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1. INTRODUCTION

On behalf of the Board of Directors of Engtex (the Board), AmMerchant Bank Berhad (AmMerchant Bank) had on 11 September 2003 (Earlier Announcement) announced that the Company was proposing to implement the following proposals:

(a) bonus issue of 15,000,000 new ordinary shares of RM1.00 each on the basis of one (1) new ordinary share of RM1.00 each (Bonus Share(s)) for every four (4) existing ordinary shares (Shares) held on an entitlement date to be determined later (Proposed Bonus Issue); and

(b) employees' share option scheme ("ESOS") of up to ten percent (10%) of the issued and paid-up share capital of Engtex ("ESOS Shares") (Proposed ESOS).

(Collectively referred to as the "Initial Proposals").

On behalf of the Board, AmMerchant is now pleased to announce the Company will in conjunction with the Initial Proposals be implementing a proposed private placement of up to 6,000,000 new ordinary shares of RM1.00 each (Placement Shares) representing ten percent (10%) of the issued and paid-up share capital of the Company (Proposed Private Placement) which shall be implemented prior to the Proposed Bonus Issue and the Proposed ESOS.

2. DETAILS OF THE PROPOSED PRIVATE PLACEMENT

The Company proposes to undertake the Proposed Private Placement to investors to be identified at a later date. The placement will be done via an independent placement agent i.e. AmMerchant Bank and with the respective allotments of Placement Shares to be determined at a later date.

2.1 Basis of pricing of Placement Shares

The issue price of the Placement Shares will be determined based on the five (5) day weighted average market price of the Shares (with a discount of up to ten percent (10%)) from the price-fixing date which shall be after the receipt of the approvals from the relevant authorities (Placement Price).

Assuming the price-fixing date falls on 13 October 2003, (being the latest practicable date prior to the release of this Announcement), the Placement Price shall be RM5.04 for each Placement Share, based on the five (5) day weighted market price of RM5.60 per share up to 13 October 2003 (with a discount of up to ten percent (10%)).

2.2 Rationale for the Proposed Private Placement

The Proposed Private Placement will enable the Company to raise funds for the purposes of upgrading the production capacity of its existing plants, working capital and the repayment of bank borrowings.

2.3 Ranking of the Placement Shares

The Placement Shares shall, upon allotment and issuance, rank pari passu in all respects with the existing Shares of the Company, except that they will not be entitled to participate in any dividends, rights, allotments and/or any other forms of distribution that may be declared, made or paid before the allotment of the Placement Shares. The Placement Shares will however be entitled to the Bonus Shares arising from the Revised Proposed Bonus Issue.

3. DETAILS OF THE PROPOSED BONUS ISSUE

The details and terms pertaining to the Proposed Bonus Issue as announced on 11 September 2003 remain unchanged save and except for the following:

Capitalisation of Reserves

The Proposed Bonus Issue will continue to be on a basis of one (1) Bonus Share for every four (4) Shares but the total number of Bonus Shares to be issued and allotted will be increased as a result of the enlarged share capital upon completion of the Proposed Private Placement. Upon completion of the Proposed Private Placement, the issued and paid up share capital will be increased from RM60,000,000 to RM66,000,000 comprising 66,000,000 Shares and hence the number of Bonus Shares to be issued shall be 16,500,000 Bonus Shares.

The Proposed Bonus Issue will continue to be capitalised from the Companys share premium account which as at 31 December 2002 stood at RM15.580 million. However as the share premium account will be insufficient for the purposes of capitalising the Proposed Bonus Issue, the Company will also be capitalising part of its retained profits account which as at 31 December 2002 stood at RM3.196 million.

Further to the above, should the Proposed Private Placement result in an increase in the Companys share premium account upon its completion, the number of shares to be issued and allotted pursuant to the Proposed Bonus Issue will be revised upwards.

For illustrative purposes, if the Placement Price is RM5.04 per Placement Share, based on the five (5) day weighted market price of RM5.60 per share up to 13 October 2003 (with a discount of ten percent (10%)), the resulting increase in the share premium account of the Company and the increase in the number of Bonus Shares to be issued shall be as follows:

	As at 31 December 2002	Proposed Private Placement	After Proposed Private Placement	Proposed Bonus Issue
	(RM000)	(RM000)	(RM'000)	(RM'000)
Share premium account	15,580	24,240	39,820	6,500*
Number of Bonus Shares	-	-	-	33,000**

Notes:

* Assuming share premium is net of the estimated expenses of the Proposals amounting to approximately RM320,000
** assuming increase in Bonus Shares is on the basis of 1 Bonus Share for every 2 Shares

It is the intention of Engtex to maximise the capitalisation of the share premium arising from the Proposed Private Placement. Therefore, if the final Placement Price exceeds RM3.92 per Placement Share, the Company will implement a bonus issue of up to one (1) Bonus Share for every two (2) Shares held, subject to obtaining the requisite approvals.


