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OSK is pleased to announce that O.S.K. Securities Berhad (OSKS), a wholly owned subsidiary of the Company has on 8 December 1999 signed a Business Merger Agreement (BMA) with Gong Wee Ning and Yap Wai Fun (as Special Administrator of PCS) to acquire the stockbroking business of PCS.

Pursuant to the BMA, OSKS would acquire the entire stockbroking business of PCS including, inter alia, the fixed assets and rights over the operating agreements of PCS, for a total cash consideration of RM72.5 million. OSKS will not assume any liabilities in respect of the stockbroking business of PCS.

Upon completion of the Proposed Acquisition, OSKS would merge the entire stockbroking business of PCS with its existing operations by establishing a branch office in Ipoh.

2.2 Information on PCS

PCS was incorporated on 8 November 1980 and is a member of the Kuala Lumpur Stock Exchange (KLSE). PCS is principally involved in the stockbroking business which is operated out of Ipoh, Perak. Its current authorised share and preference share capital are RM60,000,000 ordinary shares of RM1.00 each and RM40,000,000 preference shares of RM1.00 each respectively whilst RM20,000,000 ordinary shares of RM1.00 each and RM36,891,441 preference shares of RM1.00 each are currently issued and paid-up.

The Kuala Lumpur Stock Exchange (KLSE) imposed trading restriction on PCS for non-compliance of Rule 17A of the KLSEs Rules Relating to Member Companies on 14 October 1998 and subsequently on 30 April 1999, the Special Administrators were appointed by Pengurusan Danaharta Nasional Berhad to take over the day-to-day operations of PCS and to formulate a workout proposal to revive its operations. The Proposed Acquisition forms part of the workout proposal which is subject to the approval of the secured creditors of PCS.

2.3 Purchase Consideration

The purchase consideration of RM72.5 million is arrived at on a willing seller and willing buyer basis after taking into consideration the intrinsic business value of PCS.

Upon signing the BMA, a refundable cash deposit of RM7.25 million will be paid to the Special Administrator whilst the remaining balance of RM65.25 million will be paid on the completion of the Proposed Acquisition.

The consideration will be financed by internally generated funds of the OSK Group.

The Proposed Acquisition is undertaken in tandem with the Governments intention and effort to consolidate the stockbroking industry. The Proposed Acquisition would enable OSK Group to extend its services to the Northern region of the country and to increase its revenue base through a wider market share.

The Proposed Acquisition would not have any effect on the share capital and shareholding structure of the Company.

There will not be any effect on the consolidated NTA of OSK as the purchase consideration will be satisfied by cash.

The Proposed Acquisition is not expected to have any effect on the earnings of OSK Group for the financial year ending 31 December 1999 as it is expected to be completed after 31 December 1999. However, the Board of Directors expect that the Proposed Acquisition will contribute positively to the future earnings of the OSK Group.

The Proposed Acquisition is subject to approvals being obtained from the following:-

None of the Directors and substantial shareholders of the OSK Group have any interest, either direct or indirect, in the Proposed Acquisition.

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