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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

3.01 BACKGROUND INFORMATION

a) Issuer

i. Name Englotechs Holding Bhd (“Englotechs”)

ii. Address Principal Place of Business:


Lot 11, Jalan Baling,
Padang Meha Industrial Estate,
09400 Padang Serai,
Kulim, Kedah Darul Aman

iii. Company No. 534222-U

iv. Date/ Place of • 7 December 2000/ Malaysia


Incorporation

v. Date of Listing • 7 August 2003


(in case of a
public listed
company)

vi. Status :
• resident/non- • Resident controlled company
resident
controlled
company
• bumiputra/ • Non-Bumiputera controlled company
non-bumiputra
company

vii. Principal Investment holding and provision of management services.


Activities Subsidiaries are principally involved in the following activities:

• Manufacture of gloves;
• Trading in all kinds of industrial and household safety
products;
• Investment holding;
• Manufacture of cotton liners and cotton work gloves and
processing of rags;
• Trading in all kinds of cleanroom accessories and products;
• Manufacture of palm coated gloves; and
• Manufacture of PVC coated and dotted gloves.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

viii. Board of The Board of Directors for the Issuer as at 6 June 2005 are as
Directors follows:
1) Puan Sri Datin Minuira Sabki
2) Dato’ Eng Hok Sing
3) Chuah Yak Hin
4) Goh Kheng Theam
5) Siti Rohani Bt A. Manan
6) Mohd Hisham Bin Harun
7) Yeap Ghim Guan
8) Fazrin Azwar Bin Dato’ Hj. Md Nor

ix. Structure of Based on the register of substantial shareholders as at 6 June


shareholdings 2005, the substantial shareholders of the Issuer are as follows:
and names of
shareholders or, Shareholder No. of Shares Held
in the case of a Direct % Indirect %
public company, Lembaga 34,091,250 25.73 - -
names of all Tabung Haji
substantial
shareholders Dato’ Eng Hok 31,441,898 23.73 7,581,226 5.72*
Sing

Allianz Life 11,763,900 8.90 - -


Insurance
Malaysia Bhd

HSBC (M) 9,406,750 7.10 - -


Trustee Bhd

Merak Wira Sdn 7,581,226 5.72 - -


Bhd

Allianz General 312,250 0.24 11,763,900 8.90**


Insurance
Malaysia Bhd

Note:
*
Deemed interest by virtue of Section 6A (4) of the Companies
Act, 1965 through shareholdings in Merak Wira Sdn. Bhd.

** Deemed interest by virtue of Section 6A (4) of the Companies


Act, 1965 through shareholdings in Allianz Life Insurance
Malaysia Bhd.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

x. Authorized and • Authorized capital as at 6 June 2005 RM


paid-up capital 200,000,000 ordinary shares of RM0.50 each 100,000,000

• Paid-up capital as at 6 June 2005 RM


132,500,000 ordinary shares of RM0.50 each 66,250,000

3.02 PRINCIPAL TERMS AND CONDITIONS

(a) Names of
parties involved
in the proposed
transaction
(where
applicable)

i. Principal OSK Securities Berhad (“OSK”) (14152-V)


Adviser(s)/Lead
Arranger(s)

ii. Arranger(s) Not applicable

iii. Valuers Not applicable

iv. Solicitors Messrs. Zaid Ibrahim & Co.

v. Financial Not applicable


Adviser

vi. Technical Not applicable


Adviser

vii. Guarantor Dato’ Eng Hok Sing (NRIC No. 580910-02-5375) of 20, Lorong
Tambun Indah 16, Taman. Tambun Indah, 14100 Simpang Ampat,
S.P.S., Pulau Pinang, a director of the Issuer company.

viii.Trustee OSK Trustees Berhad (formerly known as OSK-Signet Trustees


Berhad) (573019-U)

ix. Facility Agent OSK

x. Primary Not applicable


Subscriber(s)
and Amount
subscribed
(where
applicable)

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

xi. Underwriter(s) The MMTNs will not be underwritten.


and amount
underwritten

xii. Syariah Adviser Dr Mohd Daud bin Bakar


(where
applicable)

xiii.Central Bank Negara Malaysia (“BNM”)


Depository

xiv. Paying Agent BNM

xv. Reporting Messrs. Moores Rowland


Accountant

xvi. Others (please


specify)

• Security OSK Trustees Berhad (formerly known as OSK-Signet Trustees


Trustee Berhad) (573019-U)

• Tender Panel A selection of financial institutions licensed under the Banking and
Members Financial Institutions Act 1989 (“BAFIA”) and/or Islamic Banking
(“TPMs”) Act 1983, insurance companies registered under the Insurance
Act 1996, approved corporations and such other persons as
specified in Schedule 2 and/or 3 of the Securities Commission Act
1993 (As amended). The composition of the TPMs may be varied
from time to time by the Facility Agent in consultation with the
Issuer.

(b) Islamic Principle Murabahah


Used A contract that refers to the sale and purchase transaction for the
financing of an asset whereby the cost and profit margin (mark-up)
are made known and agreed by all parties involved. The
settlement for the purchase can be either on a deferred lump sum
basis or on an installment basis, which will be specified in the
agreement.

