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Further to the announcements made by the Board of Directors of CHHB (Board) on 25 September 1998 in respect of the proposed acquisitions by CHHB, inter alia, a 3-level shopping mall known as The Mines Shopping Fair (Shopping Fair) from Focus Range (M) Sdn Bhd and 5 office blocks known as The Mines Waterfront Business Park (excluding the 9th and the 10th floors of Block A, the 2nd floor of Block D and the ground, 1st and 2nd floors of Block E) (Business Park) (collectively referred to as the Proposed Acquisitions), on behalf of the Board, Bumiputra Merchant Bankers Berhad is pleased to announce that CHHB had on 3 December 1999 agreed to:

(i) grant a put option to AMMB, whereby AMMB as trustee for itself, Arab-Malaysian Finance Berhad and Arab-Malaysian Bank Berhad (Arab-Malaysian Group) will be granted an unconditional and irrevocable right, and not an obligation, to sell the 207,436,000 5 sen Cumulative Redeemable Preference Shares ("Option Shares") issued by Timbang Makmur Sdn Bhd (TMSB) (CRPS II) to CHHB (Proposed Put Option I); and

(ii) grant a put option to RHB Bank, whereby RHB Bank will be granted an unconditional and irrevocable right, and not an obligation, to sell the 126,000,000 CRPS II to CHHB (Proposed Put Option II).

CHHB and TMSB, a wholly-owned subsidiary of CHHB had on 25 September 1998, inter alia, entered into various sales and purchase agreements, details of which are set out in the Circular to the shareholders of CHHB dated 3 February 1999 and approved by the shareholders at an Extraordinary General Meeting (EGM) on 27 February 1999, including the following:

(i) CHHB to acquire from Focus Range (M) Sdn Bhd (FRSB), a wholly-owned subsidiary of Mines Resort City Sdn Bhd (MRC) the Shopping Fair for a total consideration of RM274 million to be partly satisfied by an issue of 66,564,000 5 sen Cumulative Redeemable Preference Shares to be issued by CHHB (CRPS I) and the balance thereof by an issue of 207,436,000 CRPS II; and

(ii) CHHB to acquire from Amat Matang Sdn Bhd (AMSB), a wholly-owned subsidiary of MRC the Business Park for a total consideration of RM140 million to be satisfied by an issue of 140,000,000 CRPS II. Pursuant to the Securities Commission (SC)s approval, the total consideration for the Business Park was revised downwards to RM126 million to be satisfied by an issue of 126,000,000 CRPS II.

Subsequent to the EGM held on 27 February 1999, the SC revised the dividend for the CRPS I and II to 5 sen from 8 sen.

The abovementioned assets are charged for the following bank loans:

(i) Charge on the Shopping Fair to AMMB as agent for the Arab-Malaysian Group as security for credit and banking facilities of an aggregate principal sum of RM225 million granted to FRSB. The loan outstanding as at 31 December 1998 is RM207.436 million; and

(ii) Charge-in-escrow over the first phase of the Business Park in favour of RHB Bank as security for credit and banking facilities in the aggregate principal sum of RM140 million granted to Country Heights Venture Sdn Bhd (CHVSB), the ultimate holding company of AMSB. The loan outstanding as at 31 December 1998 is RM140 million.

The 333,436,000 CRPS II will be issued to the said lender banks in the following proportion:

(i) 207,436,000 CRPS II to the Arab-Malaysian Group, as full and final settlement for the outstanding loans; and

(ii) 126,000,000 CRPS II to RHB Bank, as part settlement for the outstanding loans. The balance RM14 million outstanding loans will be settled by CHVSB.

Subsequent to the EGM held on 27 February 1999, AMMB and RHB Bank have required that CHHB grant a put option to them, providing them a right to sell their CRPS II to CHHB.

