issuance of RM60.0 million nominal value of RCSLS-A at 100% of its nominal value based on a nominal value RM1.00 of RCSLS-A for every RM1.00 of Principal Debt settled; and (ii) thereafter, pursuant to the corporate guarantees given by WTHB to the Scheme Creditors of WTSP, the balance of the Principal Debt shall be eligible for the proposed settlement and compromise repayment at WTHB's level; Following the part settlement and compromise repayment at each subsidiary company level as described above, the balance of the aforesaid Principal Debts of the identified subsidiary companies, together with Principal Debts of WTHB shall be settled with the following: (i) the 40 million new JAKS Resources Shares to be received by WTHB pursuant to the Proposed WTHB Land Acquisition; (ii) the RM35 million RCSLS-B to be received by WTHB pursuant to the Proposed WTHB Land Acquisition; and (iii) an additional 35 million new JAKS Resources Shares to be issued by JAKS Resources to WTHB at par. It is proposed that the terms of settlement and compromise repayment for the Principal Debts at WTHB's level shall be as follows: (i) partial settlement of the Principal Debts by cash, in proportion to the amount owing to the respective Scheme Creditors. The proposed cash settlement will be financed by the proceeds (net of expenses) from the liquidation of WTHB; (ii) there will not be any guarantee given by JAKS Resources to the Scheme Creditors of WTHB on the amount of cash to be received from the subsequent liquidation of WTHB. Any excess cash arising from the completion of the aforesaid liquidation process shall be shared proportionately amongst the said creditors; (iii) compromise settlement of the Principal Debt with a proportionate distribution of the new 75 million JAKS Resources Shares at par; (iv) compromise settlement of the Principal Debt with a proportionate distribution of the RM35 million RCSLS-B; and (v) the balance of the Principal Debts not recovered subsequent to the above shall be waived. For the salient terms of the RCSLS-A and RCSLS-B, please refer to http://bankrupt.com/misc/rcsls1.pdf. Liquidation As such, save for WTSP, all the companies in the WTHB Group shall be liquidated. Liquidators would be appointed subsequent to the day on which the Proposed Debt Restructuring Scheme shall become effective, being the date on which all approvals required for the Proposed CDRS shall have been obtained and office copies of the orders of the High Court of Malaya (Court) pursuant to Section 176 of the Act approving the Proposed Share Exchange and Proposed Debt Restructuring Scheme is lodged with the Companies Commission of Malaysia. An agent to be appointed by the Scheme Creditors shall hold proceeds arising from the liquidation process of the respective companies. Subsequently, the said proceeds will be utilized for partial cash settlement of the Principal Debt. Proposed Transfer of Listing Status The Proposed Transfer of Listing Status will result in the entire enlarged issued and paid-up share capital of JAKS Resources, after the Proposed Share Exchange, Proposed Acquisitions and Proposed Debt Restructuring Scheme, being listed on the Main Board of the KLSE in place of the issued and paid-up share capital of WTHB. Put and Call Arrangements pursuant to the Proposed Debt Restructuring Scheme Pursuant to the Proposed Debt Restructuring Scheme, 75,000,000 JAKS Resources Shares will be issued by JAKS Resources to Scheme Creditors as part settlement of the Principal Debt. Under the Proposed CDRS, JAKS Vendors and PTS Vendors shall grant the Scheme Creditors a put option to dispose of 25,000,000 JAKS Resources Shares (Option Shares) to the JAKS Vendors and the PTS Vendors at RM1.00 per JAKS Resources Share. The put option shall be secured by 25,000,000 JAKS Resources Shares to be issued to the JAKS Vendors and the PTS Vendors pursuant to the Proposed JAKS Acquisition and the Proposed PTS Acquisition respectively. The put option over the first 50% of the Option Shares (i.e. 12,500,000 JAKS Resources Shares) are exercisable any time after the 1st anniversary of the listing and quotation date of JAKS Resources (Listing Date) and shall expire on the 2nd anniversary of the Listing Date. The put option over the balance is exercisable any time after the 2nd anniversary of the Listing Date and shall expire on the 3rd anniversary of the Listing Date. At the same time, the Scheme Creditors shall grant the JAKS Vendors and the PTS Vendors a call option to acquire the Option Shares from the Scheme Creditors at RM1.00 per JAKS Resources Share any time after the Listing Date but not later than the 3rd anniversary of the Listing Date. Rationale for the Proposed CDRS The audited results of the WTHB Group for the past 3 financial years ended 31 July 2001 recorded audited losses after tax and minority interests of RM70.53 million, RM47.23 million and RM170.50 million, respectively. On 28 June 2002, WTHB announced to the KLSE that the unaudited consolidated results of WTHB for the 9 months period ended 30 April 2002 recorded further losses of RM78.23 million. As at 30 April 2002, the Group recorded a capital deficiency position amounting to RM620 million as a result of the reported losses. In view of the above and the present operating and business environment faced by the WTHB Group, the Directors of WTHB do not expect the financial performance of the WTHB Group to improve sufficiently enough for the Group to meet with its financial obligations and to service and repay the outstanding debts of the WTHB Group. Against such a backdrop and with the onerous debt liabilities of the WTHB Group, the Proposed CDRS is envisaged: (i) To enable WTHB to address the debt obligations of the WTHB Group in an equitable and orderly manner. In addition, the Proposed CDRS provides a better alternative for repayment to the Scheme Creditors, as they would receive a return higher than if the WTHB Group is to be liquidated. (ii) To enable the shareholders of WTHB (as eventual shareholders of JAKS Resources) and the Scheme Creditors (pursuant to their participation in the Proposed CDRS) to participate in the future growth and prospects of JAKS Resources and JAKS Group. WTSP's operations are complementary to that of the JAKS Group and PTS. Subsequent to the completion of the Proposed CDRS, efforts would be made to reorganize WTSP's operations and realign them to that of the JAKS Group. Risk Factors The following is a discussion of risk factors (which may not be exhaustive) pertaining to the Proposed CDRS: Sensitivity to Economic Downturn Changes in economic and political conditions in Malaysia could materially and adversely affect the financial and business prospects of JAKS Group and PTS. Whilst the Government has as a result of the recent economic downturn implemented fiscal stimulus program in the form of infrastructural projects, there is no assurance that the Government will continue to place such emphasis on infrastructural projects in the future. In addition, other uncertainties include expropriation, nationalization, changes in interest rates and unfavorable changes in government policies such as changes in method of taxation and introduction of new regulations. Whilst JAKS Resources could take effective measures to avoid any adverse impact from economic and political factors, such as prudent financial management and efficient operating procedures, there is no assurance that such adverse political and economic factors will not materially affect the performance of JAKS Resources. Dependence on Major Supplier All hot-rolled coils (HRC) used for the production of mild steel pipes and other mild steel specials (bends, tees, valves and fittings) by JAKS Resources' proposed subsidiary companies, namely, PTS, and Integrated Pipe Industries Sdn Bhd (IPI) are supplied by a local HRC manufacturer. Should the aforesaid local HRC manufacturer experience any production setbacks which subsequently impedes its production capacity, the proposed pipe manufacturing subsidiaries of JAKS Resources may face a shortage of supply of HRC required for the production of mild steel pipes and mild steel specials. Dependence on Supply Contract JAKS-KDEB Consortium had on 25 October 2001 entered into the Pipe Supply Contract with the State Government of Selangor for a duration of 10 years. For the 7-month period ended 31 July 2002, JAKS-KDEB Consortium derived all of its income from the Pipe Supply Contract. Upon completion of the Proposed CDRS, JAKS-KDEB Consortium would become a significant earnings contributor to JAKS Resources Group. The Pipe Supply Contract also provides JAKS-KDEB Consortium with the right to design, test, manufacture and supply any form of pipes and fittings that it deems capable of doing so with any other third party. Further, the State Government of Selangor may at its discretion grant to JAKS-KDEB Consortium an extension of the Pipe Supply Contract for a further 10 years upon the expiration of the initial term of 10 years from 25 October 2001. Notwithstanding the above, there is no assurance that there will not be any variations or cancellation of the Pipe Supply Contract that would not adversely affect the profitability and business operations of JAKS-KDEB Consortium. Dependence on Directors and Senior Management Upon completion of the Proposed CDRS, the Directors and senior management of JAKS, PTS and WTSP will assume management responsibilities at JAKS Resources. As such, the success of JAKS Resources will depend to a significant extent upon the abilities and efforts of the Directors and senior management of JAKS, PTS and WTSP. The senior management of JAKS and PTS have several years of experience and technical know-how in the water related construction works and mild steel pipe manufacturing. Based on the aforesaid, JAKS Resources's performance and ability to remain competitive may be adversely affected by any substantial change or loss in the Directors and/or senior management of JAKS, PTS or WTSP. Competition Mild steel pipe manufacturing Under present tariff structures, PTS, JAKS-KDEB Consortium and IPI would face competition mainly from local companies in respect of pipe trading and manufacturing. According to the Malaysian Iron and Steel Industry Federation Report 2001, there are about 35 manufacturers engaged in producing various sizes and grades of steel and cement lined