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The Board of Directors of Malaysia Building Society Berhad (MBSB or the Company) wishes to announce that the Company has entered into a Sale and Purchase Agreement dated 5 January 2007 (SPA) with Pelaburan Hartanah Bumiputera Berhad (Purchaser) for the proposed disposal of the property title no. H.S. (D) 99282 PT 210, Section 88 Town and District of Kuala Lumpur for a sale consideration of RM55,000,000.00 (Proposed Disposal).

The subject property, which was transferred or acquired by the Company via a loan settlement with a corporate borrower, is known as H.S.(D) 99282 PT 210 measuring 20,366 square meters ("Property").It is located in Section 88, Town and District of Kuala Lumpur and sited on the left (northern) side of Jalan Ampang, travelling from Jalan Tun Razak towards Ampang locality.

The Property, which has an unexpired leasehold term of 92 years expiring on 4 November 2098,
is currently being used as an army camp and accommodates several single and double-storey buildings of permanent and semi-permanent structures.

Messrs Zaki & Partners had, on 12 September 2006, ascribed an open market value of RM48,000,000.00 to the Property via an update valuation. The Property was previously valued by Messrs Zaki & Partners on 25 March 2005.

The Company had completed the transfer of the Property via a loan settlement agreement dated 29 March 2004 with a Companys corporate borrower. The total cost of the transfer is RM43.965 million.

The sale consideration of RM55,000,000.00 (Sale Price) for the Proposed Disposal was arrived at on a willing buyer willing seller basis after taking into account the open market value ascribed to the Property of RM48,000,000.00.

The net book value of the Property as at 31 December 2006 was RM43.965 million.

The SPAs salient terms, inter-alia, are as follows:

(i) The Property shall be purchased on an as is where is basis subject to all existing encumbrances and it shall comply with conditions and restrictions affecting the property and without vacant possession;

(ii) The tenure of the SPA is six (6) months from the date of the SPA;

(iii) The payment terms are as follows:

(a) A non-refundable earnest sum of RM1,100,000.00 equivalent to 2% of the Sale Price was received (Earnest Money);
(b) A payment of RM4,400,000.00 equivalent to 8% of the Sale Price was paid upon the execution of the SPA (Deposit);

(iii) The balance of the Sale Price of RM49,5000,000.00 will be paid as follows:

(a) a sum of RM22,000,000.00 equivalent to 40% of the Sale Price shall be paid within three (3) months from the date of the SPA; and

(b) the final balance of RM27,500,000.00 equivalent to 50% of the Sale Price shall be paid within six (6) months from the date of the SPA or within three (3) months from the date of the Consent to Transfer from the State Authority being obtained by the Company, whichever is later (Completion Date) or as the case may be, at an extended completion date which is one (1) month from the date of expiry of the Completion Date (the Extended Completion Date) subject to interest at the rate of 8% per annum calculated on a daily basis from the first day of the Extended Completion Period to the day the balance of the Sale Price is paid in full;

(iv) Default by the Purchaser

In the event the Purchaser failing or refusing to complete the Proposed Disposal or commits an act of bankruptcy or enter into any composition or arrangement with its creditors or being a company enters into liquidation (whether compulsory or voluntary), the Company shall be entitled to, inter-alia, terminate the SPA and the sum of RM5,500,000.00 comprising Earnest Money and Deposit shall be forfeited by the Company and the balance of the monies paid by the Purchaser, if any, shall be refunded free of interest to the Purchaser by the Company within 14 days from the date the Company exercise its right to terminate the SPA.

(v) Default by the Company

(a) In the event the Company failing or refusing to complete the Proposed Disposal or in breach of any provisions of the SPA when the Purchaser shall have performed all its obligations or before the registration of the transfer of the Property in favour of the Purchaser and/or its nominee(s) commits an act of bankruptcy or enter into any composition or arrangement with its creditors or being a company enters into liquidation (whether compulsory or voluntary), the Purchaser shall be entitled to, inter-alia, take such actions as may be available to the Purchaser under the SPA or alternatively terminate the SPA and

(i) the Company shall refund the Earnest Money and Deposit within 14 days from the date of receipt of notice of termination from the Purchaser failing which the Company shall be liable to pay interest to the Purchaser at 8% per annum calculated on a day to day basis from the date of expiry of the notice to the date of payment: and
(ii) a sum equivalent to 10% of the Sale Price shall be paid by the Company to the Purchaser as agreed liquidated damages.

The Purchaser, Pelaburan Hartanah Bumiputera Berhad (732816-U), was incorporated on 8 May 2006 in Malaysia under the Companies Act, 1965. Its registered address is at 12th Floor, Bangunan Setia 1,No. 15, Lorong Dungun, Bukit Damansara 50490 Kuala Lumpur.

The principal activities of the Purchaser are property investment and investment holding.

The Proposed Disposal is in line with the Companys objective to dispose of properties transferred or acquired through loan settlements.

The Proposed Disposal is subject to the following conditions:

(i) the State Authoritys consent to transfer the Property from the Company to the Purchaser; and

(ii) the Foreign Investment Committees approval.

The proceeds of RM55,000,000.00 from the Proposed Disposal would be utilised towards working capital, commission payable relating to the said disposal and/or repayment of borrowings.

The Proposed Disposal will not have any effect on the share capital and substantial shareholders shareholdings structure as there are no issuance of shares or other securities.

The Proposed Disposal is expected to be completed in 2007 and would result in an approximate gain of RM10.48 million (after taking account the commission payable) to the Group for the financial year ending 31 December 2007.

The basic earnings per share of the Group for the financial year ending 31 December 2007 would improve by 3.1 sen arising from the Proposed Disposal.

The Proposed Disposal would not have any material effect on the net assets per share of the Company and of the Group.

None of the Directors and/or major shareholders of the Company or persons connected to them have any interest, direct or indirect, in the Proposed Disposal.

The Board of Directors of the Company is of the opinion that the Proposed Disposal is in the best interests of the Company and of the Group.

The Proposed Disposal has not departed from the Securities Commissions Policies and Guidelines and Offer of Securities.

The SPA and the valuation report together with the update valuation letter can be inspected at the Companys registered office at 11th Floor, Wisma MBSB, 48 Jalan Dungun, 50470 Kuala Lumpur at normal business hours on Mondays to Fridays (except public holidays) within 14 days from the date of this announcement.

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