Bai’ Dayn
A transaction that involves the sale and purchase of securities or
debt certificates that conform with Syariah. Securities or debt
certificates will be issued by a debtor to a creditor as an evidence
of indebtedness.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(c) Facility Murabahah Medium Term Notes (“MMTNs”) Programme of up to


Description RM50.0 million nominal value.

Underlying Transaction
The MMTNs Programme is based on the Syariah principle of
Murabahah.

The investor(s) (“Investor(s)”) shall first enter into an asset


purchase agreement (“Asset Purchase Agreement”) with the
Issuer to purchase the Identified Asset(s) (as defined herein) from
the Issuer at an agreed asset purchase price (“Asset Purchase
Price”).

The Investor(s) shall subsequently thereafter enter into an asset


sale agreement (“Asset Sale Agreement”) with the Issuer to re-sell
the Identified Asset(s) to the Issuer at an agreed asset selling
price (“Asset Selling Price”) which is made up of the Asset
Purchase Price and the profit margin imposed by the Investor(s).

The Asset Purchase Agreement and Asset Sale Agreement may


be entered into between the Issuer and the Investor(s) at any
point in time during and subject to the Tenure of the Facility/Issue
(as defined under Paragraph (f)).

The settlement of the Asset Selling Price by the Issuer shall be


evidenced by the issuance of primary notes (“Primary Notes”)
representing the principal or nominal value of the MMTNs and
secondary notes (“Secondary Notes”) representing the profit
payment of the MMTNs. The non-interest bearing promissory
notes evidences the deferred settlement by the Issuer on the
purchase of the Identified Asset(s) which the Issuer shall redeem
on the respective maturity dates. The Asset Selling Price is
payable by the Issuer in either one lump sum at the end of the
respective maturity dates or over an agreed period in deferred
installments (where applicable).

The Primary Notes and Secondary Notes (collectively known as


the “MMTNs”) shall be attached together and may be traded in the
secondary market under the Syariah principle of Bai’ Dayn i.e.
debt-trading.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(d) Issue Size (RM) The aggregate nominal value of the outstanding MMTNs issued
under the MMTNs Programme shall not exceed a cumulative limit
of RM50.0 million from the date of first issuance of the MMTNs.

The cumulative limit shall be reduced in the following manner:-

Reduction Date Reduction Cumulative


(years from date of first Amount Limit
issuance) (RM million) (RM million)
4 10.0 40.0
5 10.0 30.0
6 15.0 15.0
7 15.0 0

(e) Issue Price The MMTNs will be either issued at par, discount or premium to
the nominal value.

(i) The amount conclusively determined by the Facility Agent


(“FA”) to be equal to:

Discounted Value of Discounted Value of


= Redemption Value At + Stream of Profit
Maturity Payments

_ RV _ N C/2 _
K-1+T/E
= 1+ r
N-1+T /E
+ ∑ 1+ r _
K=1
200 200

where,
FV = Face amount of the MMTNs;
RV = Redemption value;
(=FV, if redemption is at par)
C = Profit rate;
r = Market yield for a similar maturity period;
N = Number of semi-annual profit payments between
the value date and maturity date;
T = Number of days from the issue date to the next
profit payment date;
E = Number of days in a profit period in which
settlement takes place;

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(f) Tenure of the Seven (7) years from the date of first issuance of the MMTNs.
Facility/ Issue
The date of first issuance of the MMTNs is subject to the
completion of documentation and compliance of all relevant
conditions to the reasonable satisfaction of the Lead Arranger, but
in any case, the date of first issuance of the MMTNs is to be no
later than two (2) years from the date of the Securities
Commission (“SC”)’s approval or such other period approved by
the SC from time to time.

The MMTNs shall be issued for maturities of two (2), three (3),
four (4), five (5), six (6) or seven (7) years, or such other period as
may be agreed between the Issuer and the Lead Arranger, being
a period of more than one (1) year but not more than seven (7)
years, but shall not in any case exceed the maturity of the MMTNs
Programme.

(g) Profit or The profit rate for each issuance of MMTNs will be determined
equivalent rate through bidding amongst the TPMs, or agreed between the Issuer
(%) (please and approved Investor(s) in the case of private placement.
specify)

(h) Profit payment The frequency of profit payment is semi-annually in arrears.


frequency and
basis The profit will be calculated on the basis of actual number of days
in a year and the actual number of days elapsed, the calculation of
which is as per the formula stated in item (e) above.