pipes (including fittings) in Malaysia. In view of the prevailing level of competitiveness, there can be no assurance that the aforesaid level of competitiveness will not materially affect the future performance of JAKS Resources Group. Water-supply construction activities With the amount of emphasis placed by the Government on the improvement of the national water supply system through the proposed National Water Policy and the National Water Resources Master Plan, JAKS anticipate that this will attract other construction based companies into the water-supply construction activities. In view of the increasing level of competitiveness in the water-supply construction activities, there can be no assurance that the aforesaid level of competitiveness will not materially affect the future performance of JAKS Resources Group. Market Liberalization through the Asean Free Trade Agreement (AFTA) The overall goal of the Common Effective Preferential Tariff (CEPT) Scheme under Asean Free Trade Agreement (AFTA) is to reduce intra-regional tariffs on goods to between 0% and 5% by 1 January 2003. Countries that have committed to this arrangement include Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Cambodia, Laos and Myanmar. The aforesaid scheme is expected to result in a liberalized market and intensify competition among producers of similar products in the region. The local tariff on Malaysian welded steel pipe and tubes category was increased with effect from 15 March 2002 from between 11% and 30% to 50%. With AFTA in place, this tariff may be reduced to between 0% and 5% by 1 January 2003. Therefore, the Malaysian steel industry would have to be more cost and quality competitive in the future. With the removal of trade and non-trade barriers, not only would exports be more competitive, there is also the danger of erosion of the domestic market share to foreign products. Nevertheless, it is believed that any tariff adjustments under AFTA to be adopted by the Malaysian Government would take into consideration the impact on the domestic steel industry. Business Risks JAKS Group and PTS are also generally subject to risks which are inherent in their respective industries in which they operate such as rising costs and/or shortage of inputs including labor and raw materials, limited availability of and/or increasing costs or working capital, credit lines or other financing for its operations or projects, and technological advances. More specific factors which could adversely affect the future principal businesses of JAKS Resources Group are as follows: (i) Construction activities under water supply projects are subject to, inter-alia, shortages in the supply of labor and raw materials, sufficiency of financing and cash flows for the duration of the water supply projects, business and credit conditions and unsatisfactory performance of sub-contractors who participate in JAKS's construction contracts under the water supply projects. (ii) Mild steel pipe manufacturing is subject to, inter-alia, shortages in the supply of labor and raw materials, adverse movements in the cost of raw materials especially the price of steel plates, a decline in the creditworthiness of its trade or other debtors, business and credit conditions. Contribution to Economic Growth and Future Prospects Upon completion of the Proposed Acquisitions, JAKS Resources will principally be involved in the construction activities of water supply projects, manufacturing of mild steel pipes and mild steel specials (bends, tees, valves and fittings) for water supply projects as well as the trading of all forms of pipes and other related products. Presently, the nation's water demand is 9,540 million liters per day (MLD) and this demand is expected to grow at an average of 6% per annum from 2000 to 2010. As the nearer and more economical water sources are quickly exhausted, future water supply will have to depend on bigger and further water sources almost inevitably requiring the construction of dams, large water treatment plants, long transmission mains and water transfers. As such, over the next 5 years, the thrust of the country's water supply will focus on the need to efficiently manage the national water resource system so that the nation will have an adequate supply of safe water. A total of RM3.9 billion (as compared to RM2.4 billion under the 7th Malaysia Plan) has been allocated under the 8th Malaysia Plan (8MP) for water supply. The Government has approved a master plan for the development of water sources in the country up to year 2050. The aforesaid master plan includes a total of 62 major water projects, including the construction of 47 dams which total capital cost is about RM 51.9 billion. Some of the water projects to be implemented in the near future up to 2010 include the Jelebu Dam and the Batu Hempar Dam in Negri Sembilan, the Perak-Penang Raw Water Transfer, the Sayong Dam and the Ulu Sedili Besar Dam in Johor, the Keruak Dam in Trengganu, and several others in Sabah and Sarawak. (Source: Speech by Yang Berbahagia Tuan Mohamed Khaled Bin Nordin, Deputy Minister of Works at the Water and Wastewater Technology Cooperation Meeting held on 27 March 2002 and the Eighth Malaysia Plan 1996 - 2005) In Selangor and Kuala Lumpur, 40% of water is lost through Non- revenue Water (NRW). NRW is the loss of revenue arising from the loss of water through seepage, leakage from burst pipes and stolen water. Of the said 40%, more than half is due to leaking pipes that are old and brittle. As such, according to the Selangor Waterworks Department, plans are underway to replace all the existing asbestos cement pipes in Selangor and Kuala Lumpur within the next five years. The aforesaid pipe replacements are expected to cost approximately RM1.2 billion for the 5,010 km of pipes in Selangor and Kuala Lumpur. The asbestos cement pipes are to be replaced with those of different materials such as ductile iron, polyethylene, cement or mild steel depending on certain criteria such as the location. (Source: Pipe decay costing millions, Public Works Department: Asbestos-cement type has far exceeded its 20-year lifespan, New Straits Times dated 30 January 2002). JAKS is currently carrying out pipe laying and reservoir construction activities at Bukit Badong as well as pipe laying activities at Rasa in Selangor. In addition to the construction activities carried out by JAKS, the Pipe Supply Contract will provide JAKS-KDEB Consortium with the right to manufacture and supply all forms of pipes and fittings such as tees, bends, tapers, collars, mechanical joints as required by the State Government of Selangor. Effects of the Proposed CDRS On Group Structure For diagrammatic effects of the Proposed CDRS on the group structure, please refer to Table 20 of this announcement. On Share Capital WTHB As at 31 July 2002, the existing issued and paid-up share capital of WTHB is RM68,081,700 comprising 68,081,700 WTHB Shares. Under the Proposed CDRS, WTHB would eventually be liquidated. JAKS Resources The changes in the issued and paid-up share capital of JAKS Resources pursuant to the Proposed CDRS are set out in http://bankrupt.com/misc/cdrs_effects.pdf. On Earnings The existing WTHB Group has been suffering losses for the past 3 financial years ended 31 July 2001 and the Directors do not foresee any immediate turnaround in the Group's financial performance. On the other hand, JAKS Group and PTS are profitable and following the completion of the Proposed CDRS, JAKS Resources Group is expected to perform positively. The RCSLS-A and the RCSLS-B are not expected to have any material effect on the earnings of JAKS Resources until such time as the RCSLS-A and the RCSLS-B are converted. Any potential effect on the earnings of JAKS Resources would depend on the nominal amount of RCSLS-A and RCSLS-B converted at the relevant point in time. On Net Tangible Assets (NTA) and Gearing Based on the audited accounts of WTHB for the financial year ended 31 July 2001, the WTHB Group has a net tangible liability of RM379.27 million as at 30 July 2001. For further details on the effects of the Proposed CDRS on the NTA and gearing of JAKS Resources, please refer to http://bankrupt.com/misc/jaks_nta.pdf. On Substantial Shareholders' Interest WTHB Based on the Register of Substantial Shareholders as at 31 July 2002, Lembaga Tabung Haji is the only substantial shareholder of WTHB holding 11,302,000 WTHB Shares representing 16.60% equity interest in WTHB. Pursuant to the Proposed Share Exchange, WTHB shall become a wholly owned subsidiary company of JAKS Resources and Lembaga Tabung Haji shall exchange its existing 11,302,000 WTHB Shares for 1,412,750 new JAKS Resources Shares. Upon completion of the Proposed CDRS, Lembaga Tabung Haji shall become a shareholder of JAKS Resources with an approximate 0.45% equity interest. JAKS Resources Pursuant to the implementation of the Proposed CDRS, the eventual substantial shareholders of JAKS Resources and their shareholdings are as set out in http://bankrupt.com/misc/cdrs_effects1.pdf. Upon completion of the Proposed CDRS but prior to the full conversion of the RCSLS-A and the RCSLS-B, approximately 27.51% of JAKS Resources' enlarged issued and paid-up share capital will be in the hands of public shareholders. On Dividends In view of the current financial position of WTHB Group, the Company is in no position to declare any dividend for the financial year ending 31 July 2003. Moratorium on Sale of JAKS Resources Shares by the Vendors It is a requirement of the Securities Commission (SC) that a moratorium be imposed on 50% of the new JAKS Resources Shares to be issued to the JAKS Vendors and PTS Vendors, as consideration for the Proposed JAKS Acquisition and Proposed PTS Acquisition respectively for one year from the date of listing of the said new JAKS Resources Shares. Thereafter, the JAKS Vendors and PTS Vendors are allowed to sell, transfer or assign only up to a maximum of 1/3 per annum (on a straight-line basis) of their respective shareholdings in JAKS Resources, which are under moratorium. Upon completion of the Proposed CDRS, the JAKS Vendors will collectively own approximately 208.0 million new JAKS Resources Shares, representing approximately 68.53% equity interest in the enlarged share capital of JAKS Resources. On the same note, the PTS Vendors will collectively own