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Arab-Malaysian Merchant Bank Berhad (Arab-Malaysian), on behalf of the Board of Directors of OSK, is pleased to announce to the Kuala Lumpur Stock Exchange(KLSE) that the Company is proposing the following exercise:-

(i) A Bonus Issue of up to 129.6 million new ordinary shares of RM1.00 each on the basis of one (1) new ordinary share for every three (3) existing ordinary shares held (Proposed Bonus Issue);

(ii) A Rights Issue of up to RM129.6 million nominal amount of 5 year 6% Irredeemable Unsecured Loan Stocks (ICULS) on the basis of RM1.00 nominal amount of ICULS for every three (3) existing ordinary shares held before the Proposed Bonus Issue (Proposed Rights Issue of ICULS); and

(iii) A Rights Issue of up to RM129.6 million nominal amount of 5 year 3.5% Redeemable Unsecured Bonds (RUB) on the basis of RM1.00 nominal amount each of RUB for every three (3) existing ordinary shares held before the Proposed Bonus Issue (RUB Issue) with 129.6 million detachable warrants on the basis of one (1) warrant for every RM1.00 nominal amount of RUB and ICULS to be subscribed (Proposed Bonds with Warrants Issue).

(collectively referred to as the Proposals)

It should be noted that the Proposed Rights Issue of ICULS and Proposed Bonds with Warrants are inter-conditional and cannot be subscribed and renounced separately. Shareholders of OSK may subscribe wholly for both the Proposed Rights Issue of ICULS and Proposed Bonds with Warrants, but in the case of part subscription, shareholders of OSK must subscribe for both the Proposed Rights Issue of ICULS and Proposed Bonds with Warrants in equal proportion to their entitlements.

As at 31 March 1999, being the most practicable date prior to this announcement, there are in issue 77,137,576 outstanding Warrants 1994/2004 which entitle the holders of such Warrants to subscribe and convert into new ordinary shares of OSK. The Warrants are governed by the terms of a Deed Poll and two supplemental Deed Polls (Deed Polls) executed by OSK on 19 January 1994, 3 April 1997 and 9 February 1999 respectively. In accordance with the provisions of the Deed Polls, adjustments will be made to the exercise price and the number of Warrants currently in issue pursuant to the Proposed Bonus Issue.

2. DETAILS OF THE PROPOSED BONUS ISSUE

2.1 The Proposed Bonus Issue

The Proposed Bonus Issue of up to 129.6 million new ordinary shares of RM1.00 each (Bonus Shares) is to be credited as fully paid ordinary shares to the existing shareholders of the Company on the basis of one (1) new ordinary share for every three (3) existing ordinary shares held on Books Closure Date to be determined at a later date.

The Bonus Shares are to be fully capitalised from the Share Premium account of the Company based on the latest audited accounts for the financial year ended 31 December 1998.

The Bonus Shares shall upon allotment and issue, rank pari passu in all respects with the existing ordinary shares of OSK in issue, except that the Bonus Shares will not be entitled to any dividends which may be declared or paid in respect of any financial period immediately preceding the date of allotment and issue of the Bonus Shares nor shall the Bonus Shares be entitled to the Proposed Rights Issue of ICULS and Proposed Bonds with Warrants Issue.

3.1 The Proposed Rights Issue of ICULS

The Company proposes a renounceable rights issue of up to RM129.6 million nominal value of ICULS on the basis of RM1.00 nominal value of ICULS for every three (3) existing ordinary shares held in OSK on the Entitlement Date for the Proposed Rights Issue of ICULS to be determined at a later date.

The indicative terms for the Proposed Rights Issue of ICULS are set out in TABLE 1 below.

4.1 The Proposed Bonds with Warrants Issue

OSK also proposes to issue up to RM129.6 million nominal amount of 5 year 3.5% RUB on the basis of RM1.00 nominal amount of RUB for every three (3) existing ordinary shares held before the Proposed Bonus Issue with 129.6 million detachable warrants on the basis of one (1) Warrant for every RM1.00 nominal amount of RUB and ICULS to be subscribed.

The principal terms of the Proposed Bonds with Warrants Issue are set out in TABLE 2 below.

5.1 Rationale

The Proposed Bonus Issue will increase the issued and paid-up share capital of the Company to provide a better reflection of the assets employed. It will also increase the number of shares held by the existing shareholders of OSK with a view to improving the liquidity of the Companys shares traded in the market.

The Proposed Rights Issue of ICULS and Bonds with Warrants Issue will provide cost efficient long term financing for OSK to support the Groups new businesses and on going property development activities. It would also reduce the immediate effect of dilution on the earnings per share of the Group which would otherwise arise from a straight equity issue.

The Warrants will also provide an opportunity for shareholders of the Company to participate in the future growth of OSK by increasing their shareholding through the exercise of the Warrants.

Assuming that none of the outstanding Warrants 1994/2004 and options under the Employees' Share Option Scheme ("ESOS Options") are converted/exercised before the Entitlement Date for the Proposals, the proceeds from the Proposed Rights Issue of ICULS and Proposed Bonds with Warrants Issue amounting to at least approximately RM199.82 million would be utilised in the manner as set out in TABLE 3 below.