(i) Yield to Maturity The Yield to Maturity for the MMTNs will only be known prior to
(%) the proposed issue day/tender day when Issuer confirms the
acceptance of the allocated tender/private placement bids.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(j) Security / The MMTNs holders will share the following security on a pari
Collateral passu basis:

i) A first fixed charge on machinery and equipment of the


Issuer and/or its subsidiaries whereby the
purchase/ownership was financed/refinanced using the
MMTNs proceeds including but not limited to the following:-

Description of Facility Net Book Value


as at 31 May 2005
(RM)
14 units Shima Seiki SFG-13G L2/L3 589,040.34
(83/88)
36 units Shima Seiki SFG-13G 1,530,453.08
L2/L3-(88/83): M/L (73/78)
10 units of Shima Seiki SFG-15G 427,662.45
M/L Seamless Ultrafine Glove
Machine
15 units of Shima Seiki 15G glove 700,857.00
knitting machine-new SFG-15G L/L2-
93
9 units of SFG13G L2/L3-83/88 393,122.55
Shima Seiki Machine
4 units of SFG13G L/M-78/73 Shima 174,721.12
Seiki Machine
20 units of SFG7G L/L2 Shima Seiki 662,912.46
Machine
10 units of SFG10G-58/63 Shima 411,108.51
Seiki Knitting Machine
11 units of SFG 13G L2/L3-83/88 480,483.07
Shima Seiki Knitting Machine
6 units of SFG7G L/L2 Shima Seiki 198,873.73
Knitting Machine

ii) A first legal charge over the Designated Accounts;

iii) A first legal charge over all that parcel of land held under
H.S.(M) 104, PT 300, Tempat Padang Meha, Pekan Sungai
Karangan, Daerah Kulim, Negeri Kedah Darul Aman.

and

iv) A Personal Guarantee by Dato’ Eng Hok Sing.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(k) Details on Proceeds raised from the MMTNs shall be utilized as follows:
utilisation of
proceeds Amount of
Purpose Proceeds
(up to RM)

i) Firstly, for the payment of fees and Based on invoices or


expenses relating to the issuance of documentary
the MMTNs Programme to relevant evidence received
parties based on invoices or such from relevant parties
other documentary evidence;

ii) Secondly, to pre-fund the Finance Based on agreed


Service Reserve Account with an profit rates at the
initial balance equivalent to one (1) point of each
profit payment for each MMTNs MMTNs issuance
issued under the MMTNs
Programme;

iii) Thirdly, for repayment or refinancing Up to 16,000,000


of existing bank borrowings, hire
purchase and/or leasing facilities;

iv) For capital expenditure requirements; Balance thereafter


can be utilized for
v) For working capital requirements; one or more of the
purposes specified
vi) For repayment or refinancing of from (iv) to (vii)
additional bank borrowings, hire (provided always
purchase and/or leasing facilities (if that the Issue Size of
any); and the MMTNs
Programme is not
vii) For redemption of the outstanding exceeded)
maturing MMTNs, subject to the
Tenure of the Facility/Issue under
Paragraph (f).

Notes:-

For the Utilization of Proceeds under Purpose (iii), upon the first
drawdown of the MMTNs and after payments for purpose (i) and
(ii) as defined under Paragraph (k) has been made, the MMTNs
proceeds allocated under purpose (iii) must be used as follows:-

1. Firstly, to redeem in full the USD2,500,000.00 (equivalent to


RM9,500,000.00 based on the prevailing exchange rate of
USD1.00 = RM3.80) Islamic banking facility termed Al-Ijarah
Al-Muntahiyah Bit-tamlik (Lease) Agreement that was entered
into between Malwira Manufacturing Sdn Bhd (the Issuer’s
subsidiary) and Bank Islam Malaysia Berhad, Labuan

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

Offshore Branch (“Islamic Banking Facility”) on 23 November


2001.

The redemption of the Islamic Banking Facility using the


MMTNs proceeds from the first drawdown must secure the
release of the following security/collateral already pledged to
the respective financiers:

a) debenture by way of fixed and floating charges over the


present and future assets of Malwira Manufacturing Sdn
Bhd; and
b) the assignment of present and future sale proceeds of
Malwira Manufacturing Sdn Bhd’s operating income.

As at 31 May 2005, the outstanding balance under the Islamic


Banking Facility is USD1,798,304.73 (equivalent to
RM6,833,558.00 based on the prevailing exchange rate of
USD1.00 = RM3.80).

2. Secondly, to repay or refinance the following outstanding


balances of existing bank borrowings, hire purchase and/or
leasing facilities of Malwira Manufacturing Sdn Bhd, in addition
to the Islamic Banking Facility:-

Repayment
Financial Facility Purpose of Amount as at
Institutions Type Facility 31 May 2005
(RM)
Hire
396,650.91
Orix Credit M’sia Purchase
Sdn Bhd Hire
1,044,461.78
Purchase
Sime Credit (M) Hire Acquisition of Plant
123,522.41
Sdn Bhd Purchase and Machineries
Bank Islam
Leasing 605,761.48
Malaysia Berhad
EON Bank
Term Loan 1,667,896.88
Berhad
Bank Islam M’sia For Working
Trade Lines 5,000,000.00
Berhad Capital

Total 8,838,293.46

10
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(l) Sinking Fund (if The Sinking Fund shall be represented by the Designated
any) Accounts.

The Issuer is required to open and maintain the Designated


Accounts with a licensed bank (or banks as required) in Malaysia
to be appointed by the Trustee. The Designated Accounts must be
Syariah compliant.

Designated Accounts:
1. Disbursement Account (“DA”);
2. Sinking Fund Account (“SFA”);
3. Profit Service Reserve Account (“PSRA”); and
4. Finance Service Reserve Account (“FSRA”);

i) DA

The Issuer shall open a Disbursement Account to capture all


proceeds raised from the issuance of the MMTNs and funds from
this account shall be utilized in the manner as set out in
Paragraph (k) above.