approximately 12.0 million new JAKS Resources Shares representing approximately 3.95% equity interest in the enlarged share capital of JAKS Resources. Details of the shareholdings of the JAKS Vendors and PTS Vendors in JAKS Resources that are subjected to the moratorium are set out in http://bankrupt.com/misc/jaks_moratorium.pdf. Conditions of the CDRS The Proposed CDRS is conditional upon the following: (i) the approval of the SC for the Proposed CDRS and for a waiver to JAKS Resources from compliance with the rating requirement in respect of the proposed issuance of RSCLS-A and RCSLS-B; (ii) the approval of the FIC for the Proposed Acquisitions; (iii) the approval of the Ministry of International Trade and Industry ("MITI") for the Proposed Acquisitions; (iv) the approval of the Controller for the proceeds from the private debt securities issued by a resident controlled company to be utilized for the settlement of offshore borrowings and offshore credit facilities of the applicable Scheme Creditors; (v) the approval of the Scheme Creditors in respect of their respective schemes of arrangement under the Proposed CDRS pursuant to Section 176 of the Act; (vi) the approval of the shareholders of WTHB, WTMI, WTDIP, WBH, VS and WTSP at the respective court convened meetings to be held pursuant to Section 176 of the Act; (vii) the Proposed CDRS being sanctioned by the High Court of Malaya pursuant to Section 176 of the Act; (viii) the approval-in-principle of the Kuala Lumpur Stock Exchange (KLSE) for the listing of and quotation for the JAKS Resources Shares to be issued pursuant to the Proposed CDRS; (ix) the approvals of other relevant authorities, if any. The Proposed Share Exchange, Proposed Acquisitions, Proposed Debt Restructuring Scheme and Proposed Transfer of Listing Status are inter-conditional. The Proposed Debt Restructuring Scheme of WTHB and WTSP are inter-conditional. The Proposed Debt Restructuring Scheme of WTMI, WTDIP, WBH and VS are not conditional upon each other but are conditional upon the implementation of the Proposed Debt Restructuring Scheme of WTHB. The Proposed Debt Restructuring Scheme of WTHB is not conditional upon the Proposed Debt Restructuring Scheme of WTMI, WTDIP, WBH and VS. Directors' and Substantial Shareholders' Interests None of the Directors and/or the substantial shareholder of WTHB and/or any persons connected with them have any interest, direct of indirect in the Proposed CDRS. Directors' Statement Having considered the current financial position of the WTHB Group and the rationale for the Proposed CDRS, the Directors of WTHB are of the view that the Proposed CDRS is in the best interest of the shareholders of WTHB. Departure from SC's Guidelines Save as disclosed below, the terms of the Proposed CDRS complies with the requirements of the SC's Policies and Guidelines on the Issue/Offer of Securities and the SC's Guidelines on the Offering of Private Debt Securities (SC's PDS Guidelines): Rating Requirement Section 20 of the SC's PDS Guidelines stipulates that save for irredeemable convertible loan stocks, all issues, offers or invitations of private debt securities are required to be rated by a rating agency recognized by the SC unless otherwise allowed in writing by the SC. Under the Proposed CDRS, the RCSLS-A and RCSLS-B would be issued to Scheme Creditors who comprise mainly financial institutions in settlement of existing borrowings and therefore would not be issued to raise fresh funds. Further, the RCSLS-A and RCSLS-B are non-transferable and will not be listed. In this connection, JAKS Resources proposes to seek the SC's approval for a waiver from compliance with the aforesaid rating requirement. Submission to Authorities and Completion The applications to the relevant authorities for the Proposed CDRS is expected to be made no later than the week commencing on 16 September 2002. The completion and implementation of the Proposed CDRS is expected to require 12 months. Advisers RHB Sakura Merchant Bankers Berhad has been appointed as the Financial Adviser to WTHB whilst Messrs. Anuarul Azizan Chew & Co has been appointed as the Independent Financial Adviser to the Scheme Creditors in respect of the Proposed CDRS. Documents Available for Inspection The following documents will be available for inspection at the Registered Office of WTHB at 10 Floor, Tower Block, Kompleks Antarabangsa, Jalan Sultan Ismail, 50250 Kuala Lumpur during normal business hours from Mondays to Friday (except public holidays): (i) Definitive Agreement dated 29 August 2002 entered into between WTHB and JAKS Vendors and PTS Vendors in respect of the Proposed CDRS; (ii) Memoranda and Articles of Association of WTHB, WTSP, WTMI, WTDIP, WBH and VS; (iii) Memoranda and Articles of Association of JAKS and PTS; (iv) Audited accounts of WTHB, WTSP, WTMI, WTDIP, WBH and VS for the past 3 financial years ended 31 July 2001 and the audited accounts of WTSP for the 9 month period ended 30 April 2002; (v) Audited accounts of JAKS for the past 5 financial years ended 31 December 2001 and the audited accounts for the 7 month period ended 31 July 2002; (vi) Audited accounts of PTS for the past 5 financial years ended 30 September 2001 and the audited accounts for the 10 month period ended 31 July 2002; and (vii) Valuation Reports on the WTHB Land from Messrs. Khong & Jaafar Sdn Bhd. UCP RESOURCES: Executes PA With Investors ----------------------------------------- The Board of Directors of UCP Resources Berhad wishes to announce that on 30 August 2002, that the Company executed a Principal Agreement (PA) with Dato' Ir. Goh Nai Kooi and Ir. Dr Goh Yong Chee, investors who have expressed an interest in participating in the restructuring scheme of the Company includes, inter alia, the following: 1. Proposed Incorporation of a company; 2. Proposed Exchange of Shares; 3. Proposed Acquisitions; 4. Proposed Transfer of Listing Status; 5. Proposed Special Issue of Shares; 6. Proposed Settlement of Debts; and 7. Proposed Liquidation. The Company wishes to inform that a definitive agreement will be executed once the Proposals have been finalized between the respective parties. None of the Directors or substantial shareholders of the Company and/or persons connected with them have any interest, direct or indirect in the PA. UNITED CHEMICAL: Plans to Commence Restructuring Agreement ---------------------------------------------------------- Further to the announcement made by Alliance Merchant Bank Berhad on behalf of United Chemical Industries Berhad (UCI) on 1 August 2002, Alliance wishes to announce on behalf of UCI that the Company proposes to undertake the following proposals (which are defined hereinafter), terms of which are to be recorded in and to be regulated under a Corporate Restructuring Agreement (CRA) to be entered into between Perbadanan Kemajuan Negeri Perak (PKNP), KUB Malaysia Berhad (KUB), Aspirasi Ekuiti Sdn Bhd (AESB) and UCI. On 30 August 2002, KUB, PKNP and AESB have issued the respective letters of irrevocable and unconditional undertaking to UCI to enter into the said CRA. A summary of the proposals is set out as follows: (i) proposed scheme of arrangement between UCI and its shareholders under Section 176 of the Companies Act, 1965 to exchange their existing ordinary shares of RM1.00 in UCI (UCI Shares) with new ordinary shares of RM0.50 each in AESB (AESB Shares) (Proposed UCI Scheme); (ii) proposed acquisitions by AESB of equity interest in a group of companies involved in property development and investment from KUB, KUB Ekuiti Sdn Bhd (KUBE) and PKNP respectively (Proposed Acquisitions); (iii) proposed settlement of debts outstanding in UCI pursuant to a scheme of arrangement under Section 176 of the Companies Act, 1965 (Proposed Debt Restructuring); (iv) proposed scheme of arrangement between Syarikat Majuperak Berhad (Majuperak) and its shareholders under Section 176 of the Companies Act, 1965 to exchange their existing shares in Majuperak with AESB Shares and Zero-Coupon Irredeemable Convertible Preference Shares in AESB (ICPS) (Proposed Majuperak Scheme); (v) proposed transfer of the listing status of UCI to AESB (Proposed Transfer of Listing Status); (vi) proposed restricted issue of 11,000,000 new AESB Shares to investors to be identified at an issue price of RM0.70 per AESB Share (Proposed Restricted Issue); and (vii) proposed offer for sale of: * 7.5 million AESB Shares by PKNP at an offer price of RM0.70 per share; * 8.0 million AESB Shares by KUB at an offer price of RM0.70 per share; and * RM2 million nominal value of 0.5% Irredeemable Convertible Unsecured Loan Stocks in AESB (ICULS) at 100% of the nominal value; to the public (Proposed Offer for Sale). (collectively referred to as Proposed Restructuring Scheme). The Proposed UCI Scheme, Proposed Acquisitions, Proposed Debt Restructuring, Proposed Majuperak Scheme, Proposed Transfer of Listing Status, Proposed Restricted Issue and Proposed Offer for Sale are inter-conditional. DETAILS OF THE PROPOSED RESTRUCTURING SCHEME The summary of the Proposed Restructuring Scheme, which is expected to be completed by the first half of 2003, is set out below. It should be highlighted that the details on the Proposed Restructuring Scheme as disclosed is indicative and is subject to further amendments and/or changes pending the execution of the CRA and a requisite announcement will be made subsequently. Proposed UCI Scheme The Proposed UCI Scheme entails the exchange of each UCI Share for 1.4 AESB Shares at an issue price of RM0.70 per AESB Share to facilitate the completion of the Proposed Restructuring Scheme which will become the new listed vehicle. The Proposed UCI Scheme will be subject to changes pending the outcome of the negotiation with the creditors. Upon completion of the Proposed UCI Scheme, the Company will become a wholly owned subsidiary of AESB. The new AESB Shares shall upon allotment and issue, rank pari passu in all respects with the existing shares of AESB. Proposed Acquisitions Acquiree Companies AESB will be entering into several conditional sale and purchase agreements (SPAs) with KUB, KUBE and PKNP respectively for the proposed acquisitions of the following companies: (i) 21,050,763 ordinary shares of RM1.00 each in KUB Development Berhad (KUBD) representing the entire issued and paid-up capital of KUBD from KUBE for a total