Details of Announcement

Contents :

This announcement is dated 21 February 2005.

Reference is made to the announcement dated 11 October 2004. Following its appeal against the decision of the Securities Commission (“SC”) in the abovementioned announcement, AmMerchant Bank Berhad (“AmMerchant Bank”), on behalf of the Board of Directors of Kia Lim is pleased to announce that the Securities Commission (“SC”) had vide its letter dated 16 February 2005, approved the following:-

(a) A Proposed Rights Issue with Warrants; and
(b) The Proposed DRS
pursuant to Section 32(5) and Section 146(1) of the SCA. The approvals are subject to the terms and conditions as detailed below.

However, the SC did not approve the appeal for the Proposed Two-Call Rights Issue with Warrants under Section 146(1) of the Securities Commission Act 1993 (“SCA”).

Further to the above, an application for the Proposed Rights Issue with Warrants and the Proposed DRS must be submitted under the Foreign Investment Committee Guideline on the Acquisition of Interests, Mergers and Take-Overs by Local and Foreign Interests.

The terms and conditions of the SC’s approval are as follows:-

Terms
(i) Rights issue of up to 9,671,000 new ordinary shares of RM1.00 each together with up to 9,671,000 warrants in Kia Lim at an issue price of RM1.00 per share payable in cash, on the basis of one (1) new share together with one (1) warrant for every five (5) existing shares held;

(ii) DRS involving the settlement of outstanding principal and interest amounting to RM44,667,924 owing by the subsidiaries of Kia Lim to the participating bankers (PBs), namely RHB Bank Berhad and Malaysian Industrial Development Finance Berhad, by way of –
(a) settlement of 40% of the outstanding principal amounting to RM15,716,000 by the issuance of RM15,716,000 nominal value of 4% 10-year redeemable convertible secured loan stocks (RCSLS) of RM1.00 each at 100% of its nominal value to the PBs;
(b) restructuring of 40% of the outstanding principal amounting to RM15,716,000 involving payment via instalments over a period of 6 to 7 years; and
(c) settlement of the remaining 20% of the outstanding principal of RM7,858,000 and interest of RM5,377,924 (ie amounting to RM13,235,924 in aggregate) by the issuance of up to 13,235,924 new ordinary shares of RM1.00 each in Kia Lim at par to the PBs; and

(iii) Listing of and quotation for the new shares and warrants arising from the rights issue and DRS, and the new shares arising from the exercise of warrants and conversion of RCSLS, on the Main Board of Bursa Malaysia.


Conditions

(i) AmMerchant Bank Berhad (“AmMerchant”) / Kia Lim to submit the revised equity structure of Kia Lim pursuant to the rights issue and DRS for the SC’s consideration;

(ii) Kia Lim to disclose the status of the utilisation of proceeds from the rights issue in its quarterly and annual reports until the proceeds are fully utilized,

(iii) AmMerchant / Kia Lim to obtain the SC’s prior approval should there be any change to the terms and conditions of the RCSLS issue;

(iv) Prior to the issuance of the RCSLS, AmMechant to submit the following information or documents to the SC:
(a) A copy of the Facility Maintenance File form;
(b) A written confirmation as stipulated in Paragraph 7.02 of the Guidelines on the Offering of Private Debt Securities;
(c) A hard copy and soft copy of the complete principal terms and conditions of the RCSLS in the format required;
(d) A written confirmation and a duly completed checklist on compliance with all terms and conditions impose above and in the SC’s previous letters (if any) upon completion of the proposed DRS;
;and

(v) AmMerchant / Kia Lim to comply fully with the relevant requirements as stipulated in the Policies and Guidelines on Issue/Offer of Securities in relation to the implementation of the proposals.