On 3 December 1999, CHHB had agreed to grant a put option to AMMB, whereby AMMB as trustee for the Arab-Malaysian Group will be granted an unconditional and irrevocable right, and not an obligation, to sell the 207,436,000 CRPS II to CHHB at the purchase price equivalent to the full value of the CRPS II plus dividend (Purchase Price). CHHB and AMMB are currently finalising the relevant legal documents to reflect the terms and conditions of the Proposed Put Option I summarised below.

The Purchase Price takes into account the following:

(i) Interest of 10% per annum on a compounded basis on any dividend unpaid;

(ii) 5 sen per annum dividend rate; and

(iii) Date of exercise of the put option on the Option Shares.

The put option is exercisable upon the occurrence of certain events (Exercise Events), inter alia, either of the following events:

(i) (a) on or at any time after the third anniversary following the date on which the CRPS II is issued (Anniversary Date), if less than 40% of the Option Shares are redeemed by TMSB; or
(b) on or after the fifth Anniversary Date, if any of the Option Shares is not redeemed by TMSB; and

The Proposed Put Option I will expire on the date when the Arab-Malaysian Group ceased to legally or beneficially own any of the Option Shares. The day the put option is exercisable to the day of expiry of the put option is known as the Option Period.

However, if AMMB becomes aware of the occurrence of any Exercise Event and AMMB is of the opinion that the Exercise Event constitutes acts which can be rectified, AMMB may give notice (the Notice) to the defaulting party to rectify the acts within a period of seven (7) Business Days (the Rectification Period) from the date of the Notice and in the event AMMB serves the Notice on the defaulting party, the Option Period shall be suspended for a period equivalent to the Rectification Period and on the expiry of the Rectification Period, if AMMB in its absolute discretion:

(i) determines that the acts have been rectified to the satisfaction of AMMB, the Option Period shall cease; and

(ii) does not determine that acts have been rectified to the satisfaction of AMMB, Option Period shall continue to run.

The Proposed Put Option I will be secured against the following as security for the performance by CHHB of its obligation under the put option:

(i) Timeless Yield Sdn Bhd, an indirect subsidiary of CHHB will execute a third legal charge over all that piece of land held under H.S.(D) 59894 P.T. No. 16722, Mukim of Petaling, District of Selangor Darul Ehsan (Shopping Fair);

(ii) CHVSB will execute a third legal charge over 23,675,000 ordinary shares of RM1.00 each in CHHB beneficially owned by CHVSB; and

(iii) CHHB will open a Cash Collateral Account, a special cash collateral account to be opened by CHHB and to be charged to the Arab-Malaysian Group, whereby CHHB charges to AMMB as trustee for the Arab-Malaysian Group all amounts from time to time standing to the credit of the Cash Collateral Account. No part of any amount standing to the credit of the Cash Collateral Account may be paid or repaid to CHHB until such time as all of the CHHBs obligations are fully discharged.

CHHB will fund the Proposed Put Option I via internally-generated funds and/or borrowings.

Information on AMMB

AMMB was incorporated in Malaysia on 5 August 1975 as a private limited company under the name Arab-Malaysian Development Finance Corporation Sdn Bhd, under the Companies Act, 1965. On 16 August 1976, the company changed its name to Arab-Malaysian Development Bank Sdn Berhad and was converted to a public company. The company assumed its current name on 1 December 1983. AMMB was listed on the KLSE on 1 December 1988.

Pursuant to a Scheme of Arrangement between AMMB and its shareholders under Section 176 of the Companies Act, 1965 in 1991, AMMB Holdings Berhad (AHB) acquired the entire issued and paid-up share capital of AMMB, resulting in AHB becoming the new holding company of AMMB and its group of companies. The listing status of AMMB was transferred to AHB, which became listed on 13 February 1992, while AMMB was delisted.

AMMB and its group of companies provide a wide range of merchant banking and related financial services which also includes interest-free banking business, investment advisory and property and unit trusts management. Its current authorised share capital is RM2 billion comprising 2 billion ordinary shares of RM1.00 each, of which 292.5 million of the share capital has been issued and fully paid-up.