purchase consideration of approximately RM34.6 million; (ii) 4,125,000 ordinary shares of RM1.00 each in KUB Realty Sdn Bhd (KUBR) representing the entire issued and paid-up capital of KUBR from KUBE for a total purchase consideration of approximately RM17.0 million; (iii) 20,000,000 ordinary shares of RM1.00 each in Peraharta Sdn Bhd (Peraharta) representing the entire issued and paid-up capital of Peraharta from KUB for a total purchase consideration of approximately RM23.5 million; (iv) 1,000,000 ordinary shares of RM1.00 each in Perbiba Sdn Bhd (Perbiba) representing the entire issued and paid-up capital of Perbiba from KUB for a total purchase consideration of approximately RM1.6 million; (v) 300,000 ordinary shares of RM1.00 each in Pembinaan Efektif (M) Sdn Bhd (Pembinaan Efektif) representing 60% equity interest in Pembinaan Efektif from KUBE for a total purchase consideration of approximately RM44.8 million; and (vi) 200,004 ordinary shares of RM1.00 each in Harta Perak Corporation Sdn Bhd (Harta Perak) representing the entire issued and paid-up capital of Harta Perak from PKNP for a total purchase consideration of approximately RM167.6 million. The aggregate purchase consideration of approximately RM289.2 million will be satisfied via the issuance of a combination of approximately156.7 million AESB Shares issued at RM0.70 per share, 167.8 million ICPS issued at par and RM95.6 million nominal value of ICULS. KUBD, KUBR, Peraharta, Perbiba, Pembinaan Efektif and Harta Perak are collectively referred to as Acquiree Companies. The shares of the Acquiree Companies shall be acquired free from all encumbrances and with all rights attaching thereto. There are no liabilities to be assumed by AESB pursuant to the Proposed Acquisitions. Basis of arriving at the Purchase Consideration The consideration for the shares in the Acquiree Companies was arrived at on a willing buyer-willing seller basis based on the audited net tangible assets (NTA) of the respective Acquiree Companies after taking into consideration the following: (i) revaluation of the landed properties of the respective Acquiree Companies as valued by independent firms of valuers; and (ii) capitalization of debts owing by the Acquiree Companies to the vendors, namely KUB and PKNP. The final consideration for the Acquiree Companies will be adjusted for their respective audited NTA as at 31 December 2002 and any additional consideration will be satisfied via the issuance of ICPS. New Securities in AESB to be Issued AESB Shares The issue price of RM0.70 per AESB Share in respect of the Proposed Acquisitions was arrived at after taking into consideration the following: (i) closing market price of UCI prior to suspension of its shares on the Kuala Lumpur Stock Exchange (KLSE) on 31 July 2002 of RM0.22, which is below its par value of RM1.00; (ii) 5-day weighted average market price of UCI up to 31 July 2002 of RM0.19, prior to the suspension of UCI Shares on the KLSE; (iii) NTA of RM1.37 per AESB Share upon completion of the Proposed Restructuring Scheme (prior to conversion of ICULS, RCULS and ICPS); (iv) the par value of AESB Shares of RM0.50. The new AESB Shares to be issued pursuant to the Proposed Acquisitions shall, upon issue and allotment, rank pari passu in all respects with the existing AESB Shares. Information on Acquiree Companies and Vendors KUBD was incorporated in Malaysia under the Companies Act, 1965 on 15 February 1984 as a private limited company under the name of Bersatu Raya Development Sdn Bhd. The company was converted into a public limited company on 7 May 1986 and changed to its present name on 29 July 1992. KUBD has an authorised share capital of RM21,500,000 comprising 21,500,000 ordinary shares of RM1.00 each of which 21,050,763 ordinary shares of RM1.00 each have been issued and paid-up. KUBD is principally involved in property development and related business such as contracts and project management. The consolidated NTA and profit after tax and minority interest (PAT) of KUBD based on its audited financial statement for the financial year ended 31 December 2001 was RM16.8 million and RM2.6 million respectively. KUBR was incorporated in Malaysia under the Companies Act, 1965 on 16 July 1996 as a private limited company under the name Prestasi Bitara Sdn Bhd. The company assumed its present name on 23 August 1996. KUBR has an authorized share capital of RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each of which 4,125,000 ordinary shares of RM1.00 each have been issued and paid-up. KUBR is principally involved in the property and real estate management and maintenance and project management consultancy. The consolidated NTA and loss after taxation (LAT) of KUBR based on its audited financial statement for the financial year ended 31 December 2001 was RM1.7 million and RM2.4 million respectively. Peraharta was incorporated in Malaysia under the Companies Act, 1965 on 28 June 1974 as a private limited company under the name of Mara-Uda Sdn Bhd. The company assumed its present name on 21 February 1986. Peraharta has an authorized share capital of RM20,000,000 comprising 20,000,000 ordinary shares of RM1.00 each of which 20,000,000 ordinary shares of RM1.00 each have been issued and paid-up. Peraharta is principally involved in property management and building maintenance. The consolidated NTA and LAT of Peraharta based on its audited financial statement for the financial year ended 31 December 2001 was RM12.4 million and RM0.8 million respectively. Perbiba was incorporated in Malaysia under the Companies Act, 1965 on 17 October 1973 as a private limited company. Perbiba has an authorized share capital of RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each of which 1,000,000 ordinary shares of RM1.00 each have been issued and paid-up. Perbiba is principally involved in property development. The NTA and PAT of Perbiba based on its audited financial statement for the financial year ended 31 December 2001 was RM1.6 million and RM1.0 million respectively. Pembinaan Efektif was incorporated in Malaysia under the Companies Act, 1965 on 11 February 1992 as a private limited company. Pembinaan Efektif has an authorized share capital of RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each of which 500,000 ordinary shares of RM1.00 each have been issued and paid-up. Pembinaan Efektif is principally involved in property development. The NTA and LAT of Pembinaan Efektif based on its audited financial statement for the financial year ended 31 December 2001 was RM8.2 million and RM0.2 million respectively. Pembinaan Efektif is 60% owned by KUBE whilst the remaining 40% is held by Villa Annexe Sdn Bhd, a wholly owned subsidiary of Peraharta which is one of the Acquiree Companies. Harta Perak was incorporated in Malaysia under the Companies Act, 1965 on 18 April 1977 as a private limited company. The company changed its name to Maju Kawal Sdn Bhd, Perak Bumiharta Sdn Bhd and Maju Perak Corporation Sdn Bhd on 18 April 1977, 5 December 1997 and 6 September 2000 respectively. The company assumed its present name on 3 July 2001. Harta Perak has an authorized share capital of RM250,000 comprising 250,000 ordinary shares of RM1.00 each of which 200,004 ordinary shares of RM1.00 each have been issued and paid-up. Harta Perak is principally involved in the business of property development and investment, the provision of project management services and investment holding. The consolidated NTA and PAT of Harta Perak based on its audited financial statement for the financial year ended 31 December 2001 was RM18.4 million and RM5.5 million respectively. AESB was incorporated in Malaysia under the Companies Act, 1965 on 5 July 2002 as a private limited company. AESB has an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which 2 ordinary shares of RM1.00 each have been issued and fully paid-up. AESB is currently dormant. PKNP is a state incorporated body formed on 7 October 1967 under the Perak State Development Corporation Enactment No. 3 of 1967. The main objective of the establishment of PKNP was to become the main government agency responsible for implementing and expediting the socio-economic development and progress of the state. Its principal activities include property and infrastructure development, tourism, manufacturing and investment holding. KUB was incorporated in Malaysia under the Companies Act, 1965 on 21 June 1965 as a public limited company under the name of Syarikat Permodalan dan Perusahaan Perak Berhad before it changed its name to Permodalan Perak Berhad on 28 April 1995. The company assumed its present name on 19 October 1996. KUB has an authorised share capital of RM1,000,000,000 comprising 1,000,000,000 ordinary shares of RM1.00 each of which 504,620,391 ordinary shares of RM1.00 each have been issued and paid-up. KUB is an investment holding company and its subsidiaries are principally involved in information & communications technology, liquefied petroleum gas, food & beverage, education & training, and engineering & construction. The consolidated NTA and LAT of KUB based on its audited financial statement for the financial year ended 31 December 2001 was RM634.6 million and RM18.7 million respectively. KUBE was incorporated in Malaysia under the Companies Act, 1965 on 18 July 1996 as a private limited company under the name of Imbasan Pelangi Sdn Bhd before it assumed its present name on 26 September 1996. KUBE has an authorized share capital of RM500,000,000 comprising 500,000,000 ordinary shares of RM1.00 each of which 127,697,451 ordinary shares of RM1.00 each have been issued and paid-up. KUBE is principally involved in investment holding activities. The consolidated NTA and LAT of KUBE based on its audited financial statement for the financial year ended 31 December 2001 was RM617 million and RM48.9 million respectively. Information on the projects/properties of the Acquiree Companies will be provided upon the execution of the CRA and SPAs. Proposed Debt Restructuring The Proposed Debt Restructuring entails the settlement of all known debts involving the secured lenders, unsecured lenders, and trade and other creditors (Creditors) as at 31 March 2002. As at todate, UCI is in the midst of negotiating with its Creditors and has yet to obtain the Creditors' agreement to the Proposed Debt Restructuring pursuant to the