TAMADAM BONDED WAREHOUSE BERHAD (“TAMADAM” OR “COMPANY”)
MEMORANDUM OF UNDERSTANDING ON THE FOLLOWING :-

(i) PROPOSED ACQUISITION OF 51% EQUITY INTEREST IN BRAHIM’S-LSG SKY CHEFS HOLDINGS SDN BHD (“BLH”) FROM BRAHIM’S INTERNATIONAL FRANCHISES SDN BHD (“BIF”) (“PROPOSED BLH ACQUISITION”);

AND

(ii) PROPOSED ACQUISITION OF 51% EQUITY INTEREST IN DEWINA HOST SDN BHD (“DHOST”) FROM DEWINA HOLDINGS SDN BHD (“DHSB”) (“PROPOSED DHOST ACQUISITION”)
(COLLECTIVELY TO BE REFERRED TO AS “PROPOSED ACQUISITIONS”)

1. INTRODUCTION

On behalf of Tamadam, AmInvestment Bank Berhad (formerly known as AmMerchant Bank Berhad) (a member of AmInvestment Group) (“AmInvestment Bank”) would like to announce that the Company has today entered into a memorandum of understanding with BIF (“BIF MoU”) for purposes of the Proposed BLH Acquisition. The Company has also today entered into a memorandum of understanding with DHSB (“Dewina MoU”) for purposes of the Proposed DHost Acquisition.

(The BIF MoU and the Dewina MoU to be collectively referred to as “MoUs”)

Pursuant to the MoUs, the parties have agreed to exercise their best endeavour to finalise the terms of the Proposed Acquisitions with the intention to enter into the relevant share sale agreements (“Agreements”). The MoUs is binding upon the parties.

2. INFORMATION ON BLH AND DHOST

2.1 Background Information On BLH
BLH was incorporated in Malaysia under the Companies Act, 1965 (“Act”) as a private limited company on 18 June 2002.

As at 30 April 2007, the authorised share capital of BLH is RM5,000,000 comprising 4,990,000 ordinary shares of RM1.00 each (“Shares”) and 1,000,000 preference shares of RM0.01 each, of which 1,000,000 Shares have been issued and are fully paid-up.

BLH is principally an investment holding company. Its sole 70%-owned subsidiary, LSG Sky Chefs-Brahim’s Sdn Bhd (“LSGB”), is principally involved in the provision of in-flight catering and its related services such as cabin handling. Currently, LSGB is the principal in-flight catering service provider at both the Kuala Lumpur International Airport (“KLIA”) and Penang airport where its clientele consist of international as well as domestic airlines.

LSGB has a catering agreement with Malaysian Airline System Berhad (“MAS”) which gives LSGB the exclusive right to supply and provide in-flight catering and cabin handling services to MAS at both the KLIA and Penang airport. LSGB also has a technical assistance agreement with LSG Asia GmbH (“LSG Asia”) which basically entails the provision of various technical assistance by LSG Asia for the operations of LSGB. MAS holds the remaining 30% equity interest in LSGB.

Based on the audited consolidated financial statements of BLH for the financial year ended (“FYE”) 31 December 2005, the net profits and net assets of BLH are approximately RM10.303 million and RM30.031 million respectively.

2.2 Background Information On DHost
DHost was incorporated in Malaysia under the Act as a private limited company on 20 September 1997.

As at 30 April 2007, the authorised share capital of DHost is RM250,000 comprising 250,000 Shares, of which 250,000 Shares have been issued and are fully paid-up.

DHost is principally involved in the food catering business where it currently owns and operates a total of eleven (11) restaurants and cafes that are located at the KLIA and the Low Cost Carrier Terminal (“LCCT”) including Burger King, Asian Kitchen, Café Marche and Suria Café.

Based on the audited financial statements of DHost for the FYE 31 December 2005, the net profits and net deficit in shareholders’ funds of DHost are approximately RM1.972 million and RM2.180 million respectively.

3. SALIENT TERMS OF THE MOUs

3.1 BIF MOU
The salient terms of the BIF MoU are as follows :-

(a) Tamadam and BIF agree to negotiate in good faith and use its best endeavours to agree upon the terms of, prepare, finalise and execute the share sale agreement for the Proposed BLH Acquisition (“BLH SSA”) no later than thirty (30) days from the date of the BIF MoU or such longer period as may be mutually agreed between the parties.