(i) Subscription of additional 47 million new ordinary shares of RM1.00 each in OSK Capital Sdn Bhd ("OSK Capital")

OSK Capital was incorporated on 26 April 1996 as a wholly owned subsidiary of OSK. The existing issued and paid up share capital of OSK Capital is RM5 million. The principal activities of OSK Capital is that of capital financing activities through which OSK makes strategic financing of securities. The proceeds of RM47 million to be injected as paid-up capital into OSK Capital will be utilised for the purchase and development of computer systems, operating expenses and working capital.

(ii) Funds for investment by OSK Group in venture capital entities/business

The proceeds of RM100 million will be utilised by OSK Group for strategic direct equity investment in private and public entities with high growth potential. The objective of this investment is to achieve an above average rate of return from the short to medium term capital investment through capital appreciation. The diversification into venture capital business will represent a strategic move from OSK Groups core activity of stockbroking into other financial services.

(iii) Development expenditure for OSK Properties Sdn Bhd ("OSK Properties")

OSK Properties was incorporated on 25 February 1993 and it is a wholly owned subsidiary of OSK. The existing issued and paid up capital of OSK Properties is RM40 million. OSK Properties is the beneficial owner of two (2) parcels of freehold land with a combined area of approximately 2,581.4 acres held under Title No. 19129 and 8566 being part of Lot Nos. 18479 and 14215 Mukim of Sungai Petani, District of Kuala Muda, Kedah Darul Aman respectively. OSK Properties had on 23 October 1994 entered into an agreement with Majlis Perbandaran Sungai Petani, a local authority within the meaning of the Local Authority Act, 1976 to undertake a mixed development project on the Land. The entire development project is expected to be carried out over a period of twelve (12) years and over eight (8) phases of development. The total development cost for the entire project is estimated to be about RM1.3 billion. The proceeds of RM50 million will be utilised for the purpose of the working capital for the development project.

(iv) Estimated issue expenses

The estimated expenses for the Proposals amount to RM2.822 million.

Apart from the ICULS and Bonds undertaken to be subscribed by the major shareholders, arrangements will be made for the remaining ICULS and Bonds pursuant to the Proposed Rights Issue of ICULS and Proposed Bonds with Warrants Issue to be underwritten.

The financial effects of the Proposals are summarised below:-

Assuming that all the outstanding Warrants and ESOS Options are exercised before the Entitlement Date of the Proposals, the changes in the issued and paid up share capital of OSK are set out in TABLE 4 below.

The effect on the share capital of OSK after the Proposed Rights Issue of ICULS and the Proposed Bonds with Warrants Issue would depend on the aggregate number of new OSK ordinary shares to be issued which would be based on the then conversion/exercise price and the nominal amount of ICULS/Warrants to be converted/exercised. The conversion/exercise price of the aforementioned ICULS/Warrants will be determined at a later date.

As the Proposals are not expected to complete by 31 December 1999, there will be no effect on earnings. However, the Proposals are expected to contribute positively to the earnings of the OSK Group for the next financial year ending 31 December 2000. Based on the total proceeds to be raised of approximately RM199.8 million (as per Section 5.2 of this announcement), the OSK Group would have net interest savings of approximately RM10.5 million per annum.

Based on the audited accounts as at 31 December 1998, the NTA per share was RM2.39. The Proposals will result in the NTA per share reducing to RM1.82 primarily due to the Proposed Bonus Issue (before full exercise of the outstanding Warrants 1994/2004, the exercise of ESOS Options and the full conversion of the new ICULS to be issued).

The NTA per share of the Group is expected to be further enhanced upon the exercise of the new Warrants, the extent of which will be dependent upon the number of new Warrants to be exercised and the exercise price to be determined. The NTA of OSK Group after the Proposed Rights Issue of ICULS would depend on the aggregate value of the funds received and the number of new OSK ordinary shares to be issued which would be based on the then conversion price and the nominal amount of ICULS to be converted.

Based on the audited accounts as at 31 December 1998, the gearing was 0.01 times. The Proposals which comprise principally of debt securities will result in the gearing increasing to 0.28 times.

The following approvals are required to be obtained:-

i) Bank Negara Malaysia, after a rating is obtained for the Proposed Bonds with Warrants Issue;

ii) Securities Commission (SC) for the Proposals;

iii) Shareholders at an Extraordinary General Meeting to be convened for the Proposals;

iv) The KLSE for the listing and quotation of the Bonus Shares, ICULS, RUB and the Warrants; and the new shares to be issued upon conversion/exercise of the ICULS/Warrants; and

v) any other relevant authority

None of the Directors and/or substantial shareholders of OSK and/or persons connected with the Directors and/or substantial shareholders of OSK has any interest, direct or indirect, in the Proposals beyond their entitlements under the Proposals, of which all existing shareholders of OSK are entitled to.

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

Application for rating for the Bonds will be made by the Company within one (1) month of this announcement.

The Board of OSK has appointed Arab-Malaysian Merchant Bank Berhad as the adviser for the Proposals.