scheme of arrangement. (i) Secured Lenders The Secured Lenders are financial institutions who have extended credit facilities to UCI which were secured by certain tangible assets pledged by UCI. The Secured Lenders are ACF-Affin Finance Berhad, BI Credit & Leasing Berhad and Bank Industri Malaysia Berhad. It is proposed that the amount owing to Secured Lenders of RM39.8 million to be settled as follows: (a) approximately 54% or approximately RM21.3 million of the outstanding debt will be written-off; (b) approximately 37% or approximately RM14.7 million of the outstanding debt will be converted into approximatelyRM14.7 million nominal value of 2.5% Redeemable Convertible Unsecured Loan Stocks in AESB (RCULS); and (c) approximately 9% or approximately RM3.8 million of the outstanding debt will be converted into approximately RM3.8 million nominal value of ICULS. (ii) Unsecured Lenders, and Trade and Other Creditors The Unsecured Lenders have been classified as financial institutions who have extended credit facilities to UCI which were not secured by any tangible assets. As at 31 March 2002, the outstanding amount is approximately RM12.8 million. The amount is proposed to be settled as follows: (a) 85% or approximately RM10.9 million of the outstanding debt will be written-off; and (b ) 15% or approximately RM1.9 million of the outstanding debt will be converted into approximately RM1.9 million nominal value of ICULS. Proposed Majuperak Scheme The Proposed Scheme Scheme entails the exchange of ordinary shares of RM1.00 each in Majuperak (Majuperak Shares) for approximately 27.2 million AESB Shares and approximately 148.7 million ICPS. The Proposed Majuperak Scheme is to facilitate the acquisition of Majuperak which has 2,425 shareholders. Upon completion of the Proposed Majuperak Scheme, the company will become a wholly-owned subsidiary of AESB. The new AESB Shares shall upon allotment and issue, rank pari passu in all respects with the existing shares of AESB whilst the new ICPS shall rank pari passu upon allotment and issue among the holders. Basis of Exchange Ratio The exchange ratio was arrived at based on the adjusted audited NTA of Majuperak as at 31 December 2001 of approximately RM93.4 million adjusted for revaluation surplus on the landed properties of Majuperak and capitalisation of certain advances owing to PKNP, its holding company. The appraisal for the landed properties of Majuperak was undertaken by independent firms of valuers, Messrs Colliers, Jordan Lee & Jaafar Sdn Bhd, CH Williams Talhar & Wong, and Suleiman & Co. The open market value of the aforesaid properties are approximately RM212 million. The final exchange ratio for the ICPS will be adjusted after taking into consideration the audited NTA of Majuperak as at 31 December 2002 whilst the exchange ratio for the AESB Shares remains. Information on Majuperak Majuperak was incorporated in Malaysia under the Companies Act, 1965 on 2 September 1976 as a private limited company under the name Syarikat Majuperak Sdn Bhd. The company was converted into a public limited and assumed its present name on 18 November 1976. Majuperak has an authorised share capital of RM20,000,000 comprising 20,000,000 ordinary shares of RM1.00 each of which 5,500,000 ordinary shares of RM1.00 each have been issued and paid-up. Majuperak is principally involved in property development, property letting, the provision of management services and investment holding. The consolidated NTA and PAT of Majuperak based on its audited financial statement for the financial year ended 31 December 2001 was RM19.82 million and RM2.87 million respectively. Proposed Transfer of Listing Status Upon completion of the aforementioned proposals, UCI will transfer its listing status to AESB. Consequently, UCI will be delisted from the Official List of the Second Board of the KLSE and AESB will be listed in its place on the Main Board of the KLSE. Proposed Restricted Issue and Proposed Offer for Sale Upon the transfer of its listing status from UCI, AESB will have to meet the public shareholding spread requirement as stipulated by the relevant authorities. This will be fulfilled by the following: (i) proposed restricted issue by AESB of 11 million new AESB Shares to the public and/or investors to be identified at an issue price of RM0.70 per share; (ii) proposed offer for sale by PKNP of 5 million AESB Shares to the public at an issue price of RM0.70 per share; and (iii) proposed offer for sale by KUB of 8 million AESB Shares to the public at an issue price of RM0.70 per share and RM2 million nominal value of ICULS to the public at an offer price of RM1.00 for every RM1.00 nominal value of ICULS. Utilization of Proceeds The proceeds of RM7.7 million from the Proposed Restricted Issue will accrue to AESB and will be applied towards working capital (RM4.2 million) and defraying expenses (RM3.5 million) pertaining to the Proposed Restructuring Scheme. The proceeds of RM5.25 million and RM7.6 million from the Proposed Restricted Offer will accrue to PKNP and KUB respectively. Mandatory Offer Implication Upon completion of the Proposed Restructuring Scheme, PKNP will own approximately 54.9% of the enlarged issued and paid-up share capital of the enlarged UCI/AESB Group (before conversion of ICULS, RCULS and ICPS). Pursuant to Part 2- Section 6 of the Malaysian Code on Take- overs and Mergers, 1998 (Code), PKNP is obligated to acquire the remaining voting shares in AESB not already owned by them. An application will be made by PKNP to the Securities Commission (SC) for a waiver from having the mandatory offer obligation pursuant to Practice Note 2.9.3 of the Code. PROSPECTS OF THE KUB AND PKNP ASSETS Upon completion of the Proposed Restructuring Scheme, AESB and its subsidiary companies (AESB Group) will be primarily involved in the property development sector. The expected recovery of the property sector and large strategic land bank should enable the AESB Group to experience an upturn in business volume and profitability. RATIONALE FOR THE PROPOSED RESTRUCTURING SCHEME The objective of the Proposed Restructuring Scheme is to enable UCI to restructure via AESB, a newly incorporated company, and discharge in an equitable and orderly manner its outstanding debts of which will allow its lenders to receive significantly higher return than they would otherwise receive if UCI were to be liquidated. The Proposed Restructuring Scheme will alleviate the current debt burden of UCI through debt write-off and debt conversion into securities of AESB. The diluting effect on UCI after the assets injection by KUB and PKNP will be mitigated as part of the consideration for the assets injection is by way of ICPS and ICULS. The existing shareholders of UCI will be able to continue to participate in the restructured group under AESB through AESB Shares. FINANCIAL EFFECTS The financial effects of the Proposed Restructuring Scheme based on preliminary financial information are set out below. Barring any unforeseen circumstances, the Proposed Restructuring Scheme is expected to enhance the future earnings of the enlarged group. APPROVALS REQUIRED The Proposed Restructuring Scheme is conditional upon the following approvals: (i) SC; (ii) Minister of Finance (iii) Foreign Investment Committee; (iv) Ministry of International Trade and Industry (MITI), if any; (v) Economic Planning Unit; (vi) KLSE; (vii) Shareholders of UCI, KUB and Majuperak; (viii) Creditors of UCI; and (ix) Any other relevant authorities. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS KUB is a substantial shareholder of UCI. Thus, KUB is deemed interested for the Proposed KUB Acquisition, Proposed KUBR Acquisition, Proposed Peraharta Acquisition, Proposed Perbiba Acquisition and Proposed Pembinaan Efektif Acquisition (Proposed KUB Assets Acquisition, collectively) and will abstain from voting on the resolution pertaining to the Proposed KUB Assets Acquisition. Datuk Hassan Harun (DHH) who is the Chairman of KUB was a Director of UCI. He resigned as a Director of UCI on 26 July 2002. Encik Shabaruddin bin Ibrahim and Mr Donald Han Low are nominee Directors of KUB on the Board of UCI. Thus, Encik Shabaruddin and Mr Donald Han Low are deemed interested in the Proposed KUB Assets Acquisition and will thus abstain from deliberation and voting in the Board meetings of UCI pertaining to the Proposed KUB Assets Acquisition. Save as disclosed above, none of the Directors and major shareholders of UCI and persons connected to them has any interest, direct or indirect, in the Proposed Restructuring Scheme. DIRECTORS' STATEMENT The Board Directors of UCI, after careful deliberations on various factors, is of the opinion that the Proposed Restructuring Scheme is in the best interest of UCI. DEPARTURE FROM THE SC'S GUIDELINES Save as disclosed below, the SC's Policies and Guidelines on Issue/Offer of Securities have been adhered to in undertaking the Proposed Restructuring Scheme: Fixing of Exercise Price/Conversion Price Of RCULS, ICPS and ICULS Under the SC's Policies on Issue/Offer of Securities, the conversion price of convertible securities should be fixed at a price-fixing date to be determined after the approval of the SC for the issuance of the convertible securities. However, AESB proposes to fix the conversion price of the RCULS, ICPS and ICULS at RM0.70 prior to obtaining SC's approval. UCI will seek an exemption from the SC to fix the conversion price of the RCULS, ICPS and ICULS at RM0.70. ADVISERS Alliance has been appointed as the adviser for the Proposed Restructuring Scheme. In view of the interest of major shareholder of UCI as set out above, Hwang-DBS Securities Berhad has been appointed as the independent adviser to the minority shareholders and independent Directors of UCI. SUBMISSSION TO AUTHORITIES The application to the authorities on the Proposed Restructuring Scheme is expected to be made by 30 October 2002. All information disclosed in this announcement is subject to further verification and finalization. A further announcement will be made in due course upon entering into the CRA. Full disclosure of information will be made available in the Requisite Announcement upon execution of the CRA and SPAs. ===================== P H I L I P P I N E S ===================== DMCI HOLDINGS: Appoints New Corporate Directors ----------------------------------------------- DMCI