The Disbursement Account will be operated solely by the Trustee


or such other person appointed by the Trustee.

ii) SFA

The Issuer shall open a SFA and so long as any maturing MMTNs
is not capable of being fully refinanced by a new issuance of
MMTNs, the Issuer shall remit and/or deposit funds into the SFA
to redeem the specific amount under the MMTNs that is not
capable to be refinanced by a new issuance of MMTNs
(“Redemption Amount”).

The Redemption Amount shall be determined in the following


manner:
Redemption Amount
= Nominal value of maturing MMTNs
Less: Nominal value of new issuance of MMTNs

The Issuer shall build up the minimum credit balance in the SFA to
meet the Redemption Amount as follows:

1. at least 25% of the Redemption Amount of MMTNs three (3)


months prior to the maturity of MMTNs;
2. at least 50% of the Redemption Amount of MMTNs two (2)
months prior to the maturity of MMTNs; and
3. at least 100% of the Redemption Amount of MMTNs one (1)

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

month prior to the maturity of MMTNs.

In addition to the Redemption Amount, should there be any


shortfall in the redemption of the maturing MMTNs, the Issuer
must top up additional funds required at least two (2) days prior to
the maturing MMTNs.

Upon the relevant maturity dates of the MMTNs, the funds from
this account shall be utilized towards redemption of the MMTNs.

The SFA shall be operated solely by the Trustee or such other


person appointed by the Trustee.

iii) PSRA

The Issuer shall open a PSRA to remit and/or deposit funds


equivalent to at least one (1) profit payment in respect of each
MMTNs issued one (1) month prior to the profit payment date.

The funds from this account shall be utilized towards the


redemption of profit payment in respect of each MMTNs issued.
(“Profit Payment”).

Where at any time funds in the PSRA is less than the minimum
required credit balance for Profit Payment of the MMTNs, the
Issuer may withdraw funds for such shortfalls from the FSRA in
accordance with the provisions set out herein.

The PSRA shall be operated solely by the Trustee or such other


person appointed by the Trustee.

iv) FSRA

The Issuer shall open a FSRA for the purpose of depositing and
maintaining funds equivalent to at least one (1) profit payment in
respect of each MMTNs issued at all times. The FSRA shall be
pre-funded from the issue proceeds of each MMTNs issued.

The funds in the FSRA shall be utilized only in the event that there
is a shortfall in the minimum required credit balance in the PSRA
in relation to Profit Payment due for MMTNs issued. Any amount
withdrawn from the FSRA shall be replenished with funds directly
by the Issuer within one (1) month of such withdrawal.

The FSRA shall be operated solely by the Trustee or such other


person appointed by the Trustee.

12
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(m) Rating Credit Rating Assigned : AID (indicative)

Name of Rating Agency : Malaysian Rating Corporation Berhad


(“MARC”)

(n) Form and The MMTNs shall be represented by Global Certificates in bearer
Denomination form and issued in denomination of RM1,000,000. The Global
Certificates shall be deposited with the Central Depository and are
exchangeable for Definitive Certificates only in certain limited
circumstances. No physical delivery of the Global Certificates will
be made.

(o) Mode of Issue By way of tender to TPMs and/or private placements without
prospectus to eligible Investor(s) through and traded scripless
under the Real Time Electronic Transfer of Funds and Securities
(“RENTAS”) System in accordance with the Rules on Fully
Automated System for Issuing/Tendering (“FAST Rules”) issued
by BNM, and/or under any regulations to be implemented by BNM
from time to time.

(p) Selling The MMTNs may not be offered, sold or delivered, directly or
Restriction indirectly, nor may any document or other material in connection
therewith be distributed in Malaysia, other than to persons falling
within the categories set out in Schedule 2 and/or 3 of the
Securities Commission Act, 1993 (As amended) subject to any
law, order, regulation or official directive of BNM, Securities
Commission (“SC”) and/or any other regulatory authority from time
to time.

(q) Listing Status The MMTNs will not be listed on the Bursa Malaysia Securities
Berhad or on any other stock exchange.

(r) Minimum Level The minimum level of subscription for each issue of the MMTNs is
of Subscription one hundred percent (100%).
(RM or %)
In respect of each issue of the MMTNs, the issue will be aborted
should the minimum level of subscription is not met. The Issuer
shall return all considerations received to the subscribers.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(s) Other regulatory Not required.


approvals
required in
relation to the
issue, offer or
invitation and
whether or not
obtained [please
specify]

(t) Identified Assets The Identified Assets are assets whose values are in compliance
with the SC’s Syariah Advisory Council (“SAC”) Pricing Guidelines
issued on 31 December 2003 and 30 April 2004. The assets
identified shall include but will not be limited to:

Description of Assets Net Book Value as at


31 December 2004 (RM)
30,000,000 unquoted ordinary 56,754,935
shares of RM1.00 each in
Malwira Manufacturing Sdn Bhd

The Issuer may utilize either all or part of the Identified Assets to
the extent that the aggregate Net Book Value of the Identified
Assets utilized is relevant to the issue size and tranches of the
MMTNs in order to facilitate the asset sale and purchase under
the Syariah principle of Murabahah. The aggregate Net Book
Value of the Identified Assets represents the fair value of the
Identified Assets.