(b) The BLH SSA to be executed and agreed upon by the parties shall reflect provisions of the BIF MOU and will include provisions acceptable to the parties as appropriate in transactions of the same type and magnitude reflecting, inter alia, the following understanding and principal terms :-

(i) The indicative purchase consideration for 51% equity interest in BLH shall be RM130.0 million (“Indicative BLH Price”).

(ii) The final purchase consideration for the Proposed BLH Acquisition shall be satisfied by the issuance of such number of new Shares in Tamadam at an indicative valuation of RM0.85 per Share ranking pari passu with the existing Shares in Tamadam.

(iii) The final purchase consideration for the Proposed BLH Acquisition shall be subject to a valuation to be conducted by an independent valuer to be appointed by Tamadam and will be subject to the approval of the Securities Commission (“SC”).

(iv) The Proposed BLH Acquisition shall be subject to the following :-

(aa) A waiver to be sought from the SC under the Malaysian Code on Take-Overs and Mergers, 1998 (“Code”) to exempt Tamadam and parties acting in concert with it from the obligation to extend a general offer (“GO”) for all the remaining Shares not already owned by them in BLH and LSGB;

(bb) A waiver to be sought from the SC under the Code to exempt BIF and parties acting in concert with it from the obligation to extend a GO for all the remaining Shares not already owned by them in Tamadam;

(cc) the approval of the shareholders of Tamadam for the Proposed BLH Acquisition and an increase in the authorised share capital of Tamadam;

(dd) the consents of other shareholders of BLH and/or LSGB as may be required; and

(ee) approvals and consents of all appropriate authorities, corporate, creditors and any other parties which are required or advisable for or in connection with the Proposed BLH Acquisition, and the fulfilment of all other condition precedents as may be determined by the parties.

(c) Tamadam shall be entitled to carry out a legal, operational, financial and tax due diligence review on BLH, LSGB, their respective assets and businesses at Tamadam’s own cost and expense, within thirty (30) days or such other mutually extended period commencing from the date of the BLH SSA.

(d) The BIF MoU shall automatically terminate and be of no effect on the occurrence of any of the following events :-

(i) the execution of the BLH SSA by the parties;

(ii) any of the agreed timeframes set out in the BIF MoU is not met and the parties are unable to agree in writing on an extension of such timeframe(s);

(iii) the mutual agreement to terminate by Tamadam and BIF; and

(iv) as may be otherwise provided in the BIF MoU.

3.2 DEWINA MOU
The salient terms of the Dewina MoU are as follows :-

(a) Tamadam and DHSB agree to negotiate in good faith and use its best endeavours to agree upon the terms of, prepare, finalise and execute the share sale agreement for the Proposed DHost Acquisition (“DHost SSA”) no later than thirty (30) days from the date of the Dewina MoU or such longer period as may be mutually agreed between the parties.

(b) The DHost SSA to be executed and agreed upon by the parties shall reflect provisions of the Dewina MOU and will include provisions acceptable to the parties as appropriate in transactions of the same type and magnitude reflecting, inter alia, the following understanding and principal terms :-

(i) The indicative purchase consideration for 51% equity interest in DHost shall be RM6.12 million (“Indicative DHost Price”).

(ii) The final purchase consideration for the Proposed DHost Acquisition shall be satisfied by the issuance of such number of new Shares in Tamadam at an indicative valuation of RM0.85 per Share ranking pari passu with the existing Shares in Tamadam.

(iii) The Proposed DHost Acquisition shall be conditional on the Proposed BLH Acquisition becoming unconditional.

(iv) The Proposed DHost Acquisition shall be subject to the following :-

(aa) the approval of the shareholders of Tamadam for the Proposed DHost Acquisition and an increase in the authorised share capital of Tamadam;

(bb) the consent of other shareholders of DHost, if such consent is required; and

(cc) approvals and consents of all appropriate authorities, corporate, creditors and any other parties which are required or advisable for or in connection with the Proposed DHost Acquisition, and the fulfilment of all other condition precedents as may be determined by the parties.

