Telekom Malaysia - Investor Relations

Type	Announcement
Subject	SECURITISATION OF MORTGAGE PORTFOLIO ASSETS COMPRISING RESIDENTIAL LOANS OF TM EMPLOYEES
Contents	We forward herewith a press statement released by Telekom Malaysia Berhad (TM) today on the abovematter. We wish to add that none of TM’s directors, major shareholders and/or persons connected with them have any interests, direct or indirect, in this transaction.

Telekom Malaysia Berhad (TM) today signed a Sale and Purchase Agreement with AmMortgage One Berhad (AmMortgage One), a wholly-owned subsidiary of AmBank (M) Berhad (AmBank), for the acquisition of residential loans of TM employees by AmMortgage One.
Under the terms of the agreement, the residential loans of TM employees will be sold to AmMortgage One with the first series of the sale having outstanding principal value of RM348.9 million. Following the signing of the agreement, AmMortgage One will issue medium term notes to raise sufficient proceeds to satisfy the purchase consideration of the first series of the mortgage assets from TM.

In tandem with the sale and purchase transaction, a Servicing Agreement between TM, AmMortgage One and AmBank was also signed. This arrangement will see the outsourcing of TM’s mortgage servicing operations to AmBank.

The agreement was signed on behalf of TM by its Group Chief Executive Officer, Dato’ Zamzamzairani Mohd Isa, and Group Chief Financial Officer, Datuk Bazlan Osman, while AmBank Group was represented by Mr Cheah Tek Kuang, Group Managing Director, AmBank Group, and Mr Kok Tuck Cheong, Managing Director, AmInvestment Bank Berhad.

Speaking at the signing ceremony, Dato’ Zamzamzairani Mohd Isa, TM’s Group Chief Executive Officer, TM said, “This business collaboration will monetize one of our biggest non-core assets, namely the housing loans of our employees and with a current carrying value of around RM400 million, TM will be able to unlock that value from our balance sheet. This exercise signifies yet another TM effort to comply with the Purple Book, the guidelines for GLCs with regards to optimal capital management.”

“Another purpose of this collaboration is to leave the business of managing these loans to the experts – in this case, AmBank, and we are pleased that AmBank is providing TM with a complete solution for our employees housing loan programme. This exercise also frees up resources needed to manage these assets so now the resources can then be redeployed to other core areas of our business. To our employees, the housing loan policy remains unchanged, the only difference is that now their housing loans will be managed by AmBank,” Dato’ Zamzamzairani added.

To date, TM Group has about 22,000 employees, of which a total of 7,700 TM employees have taken up housing loans from the Company.

Mr Cheah said, “The AmBank Group’s relationship with TM goes back a long way and I recall one of our earliest engagements was our role as TM’s advisor for its IPO back in 1990. Whilst we have since been working closely with the TM Group on other matters, we are proud to again be associated with TM on this landmark transaction and more importantly, we are also happy we are able to help TM achieve its objectives. We look forward to more opportunities where the AmBank Group can be of further service to TM Group in the future.” Mr Cheah further added that this transaction was also timely as highly rated private debt securities continue to be in demand in this current economic environment.

AmInvestment Bank Berhad is the Lead Arranger for the securitisation of the portfolio of residential loans of TM employees and is also the Facility Agent for the issuance of these structured papers. Under the funding programme to cater for the acquisition of the asset portfolio comprising TM staff housing loans, AmMortgage One is expected to issue up to RM250 million Commercial Papers (CP) and up to RM1,000 million Medium Term Notes (MTN) pursuant to this asset-backed securitisation exercise. The CP/MTN programme period is up to 7 years for the CP tranche and up to 50 years for the MTN tranche. The papers to be issued to acquire the first series of mortgage assets are expected to be assigned a rating of AAA by RAM Rating Services Berhad.

This securitization of TM’s staff housing loan is not TM’s first initiative for optimum capital management in line with the Purple Book guidelines. In January last year, TM had monetised RM1 billion worth of its office buildings. These initiatives unlock the value of these assets, giving TM a one-off inpayment. The exercise enables TM to effectively monetize the non-core assets as well as the option to fully outsource the related functions of managing them. Hence, TM is then able to re-deploy the resources to other core areas of its business.