The aggregate Net Book Value of the Identified Assets will be


determined based on the latest audited financial statements of
Malwira Manufacturing Sdn Bhd. As at 31 December 2004, the
Net Book Value of each RM1.00 unquoted ordinary share in
Malwira Manufacturing Sdn Bhd is RM1.89.

The Identified Assets may be changed from time to time as long


as the Identified Assets are acceptable and approved by the
Facility Agent and the Syariah Advisor. The SC will be notified
prior to any change of the Identified Assets.

Each issuance under the MMTNs Programme and the value


ascribed to the Identified Assets under the relevant sale and
purchase transaction will fully comply with the SAC Pricing
Guidelines issued on 31 December 2003 and 30 April 2004 and
as and when advised by the SAC.

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(u) Purchase and The purchase price for each MMTNs issue shall be equal to the
Selling issue price of the MMTNs and shall be determined at the point of
Price/Rental issuance by way of tender to TPMs and/or private placements
(where without prospectus to eligible Investor(s). It will be administered
applicable) electronically through the Fully Automated System for
Issuing/Tendering (“FAST”) and governed by the FAST Rules of
BNM.

The selling price for each MMTNs issue shall be equal to the
aggregate sum of the nominal value and all profit payment of the
MMTNs issue. The selling price shall be determined at the point of
issuance.

(v) Conditions Conditions precedent to the initial issuance of the MMTNs shall
Precedent to be subject but not limited to the following:
Initial MMTNs
Issuance: i) completion of the due diligence exercise on the Issuer to the
satisfaction of the Lead Arranger and the solicitors;

ii) all necessary approvals and consents including the SC and


the Syariah Advisor have been secured and obtained;

iii) receipt by the Lead Arranger of certified true copy of the


resolution of the Board of Directors of the Issuer authorizing
the acceptance of the MMTNs Programme and the
appointment of the signatories to accept and operate the
MMTNs Programme and to execute the relevant documents
relating to the MMTNs Programme;

iv) receipt by the Lead Arranger of the solicitors’ confirmation


that the necessary legal documents pertaining to the MMTNs
Programme have been executed, stamped (or endorsed as
exempt from stamp duty) and presented for registration
(where applicable);

v) no event of default has occurred or is continuing or will occur


as a result of the issuance of the MMTNs;

vi) evidence that the Designated Accounts have been opened


with a licensed bank (or banks) in Malaysia;

vii) for the purpose of payment of fees and expenses relating to


the issuance of the MMTNs Programme, confirmation by the
Trustee that it has received all the invoices or such other
documentary evidences from the relevant parties relating to
the said payment of fees and expenses for the issuance of
the MMTNs Programme;

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APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

viii) for the purpose of repayment/refinancing of bank borrowings,


confirmation by the Trustee that it has received the following:

a) the redemption statement and/or letters of undertaking


confirming the outstanding borrowings payable from the
Issuer’s existing bankers/financiers and that the relevant
discharges of charge and original title deeds will be
executed and delivered to the Trustee (where relevant to
the security arrangement for the MMTNs Programme);
and
b) a schedule of bank borrowings to be repaid using the
MMTNs proceeds including the bank’s name, account
number, amount and expected due date by the Issuer
and/or any of its subsidiaries.

ix) For the purpose of capital expenditure, confirmation by the


Trustee that it has received the relevant invoices or such
other supporting/documentary evidences that is satisfactory
to the Trustee;

x) a minimum final rating of AID for the MMTNs Programme from


MARC or any other equivalent rating(s) from any other rating
agency acceptable to Lead Arranger; and

xi) any other conditions as may be deemed appropriate by the


solicitors.

(v)(i)Conditions Conditions precedent to subsequent issuances of MMTNs shall


Precedent to be subject but not limited to the following:
Subsequent MMTNs
Issuances: i) the Issuer’s certification that it is in compliance with all
Representations and Warranties under the Issue Documents;

ii) no event of default or event which with the passing of time,


giving of notice or the making of a determination may become
an event of default has occurred and continues to subsist;

iii) for the purpose of payment of fees and expenses relating to


the issuance of the MMTNs Programme, confirmation by the
Trustee that it has received all the invoices or such other
documentary evidences from the relevant parties relating to
the said payment of fees and expenses for the issuance of
the MMTNs Programme;

16
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

iv) for the purpose of repayment/refinancing of bank borrowings


(if applicable), confirmation by the Trustee that it has received
the following:

a) the redemption statement and/or letters of undertaking


confirming the outstanding borrowings payable from the
Issuer’s existing bankers/financiers and that the relevant
discharges of charge and original title deeds will be
executed and delivered to the Trustee (where relevant to
the security arrangement for the MMTNs Programme);
and
b) a schedule of bank borrowings to be repaid using the
MMTNs proceeds including the bank’s name, account
number, amount and expected due date by the Issuer
and/or any of its subsidiaries;

v) for the purpose of capital expenditure, confirmation by the


Trustee that it has received the relevant invoices or such
other supporting/documentary evidences that is satisfactory
to the Trustee; and

vi) any other conditions as may be deemed necessary by the


solicitors.