(c) Tamadam shall be entitled to carry out a legal, operational, financial and tax due diligence review on DHost, its assets and its business at Tamadam’s own cost and expense, within thirty (30) days or such other mutually extended period commencing from the date of the DHost SSA.

(d) The Dewina MoU shall automatically terminate and be of no effect on the occurrence of any of the following events :-

(i) the execution of the DHost SSA by the parties;

(ii) any of the agreed timeframes set out in the Dewina MoU is not met and the parties are unable to agree in writing on an extension of such timeframe(s);

(iii) the mutual agreement to terminate by Tamadam and Dewina; and

(iv) as may be otherwise provided in the Dewina MoU.

4. BASIS OF ARRIVING AT THE INDICATIVE PURCHASE CONSIDERATION

The Indicative BLH Price was arrived at on a “willing-buyer willing-seller” basis after taking into consideration the adjusted net asset value of BLH after adjusting for the indicative valuation of its 70% equity interest in LSGB using the discounted cashflow methodology.

The Indicative DHost Price was arrived at on a “willing-buyer willing-seller” basis after taking into consideration the earnings potential of DHost.

5. RATIONALE FOR THE PROPOSED ACQUISITIONS

With the Proposed Acquisitions, Tamadam will be able to benefit immediately in terms of earnings contribution from the BLH group of companies and DHost respectively. Further, with LSGB being the principal provider of in-flight catering at both the KLIA and Penang airport, it can be said that LSGB and consequently, BLH is well-poised to reap the benefits of further growth in passenger traffic at both airports, particularly at KLIA, being the main international gateway to Malaysia. The growth in passenger traffic will also augur well for the food catering business of DHost as its restaurants and cafes are located at the KLIA and the LCCT. This in turn will bode well for Tamadam as it may result in higher income and cashflow contribution from BLH and DHost respectively.

6. DOCUMENTS AVAILABLE FOR INSPECTION

The MoUs will be made available for inspection at the registered office of Tamadam at Mezzanine Floor, 8A Jalan Sri Semantan Satu, Damansara Heights, 50490 Kuala Lumpur during normal business hours from Monday to Fridays (except public holidays) for a period of three (3) months from the date of this Announcement.

A detailed announcement on the Proposed Acquisitions will be made upon finalisation of the terms and conditions of the Proposed Acquisitions, including the execution of the Agreements for the Proposed Acquisitions.

This announcement is dated 11 May 2007.

ANNOUNCEMENT DATED 8 JUNE 06
Proposed Sale and Leaseback Of Lot 11614 and Lot PT 21596, Mukim and District of Klang, Selangor Darul Ehsan (collectively known as “the Property”) (“Proposed Sale and Leaseback”)

1. INTRODUCTION 

We refer to the announcements dated 30 May 2006 and 28 March 2006 in relation to the above.

On behalf of the Board of Directors of Tamadam (“Board”), Public Merchant Bank Berhad (“Public Merchant”) wishes to announce that Tamadam had on 8 June 2006 entered into a Sale and Purchase Agreement (“Agreement”) with Amanah Raya Berhad (“ARB”) for the sale of the above-mentioned Property from Tamadam to ARB for a cash consideration of RM27.9 million (“Purchase Price”). On 8 June 2006, Tamadam and ARB had also simultaneously entered into a Lease Agreement (“LA”) pursuant to which Tamadam agrees to lease back the Property from ARB for ten (10) years (extendable for an additional five (5) years). In addition, Tamadam will have a first right of refusal to repurchase the Property from ARB should ARB decide to sell the Property during the term of the lease.

2. DETAILS OF THE PROPOSED SALE AND LEASEBACK 

2.1 Description of the Property 

Please refer to Table 1 for description of the Property.

2.2 Basis of arriving at the sale consideration for the Property

The cash sale consideration for the Proposed Sale and Leaseback of RM27.9 million was arrived at on a willing buyer-willing seller basis, after taking into consideration the market value of the Property of RM29.0 million as appraised by Jabatan Penilaian dan Perkhidmatan Harta (“JPPH”), a department in the Ministry of Finance, Malaysia, vide its valuation report dated 26 April 2006. The Purchase Price is a discount of approximately 3.8% to the value given by JPPH.