For more information on Telekom Malaysia Berhad, please visit www.tm.com.my. For more information on the AmBank Group please visit www.ambg.com.my.

About TM

Telekom Malaysia Berhad (TM), Malaysia’s leading integrated information and communications group, offers a comprehensive range of communication services and solutions in broadband, data and fixed-line. As a market leader in the broadband and fixed-line businesses, TM is driven to deliver value to its stakeholders in a highly competitive environment. The Group places emphasis on continuing customer service quality enhancements and innovations.

With its extensive global connectivity, TM is poised to position Malaysia as a regional Internet hub and digital gateway for South-East Asia. In line with this, TM is evolving into a Next Generation Network service provider enabling the Group to enhance its efficiency and productivity while providing enriched products and services.

On the Corporate Responsibility (CR) front, the Group has always been a major corporate contributor towards responsible activities in the belief that these practices are a fundamental tenet of good corporate governance. The Group promotes 3 major platforms i.e. education, community/nation-building and environment. Under education, TM has spent some RM800 million to develop Multimedia University into one of the top universities in Malaysia with more than 20,000 students. TM has also provided scholarships to over 10,000 graduates pursuing academic programmes locally and overseas. Under the community/nation-building platform, the Group contributes towards causes that bring value to the community and nation at large. TM was awarded the prestigious STAR-BIZ ICRM Corporate Responsibility Award under the workplace category for 2008.

For further information on TM, visit www.tm.com.my.

About AmMortgage One

AmMortgage One is a limited-purpose bankruptcy-remote special-purpose vehicle set up for the specific purpose of undertaking the asset-backed securitisation programme involving the mortgage portfolio of TM employees and funding its acquisition for such pool of assets. AmMortgage One is a wholly-owned subsidiary of AmBank.

About AmBank Group

Established in August 1975, AmBank Group is the fifth-largest banking group in Malaysia* and comprises AMMB Holdings Berhad and its principal subsidiaries in retail and business banking (AmBank (M) Berhad), investment banking (AmInvestment Group Berhad), Islamic banking (AmIslamic Bank Berhad) and insurance (AmLife Insurance Berhad and AmG Insurance Berhad).

The Group provides a wide range of investment banking, commercial banking, retail financing and related financial services, which also include Islamic banking, underwriting of general and life insurance, stock, share and futures broking, investment advisory as well as asset, property and unit trust management.

The Group’s investment banking arm, AmInvestment Bank Group is one of Malaysia’s leading investment banking groups, and has an enviable track record of over 30 years of experience, innovation, and market leadership. It has won an impressive stable of awards from the international financial press and major rating agencies. Recent awards include Real Estate Deal of the Year (Islamic Finance News Deals of the Year 2008), Best Islamic Financing Deal of the Year in South East Asia (Second Alpha Southeast Asia Awards 2008), Malaysia Capital Markets Deal (IFR Asia Awards 2008) and Most Innovative Deal (Euromoney Islamic Finance Awards 2008.

The Group’s retail banking services are offered by AmBank, and includes loans, advances and financing, deposit services, credit cards, remittance services, foreign exchange and Islamic banking services (through AmIslamic Bank). Recent awards include “One of the Top 30 companies in Malaysia 2008” from “Malaysia’s Most Valuable Brands”.

AmBank Group’s core philosophy incorporates a deep-seated commitment to the satisfaction of its wide range of customers, highlighted by customer-focused initiatives and communications. The Group is committed to providing new and innovative products and services to its customers, and its strategic partnership with the Australia and New Zealand Banking Group (ANZ), one of Australia’s leading banking groups, provides the powerful synergy of combined expertise and experience

For more information, please visit www.ambg.com.my.

*By assets, as at 31 December 2008

Announcement Info

Company Name	TELEKOM MALAYSIA BERHAD
Stock Name	TM
Date Announced	27 May 2009
Category	General Announcement
Reference No	TM-090527-59268

Securitisation Of Mortgage Portfolio Assets Comprising Residential Loans Of TM Employees

Announcement Info