Holdings, Inc. informed that the following were elected Directors of the Corporation for the year 2002-2003: David M. Consunji Cesar A. Buenaventura Isidro A. Consunji Victor A. Consunji Jorge A. Consunji Ma. Edwina C. Laperal Herbert M. Consunji Oscar S. Reyes - independent Evaristo T. Francisco - independent Immediately after the stockholders' meeting, the following were elected officers of the Corporation: David M. Consunji - Chairman Cesar A. Buenaventura - Vice Chairman Isidro A. Consunji - President / CEO Ma. Edwina C. Laperal - Treasurer Ma. Cristina C. Gotianum - Asst. Treasurer Herbert M. Consunji - Chief Finance Officer Alfredo R. Austria - VP for Business Development Noel A. Laman - Corporate Secretary Zenaida L. Salipsip - Asst. Corp. Secretary TCR-AP reported in April that DMCI Holdings Inc. has warned it will not be able to wholly redeem or buy back the P2.4 billion (US$46.98 million) convertible preferred shares it issued in April five years ago due to financial constraints, citing DMCI Chief Finance Officer Herbert M. Consuji. NATIONAL POWER: Mak-Ban Power Plant Rehab Set on February 2003 -------------------------------------------------------------- The National Power Corp. (Napocor) said the rehabilitation of the 425 MW Mak-Ban geothermal power plant will start on February 2003 as approved by Japan Bank for International Cooperation (JBIC), the Philippine Star said Monday, citing Mak-Ban plant maintenance manager Efren San Sebastian. San Sebastian said if the rehabilitation will commence on schedule, the rehabilitation program would be completed by January 2004. The rehabilitation plan will include the repair and replacement of various equipment and materials such as steam supply, steam turbine and auxiliaries, cooling water system cooling tower, generator and excitation system, transformer, uninterruptible power supply system, instrument and control system and utility and instrument air system. San Sebastian said they are looking at the possibility of asking for additional fund from JBIC to make a full rehabilitation of the Mak-Ban. After the rehabilitation, the capacity of the power facility's units will be increased from 55,000 kilowatt (kw) to 63,000 kw with improved steam rate of 7.139 kilogram per kw-hour from eight kg/kw-hr. * Pres. Arroyo Promulgates Restructuring Program for EC's --------------------------------------------------------- President Gloria Macapagal-Arroyo has formally signed last August 28 an Executive Order (EO) No.119, promulgating the Restructuring Program for Electric Cooperatives (EC's) nationwide. The issuance of the EO came after the President announced last week that she would be issuing an EO for the restructuring of the 119 EC's in the country. The restructuring program, among others, authorizes the condonation of EC's rural electrification loans incurred as of 26 June 2001. "This means P18 billion worth of government support will directly benefit almost six (6) million households served by 119 ECs throughout the country. This E.O. effectively condoning certain loans of all ECs, would lead to the eventual lowering of electric rates and improved power service in the rural areas," President Arroyo said. Section 60 of Republic Act (RA) 9136 or the Electric Power Industry Reform Act (EPIRA) provides for the condonation of all outstanding financial obligations of electric cooperatives to the National Electrification Administration (NEA) and other government agencies which were incurred for purposes of financing the rural electrification program. "Pursuant to Section 60, all outstanding financial obligations of ECs.shall be assumed by the Power Sector Assets and Liabilities Management Corp. (PSALM) in accordance with the program approved by the President of the Philippines," Rule 31 of the Implementing Rules and Regulations of the EPIRA said. In issuing EO 119, President Arroyo stressed that "the assumption by PSALM of the outstanding financial obligations of ECs entails substantial government support that must come hand- in-hand with meaningful and lasting reforms, both mandated and self imposed, among the ECs." This is meant to achieve reliable, secure and cheaper electricity for all consumers, particularly in the rural areas, the President added. The reduction in rural electricity rates will depend, if any, on the final condition of each EC, and will vary among franchise areas. The reduction on the rates will still require the approval of the Energy Regulatory Commission (ERC) and is anticipated to take several months to implement. Section 5 of EO 119 sets forth the terms and conditions for the assumption of the rural electrification loans. These are: Each rural electrification loan must be (a) duly recorded in the books of NEA and/or the corresponding creditor government agencies; (b) validated by the Commission on Audit; and (c) confirmed by the concerned EC as due and outstanding Each rural electrification loan shall be audited for verification purposes by PSALM The ERC shall have approved the reduction in the EC's power rates commensurate with the resulting savings due to debt condonation. At all times, the assumption by PSALM of the loan shall take effect only upon such ERC approval. Each EC must be current and continue to be current in the payment of its obligations to the National Power Corp. (Napocor) to be eligible for assumption by PSALM of its loan In the event that an EC is not current in the payment of its obligations to Napocor, such EC must first submit to NEA a duly executed agreement with Napocor, containing a sustainable payment arrangement acceptable to Napocor, before such EC may be eligible for the assumption by PSALM of its loan. - each EC shall at all times comply with all NEA policies governing the EC's relationship with NEA - each EC shall cooperate with NEA in order for NEA to effectively prepare them for operating and competing under the deregulated electricity market within five years from the effectivity of EPIRA - each EC is required to submit a Performance Improvement Program (PIP) and/or a Rehabilitation and Efficiency Plan (REP), which will cover, among others, institutional, technical, financial and managerial reforms and financial restructuring The PIP/REP should provide for specific yearly targets for the next five years to achieve prescribed levels of efficiency. Under EO 119, the NEA Board shall issue guidelines for the PIP and/or REP. Consistent with Section 10 of PD 269 as amended by PD 1645, said guidelines shall include preventive and/or disciplinary measures, as may be warranted. Well performing ECs with rating of A and B will be mandated to submit a PIP while underperforming ECs with ratings of C, D, or E will be required to submit an REP, and as warranted, comply with disciplinary measures. President Arroyo has been calling for consolidation of EC's in Bicol, Panay, Negros and Leyte in order to strengthen themselves in anticipation of a deregulated power industry. Given its increased and expanded functions, President Arroyo also ordered the NEA to submit to the Department of Energy and the Department of Budget and Management a reorganization plan containing NEA's redefined institutional, technical and financial functions. Earlier, the President Arroyo directed NEA to "exercise forcefully, strictly and consistently its supervisory powers over the electric cooperatives." NEA administrator Father Francisco Silva, for his part, reiterated the President's call to the 119 EC's to initiate and implement the necessary reforms among themselves to better serve the public. "Echoing the call of President Arroyo, I urge the ECs to put in place the needed reforms for the improvement and rehabilitation of their operations. We cannot allow our electric consumers to be held hostage by ill-performing ECs. It has to stop," Father Silva emphasized. For his part, Energy Secretary Vincent S. Perez, Jr. said the whole Energy Family will work hand-in-hand in implementing the restructuring of the ECs to ensure that the electric consumers get the benefit out of this and that the EC's, themselves, will be able to operate and compete in a deregulated electricity industry. "Now that President Arroyo has spoken through EO 119, Administrator Silva and I stand shoulder- to-shoulder in implementing the President's order to implement the restructuring program for electric cooperatives. We believe we will be able to see improved and efficient electric service in the rural areas if we work together," Secretary Perez said. "I urge all EC general managers, all EC Presidents and board members, and our friends at PHILRECA, NAGMEC and APEC to assist NEA in reforming our ECs hand-in-hand with this one-time opportunity of loan condonation," Secretary Perez added. ================= S I N G A P O R E ================= ALEXANDRA HOLDINGS: Seeks Shareholder's Approval on Liquidation --------------------------------------------------------------- Reference is made to the announcement of Alexandra Holdings Limited made on July 23, 2002. The Company announced that it would be issuing a circular to shareholders (Circular), together with the Notice of the Extraordinary General Meeting to seek shareholders' approval for the Proposed Voluntary Liquidation (EGM), shortly. Delisting Of The Company Pursuant To The Proposed Voluntary Liquidation The Company has received notice from the Singapore Exchange Securities Trading Limited (SGX-ST) that it has no objection to the Company being delisted from the Official List of the SGX-ST, conditional upon the Company obtaining shareholders' approval for the Proposed Voluntary Liquidation. The notice of no objection from the SGX-ST should not be taken as an indication of the merits of the Proposed Voluntary Liquidation. Extension Of Time Reference is made to the announcement of the Company made on 31 May 2002. The SGX-ST has, on the Company's application, granted a further extension of time to comply with Rule 723 of the SGX-ST Listing Manual up to the date of the EGM for the purpose of facilitating the Company's use of MASNET to disseminate information to shareholders in connection with the Proposed Voluntary Liquidation. CHARTERED SEMICONDUCTOR: Unveils Rights Offering ------------------------------------------------ Chartered Semiconductor Manufacturing announced Monday its plans to raise approximately US$633 million by