On 3 December 1999, CHHB had agreed to grant a put option to RHB Bank, whereby RHB Bank will be granted an unconditional and irrevocable right, and not an obligation, to sell the 126,000,000 CRPS II to CHHB at an agreed price of RM1.00 per CRPS II (Purchase Price). The Purchase Price was arrived at after taking into consideration the full value of the CRPS II. CHHB and RHB Bank are in the process of preparing the relevant legal documents to reflect the terms and conditions of the Proposed Put Option II summarised below.

CHHB and RHB Bank had agreed that the put option will be exercisable in the event TMSB fails to redeem the CRPS II and the Proposed Put Option II will expire on the date when RHB Bank has ceased to legally or beneficially own any of the 126,000,000 CRPS II.

The Proposed Put Option II will be secured against a third legal charge over all that piece of land held under H.S.(D) 59887 P.T. No. 16715, Mukim of Petaling, District of Selangor Darul Ehsan (Business Park).

CHHB will fund the Proposed Put Option II via internally-generated funds and/or borrowings.

Information on RHB Bank

RHB Bank was incorporated in Malaysia on 4 October 1965 as a public limited company under the name Development & Commercial Bank Berhad, under the Companies Act, 1965. The company assumed its current name on 1 July 1997.

RHB Bank is principally involved in commercial banking while its subsidiary companies are principally involved in offshore banking and nominee operations. Its current authorised share capital is RM2,000,000,000 comprising 4,000,000,000 ordinary shares of RM0.50 each, of which 3,899,722,000 of the share capital has been issued and fully paid-up.

As the Arab-Malaysian Group has a charge on the Shopping Fair and RHB Bank has a charge-in-escrow over the first phase of the Business Park and in order to complete the acquisition of both the Shopping Fair and the Business Park by CHHB, both the Arab-Malaysian Group and RHB Bank will be issued CRPS II as settlement for the outstanding loan. One of the terms for accepting the CRPS II is that both the Arab-Malaysian Group and RHB Bank require that an unconditional and irrevocable right, and not an obligation, be granted to them (secured against the same collateral attached to the existing loans) by CHHB to sell their CRPS II to CHHB.

The Proposals will not have any effect on the issued and paid-up share capital, earnings and net tangible assets of CHHB for the financial period ending 31 December 1999 and financial year ending 31 December 2000.

The Proposals will be conditional upon the following approvals being obtained from:

(i) Foreign Investment Committee, which was obtained on 13 October 1999;

(ii) Securities Commission, if required;

(iii) The shareholders of CHHB at the forthcoming extraordinary general meeting; and

(iv) Any other relevant authorities.

Save for Dato Azhar Bin Hashim, none of the Directors or persons connected with the Directors has any interest, direct or indirect, in the Proposed Put Option I. Dato Azhar Bin Hashim, Tan Sri Dato Azman Hashim and Dato Azlan Hashim are brothers. Tan Sri Dato Azman Hashim and Dato Azlan Hashim are directors of AMMB. Accordingly, Dato Azhar Bin Hashim has abstained and will continue to abstain from all votings of the Board on the Proposed Put Option I.

None of the Directors and/or substantial shareholders and/or persons connected with them has any interest, direct or indirect, in the Proposed Put Option II.

None of the substantial shareholders or persons connected with the substantial shareholders has any interest, direct or indirect, in the Proposals.

The Board has appointed Bumiputra Merchant Bankers Berhad as adviser for the Proposals.

The Board has also appointed Amanah Merchant Bank Berhad as the independent adviser to the independent shareholders of CHHB in respect of the Proposed Put Option I.

After considering all of the above factors, the Board are of the opinion that the Proposals are in the best interest of CHHB and that the terms and conditions of the Proposals are fair and reasonable.

A circular setting out the full details of the Proposals together with the notice of EGM will be despatched to the shareholders of CHHB in due course.

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