The Board is of the view that the offer for RM27.9 million from ARB is reasonable and acceptable to the Company.

2.3 Information on ARB

ARB is a trustee company established as the Department of Public Trustee and Official Administrator on 1 May 1921. The Department of Public Trustee and Official Administrator was corporatised on 29 May 1995 and on 1 August 1995 commenced its operations as ARB. ARB is principally involved in providing trust, deceased estate administration and will services. ARB is wholly-owned by the Government of Malaysia through the Minister of Finance (Incorporated).

2.4 Original cost of investment

The aggregate cost of investment for the Property is as follows:

The Property was purchased from Innovest Berhad through a Sale & Purchase Agreement dated 31 December 1992. Lot 11614 Mukim and District of Klang, Selangor (“Lot 11614”) was registered on 11 March 1982 and Lot PT 21596 Mukim and District of Klang, Selangor (“Lot PT 21596”) was registered on 11 May 1990.

2.5 Salient terms and conditions of the Agreement and LA

An extract of the salient terms and conditions of the Agreement is set out below:

(i) Tamadam agrees to sell and ARB agrees to buy the Property at a price of RM27.9 million. The Property shall be sold to ARB free from all encumbrances but subject to all conditions and restriction in interest express or implied in the issue documents of title to the Property.

(ii) The Agreement is conditional upon the following:

(a) the Foreign Investment Committee’s approval;

(b) Tamadam shareholders’ approval; and

(c) obtaining the approval of the relevant State Authority pertaining to the transfer of Lot PT 21596 to ARB.

(collectively known as the “Conditions Precedent”).

(iii) ARB shall pay the Purchase Price at the time and in the following manner:

(a) the earnest deposit of RM558,000 or two percent (2%) of the Purchase Price (“Earnest Money”) to ARB’s solicitors as stakeholders, which the ARB’s solicitors have received on 23 May 2006;

(b) the balance deposit of RM2,232,000 (“Balance Deposit”) or eight percent (8.0%) of the Purchase Price less half (1/2) of the
arrangement fee of RM697,500 (“ArrangementFee”) or 2.5% of the Purchase Price to the ARB’s solicitors as stakeholders upon execution of the Agreement;

(c) the redemption sum to the chargee on or before the Completion Date to redeem the said Property from the chargee and procure the Discharge Documents subject to Tamadam having delivered to the ARB or ARB’s solicitors a redemption statement cum letter of undertaking issued by the chargee and addressed to the ARB within ten (10) Business Days from the date of receipt of a written request from the ARB’s solicitors;

(d) The balance purchase price of RM25,668,000 (“Balance Purchase Price”) less half (1/2) of the Arrangement Fee less the redemption sum and less the security deposit under the lease to the ARB’s solicitors as stakeholders within three (3) months or such extended date as mutually agreed by both parties hereto from the date of fulfilment of the Conditions Precedent; and

(e) ARB’s solicitors to release the Earnest Money and the Balance Deposit and all interest earned and accrued thereon to the Tamadam upon presentation of the Discharge Documents and the Instrument of Transfer together with the Balance Purchase Price.

(iv) ARB has agreed to purchase the said Property in reliance upon the agreement and assurance of Tamadam that it will take the lease of the Property upon the terms and conditions set out in the LA.

An extract of the salient terms and conditions of the LA is set out below:
(i) In the event that ARB desire to sell the Property at any time during ten (10) year term of lease (“Term”), ARB shall, before offering the said Property for sale to any other person, give to Tamadam the first right of refusal to purchase the Property;

(ii) Tamadam shall have the right to renew the lease for a further term of five (5) years from the date of expiry of the said Term provided that Tamadam shall notify ARB in writing not less than six (6) months before expiration of the said Term.

(iii) The guaranteed net yearly rate of lease rental for the tenure of the said Term of the lease shall be as follows (calculated based on the Purchase Price of the Property at RM27.9 Million) payable on monthly basis in advance:

Term Annual Rate Net Rental per month
Year 1 to Year 2 7.40% RM172,050
Year 3 to Year 4 7.70% RM179,025
Year 5 to Year 6 8.20% RM190,650
Year 7 to Year 8 8.60% RM199,950
Year 9 to Year 10 9.10% RM211,575
Average 8.20% RM190,650

(iv) Tamadam, as the lessee, shall bear and pay or otherwise be responsible for all costs of outgoings, i.e. all services and maintenance charges (where applicable) including but not limited to, building repairs, quit rent, assessments, fire/building insurance and/or other related capital expenditure/costs payable in respect of the said Property for the whole duration of the said Term under the lease.