way of an eight-for-ten rights offering to existing shareholders. Principal Terms of the Rights Offering Chartered announces that it plans to raise approximately US$633 million (S$1,110 million) by way of an eight-for-ten rights offering to existing shareholders. The rights to the ordinary shares will be priced at S$1.00 (indicative ADS rights price of US$5.71 based on current exchange rates) which represents an approximate 52 percent discount to Chartered's last ordinary share closing price of S$2.10 per share (ADS closing price of US$11.85) on 30 August 2002. Pursuant to the rights offering, approximately 1,110 million new ordinary shares will be issued. Singapore Technologies Group, Chartered's largest shareholder, has irrevocably undertaken to subscribe for its pro-rata entitlement of 60.5 percent of the offer. Merrill Lynch Singapore is acting as financial adviser to the offer and underwriter for the portion not pre-committed by the Singapore Technologies Group (excluding any rights in respect of any shares issued after the date hereof). Ordinary shareholders will be entitled to the rights if they are shareholders at close of trading on September 18, 2002 in Singapore. ADS holders will be entitled to the rights if they are holders at close of trading on September 17, 2002 (ET). The Company will be distributing a Prospectus, application forms, provisional allotment letters and/or warrant certificates for the Rights Offering to entitled shareholders and ADS holders. Any entitled shareholder or entitled ADS holder who wishes to subscribe for any ordinary share rights or ADS rights, respectively, must do so in the manner set out in the Prospectus. The Company will be seeking approval from Singapore Exchange and NASDAQ for the listing of the rights and the new shares issuable pursuant to the rights. The offering is expected to be completed by mid to end of October 2002. For more details, please read the release announcement filed on MASNET in Singapore and with the SEC. The release announcement will also be available on Chartered's web site under the investor relations' section. Additional information can also be obtained by calling the Shareholder Rights Offering Helpline below: U.S.: (1)800.822.6588 and inform the operator that it is a collect call to 6877.7077 (Mondays to Fridays 9 a.m. to 7 p.m. ET, Saturdays 9am to 1pm ET) Singapore: (65) 6877.7055 (Mondays to Fridays 9am to 7pm Singapore time, Saturdays 9 a.m. to 1 p.m. Singapore time) Rationale for Rights Offering and Use of Proceeds Chartered is one of the world's leading independent semiconductor foundries. We believe our sector has strong long-term growth potential supported by three major trends: overall semiconductor industry growth, increased outsourcing from IDMs (Integrated Device Manufacturers) and the increasing importance and prevalence of high-growth fabless semiconductor companies. Our goal in this offering is to provide for our ongoing investment needs while maintaining our strong existing financial position. As of June 30, 2002, our cash and cash equivalents were US$831 million and in addition, we had undrawn credit facilities amounting to US$620 million. The net proceeds of the offering will help us strengthen our balance sheet and improve our debt-equity level. More importantly, the additional liquidity from this offering will give us the flexibility to respond quickly to market growth opportunities and strengthen our business further. A substantial portion of our future investment is expected to be in Fab 7, an all-copper 300mm facility. We expect that the proceeds of the offering will be used for our capital expenditure needs, working capital and general corporate purposes. After assessing a number of options, the Company determined that a rights offering represents the most attractive funding option at this point. The rights offering prevent dilution to existing shareholders who subscribe and provide the highest certainty of proceeds for the Company. We believe that this prudent approach to capital management is in the interests of all our stakeholders. Additionally, as semiconductor market conditions improve, raising additional capital at this time will give us the flexibility to enhance our competitive position in the future. Webcast Conference Calls In connection with this announcement, two special conference calls have been scheduled, one timed for investors in Asia and a second call timed for investors in the US and Europe. First Conference Call: - Singapore time: Today, September 2, 2002, at 9:00 a.m. (US time: 9:00 p.m. ET/6:00 p.m. PT, September 1, 2002). Second Conference Call: - US time: Tuesday, September 3, 2002 at 10:00 a.m. ET/7:00 a.m. PT (Singapore time: 10:00 p.m., September 3, 2002) A webcast of both conference calls will be available to all interested parties on Chartered's web site at www.charteredsemi.com, under Investor Information, Releases & Confcalls. Chartered Semiconductor Manufacturing, one of the world's top three silicon foundries, is forging a customized approach to outsourced semiconductor manufacturing by building lasting and collaborative partnerships with its customers. The Company provides flexible and cost-effective manufacturing solutions for customers, enabling the convergence of communications, computing and consumer markets. In Singapore, Chartered operates five fabrication facilities and has a sixth fab in the process of being developed as a 300mm facility. A Company with both global presence and perspective, Chartered is traded on both the Nasdaq Stock Market and on the Singapore Exchange. Chartered's 4,000 employees are based at 12 locations around the world. Information about Chartered can be found at www.charteredsemi.com. Investor Contacts : Suresh Kumar (1) 408.941.1110 sureshk@charteredsemi.com Clarence Fu (65) 6360.4060 cfu@charteredsemi.com Media Contacts: Chartered U.S. Tiffany Sparks (1) 408.941.1185 tiffanys@charteredsemi.com Chartered Singapore: Maggie Tan (65) 6360.4705 tanmaggie@charteredsemi.com Shareholder Rights Offering Helpline: U.S.: (1) 800.822.6588 (For call collect to 6877.7077) Singapore: (65) 6877.7055 DebtTraders reports that Chartered Semiconductor Mnfg's 2.500 percent convertible bond due in 2006 (CSM06SGN1) trades between 89 and 91. For real-time bond pricing, go to http://www.debttraders.com/price.cfm?dt_sec_ticker=CSM06SGN1 L&M GROUP: Debt Restructuring Scheme Update ------------------------------------------- L&M Group Investments Limited announced Monday that L&M Prestressing Pte Ltd, a wholly-owned subsidiary of the Company, has taken up an application in the High Court of Singapore to propose implementing a scheme of arrangement with its unsecured creditors (other than certain excluded creditors) (the Unsecured Creditors) to restructure debts owed by Prestressing to such creditors. At the hearing on 28 August 2002 at the High Court of Singapore, the Court granted leave for Prestressing to convene a meeting of the Unsecured Creditors to be held on 20 September 2002 at 10.00 a.m. at 28 Tuas Crescent Singapore 638719 ("the Meeting") for the purpose of considering and if thought fit approving the Scheme subject to such modifications as may be made. The Scheme of Arrangement The object for which Prestressing was formed was to carry on business as specialist construction sub-contractors for prestressing and post-tensioning of buildings and civil engineering structures, drilling and installation of prestressed ground anchors, chemical grouting and the like and to carry out the other objects more particularly set forth in the Memorandum of Association of Prestressing. The Scheme is proposed to restructure the debts of Prestressing. 1. Proposed Principal Terms of the Scheme The payment of all claims by the Unsecured Creditors participating in the Scheme ("the Participating Creditors") shall be made by way of issuance of new ordinary shares of S$0.01 each in the capital of the Company (New Shares) as full and final settlement of all claims of the Participating Creditors on the following terms: (i) The issue price of each New Share shall be the higher of: (aa) the weighted average price of the shares for trades done on the SGX-ST on the day that the Scheme is approved by the Participating Creditors; or (bb) the nominal value of the New Share at the date of issuance of the New Shares; provided that the weighted average price shall be calculated on the trades done for a full market day or if trading in the shares is not available for a full market day, the weighted average price shall be based on the trades done on the preceding market day up to the time the Scheme is approved by the Participating Creditors (the Issue Price). (ii) The number of New Shares allotted to each of the Participating Creditors shall be equivalent to the respective claims of each of the Participating Creditors based on the Issue Price. (iii) The New Shares shall be issued as fully paid-up Shares and shall rank pari passu with the issued S$0.01 Shares. (iv) The Scheme shall be subject to the approval of the Shareholders, the SGX-ST and the confirmation of the High Court of the Proposed Capital Reduction. (v) The issuance of the New Shares shall be subject to the approval of the shareholders of the Company. (vi) The issuance of the New Shares shall also be subject to the in-principle approval by the SGX-ST for the admission of all the New Shares to the Official List of the SGX-ST and the listing and quotation of all the New Shares on the SGX-ST. The Company shall endeavour to obtain such approval within 3 months from the date of the approval of the Scheme by the Unsecured Creditors. (vii) Subject to the conditions stated in paragraphs (iv), (v) and (vi) ("the Conditions"), the completion of the subscription of the New Shares shall take place within 7 days after the fulfilment of all (and not part only) the Conditions, in the manner provided in the Scheme. 2. Moratorium under the Scheme It is proposed that during the period commencing on (and including) the date on which the order of the High Court sanctioning the Scheme is lodged with the Registrar of Companies and Businesses till the Scheme is deemed terminated (as provided in the terms and conditions of the Scheme) (the Moratorium Period), all creditors of Prestressing shall refrain from, inter alia, commencing or continuing any legal or other proceeding against Prestressing. 