(w) Representations The representations and warranties by the Issuer to the respective
and Warranties Trustees and the Investor(s) shall include but not limited to the
following:

i) it is a company duly incorporated and validly existing under


the laws of Malaysia and has the power and authority to own
its assets and to conduct the business which it conducts
and/or proposes to conduct;

ii) (a) its memorandum and articles of association incorporate


provisions which authorise, (b) all necessary corporate action
has been taken to authorise, and (c) all authorisations of any
government or other authority have been duly and
unconditionally obtained and are in full force and effect which
are required to authorise, it to own its assets, carry on its
business as it is being conducted, and sign and deliver, and
perform the transactions contemplated in the Issue
Documents, and for the Issuer to issue the MMTNs and to
perform its obligations specified therein and under the
MMTNs in accordance with its terms;

17
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

iii) the Issuer’s audited accounts are prepared in accordance


with generally accepted accounting principles and standards
and fairly reflects the Issuer’s financial position;

iv) except as disclosed in the Information Memorandum, the


Issuer has no knowledge of any litigation or arbitrations which
will have a material adverse affect on the Issuer’s ability to
comply with the Issue Documents;

v) it has the power to enter into, exercise its rights and perform
and comply with its obligations under the trust deed and for it
to issue and perform and comply with its obligations under
the MMTNs Programme and repayments in accordance with
the trust deed; and

vi) any other representations and warranties as may be advised


by the solicitors.

(x) Events of Standard events of default for a facility of this nature which shall
Default include but not limited to the following:-

i) where the Issuer fails to pay any amount of any principal or


profit rate due from it under any of the Issue Documents on
the due date or on demand, if so payable; or

ii) where a petition is presented for the winding up of the Issuer


or where a winding-up order has been made against the
Issuer or a resolution to wind up the Issuer has been passed;
or

iii) where the Issuer convenes a meeting of its creditors or


proposes or makes any arrangement or composition with, or
any assignment for the benefit of, its creditors under section
176 of the Companies Act, 1965; or

iv) where an encumbrance takes possession of, or a trustee,


liquidator, receiver or similar officer is appointed in respect of,
all or any part of the business or assets of the Issuer and is
not paid out, withdrawn or discharged within thirty (30) days
of such appointment; or

v) where the Issuer fails to observe or perform any of its


obligations, terms and conditions or provisions under the
Issue Documents or any other related documents or under
any undertaking arrangement entered into in connection
herewith; or

18
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

vi) where any of the indebtedness of the Issuer becomes due


and payable or capable of being declared due or payable
before its stated maturity or if any security created to secure
any such indebtedness becomes enforceable; or

vii) where there is a revocation, withholding or modification of a


licence, authorisation or approval that impairs or prejudices
the Issuer's ability to comply with the terms and conditions or
the provisions of the Issue Documents or any other related
documents; or

viii) any other such events of default as may be advised by the


solicitors.

(y) Principal terms Not applicable.


and conditions
for warrants
(where
applicable)

19
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

(z) OTHER PRINCIPAL TERMS AND CONDITIONS FOR THE ISSUE

i) Redemption Unless previously redeemed, purchased or cancelled, the MMTNs


will be redeemed at nominal value on the respective maturity
dates.

The Issuer may at any time purchase the MMTNs in the open
market at any price by private treaty for redemption purposes.
MMTNs redeemed or purchased in this manner will be cancelled
but can be reissued subject to the tenure of the facility.

ii) Permitted The Issuer shall be permitted from time to time to utilize funds held
Investments in the Designated Accounts to make Permitted Investments,
provided that such funds utilized for Permitted Investments shall
be remitted to the corresponding Designated Account in a timely
manner to meet any payment obligations of the Issuer when due
and payable. The Permitted Investments shall have a maturity
date to match the utilisation of the proceeds, denominated in
Ringgit Malaysia and comply with the underlying Syariah principle.
Upon maturity, the proceeds (i.e. principal plus profit) shall be
remitted to the corresponding Designated Account.

Permitted Investments shall mean:

i) deposits in profit bearing accounts and negotiable certificates


of deposits issued by licensed banking and financial
institutions; or
ii) bonds, treasury bills or financial instruments issued by the
Government; or
iii) other finance or capital market instruments or private entities
having:
a) a maturity date no later than the maturity of the MMTNs;
and
b) in the case of only investments of the type referred to in
paragraph (iii), a minimum rating of AA3 / P1 or AA- /
MARC1 as determined by Rating Agency Malaysia
(“RAM”) or MARC respectively or a recognized rating
agency or such other higher rating as is capable of being
issued by the said rating agencies from time to time.

In the event that such investment is downgraded to below AA3 /


P1 or AA- / MARC1, whichever is applicable, such investment
shall be disposed of within thirty (30) days upon the rating
downgrade announcement.