4. DETAILS OF THE PROPOSED ESOS

The details and terms pertaining to the Proposed ESOS as announced on 11 September 2003 remain unchanged.

5. FINANCIAL EFFECTS

The financial effects of the Proposed Private Placement, Proposed Bonus Issue and Proposed ESOS ("Proposals") shall be as follows:

5.1 Share Capital

Upon completion of the Proposals assuming the full exercise of the options granted under the Proposed ESOS, the issued and paid-up share capital of the Company will be increased from RM60,000,000 to RM90,750,000 comprising 90,750,000 Shares as shown in Table 1.

5.2 Net Tangible Assets ("NTA")

Based on the audited consolidated accounts of the Engtex Group (ie. Engtex and its subsidiary companies) as at 31 December 2002, the effects of the Proposals assuming the full exercise of the options granted on the NTA of the Engtex Group as shown in Table 1.

5.3 Substantial Shareholders

The effects of the Proposals on the substantial shareholders of the Engtex Group are shown in Table 2.

5.4 Earnings

As the Proposals are expected to be completed in 2004, there is no effect on the earnings of the Company for the financial year ending 31 December 2003. Both the Proposed Bonus Issue and Proposed ESOS are not expected to have any material effect on the earnings of the Engtex Group for the finanical year ending 31 December 2004. There will however be a proportionate reduction in Engtex Group's earnings per share as a result of the increase in the issued and paid-up share capital of Engtex Group arising from the Proposed Bonus Issue for the financial year ending 31 December 2004.

The Proposed Private Placement is expected to contribute positively to the Company in terms of interest savings. Any potential earnings effect of the Proposed ESOS will depend on the number of options granted and exercised at any point in time as well as the price payable upon the exercise of the options.

5.5 Dividends

The Company paid a gross dividend of 7.0% for the financial year ended 31 December 2002. Barring any unforeseen circumstances, the Company expects to maintain the quantum of dividends for the financial year ending 31 December 2003.

6. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTEREST

Save for the respective entitlements of the Directors and substantial shareholders of Engtex pursuant to the Proposed Bonus Issue, which entitlement is also available to all the other shareholders of Engtex and as disclosed below, none of the other Directors or substantial shareholders of Engtex or persons connected to the Directors or substantial shareholders of Engtex have any interest direct or indirect, in the Proposed Private Placement and the Proposed Bonus Issue.

Ng Hook, Ng Chooi Guan, Yap Seng Kuan and Ng Yik Soon, being the Executive Directors of the Company (collectively referred as "Interested Directors") and persons connected to them, are entitled to participate in the Proposed ESOS and are therefore deemed interested in respect of their respective entitlements under the Proposed ESOS. The aforesaid Interested Directors have abstained and will continue to abstain from all deliberations and voting on their respective entitlements under the Proposed ESOS at the relevant meetings of the Board.

The Interested Directors will abstain from voting in respect of their direct and indirect shareholdings in Engtex on the ordinary resolutions pertaining to their respective entitlements under the Proposed ESOS to be tabled at the forthcoming EGM and undertake to ensure that persons connected to them will also abstain from voting on the same matter.

7. CONDITIONS TO THE PROPOSALS

The Proposals are subject to the following approvals being obtained:-

(a) the Securities Commission for the Proposals;

(b) the shareholders of Engtex at an EGM to be convened to approve the Proposals;

(c) the KLSE for the listing of and quotation of the Placement Shares, the Bonus Shares and new shares arising from the exercise of the options under the Proposed ESOS; and

(d) any other relevant authorities.

The Proposed Bonus Issue shall be conditional upon the completion of the Proposed Private Placement.

8. DIRECTORS' STATEMENT

The Board is of the opinion that the Proposed Private Placement and the Proposed Bonus Issue are in the best interests of the Company.

Save for the Interested Directors (who have abstained from expressing any opinion and recommendation relating to their specific entitlements under the Proposed ESOS), the Board is also of the opinion that the Proposed ESOS is in the best interests of the Company.

9. ADVISER

AmMerchant Bank has been appointed by Engtex as adviser for the Proposals and Placement Agent for the Proposed Private Placement.

10. DEPARTURE FROM THE SC'S POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES ("SC GUIDELINES")

To the best knowledge of the Board, there are no departures from the SC Guidelines in undertaking the Proposals.

11. SUBMISSION TO THE SC

The submission to the SC for the Proposals is expected to be made within three (3) months from the date of this announcement.

12. EXPECTED TIMEFRAME FOR COMPLETION

The Proposals are expected to be completed by first half of 2004.

This announcement is dated 14 October 2003.

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