3. Rationale for the Scheme The present financial difficulties of Prestressing arose primarily from the following: (i) an overall decline in turnover as a result of general slowdown in construction activities, as well as Prestressing's prudent selection in securing new projects; (ii) extremely competitive margins on the main on-going projects, arising from difficult operating conditions. In spite of Prestressing's effort to rationalize and restructure, the resulting lower costs is still inadequate to prevent loss in the year; (iii) insufficient working capital situation that increased procurement and operational costs which affected the progress of on-going projects; and (iv) payment for work done in respect of progress payments, variations and retention for various projects were below expectation as compared with claims submitted by Prestressing. In some cases, it created contract disputes and legal actions. In accordance with the audited accounts of Prestressing as at 31 December 2001, the breakdown of the liabilities of Prestresing is as follows: S$ Trade payables 7,779,477 Other payables and accruals 4,233,178 Owing to related corporations 32,554,111 Total owing 44,566,766 Less : Trade receivables 11,712,010 Other receivables 100,507 Due from related corporations 11,813,720 Due from holding companies 944,880 Due from subsidiary Company 3,050,637 Total receivables 27,621,754 Excess of payables over receivables 16,945,012 This "excess of payables over receivables" increased the severe cash flow difficulties for Prestressing with the consequence that there was a delay of payment to various sub-contractors, suppliers and other creditors. Based on the audited accounts of Prestressing for the year ended 31 December 2000, the accumulated losses of Prestressing are approximately S$13,700,000.00. Prestressing's cash flow and liquidity situation was further aggravated by the net loss after tax of approximately S$17,000,000.00 for the year ended 31 December 2001. In that financial year, the revenue of Prestressing fell approximately 47 percent from the preceding year, 2000. The rationale for the Scheme is as follows: (i) The directors of Prestressing believe that the undertaking and business of Prestressing is fundamentally sound and has good prospects for the future if it is allowed an opportunity to trade through its current difficulties. With the continued support from the Company and the issuance of the New Shares, Prestressing believes that it would be able to continue operating as a going concern. (ii) A judicial management or liquidation will be of no benefit to any of the creditors of Prestressing as there will be no beneficial return to the creditors of Prestressing arising from such judicial management or liquidation. (iii) In liquidation, the issuance of New Shares would be jeopardised. Further, Prestressing would not be given the opportunity to continue to operate as a going concern. (iv) In a judicial management, Prestressing will be placed in the hands of a third party and this may not be favourably perceived by Prestressing's trade creditors, who may or may not wish to continue to trade with Prestressing. 4. Approvals required Prestressing has appointed Mr Koh Teng Kiat to act as scheme manager of the Scheme. The following approvals, amongst others, are required to effect the Scheme: (i) the approval of the Scheme by a majority in number representing 75 percent in value of the Unsecured Creditors present and voting at the Meeting; (ii) the approval of the Shareholders, the approval of the SGX- ST and the confirmation by the High Court of the Proposed Capital Reduction; (iii) the approval of the Shareholders for the issue of the New Shares; and (iv) the approval of the SGX-ST for the admission of all the New Shares to the Official List of the SGX-ST and the listing and quotation of all the New Shares on the SGX-ST. An application will be made to the SGX-ST for the listing and quotation of the New Shares. A circular to the Shareholders will be issued to convene an Extraordinary General Meeting to seek their approval for the same. L&M GROUP: Proposes Capital Reduction ------------------------------------- The Board of Directors of L&M Group Investments Ltd. is proposing a capital reduction to be carried out by the Company to reduce the par value of each ordinary share in the capital of the Company from S$0.10 to S$0.01. The Directors duly passed the resolution on 29 August 2002. An application to the Singapore Exchange Securities Trading Limited (SGX-ST) shall be made for its approval for the Proposed Capital Reduction. 1. Details of the Proposed Capital Reduction If approved, the Proposed Capital Reduction will be carried out pursuant to Section 73 of the Companies Act, Chapter 50 of Singapore (the Companies Act) whereby the Company's resultant issued and paid-up share capital will be reduced from S$54,242,261.80 divided into 542,422,618 ordinary shares of S$0.10 each (the Shares) to S$5,424,226.18 divided into 542,422,618 ordinary shares of S$0.01 each (the S$0.01 Shares). The effect of the Proposed Capital Reduction will be as follows: a) the nominal amount of all Shares, both issued and un issued, will be reduced from S$0.10 to S$0.01 each; b) in relation to (a) above, the paid-up share capital will be canceled by an amount of S$0.09 each of the 542,422,618 Shares which have been issued and are fully-paid up, or credited as fully paid-up; and c) Forthwith upon the Proposed Capital Reduction taking effect an amount equal to S$48,818,035.62 being the credit arising on the Proposed Capital Reduction taking effect be applied in writing-off the accumulated losses of the Company as at 31 December 2001. The Proposed Capital Reduction would have the effect of reducing the authorized share capital of the Company from S$250,000,000.00 to S$25,000,000.00. There will be no change in the number of Shares held by shareholders of the Company ("Shareholders") immediately after the Proposed Capital Reduction nor will the Proposed Capital Reduction entail the distribution of any assets to Shareholders. 2. Rationale for the Proposed Capital Reduction The Directors have been exploring ways in which the Company can raise new capital. The Shares have been trading less than their par value of S$0.10 in the last few months prior to the date of this announcement. In view of the fact that new shares cannot be issued at a discount to par value, it is proposed that the par value of the Shares be reduced from S$0.10 to S$0.01. In addition, the accumulated losses of the Company based on the audited accounts as at 31 December 2001 amount to approximately S$105,518,000.00. The cancellation of a substantial part of the share capital of the Company no longer represented by available assets would rationalize the Company's balance sheet. It is accordingly, in the opinion of the Directors, in the interests of the Company that the Proposed Capital Reduction be effected upon the terms set out in this announcement as soon as practicable so that the Company can take advantage of opportunities when they arise. 3. Financial effects of the Proposed Capital Reduction The Proposed Capital Reduction has no impact on the number of issued shares, earning per share, net tangible assets per share and gearing of the Company as at 31 December 2001 as the Proposed Capital Reduction is an accounting procedure that cancels the portion of the value of the issued and paid up share capital which is lost or un represented by unavailable assets. 4. Approval of the Proposed Capital Reduction The Proposed Capital Reduction is subject to, inter alia: (a) the in-principle approval from the SGX-ST; (b) approval of Shareholders at an extraordinary general meeting (EGM) to be convened at a later date; and (c) the confirmation of the High Court of the Republic of Singapore. The above-mentioned approval may be subject to conditions, which may vary the terms of the Proposed Capital Reduction as set out herein. A circular to Shareholders setting out details of the Proposed Capital Reduction and the notice convening the EGM will be dispatched to Shareholders once the relevant approvals from SGX- ST have been obtained. LKN-PRIMEFIELD: Appoints KPMG as Financial Adviser -------------------------------------------------- Following our last announcement on 31 July 2002, LKN-Primefield Limited informed Friday that the Bondholders have shortlisted KPMG Corporate Restructuring Services (KPMG) as a financial adviser to advise them on the Debt Restructuring Proposal. The Bondholders are now finalizing the terms of appointment with KPMG. With the appointment, KPMG is expected to finalize its report on the Proposal to the Bondholders by the end of September 2002. The Company will update shareholders on further developments at a later date. NATSTEEL LTD: Posts Notice of Shareholder's Interest ---------------------------------------------------- Natsteel Ltd posted a notice of changes in substantial shareholder Temasek Holdings (Private) Ltd's interest: Date of notice to Company: 30 Aug 2002 Date of change of deemed interest: 29 Aug 2002 Name of registered holder: CDP: Keppel Insurance Pte Ltd Circumstance(s) giving rise to the interest: Sales in open market at own discretion Shares held in the name of registered holder No. of shares of the change: (78,000) Percentage of issued share capital: 0.02 Amount of consideration per share excluding brokerage,GST,stamp duties,clearing fee: S$1.76 No. of shares held before change: 76,560,945 Percentage of issued share capital: 20.93 No. of shares held after change: 76,482,945 Percentage of issued share capital: 20.91 Holdings of Substantial Shareholder including direct and deemed interest Deemed Direct No. of shares held before change: 47,260,945 29,300,000 Percentage of issued share capital: 12.92 8.01 No. of shares held after change: 47,182,945 29,300,000 Percentage of issued share capital: 12.9 8.01 Total shares: 47,182,945 29,300,000 Based on 365,750,737 shares issued as at 26 August 2002. S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Asia Pacific is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Lyndsey Resnick, Maria Vyrna Nineza-Merlin, Maria Cristina Pernites-Lao, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR -- Asia Pacific subscription rate is $575 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***