20
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

iii) Positive The Issuer covenants and undertakes inter alia, with the Trustee
Covenants and the subscribers that until all its liabilities and obligations under
the MMTNs Programme has been discharged, the Issuer will,
amongst others :

i) maintain the following Financial Covenants (as defined


herein):
a) a Finance Service Cover Ratio (“FSCR”) of not less than
1.50 times at all times; and
b) a Finance to Net Tangible Assets Ratio (“FNR”) of not
more than 1.35 times at all times;
(If any of the Financial Covenants are breached, the Issuer is
given a cure period of 60 days to remedy and comply with
the required Financial Covenants.)

ii) use its reasonable diligence to carry on and conduct its


affairs in a proper and efficient manner which should ensure,
amongst others, that all necessary approvals or relevant
licences are obtained and/or being obtained;

iii) make available to the Facility Agent, Trustee and/or an


auditor appointed by the Trustee for their respective
inspection the whole of the accounting or other records of the
Issuer and give them such information as they may
reasonably require with respect to all matters relating to the
accounting records of the Issuer;

iv) it shall provide to the Trustee annually at the end of its


financial year, a certificate that the Issuer has complied with
its obligations under the trust deed and the terms and
conditions of the MMTNs Programme and that there did not
exist or had existed, from the date of the first issuance of the
MMTNs or the date of the previous certificate as the case
may be, any Event of Default and if such is not the case, to
specify the same;

v) obtain, preserve and keep in full force and effect all


necessary licenses and approvals;

vi) maintain or cause to be maintained such insurance in


respect of its assets and its business against all risk in
accordance with industry practice;

vii) cause all advances made or to be made hereafter by its


shareholders and directors to be subordinated to its liabilities
to the MMTNs Programme; and

viii) any other covenants as may be advised by the solicitors


and/or the Trustee.

21
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

iv) Negative The Issuer covenants and undertakes inter-alia, with the Trustee
Covenants and the subscribers that, from the signing of the Issue Documents
of the MMTNs until all its liabilities and obligations hereunder and
under the MMTNs have been discharged, the Issuer will not
without prior written consent of the Trustee:

i) amend its Memorandum and Articles of Association in a


manner that is inconsistent with the provision of the Issue
Documents, save and except to comply with the rules,
regulations or guidelines of the relevant authorities and
where such amendments that are, in the opinion of the
Trustee, not prejudicial to the interests of the subscribers;

ii) substantially change the nature of its present business;

iii) reduce the nominal value and the total amount of its
authorised, issued and paid-up share capital;

iv) dispose of major assets that contribute substantially to its


revenue unless in the ordinary course of business and on
arms length basis or which are either obsolete or worn out;

v) make any advances or loans to any persons or provide


guarantees to secure advances or loans for the benefit of
any shareholders, affiliates or related corporation of the
Issuer (other than normal trade credits or temporary loans to
staff, customers, contractors or suppliers in the ordinary
course of business and other than those provided for the
benefit of its subsidiaries);

vi) create or permit to continue any other encumbrance,


mortgage, charge, pledge, lien, assignment by way of
security/collateral, hypothecation, trust arrangement for the
purpose of providing security/collateral comprising of a piece
of freehold land and buildings/building improvements located
at Plot No. 300 H.S (M) 3/1996 Mk. of Padang Meha District
of Kulim, Kedah that is owned by Malwira Manufacturing Sdn
Bhd, including, without limitation, debentures incorporating
fixed and floating charges, title transfers or other
arrangements that will have a similar effect;

vii) declare any dividend on share capital if:


a) the FSCR will be less than 2.00 times after such
dividends are declared;
b) the Financial Covenants are breached, or following such
declaration, they would be breached;
c) an event of default has occurred, or if following such
declaration, an event of default would occur; and

22
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

d) funds in the SFA, PSRA and FSRA do not meet the


minimum required credit balance for the respective
accounts.

viii) any other undertakings as may be advised by the solicitors


and/or Trustee.

v) Financial The following financial covenants below shall be calculated at the


Covenants end of each financial year of its financial statements and each half
year period of its management accounts for that period:

i) Finance Service Cover Ratio (“FSCR”): Defined as the ratio


of cash and bank balances at the beginning of the financial
period and net cash flow (excluding the total finance service
obligations) for the relevant financial period to the Issuer’s
total finance service obligations in the corresponding
financial period.

The total finance service obligations refer to the aggregate


of:
a) all principal, profit and related costs paid by the Issuer
under the MMTNs Programme;
b) net repayment of short term banking facilities (for
working capital purposes), both conventional and
Islamic banking facilities, including but not limited to
trade related bills, revolving credits and overdrafts; and
c) all other principal, interest, profit and related costs paid
for external borrowings and redeemable loan stocks.
(For avoidance of doubt, the external borrowings to be
categorized under item (c) shall cover both conventional
and Islamic arrangements, secured and unsecured, but
excluding those falling within item (a) and (b) above).

ii) Finance to Net Tangible Assets Ratio (“FNR”): Defined as


the ratio of indebtedness of the Issuer represented by:
a) all amounts outstanding under the MMTNs Programme
(less balances standing to the credit of the Designated
Accounts); and
b) all other outstanding external borrowings, both
conventional and Islamic financing, secured and
unsecured; and
c) all outstanding redeemable loan stocks, secured and
unsecured;
to the Issuer’s shareholders’ funds, loan stocks (that are
irredeemable and convertible) plus loans/advances from
shareholders/directors that is subordinated to the MMTNs
Programme less intangible assets.

