APPROVAL OF SECURITIES COMMISSION (13 December 2007)

TAMADAM BONDED WAREHOUSE BERHAD (“TAMADAM” OR “COMPANY”)

I. PROPOSED ACQUISITION OF 51% EQUITY INTEREST IN BRAHIM’S-LSG SKY CHEFS HOLDINGS SDN BHD (“BLH”) COMPRISING 510,000 ORDINARY SHARES OF RM1.00 EACH (“SHARES”) FOR A PURCHASE CONSIDERATION OF RM136.5 MILLION FROM BRAHIM’S INTERNATIONAL FRANCHISES SDN BHD (“BIF”) TO BE SATISFIED BY THE ISSUANCE OF 160,588,235 NEW SHARES IN TAMADAM VALUED AT RM0.85 PER SHARE (“PROPOSED BLH ACQUISITION”);

II. PROPOSED WAIVER TO BIF AND PARTIES ACTING IN CONCERT WITH IT FROM THE OBLIGATION TO EXTEND A MANDATORY GENERAL OFFER (“GO”) FOR ALL THE REMAINING SHARES NOT ALREADY OWNED BY THEM IN TAMADAM AND ALL NEW SHARES THAT MAY BE ALLOTED AND ISSUED PURSUANT TO THE EXERCISE OF THE COMPANY’S 2000/2010 WARRANTS (“WARRANTS”) AFTER THE PROPOSED BLH ACQUISITION (“PROPOSED WAIVER”);

III. PROPOSED OFFER FOR SALE AND/OR PLACEMENT OF SHARES IN TAMADAM HELD BY BIF TO THE MALAYSIAN PUBLIC (“PROPOSED OFFER FOR SALE AND/OR PLACEMENT”); AND

IV. PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL OF TAMADAM FROM RM100,000,000 COMPRISING 100,000,000 SHARES TO RM500,000,000 COMPRISING 500,000,000 SHARES (“PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL”)

INTRODUCTION
On 28 June 2007, Tamadam announced that it had entered into a share sale agreement with BIF to acquire 51% equity interest in Brahim’s-LSG Sky Chefs Holdings Sdn Bhd comprising 510,000 ordinary shares of RM1.00 each for a purchase consideration of RM136.5 million to be satisfied by the issuance of 160,588,235 new Tamadam shares at an issue price of RM0.85 per share.

Tamadam has obtained the approval of the Securities Commission, in their letter dated 13 December 2007, for the following:

acquisition of 51% equity interest in BLH comprising 510,000 Shares from BIF for a purchase consideration of RM130.0 million to be satisfied by the issuance of 130.0 million new Shares in Tamadam;
offer for sale and/or placement of up to 11,394,750 Shares in Tamadam held by BIF to the Malaysian public; an
listing of and quotation for the 130.0 million new Shares in Tamadam to be issued pursuant to the Proposed Acquisition on the Second Board of Bursa Securities

Tamadam has also obtained the approval of the Equity Compliance Unit of the SC (“ECU“) for the Proposed Acquisition under the Guidelines on the Acquisition of Interests, Mergers and Take-Overs by Local and Foreign Interests issued by the Foreign Investment Committee via the same letter.

BASIS OF DETERMINING THE PURCHASE CONSIDERATION
The purchase consideration for the Proposed Acquisition of RM130.0 million was arrived at on a “willing-buyer willing-seller” basis after taking into consideration the fair value of BLH and its subsidiary company, LSG Sky Chefs-Brahim’s Sdn Bhd (“LSGB“)(collectively referred to as “the BLH Group“) which was arrived at using the DCF methodology on the projected future cashflows of BLH and LSGB which is attributable to BLH.

Based on an independent valuation report on the BLH Group dated 13 September 2007 by Messrs Horwath (a chartered accounting firm), the BLH Group was valued to be between RM262.0 million and RM271.9 million using discount rates based on WACC of between 7.31% and 7.66%. Accordingly, the fair value for 51.0% equity interest in BLH ranges between RM133.6 million to RM138.7 million.

Accordingly, the purchase consideration for the Proposed Acquisition of RM130.0 million does not fall within the range of the valuation ascribed by Horwath and is below the lower end of the range of valuation ascribed by Horwath.

BACKGROUND INFORMATION ON BLH
BLH is principally an investment holding company. It commenced operations in December 2003 when it acquired its sole 70%-owned subsidiary, LSGB which is principally involved in the provision of in-flight catering and related services such as cabin handling.

LSGB’s HQ at KLIA

LSGB is also the principal in-flight catering service provider at both the KLIA and Penang Airport. As a global airline catering company, LSGB serves more than thirty international airlines. It operates 24 hours daily with an output of about 35,000 meals per day at the KLIA and more than 1,000 meals per day at the Penang Airport. LSGB prides itself on the preparation of 100% guaranteed halal meals and a fully integrated food logistics supply chain which includes coldrooms, warehouses and distribution support.

LSGB’s skylift and A380

LSGB has a catering agreement with MAS which was entered into on 25 September 2003, giving LSGB the exclusive right to supply and provide in-flight catering and cabin handling services to MAS at both the KLIA and Penang Airport for a period of twenty-five years expiring on 1 December 2028. Some of LSGB’s other clients are Japan Airlines, Cathay Pacific Airways, Korean Air, Air Asia, Thai Airways and Emirates Airlines.

LSGB’s catering trucks

In addition, LSGB also has a technical assistance agreement with LSG Asia entered into on 25 September 2003 (“Technical Assistance Agreement”) which basically entails the provision of various technical assistance by LSG Asia for the operations of LSGB for a period of twenty-five (25) years expiring on 1 December 2028. MAS holds the remaining 30% equity interest in LSGB.

LSGB kitchen

Based on the audited financial statements of the BLH Group for the FYE 31 December 2006, the net profits and net assets of the BLH Group are approximately RM13.0 million and RM23.69 million respectively.

PROSPECTS OF BLH AND THE ENLARGED TAMADAM GROUP
LSGB has plans within the next five years to venture into the business of high-end and industrial food catering services such as food catering for schools, colleges, and universities, event catering services and the provision of food catering services to convenience stores and eatery outlets, as a source of diversification into other areas of the food and hospitality industry whilst reducing its dependence on in-flight catering business.

On the other hand, the Tamadam Group, which is expected to have a significantly improved earnings and an increase in paid-up capital after the completion of the Proposed Acquisition, will likely be in a position to further invest in the logistics business to increase its scale, quality and range of services offered. This, coupled with its cost-cutting efforts will result in greater efficiencies. This in turn, may place Tamadam in a better position to offer more competitively priced and better services which will translate to an increase in revenue from its logistics business.

CONDITIONS TO THE PROPOSALS
The Proposals are conditional upon the following :-

(a) the approval of the SC for the Proposed Acquisition, the Proposed Offer For Sale And/Or Placement and the listing of and quotation for the new Shares in Tamadam to be issued pursuant to the Proposed Acquisition which was obtained on 13 December 2007;

(b) the approval of the ECU for the Proposed Acquisition which was obtained on 13 December 2007;

(d) the approval of the shareholders of Tamadam at the forthcoming EGM, save for the Proposed Offer For Sale And/Or Placement;

(e) the approval in-principle from Bursa Securities for the listing of and quotation for the new Shares to be issued pursuant to the Proposed Acquisition; and

(f) the approvals, waivers and/or consents from any other relevant authorities and/or persons, if required.

EXPECTED COMPLETION DATE
At the date of writing (that is 1 January 2008), the Proposals are expected to be completed by 31 January 2008.