– PROPOSED DISPOSAL OF 600,000 ORDINARY SHARES OF RM1.00 EACH IN PDC  TELECOMMUNICATION SERVICES SDN. BHD., ASSOCIATES COMPANY OF MESB

The Board of the Directors of the Company wishes to announce that the Company had on 15 July 2015 entered into a Share Sale Agreement (“the Agreement”) with Trillion Reward Sdn. Bhd. (Company No.: 1146849-W) (“the Purchaser”) to dispose of its the entire stake of 600,000 ordinary shares of RM1.00 each (“Sale Shares”), representing 40% equity shares in PDC Telecommunication Services Sdn. Bhd. (Company No. 9761-V) (“PDC”) for a total cash consideration of RM9,000,000.00 (Ringgit Malaysia Nine Million) only (“the Proposed Disposal”).

2.   DETAILS OF THE PROPOSED DISPOSAL

2.1    Information on PDC

PDC was incorporated on 24 July 1970. The principal activities of PDC comprise development, rental and legalisation of the telecommunication base transceiver stations in Penang.

The issued and paid-up capital of PDC is RM1,500,000 divided into 1,500,000 ordinary shares of RM1.00 each, of which 40% of PDC’s shares are owned by MESB and the remaining shares are held by PDC Premier Holdings Sdn. Bhd. (Company No.: 25069-D).

2.2    Basis of Arriving the Purchase Consideration

The total consideration was arrived on a “willing buyer-willing seller” basis after taking into account the following factors:-

(i)      The audited shareholders’ fund of PDC as at 31 December 2014 was RM21,543,987.

(ii)     Based on MESB’s proportion of shareholders’ fund value in PDC.

2.3    Salient Terms of the Agreement

(i)      Conditions Precedent

The Proposed Disposal is subject to the fulfillment of the following conditions precedent:-

(a)   The attainment of the approval of the existing shareholder and Board of Directors of PDC approving this sale shares.

(ii)     Manner of Payment of Purchase Consideration

The Purchase Consideration of RM9,000,000.00 will be satisfied by the Purchaser to MESB in the following manner:-

a)    the sum of RM900,000.00 (hereinafter referred to as “the Deposit”)  will be payable to the MESB’s solicitors as stakeholders. The MESB’s solicitor will release the Deposit to MESB upon compliance by MESB on item 2.3 of this announcement and upon MESB’s undertaking to refund the Deposit to the Purchaser in the event of their inability to complete the sale for any reason not attributable to the Purchaser; and

b)   The balance of the purchase consideration of RM8,100,000.00 (herein referred to as “the Balance Purchase Sum”) will be payable within four (4) months from the date of the Agreement or within two (2) months from the date of fulfilment of the last of the conditions precedent whichever shall be the later (“the Completion Date”); and

c)   if the Purchaser shall fail to pay the Balance Purchase Sum on or before the Completion Date, the Company shall grant to the Purchaser an automatic extension until the day falling two (2) months after the Completion Date or such other longer period as may be mutually agreed upon in writing between the parties, subject to the terms and conditions as stated in the Agreement.

2.4    Estimated time frame for completion

The Proposed Disposal is expected to be completed within (4) months from the date of this Agreement or two (2) months from the date of fulfilment of the last of the conditions precedent, whichever is later. Upon completion of the Proposed Disposal, PDC shall cease to be an associate company of MESB.

3.   RATIONALE FOR THE PROPOSED DISPOSAL

The Proposed Disposal provides an opportunity for MESB to realise its interest in PDC, as there was no dividend that had been declared by PDC since MESB become the shareholder of PDC in year 2006. In addition, the Board is of the opinion that the Proposed Disposal is in the best interest of MESB as the Proposed Disposal   will enable MESB to increase its cash resources and to focus on its retailing business.

4.   FINANCIAL EFFECT OF THE PROPOSED DISPOSAL

4.1    The Proposed Disposal is not expected to have any material effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding of the Company and Group.

4.2    Based on the audited consolidated financial statement of MESB for the financial year ended 31 March 2014, the expected gain of the Proposed Disposal to MESB Group is approximately RM702,000.00.

4.3    The proceed arising from the Proposed Disposal shall be utilised for future investments in the Group’s retailing business.

4.3    There are no liabilities to be assumed by the Purchaser arising from the Proposed Disposal.

4.5    MESB had originally invested a sum of RM660,000 to acquire the Sale Share on 25 September 2006.

5.   DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

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

6.   DIRECTORS’ STATEMENT

Having considered all aspects of the Proposed Disposal, the Board of Directors is of the opinion that the transaction is in the best interest of the Company.

7.   CONDITION OF PROPOSED DISPOSAL

The Proposed Disposal is not subject to the shareholders’ approval and the relevant government authorities.

8.   HIGHEST PERCENTAGE RATIO

The highest percentage ratio pursuant to paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad applicable to the Proposed Disposal is 11.06%.

9.   Documents for inspection

The Agreement will be available for inspection during normal business hours at the Registered Office of the Company at 10th Floor, Menara Hap Seng, No. 1 & 3, Jalan P. Ramlee, 50250 Kuala Lumpur, for a period of three (3) months from the date of this announcement.

This announcement is dated 15 July 2015