For the purpose of declaration of dividends, the calculations


will be as follows:

23
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

i) Finance Service Cover Ratio (“FSCR”): Defined as the ratio


of cash and bank balances at the beginning of the financial
period and net cash flow (excluding the total finance service
obligations) less dividends declared for the relevant
financial period to the Issuer’s total finance service
obligations in the corresponding financial period.

The total finance service obligations refer to the aggregate


of:
a) all principal, profit and related costs paid by the Issuer
under the Murabahah MMTNs Programme;
b) net repayment of short term banking facilities (for
working capital purposes), both conventional and Islamic
banking facilities, including but not limited to trade
related bills, revolving credits and overdrafts; and
c) all other principal, interest, profit and related costs paid
for external borrowings and redeemable loan stocks.
(For avoidance of doubt, the external borrowings to be
categorized under item (c) shall cover both conventional
and Islamic arrangements, secured and unsecured, but
excluding those falling within item (a) and (b) above).

ii) Finance to Net Tangible Assets Ratio (“FNR”): Defined as


the ratio of indebtedness of the Issuer represented by:
a) all amounts outstanding under the MMTNs Programme
(less balances standing to the credit of the Designated
Accounts); and
b) all other outstanding external borrowings, both
conventional and Islamic financing, secured and
unsecured; and
c) all outstanding redeemable loan stocks, secured and
unsecured;
to the Issuer’s shareholders’ funds, loan stocks (that are
irredeemable and convertible) plus loans/advances from
shareholders/directors that is subordinated to the
MMTNs Programme less intangible assets and dividends
declared.

vi) Additional Dato’ Eng Hok Sing, the largest controlling shareholder, shall,
Covenants either directly or indirectly, maintain a shareholding of at least 23%
of the issued and paid up capital of the Issuer.

vii) Compensation In the event of overdue installment payment of sums covenanted


For Late to be paid, the Issuer shall pay late payment compensation
Payment(s) charges on such overdue amounts at the rate and in the manner
as prescribed by SC and endorsed by its Syariah Advisory Council
from time to time.

24
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

viii) Incidental All legal and professional fees including such cost relating to the
Expenses & due diligence exercise, stamp duties, taxes, SC Submission Fees
Legal Fees and any other out-of-pocket expenses, incurred pursuant to the
Issuer’s acceptance of the MMTNs Programme and for purposes of
preparation/submission of any information memorandum and the
preparation of security documentation (notwithstanding non-
utilisation of the MMTNs Programme by the Issuer) shall be borne
by the Issuer.

All costs and expenses incurred by the Lead Arranger/Trustee/


Security Trustee for and on behalf of the Issuer including legal
costs on solicitor/client basis in enforcing any term or condition or
in obtaining payment of any sum due and payable or any cost and
expenses in relation to quit rent, assessments and insurances,
etc. shall be for the account of the Issuer.

ix) Taxation All payments under the MMTNs Programme shall be made free and
clear of all present and future Malaysian taxes

x) Adverse Market Should there occur a material adverse change in the opinion of
the Lead Arranger in the business condition (financial or
otherwise) of the Issuer and/or the economic, social and political
situation in Malaysia including but not limited to the adversities in
the domestic or international financial market prior to the launch,
offering and/or distribution of the MMTNs, the Lead Arranger
reserves the right to withdraw, cancel, terminate and/or restructure
the arrangement of the MMTNs.

xi) Clear Market From the date of the appointment of the Lead Arranger to the date
falling thirty (30) days after the first issuance date of the MMTNs,
the Issuer will ensure that no other borrowings or debt instruments
or securities issued or guaranteed by the Issuer or any of their
subsidiaries or affiliates are either placed or syndicated, directly or
on its behalf, in any manner which might, in the sole opinion of the
Lead Arranger, have a detrimental effect on the successful
placement of the MMTNs.

xii) Change in If as a result of any change in applicable law, regulation or


Circumstances regulatory requirement or in the interpretation or application
thereof or if compliance by the Lead Arranger for the MMTNs with
any applicable direction, request or requirement (whether or not
having the force of law) will impose on the Lead Arranger any
material condition burden or obligation then the commitment of the
Lead Arranger to the MMTNs will end upon notice to the Issuer of
the happening of such events after becoming aware thereof.

25
APPENDIX 1 – ENGLOTECHS HOLDING BHD

UP TO RM50.0 MILLION NOMINAL VALUE MURABAHAH MEDIUM TERM NOTES PROGRAMME


(“MMTNs PROGRAMME”)

xiii) Currency Ringgit Malaysia.

xiv) Issue Standard documentation for a facility of this nature, which would
Documents include, inter-alia:
i) trust deed;
ii) depository and paying agency agreement;
iii) tender panel agreement;
iv) security documents; and
v) any other legal documentation as advised by the solicitors to
the documentation.

xv) Governing The Laws of Malaysia.


Law

26