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Joint Venture Between TM International Sdn Bhd ("TM International"), A Wholly Owned Subsidiary Of TM, And Khazanah Nasional Berhad ("Khazanah") For The Proposed Acquisition Of Shares In Mobileone Ltd ("M1")

23 September 2005

Type

 Announcement
Subject TELEKOM MALAYSIA BERHAD ("TM")

JOINT VENTURE BETWEEN TM INTERNATIONAL SDN BHD ("TM INTERNATIONAL"), A WHOLLY OWNED SUBSIDIARY OF TM, AND KHAZANAH NASIONAL BERHAD ("KHAZANAH") FOR THE PROPOSED ACQUISITION OF SHARES IN MOBILEONE LTD ("M1")

Contents :

1. INTRODUCTION

    • We refer to our announcement dated 17 August 2005.

      On behalf of TM, we wish to announce that, on 23 September 2005, SunShare Investments Ltd (“SunShare”), Khazanah and TM entered into a Subscription Agreement (“Subscription Agreement”) for the subscription by Khazanah and TM of redeemable convertible preference shares of United States of America Dollars (“USD”) 0.01 each in SunShare (“RCPS”).

      In view of the above subscription, SunShare, Khazanah, TM International and TM agreed to restate the Joint Venture and Shareholders’ Agreement (“JV Agreement”) entered into by SunShare, Khazanah and TM International on 17 August 2005 (the restated JV Agreement is referred to as the “Restated JV Agreement”).
2. SALIENT TERMS OF THE SUBSCRIPTION AGREEMENT
    • The salient terms of the Subscription Agreement are as follows:

      (i) SunShare shall issue and allot 73,399,990 RCPS to TM and Khazanah in three (3) tranches, in the following manner:

[Please refer to the attachment to view the details]
    • (ii) SunShare shall issue and allot the RCPS to TM and Khazanah in accordance with the time frame to be mutually agreed by SunShare, TM and Khazanah;

      (iii) The subscription price for the RCPS is USD1.00 per share, and shall be satisfied in cash;

      (iv) The RCPS shall be issued and allotted free from all claims, charges, liens and other encumbrances; and

      (v) In the event the proposed acquisition by SunShare of 118,526,670 M1 shares from Great Eastern Telecommunications Limited, detailed in our announcement dated 17 August 2005, is not completed, the Subscription Agreement shall be terminated and TM and Khazanah will have no obligation to further subscribe for the RCPS under Tranche 2 and 3.TM, Khazanah and SunShare have agreed that the subscription for the RCPS under Tranche 1 shall take place on 26 September 2005.

      The salient terms of the RCPS are as follows:
Issue price : USD1.00 per RCPS.
Tenure : Perpetual.
Dividend : (1) The RCPS shall carry a variable dividend which will be payable annually at the option of SunShare provided that any such dividends shall only be payable subject to availability of distributable profits.

(2) The RCPS shall rank for dividend in priority to ordinary shares of SunShare.

(3) Any declaration or payment of dividend on the RCPS shall be based on the proportion of RCPS held by the RCPS holders respectively.
Redemption : The RCPS shall only be redeemable at the option of SunShare at anytime in accordance with the Offshore Companies Act, 1990.
Conversion : The RCPS shall be convertible at the option of SunShare at anytime during the Tenure.
Conversion Price : Each RCPS is convertible into new Class B ordinary shares of SunShare at USD1.00 per share.
Status of RCPS : The RCPS shall rank prior to Class A ordinary shares of SunShare in the event of the winding-up/liquidation of the Issuer provided there shall be no further right to participate in the surplus assets or profits of the Issuer.
Status of New SunShare Shares : The new Class B ordinary shares of SunShare to be issued upon the conversion of the RCPS will rank equally with the existing Class A ordinary shares of SunShare except that they shall not be entitled to any dividends, rights, allotments and/or other distributions where the entitlement date is before the allotment date of the new SunShare shares.

Class B ordinary shares shall rank for dividend in priority to Class A ordinary shares.

Any declaration or payment of dividend on the Class B ordinary shares shall be based on the proportion of Class B ordinary shares held by the holders of Class B ordinary shares.
Rights : Voting rights

Prior to conversion of the RCPS, the RCPS holders has no voting right at SunShare’s general meetings unless the meeting convened is for the purpose of reducing capital, winding up, sanctioning a sale of the principal undertaking of SunShare, alter the Articles of Association of SunShare which affects the rights of the RCPS holders, or where the proposition to be submitted to the meeting directly affects the rights of the RCPS holders.

Changes in capital

SunShare may create and issue further preference shares with equal ranking with, but not in priority to the RCPS, with the approval of the RCPS holders. Subject to such approval, the issue of further preference shares ranking in priority to, or not equally, with the RCPS will be deemed a variation to the special rights of the RCPS.
Governing Law : Laws of Malaysia.

3. AMENDMENTS TO THE JV AGREEMENT
            • Eight (8) SunShare Shares held by TM International, and 17,339,992 RCPS held by TM, collectively representing 51% of the issued and paid-up share capital of SunShare.
            • Two (2) SunShare Shares and 16,659,998 RCPS, representing 49% of the issued and paid-up share capital of SunShare.
          • (a) TM and TM International
          (b) Khazanah
          In addition, Khazanah and TM and TM International have agreed to further increase the issued and paid-up share capital of SunShare by the issuance of RCPS under Tranche 2 and 3 as set out in Section 2 above upon receipt of the approval of Info-comm Development Authority of Singapore in connection with the proposed acquisition of shares in M1 or on a date to be agreed to reflect the economic interest of 51% : 49% between TM and TMI, and Khazanah in SunShare; and

      • The JV Agreement has been restated to allow for the investment by TM group in SunShare to be held by TM International and TM.

      The salient amendments made to the JV Agreement are as follows:(i) The issued and paid-up share capital of SunShare has been amended where upon the subscription by TM and Khazanah of RCPS in Tranche 1 as set out in Section 2 above, the issued and paid-up share capital of SunShare will be USD34,000,000 divided into ten (10) ordinary shares of USD1.00 each (“SunShare Shares”) and 33,999,990 RCPS, held in the following manner:(ii) Consequential amendments to allow TM and TM International to act collectively and be treated in a collective manner under the Restated JV Agreement.
4. EFFECTS ON TM GROUP

    • The signing of the Subscription Agreement and Restated JV Agreement does not change the effect of the joint venture and proposed acquisition of M1 shares on the share capital and shareholdings of substantial shareholders of TM, and net tangible assets and earnings of the TM group as set out in our announcement dated 17 August 2005.

5. DOCUMENT AVAILABLE FOR INSPECTION

    • The Subscription Agreement and Restated JV Agreement are available for inspection at the registered office of TM at Level 51, North Wing, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur during normal business hours from Mondays to Fridays (except for public holidays) for a period of three (3) months from the date of this announcement.
This announcement is dated 23 September 2005.

Announcement Info

Company Name TELEKOM MALAYSIA BERHAD
Stock Name TELEKOM
Date Announced 23 Sept 2005
Category General Announcement
Reference No MM-050923-61152

Attachments

  1. MM-050923-61152.pdf (Size: 82,348 bytes)