BONDS
Issue Size of RUB	Up to RM129.6 million nominal amount of RUB.
Form and Denomination	The RUB will be issued in registered form and in multiples of RM1.00.
Ratio	RM1.00 nominal value of RUB for every three (3) existing ordinary shares held.
Issue Price	100% of the nominal value of RUB.
Coupon Rate	Interest on the Bonds shall accrue at the fixed rate of 3.5% per annum on the principal amount from the date of issue and shall be payable semi-annually in arrears with the last payment of coupon to be made on the Maturity Date.
Maturity Date	Fifth (5th) anniversary of the date of issue of the RUB.
Status of Bonds	The Bonds shall constitute direct, unsecured and unconditional obligation of OSK ranking pari passu amongst themselves and with all other unsubordinated and unsecured obligations of OSK, subject only to those preferred mandatory provisions of law.
Redemption and purchase	(a) Mandatory Redemption The Bonds will be redeemed at 100% nominal amount on the Maturity Date, unless previously purchased or cancelled. (b) Optional Purchase by OSK OSK may, at any time, purchase the Bonds in the open market or otherwise, at any price. (c) Cancellation Bonds redeemed by OSK pursuant to (a) or purchased pursuant to (b) above shall be cancelled forthwith.
Taxation	All payments of principal and interest in respect of the Bonds will be made by OSK after deducting or withholding any amount for or on account of any present or future taxes or duties of whatsoever nature imposed or levied by the Government of Malaysia or any authority thereof or therein having power to tax and which are required by law to be deducted or withheld. OSK will not pay any additional amount in respect of any such deduction or withholding or payment of principal or interest for account of any such taxes and duties.
Sinking Fund	For every RM1.00 nominal amount of RUB to be issued, the Company will establish a sinking fund for the redemption of the RUB. The contribution of the sinking fund includes all proceeds receivable from the exercise of the Warrants and/or internal generated funds and would be in the following proportions:- Year Percentage of nominal amount of RUB Per annum (%) Cumulative (%) 1. 10 10 2. 10 20 3. 20 40 4. 20 60 5. 40 100
Trust Deed	The RUB will be constituted by a trust deed to be executed by OSK and a duly authorised trustee, who will act for the benefit of the holders of RUB.
Listing of RUB	The Bonds will be listed on the KLSE.
Rating	The Bonds will be rated and to be issued at least at investment grade.
WARRANTS
Form and Denomination	The Warrants will be issued in registered form and will be immediately detached from the Bonds and separately traded upon issue. For the purposes of trading on the KLSE, a board lot of Warrants will be 1,000 Warrants carrying the right to subscribe for 1,000 new ordinary shares of RM1.00 each in OSK.
Warrants Entitlement	Subject to provisions to be included in a deed poll, each Warrant will entitle its registered holder to subscribe for one (1) new ordinary share of RM1.00 each in OSK during the Exercise Period at the Exercise Price. The Warrants Entitlement is subject to adjustments under the terms and conditions to be set out in a deed poll.
Exercise Period	Five (5) years after the date of issue of the Warrants with an option to extend to ten (10) years. Warrants not exercised after the Exercise Period will lapse and cease to be valid.
Status of new Shares	The new ordinary shares to be issued pursuant to the exercise of the Warrants shall, upon allotment and issue, rank pari passu in all respects with the existing ordinary shares of OSK then in issue save for any dividends, rights, allotments or other distributions, for which the record date is before the relevant exercise dates of the Warrants. The record date means the date on which at the close of business thereof shareholders must be registered for their participation in any dividends, rights, allotments or other distributions.
Exercise Price	Each Warrant will entitle its registered holder at any time during the Exercise Period to subscribe for one (1) new ordinary share of RM1.00 each in the Company at an exercise price to be determined based on a premium above the five (5) days weighted average market price of OSK shares prior to the Price Fixing Date but after a theoretical adjustment for the Proposed Bonus Issue. The Price Fixing Date will be determined after the date of SC's approval but before the announcement of the Entitlement Date for the Proposal Bonds with Warrants Issue. The exercise price and the number of outstanding Warrants will be subject to adjustments under certain circumstances in accordance with the terms and conditions of the Deed Poll.
Deed Poll	The Warrants will be constituted by a deed poll to be executed by OSK.
Listing	Listing of the Warrants will be sought on the KLSE.

	RM000
(i) Subscription of additional 47 million new ordinary shares of RM1.00 each in O.S.K. Capital Sdn Bhd (OSK Capital)	47,000
(ii) Funds for investment by OSK Group in venture capital entities/businesses	100,000
(iii) Development expenditures for O.S.K.Properties Sdn Bhd (OSK Properties)	50,000
(iv) Estimated issue expenses	2,822
	199,822*

	No. of shares
Existing (as at 31 March 1999)	299,735
Exercise of existing Warrants 1994/2004	77,137
Exercise of outstanding ESOS Option	12,127
To be issued pursuant to the Proposed Bonus Issue	129,666
Share capital after the Proposed Bonus Issue	518,665
Conversion of 129.6 million ICULS*	64,833
Exercise of new Warrants 2000/2005	129,666
Enlarged share capital	713,164

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