2.6 Liabilities to be assumed by ARB
There are no liabilities to be assumed by ARB arising from the Proposed Sale and Leaseback

2.7 Utilisation of proceeds
The Proposed Sale and Leaseback will raise net cash proceeds of RM23.9 million.

The net proceeds will be utilised as follows.

3. RATIONALE FOR THE PROPOSED SALE AND LEASEBACK 

The Proposed Sale and Leaseback was undertaken by Tamadam mainly for the purpose of realising the value of the Property which has appreciated since its initial purchase. Hence, Tamadam would be able to fully capitalise on this price increase and secure the gain of RM9.0 million from the sale whilst retaining productive use of the assets by way of the leaseback arrangement.

The Proposed Sale and Leaseback would also generate positive cashflows for the Tamadam Group and would not have any adverse impacts on the operations of the Tamadam Group. Furthermore, the funds raised from the sale will be channelled back into the Group, i.e. will be utilised to fund working capital requirements and to retire loans.

4. EFFECTS OF THE PROPOSED SALE AND LEASEBACK

4.1 Share capital of Tamadam
The Proposed Sale and Leaseback has no effect on the share capital of Tamadam.

4.2 Substantial shareholders’ shareholding in Tamadam
The Proposed Sale and Leaseback has no effect on the substantial shareholders’ shareholding in Tamadam.

4.3 Gain and effects on earnings per share
The Proposed Sale and Leaseback will result in an expected gain of RM9.0 million. Based on the audited financial statements of the Tamadam Group for FYE 2005, the net gain per share would be RM0.18.

4.4 Net assets (“NA”) per share
The pro-forma effect of the Proposed Sale and Leaseback on the NA per share of the Tamadam Group, based on the audited financial statements of the Tamadam Group for FYE 2005 is set out in Table 2 below.

5. RISK FACTORS

The Board is unaware of any risks arising from the Proposed Sale and Leaseback which could materially or adversely affect the financial and operating conditions of the Tamadam Group.

6. APPROVALS REQUIRED

The Proposed Sale and Leaseback is subject to the following approvals to be obtained:

(a) the Foreign Investment Committee’s approval;

(b) Tamadam shareholders’ approval;

(c) the relevant State Authority’s approval pertaining to the transfer of Lot PT 21596 to ARB; and

(d) any other relevant authorities, if required.

7. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

None of the Directors, substantial shareholders or persons connected with them has any interest, direct or indirect, in the Proposed Sale and Leaseback

8. ESTIMATED TIME FRAME FOR COMPLETION

The Proposed Sale and Leaseback is expected to be completed within 3 months from the date of the Agreement.

9. DEPARTURE FROM THE SC’S POLICIES AND GUIDELINES ON ISSUE/ OFFER OF SECURITIES (“SC’S GUIDELINES”)

To the best knowledge of the Board, apart from the SC’s Guidelines on significant change in business direction of a public listed company which the Company intends to seek the SC’s waiver from compliance of the same, the terms of the Proposed Sale and Leaseback do not depart from other requirements of the SC’s Guidelines.

10. DIRECTORS’ STATEMENT

The Board is of the opinion that the Proposed Sale and Leaseback is in the best interests of the Tamadam Group.

11. DOCUMENTS FOR INSPECTION

The Agreement dated 8 June 2006, the LA dated 8 June 2006 and the valuation report by JPPH dated 26 April 2006 are available for inspection at the Tamadam’s registered office at Mezzanine Floor 8A, Jalan Sri Semantan Satu, Damansara Heights, 50490 Kuala Lumpur during normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement.

A circular to shareholders setting out the details of the Proposed Sale and Leaseback and the notice of extraordinary general meeting will be despatched to the shareholders of Tamadam in due course.

This announcement is dated 8 June 2006.