MEMORANDA OF UNDERSTANDING TO ACQUIRE SHARES IN BRAHIM’S LSG-SKY CHEFS SDN BHD AND DEWINA HOST SDN BHD (11 May 2007)

ANNOUNCEMENT DATED 11 MAY 2007

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.